TKWY Just Eat Takeaway.com N.V.

--Uber Eats, Deliveroo and other food-delivery platforms have three months to move Spanish couriers onto contracts

--Spain's law is the strictest yet in Europe and could be an important precedent for EU-wide legislation on the gig economy

--The most likely solution for companies will be subcontracting via third-party fleets, which could raise costs

By Adam Clark

Uber Technologies Inc. and other operators of food-delivery platforms in Spain have three months to change their current gig-labor models, the Spanish government said on Tuesday.

Ministers approved a law to regulate the employment conditions of delivery workers who work via digital platforms such as Uber Eats or Amazon.com Inc.-backed Deliveroo PLC. The approval begins a countdown for companies to convert their workers from independent contractors into employees by mid-August.

The new regulations could be an important precedent as the European Union is consulting on rules on platform work across the bloc this year. Uber, Deliveroo and local delivery startup Glovoapp23 SL had campaigned for a deal which would avoid reclassification of workers, similar to arrangements reached in France, arguing the majority of couriers would prefer to be self-employed.

Yolanda Diaz, the minister of Labor, said Spain would be the first country to pass such legislation but added that the government had held recent talks on the topic with counterparts in Italy and Portugal.

"Europe is watching us with close attention," she said, also noting that President Biden has said the U.S. could legislate in similar areas. Last month, U.S. Secretary of Labor Marty Walsh said many gig workers should be classified as employees.

"This regulation will directly hurt thousands of couriers who use food delivery apps for much-needed flexible earnings opportunities and made it clear they do not want to be classified as employees. It will also impact Spanish restaurants that increasingly rely on delivery solutions to make ends meet," a spokesperson for Uber said.

Courier groups in favor of maintaining self-employed status organized protests in various Spanish cities on Tuesday but unions welcomed the law and said similar regulations should be extended in other areas of the digital economy and across Europe.

The companies will now have to consider how to implement the changes to their business models. An estimated 30,000 couriers currently work with food-delivery platforms in Spain, often working for multiple companies. Couriers' groups said the most likely solution will be for the companies to subcontract workers via fleet-management companies.

The subcontracting model is already used by major European food-delivery platform Just Eat Takeaway.com NV but would likely result in relatively higher costs for Uber and Deliveroo, which have a greater proportion of restaurant deals where they handle the logistics of delivery. Uber said last month that it would use fleet-management companies for the planned expansion of its Uber Eats service to Germany.

"We want to be a long-term partner to Spain and are exploring different options to adapt our delivery business to the new regulation," the spokesperson for Uber said.

Write to Adam Clark at adam.clark@wsj.com

(END) Dow Jones Newswires

May 11, 2021 10:20 ET (14:20 GMT)

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