Food delivery platform Deliveroo says it is considering shuttering its operations in Spain ahead of a deadline to comply with a new law that requires it to hire workers who are freelancing for the company.
Deliveroo’s announcement Friday came as the mid-August deadline looms for delivery platforms to hire couriers who are currently freelancing for them. The change is required by legislation passed in May.
The changes in Spain come as other countries in Europe and elsewhere are deciding on a labor model for the so-called gig economy, which is often blamed for precarious jobs and low salaries.
That’s because, until now, gig and other contractor workers had to pay social security fees from their own pockets if they wanted to receive benefits, including unemployment subsidies and a public pension.
Some freelancers have protested against the changes, saying they prefer flexible work and don’t want to be hired as staff.
App-based food delivery businesses say the new law threatens a 700-million-euro ($832 million) industry in Spain.
Deliveroo said in a statement filed to the London Stock Exchange where it is listed, 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.”
The delivery app added it wants to focus on more profitable operations in countries where it is a market leader.
A consultation process with affected workers will begin in September, Deliveroo said. It expects that process to take around a month.