Spain’s first judicial rulings on employment relationship in collaborative economy companies

Written on 21 Jun 2018

The Social Courts number 11 in Barcelona and number 6 in Valencia have declared that the relationship that unites Take Eat Easy (a now defunct company) and Deliveroo with their respective collaborators is of an employment nature. Although we are facing the first pronouncements on the matter, these rulings allow us to analyse how the traditional labour criteria are applied to companies with a collaborative economy.

The aforementioned Social Courts have considered that the factors regarded as indicative of employee status concur in the analysed work relations. Although we are faced with two different pronouncements, both cases share certain elements that the Courts have qualified as clear signs of employment nature:

  • Both companies have a customer service department in charge of solving the problems arising from the rider´s activity.
  • The company establishes different time slots and the riders indicate their preferences, but the final decision is up to the company.
  • The remuneration is paid by the company, so that the rider does not receive any money from the restaurants or customers he serves.
  • Both companies have an internal disciplinary system that penalises late delivery, delivery without bags with the company's logo, without using the box provided or making the delivery without the required kindness, and non-compliance with which may lead to the termination of the contract by the company.

Special attention should be paid to the Deliveroo case, in which the judge has not confined himself to evaluate the proven facts of the case in the light of the traditional criteria established by the case law, but has mitigated the importance of some of these classic signs of employment status (e.g. the ownership of the means of work) and introduced new elements which he considers revealing the existence of a disguised employment relationship.

In the first place, the Social Court considers that the elements of voluntariness and personal work concur, since in order for a rider to be replaced by a colleague, the express approval of the company is required. Nor does the fact that the contract signed with the riders allows them to subcontract the activity detract from the employment nature of the relationship, as this is a very residual practice that requires express authorization.

Secondly, with regard to the absence of a fixed salary, the Court recalls that the absence of a fixed salary does not necessarily imply the classification of the relationship as mercantile. In addition, the judge emphasizes that, although the amount paid to the rider depends on the trips made, the rider does not participate in the company's profits, but receives a fixed amount per trip. The company determines the price of the service and charges it through the application, so that the employee never has direct contact with the amount charged for the service.

One of the most controversial aspects of the resolution concerns the ownership of the means of work. The Court considers that the fact that the riders are the owners of the means used to provide the service (mobile phone, bicycle and backpack) does not undermine the employment relationship when, in cases such as this, ''the means of work do not have the economic relevance necessary to make their exploitation a fundamental element of that relationship, nor the essential purpose of the contract''. In this case, the ownership of the same is mitigated by the concurrence of other elements that the judge considers to be clear indications of dependency, namely:

  • The provision of services is organized through an application that is owned by the company and whose installation is essential to provide services.
  • Deliveroo determines the area in which the rider must make the delivery, without the rider being able to choose if he prefers one or the other zone. Thus, at the beginning of the working day, the rider must go to a meeting point designated by the company and make the journeys indicated in the application.
  • During the performance of the services the riders are permanently geolocated.
  • The rider is not free to refuse orders within his own schedule, as doing so may lead to the unilateral termination of the contractual relationship by the company.
  • A notice period of two weeks is established for those cases in which the rider does not want to continue providing services.
  • The company sets up specific guidelines and determines the times at which the delivery is to be made.

For all these reasons, the Court considers that there is a relationship of dependence between Deliveroo and its riders, so that "the provision of contracted services is carried out within the framework of organization and management of the company, and therefore subject to the governing, disciplinary and organizational circle of the same''.

These judicial rulings begin a long journey that will take place in several areas:

  • In appeal proceedings, where the higher courts can both confirm and annul the judgment, establishing new criteria and interpretations;
  • In the Social Courts in which the riders have filed labour lawsuits. These new pronouncements will allow us to analyse whether there are diverging criteria between the different Courts;
  • Within companies whose business model is based on the platform economy, since the inclusion of new criteria when considering the existence of work experience affects the way in which the relationship between platforms and service providers has been formalised so far.

In any case, and without prejudice to what happens in higher proceedings, it can be said that these rulings incorporate new elements to be taken into account when deciding to formalize an employment relationship or sign a mercantile contract.