Employee status entitles workers (in theory) to a minimum wage, vacation pay, health and unemployment benefits, and other legal protections depending on the country. Riding companies like Uber Eats or Deliveroo have long classified their workers as independent contractors, allowing them to minimize their expenses and limit legal liabilities. Up to now.
Lawmakers in Europe have proposed tough new rules for these companies. And of course, the consequences that come upon them are of gigantic dimensions.
Measure. The draft, released today by the European Commission, is an important step in requiring delivery companies to classify drivers, couriers, cleaners, fitness trainers, masseurs and other workers using apps and platforms. on-line to find work as employees. The proposals, well received by the unions, could affect approximately 4.1 million workers in the economy gig in Europe. Furthermore, the EU estimates that the number of people working for digital platforms will grow from 28 million to 43 million in 2025.
Therefore, platforms would be considered employers if they determine the level of remuneration of a worker; require them to abide by the rules regarding appearance; monitor their performance through electronic means; restrict your freedom to choose hours; and they eliminate the possibility of the employee doing work for others.
The answer. Unsurprisingly, Uber and other companies are against the Commission’s reforms, which could seriously affect their business models. The new rules would result in billions of euros in new costs for them. The ridesharing giant already said those costs would end up being passed on to consumers and that roughly 250,000 couriers and 135,000 drivers across Europe would lose their jobs under the proposed rules.
“We are concerned that the Commission’s proposal will have the opposite effect: putting thousands of jobs at risk, paralyzing small businesses in the wake of the pandemic and damaging the vital services that consumers across Europe depend on,” they explained. from Uber.
They are already losing millions. Delivery Hero, Just Eat and Deliveroo have already experienced the first consequences of the measure, falling sharply in a week in their respective business valuations. In a matter of days, they have lost a capitalization of more than 8,600 million, an amount that came to touch the 10,000 million.
The one that has suffered the greatest loss has been the German Delivery Hero, which of the three is the one with the highest market value. In the last week, its shares have lost 16% of their value, going from 119.3 euros to 99.8, which implies a loss of almost 4,900 million in their capitalization. The one that is suffering the most in its action is Deliveroo. The British company, which has just ended its operations in Spain, has seen its share lose 26% of its value in the last seven days, losing 1,738 million in market value.
Europe is going to regulate the work of delivery men. More than 4 million false self-employed will be recognized as wage earners.
The reaction on the stock market: the large delivery companies collapse and have lost 9,000 million.
The success of the business was to violate rights. pic.twitter.com/EYET1SPL3f
– Javier Gil (@Gil_JavierGil) December 8, 2021
Consequences. The platforms have intensified the lobbying in the weeks leading up to the submission of the draft, rejecting the prospect of reclassification of their workers. New pressure groups have been formed and studies have been commissioned which conclude that such a change will lead to massive job losses. However, some platforms have shown willingness to work under the new model, while warning that customers could pay a price. Some cited a survey by Copenhagen Economics indicating that 250,000 people would be forced to leave delivery work.
They are also concerned that the criteria are too vague, with different interpretations leading to even more court cases rather than legal certainty. This “would have dire consequences for the platform workers themselves, the restaurants and the EU economy in general,” according to Delivery Platforms Europe.
Other cases, such as Spanish. In Europe, Spain offers a preview of the possible effects of the EU. Your new law for riders, enacted in August, required food delivery services like Uber and Deliveroo to reclassify workers as employees, covering about 30,000 workers. Uber responded by hiring multiple staffing agencies to hire a fleet of drivers for Uber Eats, a strategy to comply with the law but avoid the responsibility of directly managing thousands of people. Deliveroo, as a result, left the Spanish market.
An intermediate possibility. Companies, however, prefer policies like those in France, where the government has proposed allowing workers to choose union representation that can negotiate with companies on issues such as wages and benefits. Uber also pointed to Italy, where a major union and food delivery companies reached an agreement that guarantees minimum wage, insurance and safety equipment, but does not classify workers as employees.
Britain’s high court ruled that Uber drivers should be classified as workers entitled to minimum wage and vacation pay. In the Netherlands, a court also ruled that Uber drivers must be paid under the current collective rules for taxi drivers. Supporters of the new worker regulations explained that companies like Uber already behave like employers by controlling workers through software that sets wages, assigns jobs and measures performance, a practice the commission called “algorithmic management.” . It was therefore necessary that it also appear on paper.