Matthew Taylor talks to Hermes workers

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First Monday of February, Hermes announce self-employed driver holiday and guaranteed work, they are to call it ‘self-employed plus’ status.

Martijn de Lange, Hermes UK CEO, speaking to the IOC said:

This new option allows couriers to retain the flexibility of self-employment we know is so important to them and gives them the certainty of guaranteed levels of earning, the security of holiday pay and a strong voice.

 

We’re proud to be leading the way with this pioneering development which we hope will encourage other companies to reflect on the employment models they use.

 

We have listened to our couriers and are wholeheartedly committed to offering innovative ways of working to meet peoples’ differing needs.

 

Matthew Taylor FRSA, author of 'Good Work - The Taylor Review of Modern Working Practices' responded to the news of the Hermes-GMB deal in a communication to Fellows of the RSA...

Matthew Taylor said today (4th Feb 2019)

Perhaps I should a bear a grudge against the GMB trade union. In 2017, on the eve of the launch of my report on working practices commissioned by the Prime Minister, I gave the union’s General Secretary a personal briefing. He thanked me and said I’d made good progress. But the next day he joined the TUC in loudly condemning the report (now being implemented almost in full) as worse than useless.

That’s in the past. On the Today Programme this morning I congratulated the GMB on the deal it has done with Courier company Hermes. It is an agreement which appears to give those couriers who choose it the most important rights that go with casual worker status (minimum wage and holiday pay) while they continue to be classified as self-employed. This is a good deal for the couriers and it is also welcome that Hermes – who have been hard line in the past – are willing to recognise the GMB and offer better entitlements. More broadly, the idea of enhancing the rights of self-employed workers - who make up one in seven of the labour force – is important and might point towards an overall system characterised by what I referred to my in report as ‘two-way flexibility’.

However, there are two important questions that employment experts will now start to mull over. The first is whether this deal represents a shift in the underlying strategy of trade unions. Until now their approach has been to take employers like Uber, Hermes, Deliveroo to court to seek to have their self-employed staff categorised as workers. Such a categorisation brings with it statutory rights, not just to minimum wage and holiday pay, but other rights and protections including sick pay. The unions have been pretty successful in this approach and their case has been strengthened by the Government now committing to the recommendations in my report which would make ‘control and supervision’ the primary criterion in such cases.

The problem with the legal approach is that it is slow, expensive and uncertain. For example, the case against Uber has been winding through the courts for years. Also, even when the unions do win, the employers can then tweak their labour contracts and claim in so doing to have moved staff back over the line into self-employment.

There are clear advantages to reaching a collective agreement, not least that the GMB gets more members and more say. The downside however – beyond the fact the Hermes drivers will have fewer rights than a legally defined worker – is that the entitlements the union has negotiated are not statutory so could one day be withdrawn by the company. More importantly – in terms of the unions’ overall strategy - while Hermes may have seen the writing on the wall having lost a legal case to the GMB, being frequently attacked in the media and knowing the direction of Government policy – there will be many other employers who care less about their reputation and have no intention of talking with trade unions. Their bogus ‘self-employed’ workers won’t get a collective agreement but do need rights.

A second big issue concerns tax. This may be both the company’s key motive behind the deal and the factor that sinks it. While employment law recognises three employment statuses (employees, who get full rights; workers, who get most rights; and self-employed, who get few rights) in tax law there are only two; employees and the self-employed. Self-employed people pay lower national insurance contributions and the hirers of self-employed labour pay no national insurance. Arguably, the main reason companies like Hermes and the rest prefer self-employment status is less to do with worker rights and more with substantially reducing their tax bill.

The criterion strictly applied by HMRC in determining whether a worker and their employer should pay national insurance at the full rate is the aforementioned ‘control and supervision’ (indeed I argued for, and the Government supports in principle, the idea of bringing tax and employment law boundaries into alignment).

In recent years cracking down on ‘bogus’ self-employment has been a very big issue for the cash-strapped Treasury and has led, for example, to the imposition of IR35 rules which have reduced freelance employment in the public sector and are set to do the same in the private sector. Many people – including some high level TV presenters have faced big back tax bills and court orders as the tax authorities pursue them on the grounds they were employees not self-employed freelancers.

On the surface of it Hermes and their couriers represented by the GMB now have the benefits of worker status, without the drawbacks of having to pay employers’ or employees’ national insurance; for example, as part of the deal Hermes can now tell the workers exactly how to drive their rounds. But, given that the deal makes their couriers look even more like they are under control and supervision as well as getting many of the benefits assocaited with worker status, it is difficult to see how this will escape the notice of HMRC. Even if the tax authorities were inclined to turn a blind eye to this agreement you can bet your bottom dollar than many employers will ring their lawyers today to ask whether they could apply a similar arrangement. If the principle was applied across the workforce it could cost the Exchequer (ultimately that’s you and me) billions in lost revenues.

So, while the GMB has got a great deal for its couriers, we will have to see if it survives scrutiny. Ultimately, the Hermes case strengthens the argument for the long-term direction I set out in my report. This is that labour should be taxed equally and at source regardless of the status of the person providing it. This would remove the incentives to bogus self-employment and make deals like the GMB’s perfectly acceptable. But to do this would also almost certainly mean eroding some of the tax advantages enjoyed by the self-employed and their hirers and – as the Chancellor found out in March 2017 – this is very hot political potato.


Hermes reported that If the courier follows the agreed route, guaranteed rate and holiday pay will be made. The express, last mile, final mile sector has been under social and political pressure. Many firms operate fixed employment status models but the majority see themselves outside the gig economy with strong bricks and mortar infrastructures and long trading histories of delivery models.

Matthew Taylor speaking, ‘the CLOCK was ticking and Government was coming to a court case.’ ‘Will this lead to a change to Statutory rights? ‘Taylor asks.

Martijn de Lange, chief executive of Hermes UK, ‘We have listened to our couriers and are wholeheartedly committed to offering innovative ways of working to meet peoples' differing needs.’

In what the GMB called a "ground-breaking" deal for the gig economy, Hermes workers can opt-in to receive up to 28 days of paid leave.

In exchange, couriers will have to follow routes specified by Hermes they can also choose pay rates of "at least" £8.50 an hour over the year.

At present, Hermes' 15,000 couriers can deliver parcels in whichever order they want.

Hermes said that if it is guaranteeing hourly rates of pay, it needs to ensure that couriers are taking the most efficient route.

 

The Institute of Couriers has set a fellows' heads of industry to further review Taylor employment status on March 1st in the afternoon preceeding fellows' gowning.

The Institute of Couriers operates a code of practice, ‘doing the right thing pledge’ it lists a pledge to the driver workforce, advising clarity of employment status.

 

IOC code of practice, pledge extract

Employment Engagement status

We will provide clarity for all;

· We promise to treat all fairly, with respect, dignity and without discrimination regardless of status.

· We provide clarity of choice in different ways to work.

· All delivery agents shall be provided with clearly written and understandable information about their contract and engagement status.

 

Last modified on Monday, 04 February 2019 21:04
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