Spain to enhance rights of gig and outsourced workers

If your business has a presence in Spain, you may be interested in two significant developments affecting workers’ rights. 

The first concerns the gig economy and is known as the ‘rider law’. It will give enhanced rights for individuals engaged in delivery services offered by digital platforms. As the FT reports, it means Spain is the first EU country to amend its laws in this way following a number of landmark rulings in Europe against the type of business model used by platforms such as Uber. Spain’s Socialist-led government has been encouraged to make the change following a decision of the country’s supreme court back in September that workers for delivery firm Glovo were employees - there have been similar rulings in Italy, the Netherlands, France and Belgium. 

The rider law makes two changes to the Workers’ Statute. The first states that delivery riders shall be considered employees where the company exerts powers of organisation and direction, by co-ordinating the provision of services or working conditions through a digital platform. The second relates to the apps used by companies and the control they exercise over riders. It gives a works council the right to be informed of the parameters, rules and instructions that algorithms or artificial intelligence systems are based on. The new law will come into force on 10 August, 90 days after its publication in the Spanish Official Gazette on 12 May, so companies affected by the law change don’t have long to take the necessary measures to comply.
The second development has wider application and affects outsourcing. It has been flagged by Samuel Gonzalez in his Outlaw article: ‘Spain to give outsourced workers the same rights as employees’. The Spanish government is planning to amend employment regulations to limit outsourcing in businesses where the aim of that is to reduce workforce-related costs. So far, no official explanation or draft legislation has been made public, but we think it is likely to appear in the next year or two as part of a resumption of the government’s social agenda after the Covid-19 crisis. The change is expected to impact those sectors which are heavily dependent on short term employment contracts such as energy and construction. So, let’s hear more about this from inside Spain. Samuel joined me by video-link from Madrid to discuss what is clearly a very significant development. I started by asking what, exactly, the Spanish government is proposing:

Samuel Gonzalez: “What the Spanish government is proposing here is basically to ban any kind of outsourcing activities right now that entail or that trigger less rights on the subcontractor and employees that those rights that the employees from the main company would have. Basically, what the government administration is trying to do here is they're just trying to clamp down on any kind of outsourcing of activities which are subcontracted, mainly for a reason just to cut down costs. So, what the government has done is they have divided the outsourcing activities into two kinds. On the one side, you have just a pure outsourcing activity that have to be outsourced just because the main company has no kind of tools, or any kind of workforce, who are specially dedicated to that kind of activity that they are outsourcing in that specialist activity. On the other side, they are considering activities which could be done by the main company but where they are looking to do it at a lower cost by outsourcing that to specific other companies, third companies. So, what the government is trying to do here is just to ban this second kind of outsourcing of activities which, of course, to them simply means that if the company is looking for a benefit, or for less cost, that would trigger less protection, less social security protection for those outsourced employees.”

Joe Glavina: “Can I ask you about the impact of this on employers because it seems they will inevitably face higher costs and might even need to cut their workforce. So will they be able to maintain the same level of service?”

Samuel Gonzalez: “Well, that's a very interesting question, especially taking into account that the administration if is one of the biggest clients of the construction and the energy sectors which, of course, are two of the sectors who are going to be most influenced and impacted by this new law. The problem here is that in the short run, of course, the companies will, as you say, incur higher costs and it will mean that delivery will have to be delayed in time, and the level of service would be worse. So, in that case, what we are looking at in the long run is that the companies will have to renegotiate any kind of bid, or any kind of contract, that they may already have with the administration, with any other third party, bringing the costs up and, of course, bringing the prices up. That will be in the long run. In the short run, what the administration has said is that they will just try to make all these contractors renegotiate their covenants and their clauses with no higher costs. This, of course, will be supported by the fact that the government will pass this into law, however, they're not trying to make this law effective in the next couple of years, so we really do have a lot of space, a lot of time, to renegotiate those kinds of contracts that we have right now, from a time perspective and, of course, enter and reconfigure all these bids for future potential contracts. That, of course, would result in higher costs and higher pricing.”

Joe Glavina: “So, what advice are you giving to clients at the moment, Samuel?”

Samuel Gonzalez: “Well, the current advice is basically to reconfigure, recalculate, all the costs of the subcontracting companies of the outsourcing company, especially those related to the workforce, because that cost will most surely rise in the next couple of years. So, we are really engaging here in an analysis of what the cost-benefit of the whole of their outsourcing activities is, of course, sitting down and reconfiguring all those costs in order to analyse and take into account the possibility of streamlining their workforces, streamlining the headcount in the next couple of months. We're talking about main activities, main companies, but when we're talking about outsourcing companies, the companies that depend on the activities of the main companies who outsource to them, they have a huge problem here. So, what we are actually doing is just engaging with them, sitting down with them, to see which activities of the ones that they're actually doing right now are key to those main employers and, in those cases, we really want to stress what is important to them, which is the specialty of their activity, not so much the cost efficiency of having outsourced the activities directly to them, but the specialty of their activity and, of course, prepare themselves for the future, hiring new employees and hiring a new workforce that will give new services, especially those services that the main companies will not be able to insource directly or render themselves.“

Samuel’s article on this development is called: ‘Spain to give outsourced workers the same rights as employees’ and you can find that on the Outlaw website.