Charlie Barnes: Should employers follow Hermes’ lead with ‘self-employed plus’ status?


Organisations like Hermes, with business models based on self-employed individuals delivering parcels, have come under fire for seemingly avoiding the provision of basic worker rights, such as national minimum wage (NMW), holiday pay, statutory sick pay and pension auto-enrolment.

To tackle this, Hermes has agreed new rights with the GMB union for 15,000 of its self-employed couriers, giving them the option to receive 28 days’ holiday and a guaranteed rate of hourly pay, exceeding NMW. Hermes has called this a ‘self-employed plus’ working status, and other employers might consider following suit.

However, the way in which the work is performed will not change, and that could still be a problem for Hermes.

In 2018, an employment tribunal found that Hermes’ couriers were workers, despite being classed by the organisation as self-employed. A crucial aspect leading to the decision was personal service being a dominant feature of the relationship; while the couriers had a right to find a substitute to do the work, Hermes could veto the choice. As a result, the couriers were deemed to be workers and entitled to basic rights such as NMW, holiday pay and statutory sick pay.

Under Hermes’ new self-employed status, the working relationship will be the same, so another employment tribunal could come to the same conclusion. In fact, the provision of some basic rights is likely to make the couriers look more like workers than not in a tribunal’s eyes.

However, this is only a problem for Hermes if couriers bring employment tribunal claims, currently the only route for an individual to enforce their working rights. Due to the expense of such claims, they are usually fought with the backing of a trade union; Hermes’ motivation for introducing its new status is likely, in part, to be the appeasement of the union to prevent further costly claims being brought concerning worker rights.

HM Revenue and Customs (HMRC) has a stake in this issue, though. If couriers are deemed to be workers for employment rights purposes, that can veer them towards the ’employed’ status for tax and national insurance contribution purposes, the current tests for both of which are different.

Therefore, despite the agreement with the union, the new self-employed plus status is likely to be subject to the scrutiny of HMRC. Should HMRC deem them to be employed, that could create a significant liability for Hermes, rendering the point of its new status obsolete.

With the government also committed to clarifying and aligning the employment status test for both worker rights and tax in its recent Good Work Plan, this new self-employed plus status may only be a short-term fix, rather than an airtight solution for others to adopt.

Charlie Barnes is associate director and employment lawyer at RSM Legal