Hermes becomes the latest participant in the gig economy saga.
The delivery firm, has struck a deal with the GMB union to offer couriers paid holiday and guaranteed wage rates. Under its new “self-employed plus” status, Hermes workers can opt to receive up to 28 days of paid leave. They can also choose pay rates of at least £8.50 an hour over the year – more than the minimum wage of £7.83 an hour, which rises to £8.21 in April.
The GMB called the deal “ground-breaking”.
However an employment expert raised questions about the tax implications. Hermes’s 15,000 couriers can deliver parcels in whichever order they want and will be able to continue to do so if they take up the new arrangement. New couriers wishing to take up the pay holiday terms will have to follow routes specified by Hermes. The company said that if it is guaranteeing hourly rates of pay, it needs to ensure that couriers are taking the most efficient route.
The GMB said that the collective bargaining agreement is on an opt-in basis and “will not affect those couriers who wish to retain their current form of self-employed status and earn premium rates”.
Martijn de Lange, chief executive of Hermes UK, said,
We have listened to our couriers and are wholeheartedly committed to offering innovative ways of working to meet peoples’ differing needs.
Dean Forbes, CEO at CoreHR, shares this thoughts on what this could mean for the future of the gig economy:
The gig economy is set to become a permanent fixture of the future of work, and firms such as Hermes are setting the bar for new employment practices. People now seek higher levels of choice, flexibility and independence, so businesses that want to benefit from a larger number of transient workers will have no choice but to offer exactly that.
This ground-breaking deal is a great first step from Hermes, yet there isn’t a ‘one size fits all’ solution. Arrangements and circumstances differ across organisations, so more needs to be done to solve the employment status of these workers. Employers across all sectors must ensure they have the processes in place to guarantee fair salaries, security of holiday pay and a strong voice to these workers. By meeting employee expectations of a seamless, collaborative, real-time employee experience, businesses can drive efficiencies and scale their workforce as needed.
It is about getting employees up-to-speed, motivated and adding value as quickly as possible while ensuring a fair, productive and mutually beneficial economy for both the business and its employees.
Yvonne Gallagher, Partner in the Employment Team at Harbottle and Lewis, commented,
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 per cent 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 2 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.
David Greenhalgh, head of the Employment practice at law firm Joelson, commented,
It might look like a step in the right direction but the deal does not represent the landmark precedent that the GMB Union would have us believe. Hermes’ decision is more reactionary than anything, coming after a tribunal decision which found its drivers to be workers. For Hermes drivers, they now at least know where they stand, but the pressure for other gig economy companies to follow suit will be reputational rather than on the back of a new legal precedent having been set.