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Delivery Hero's subsidiary Glovo is staring down hefty social security charges and fines in Spain, thanks to tough gig-economy rules that threaten to cost hundreds of millions.

What does this mean?

Spain rolled out strict gig-economy rules in 2021, forcing delivery platforms like Glovo to reclassify their riders as employees, not freelancers. Glovo struggled to keep up, facing repeated fines for misclassifying workers and battling many of those cases in court. Even after moving thousands of Spanish riders onto full-time contracts last year -- a change that cost the firm €100 million and dragged down Delivery Hero's share price -- the risks are far from over. Delivery Hero now warns it could still be on the hook for between €562 million and €923 million (about $658 million to $1.08 billion) in outstanding liabilities tied to unresolved cases and back payments. If Spanish authorities decide to collect the full amount, Glovo may need even more support from its parent company just to survive.

Delivery Hero has already seen its share price take a hit from Glovo's legal mess, showing just how quickly new rules can upend entire business models. As more countries target gig-economy companies with stricter employment laws, investors may see higher costs, shifting profit outlooks, and tougher growth prospects across the sector. Market watchers are keeping a close eye on which firms can adapt -- and who might fall behind as these regulations spread.

The bigger picture: Europe could set the tone for global gig work rules.

Spain's tough approach might inspire other countries to follow suit, ramping up the pressure on delivery platforms to offer better protections -- or face huge financial penalties. As similar laws make their way around Europe and beyond, gig-economy giants will have to rethink their strategies to keep pace with new labor standards and avoid costly setbacks.