Delivery HERO
Germany Delivery Hero has been fined another ~$62M for allegedly violating labor laws by falsely classifying 7,800+ delivery couriers in Madrid as self-employed. The penalty is the latest of several penalties assessed for labor issues, bringing the running tally to over an estimated €200M. Glovo said it would appeal the penalty, contending the inspected period was before the entry into force of a Spanish law passed in 2021, which forced food delivery platforms to grant riders formal employment contracts.
JET's CEO recent comments on the Workers Directive in Europe:
- We have seen on the continent, in most countries, far more scrutiny on the freelance model than before. The reason for this is simply because of the ways that you can prevent the country from actually stepping into your business and saying, hey, hold on, what you are doing is illegal; if you have appealed a couple of times, at some point, you're going to end up at the highest court, and the highest court will tell you, oh, hold on, this is illegal. Same thing in countries like Spain.
- In Spain, the government has said, well, sorry, this is illegal. So, that's the end of the story then, nothing – I mean, of course, people can continue to do illegal stuff, but you can't incur a fine after a fine after a fine. And that's going to hurt your business.
- In the case of the court cases, look, I believe the reason Deliveroo left Holland was not that they were small, but because they are about to lose the last court case, in which the courts will determine that the couriers need to be employees.
- The European directive should see as an overarching idea of what the countries should be doing, and it seems like the idea in Europe is that these people are employees. Now, naturally, in most of the EU countries, not in all of them, but in most of the European countries, we employ the staff because it already is the law. It's not something we are hopeful will be the law; it's already the law. And that only thing that the EU directive does, it makes the – it turns the burden of proof around.
- It said, by default, they are employees, and if you want to prove that they are freelancers, by all means. That's the only thing the EU directive does, and it's on top of the national legislation. I think the national legislation is far more troublesome than the EU directive.
- So, obviously, we are supportive of the EU directive, but I think the national legislation is always the legislation to look at. And in that sense, we have seen dramatic shifts everywhere, more scrutiny on the models. More Belgium recently hired more inspectors to do something about things like child labor, and that's what, I mean, that's the sort of language people are using, right, so.
- So, I don't think you should consider the EU directive too much. It's going to move the sector towards employment; that's clear. But that's also what's happening in the countries.
LETTUCE WORRIES (SG)
It's hard to make money selling lettuce; a shortage will make it even harder.
Ad Daniel wrote yesterday in the Consumer Staples note the Salinas Valley is one of the hardest hit areas of California by the atmospheric rivers. It is a northward draining river that starts in Southern California and travels through some very fertile land in the central part of the state. The Monterey, Mariposa, and Merced counties continue to be concerned about flooding. Monterey grows over 60% of the country's leaf supply. While most of the leafy vegetables were not planted yet, it will take time to test the land for contamination and assess the infrastructure's damage. Strawberry growers in the state are already reporting $200M of damages. Carrots are one of the few crops in season, and prices have surged to a ten-year high. Restaurants may be more impacted than grocers by a shortage of leafy greens since it is more acceptable for grocers to be out of stock.
