App-based food delivery firm Glovo’s freelance riders in Spain will be hired as employees following pressure from the government to give them labour contracts, reports France24, citing an announcement from Glovo’s German owners, Delivery Hero.

“Glovo management decided to change from a freelance model to an employment-based model for its delivery riders in Spain to avoid further legal uncertainties leading to an increase of contingencies,” Delivery Hero said in a statement.

Spain, in 2021, became the first European Union nation to give labour rights to food delivery riders, requiring that they be recognised as employees instead of being considered self-employed freelancers. This means app-based food delivery firms like Glovo have to pay their riders — who get around mostly on bikes and motorcycles — employee contributions for benefits like sick leave and protections against dismissal.

After the law came into effect, Glovo agreed to employ riders for its online supermarkets but kept those delivering restaurant meals as freelancers under a new statute that it said strengthened their autonomy. This led Spain’s labour ministry to slap the company with fines totalling €205 million for violating the law. The European Commission is also investigating Glovo for labour law violations. Glovo has appealed the fines. It argues the infringements cited by the Labour Ministry took place before the new law came into effect.

Delivery Hero said the “operation model” change will be limited to Glovo’s activities in Spain and dent the German firm’s 2025 core profit. In a press release on 2 December, the firm said, “Today, Glovo management decided to change from a freelance model to an employment-based model for its delivery riders in Spain to avoid further legal uncertainties leading to an increase of contingencies. The operational model change, limited to Glovo’s business in Spain, is expected to have an impact of approximately €100 million on adjusted EBITDA for FY 2025. Despite this impact, Glovo is expected to generate a positive adjusted EBITDA in Spain in FY 2025.”