Germany’s cabinet backed a proposed law that will require companies to pay social security for contractors who deliver parcels.
The cabinet approved the draft legislation on Sept. 18. If approved by Parliament, it will require employers to pay social security taxes for contracted workers, even though they are not employees.
The legislation came in response to police raids at delivery providers in February. Police found violations in a sixth of subcontractors including failure to pay the minimum.
With the growing volumes of packages being delivered by online retailers, firms like Amazon (NASDAQ:AMZN) have increasingly turned to contractors for deliveries. Amazon told Reuters that the proposed German law would not affect the company’s operations, saying that its relationships with contractors already comply with the law.
The legislation now heads to the Bundestag for consideration.
Did you know?
The forthcoming PAL-V Liberty flying car will travel up to 350 miles by air or 820 miles by road on a single 26-gallon tank of gas. Unfortunately, it’s rated for only 44 pounds of cargo.
“While some may view this as the bottom in shares, we don’t see any support until management takes responsibility for recent performance and clearly articulates a credible path to better results and cash flow (and delivers on it). In the meantime, shares will continue to melt lower, and rightfully so.”
— Deutsche Bank analyst Amit Mehrotra on cutting his price target of FedEx after it posted weak earnings.
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Germany’s efforts to rein in contracting practices for final-mile deliveries come as Amazon builds up its logistics operations in the country. The company told Reuters on Sept. 17 that it has begun hiring drivers and plans to open 11 additional distribution centers.
As Amazon handles more of its own logistics in Germany, the company will be positioning itself as a greater threat to Deutsche Post-DHL.
Hammer down everyone!