Parcel delivery organisation Hermes and trade union GMB announced in February 2019 details of what has been described as a ‘groundbreaking deal’ relating to Hermes' self-employed courier workforce.
In June 2018, a group of couriers contracting on a self-employed basis with Hermes were successful in their claim in the Employment Tribunal (ET) that they should be treated as workers for employment law purposes.
A worker in the UK is entitled to a limited number of employment rights, including paid annual leave, national minimum wage and a right to be accompanied to any form of disciplinary meeting. Workers do not, however, have any right to a redundancy payment or to protection from unfair dismissal.
Most significantly, a worker is treated as self-employed for tax purposes, so organisations are not required to operate pay as you earn (PAYE) or pay employers' national insurance. At 13.8% of earnings in excess of £162 a week, characterising all couriers as employees rather than workers would come with a significant additional cost.
The agreement between Hermes and GMB guarantees that couriers will earn at least £8.55 an hour, a sum slightly in excess of the national minimum wage, and will be entitled to paid holidays.
The deal may well be groundbreaking, as it is the first significant example of a gig economy business engaging formally with a trade union in respect of a self-employed workforce. Deliveroo last year succeeded in resisting a claim for compulsory recognition of a trade union. The Central Arbitration Committee, which deals with recognition applications, considered that Deliveroo riders were not workers for the purposes of recognition legislation.
However, given that worker status has been consistently upheld by employment tribunals in all the gig economy cases which have reached them in recent years, such as Addison Lee, City Sprint, Uber and Pimlico Plumbers, it does not appear that Hermes has made any significant concession here.
One of their riders is quoted as stating that “it is a start, but it is not the end” and that is surely correct. The guarantee of earnings in excess of minimum wage opens the door to arguments from HM Revenue and Customs (HMRC) that the individuals are not bearing financial risks and so are not to be regarded as genuinely self-employed.
If employers wish to avoid any uncertainty around the status of those performing their services, then the only way to do this is to offer employee status. This comes at a cost, though, in the form of national insurance and qualification for full employment rights after two years’ service.
Yvonne Gallagher is partner in the employment team at Harbottle and Lewis
