Freelance food delivery firm „Glovo“ in Spain will have to formally hire its employees, its German owner „Delivery Hero“ said on Monday.

„Glovo“'s management has decided to replace its freelance model with the formal employment of its food delivery workers in Spain to avoid further legal complications,“ it said in a statement.

The change is expected to limit „Glovo“'s operations in Spain, and „Delivery Hero“ is forecast to lose €100 million in profits in 2025.

The move follows pressure from the government to give couriers employment contracts.

In 2021, Spain issued Europe's first such law, which specifically requires food couriers to be formally employed, rather than being treated as self-employed freelancers.

This means that mobile app-based food delivery companies such as „Glovo“ are obliged to provide social security for their employees.

The Spanish Ministry of Labour has fined „Glovo“ €205 million after approving the so-called „Takeaway Law“.

„Laws must be respected. We have said it before: no exceptions. No big business is above the law. Democracy wins," Labour Minister Yolanda Diaz wrote on social media after the "Delivery Hero" announcement.

Germany-based „Delivery Hero“ has controlled part of the Spanish company „Glovo“ since July 2018 and took full control two years ago.

Frankfurt Stock Exchange-listed „Delivery Hero“ operates in more than 70 countries, while „Glovo“ operates in 23 countries.