Contxto – The verdict is in; the Brazilian logistics unicorn Loggi must begin formalizing work relations with its personnel. At least this is what Judge Lávia Lacerda Menendez ruled this past Friday in São Paulo’s Labor Court. For many, this is Brazil’s latest attempt to hold last-mile delivery companies more accountable for their workforce.
Part of this reprimanding entails Loggi paying of R$10,000 fine for every unregulated professional. In the end, however, this amount was pro-rated to R$30 million (over US$7.2 million) for previously not protecting its fleet of 15,000 drivers.
While the majority work on motorbikes through hectic São Paulo traffic to make deliveries, Loggi didn’t provide formal work contracts, meaning they lacked protective provisions prior to this legal decision.
Along those lines, official working relations will require Loggi to allocate employees’ funds to government programs. This is also true for the federal public pension system. Moreover, Loggi will need to hire workers that have served between October and December of this year.
According to StartSe, fellow delivery-based companies will be subject to the same stipulations in accordance with the public civil action of the Labor Prosecutor’s Office, filed on August 27, 2018. These include iFood, Rappi, 99, Uber Eats, among others.
Nonetheless, Loggi is reportedly going to try to appeal this sentence instead of paying the compensation. Although the company still hasn’t made an official response to this development, it allegedly argues that couriers work under a “micro-entrepreneurs” model as freelance contractors backed by the Brazilian government.
Loggi in Brazil
This past June, Loggi became a unicorn after it raised US$150 million. Investors included SoftBank Group Corp, Microsoft Corp, GGV, Fifth Wall, and Velt Partners. Also in September, Loggi also began a hiring spree in Brazil and Portugal to scale and optimize its “logistics-as-a-service” technology.
While software programming certainly requires more training and technical skills than let’s say driving a moped, I’m a firm believer that everyone from full-time couriers to programmers should be entitled to the same benefits. Hopefully, this ruling will set a positive precedent, being the first step in the right direction.