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Hermes: better rights for gig economy drivers

04 February 2019

Hermes, a major courier company, has entered an agreement with a Trade Union conferring a number of rights upon self-employed individuals.

Hermes has agreed to allow drivers to opt into worker status for its self-employed couriers which ensures that they will receive holiday pay and minimum wage. It has agreed to pay an hourly rate which is greater than the current national minimum wage. In addition, the company is effectively guaranteeing a minimum rate of pay if individuals fail to achieve the agreed rate in their earnings which are calculated on the basis of a fee per delivery.

This guarantee sits perhaps uncomfortably with the concept of genuine self-employed status, where one of the legal tests is the bearing of genuine financial risk by the individual, and it will be interesting to see whether HMRC seeks to assert that these “workers” should in fact be paying employees tax and national insurance through the PAYE system, with Hermes making the additional Employers NI contribution of 13.8% of earnings. The additional burden of employer’s national insurance contributions is thought to be a powerful factor influencing the structures companies use in relation to their workforces.

Hermes notes that many of its workers choose self-employed status because they value the freedom to work when they want, to manage their other commitments in life, such as family responsibilities. That has no doubt influenced the agreement, but may not be compelling for HMRC purposes, given that there is nothing preventing employers from granting employee status and allowing a high level of flexibility to drivers as to when tasks required are completed.

Workers, unlike employees, do not qualify after two years’ service for protection from unfair dismissal or the right to receive a redundancy payment.

Hermes drivers were found by an Employment Tribunal to have worker status last year and so the company was already at risk of claims for failure to pay for holiday and national minimum wage.

The direction of travel appears to be firmly in favour of gig economy workforces having at least worker rights, but the threat of full employment rights has not gone away, and we can expect further challenges.

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