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Spain fines Delivery Hero's Glovo a further $62 million over hiring - source

The spread of the coronavirus disease (COVID-19) in Madrid

MADRID (Reuters) -Spain's Labour Ministry has fined Glovo, the local business of Germany's Delivery Hero, another 56.7 million euros ($62 million) for allegedly violating laws on hiring riders, a source with knowledge of the matter said.

Barcelona-based Glovo said it would appeal the penalty and said the inspected period was prior to the entry into force of a Spanish law passed in 2021, which forced food delivery platforms to grant riders formal employment contracts.

The fine relates to irregularities that the Labour Ministry alleges began in 2019 and affected around 8,000 workers who were not properly hired or did not have adequate work permits as they were foreign nationals, the source said, without saying if the period continued after Spain passed its new law in May 2021.

The ministry fined Glovo 79 million euros in September for similar alleged violations covering other riders. Glovo is also appealing against that penalty.

"The sanction proposal refers to an operating model that no longer exists in Spain," Glovo said in a statement, without confirming the latest penalty amount.

"There has yet to be a report from the labour inspectorate or any judicial pronouncement on the new unpublished model currently available in Spain," it added.

Delivery Hero's shares were down 0.8% at 50.76 euros 1200 GMT.

The latest fine imposed on the company was earlier reported by the El Diario news website.

Spain's 2021 law was one of the first to regulate workers' rights in the so-called gig economy in Europe.

Glovo has been fined a total of 205 million euros for alleged breaches in Spain in recent years, the source said.

As many as 37,000 workers are covered by Glovo's alleged labour law violations, the source added.

Delivery Hero said in November it would achieve a positive adjusted core profit margin on gross merchandise value (GMV) of more than 0.5% in 2023 for the group, including Glovo.

It also narrowed its loss guidance for 2022, expecting a negative margin on adjusted core loss (EBITDA) of -1.4% to -1.5% of GMV. For the fourth quarter of 2022, it expected an adjusted EBITDA below the mid-point of its prior guidance of 40-120 million euros.

($1 = 0.9197 euros)

(Reporting by Belen Carreño and Joan Faus, writing by Inti Landauro, editing by Alexander Smith and Mark Potter)