By Alyssa McMurtry
OVIEDO, Spain (AA) – British food delivery company Deliveroo said on Friday that it is considering pulling out of the Spanish market.
“The company has determined that achieving and sustaining a top-tier market position in Spain would require a disproportionate level of investment with highly uncertain long-term potential returns,” Deliveroo said in a statement filed to the London Stock Exchange, where it was listed in April.
While the company did not mention the regulatory pressure from the Spanish government as a reason for abandoning the market, the announcement comes just two weeks before Spain’s so-called “rider law” takes effect.
The law, passed in May, gave companies like Deliveroo and Uber Eats three months to properly hire the people they use to deliver food. These companies have traditionally relied on self-employed workers to make their deliveries.
“No other country in the world has dared to pass a law like this. The world is looking at Spain,” said Spanish Labor Minister Yolanda Diaz after the law was passed.
“A young person on a bike with an app isn’t an entrepreneur. That’s what the courts have decided,” she added.
An estimated 17,000 gig workers have been powering the booming food delivery industry in Spain, but for many, their futures are less certain with Deliveroo’s announcement.
Deliveroo said it will carry out a month-long consultation in September and “make sure that compensation and goodwill packages, compliant with all local regulations and laws, will be available for riders and employees,” should the company leave Spain.
UGT, one of Spain’s top unions, said it will study the case and slammed Deliveroo’s statement for being “full of ambiguities and avoiding expressions like ‘collective redundancies’ or severance payments.”
Spain represented just 2% of Deliveroo’s market in the first half of 2021.