Another step for the gig economy, another status?

In a world in which the gig economy is becoming ever more prevalent and is also increasingly in the spotlight, Hermes, a leading consumer delivery company, has taken an unprecedented step in offering its self-employed couriers "enhanced benefits". 

Hermes is, in effect, contractually seeking to bring couriers' rights more in line with workers as opposed to self-employed contractors. All those who choose to 'opt-in' to the arrangement will benefit from holiday pay and individually negotiated pay rates based on guaranteed hourly rates of pay of at least £8.50 an hour.  However, the flip side of the deal is that the couriers will have to follow directions specified by Hermes so that they are taking the most efficient routes. 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". The collective bargaining agreement with the GMB is being described by many as 'ground-breaking' and, some see it as an encouraging move in response to public opinion and demand.

It should be noted that this move is against a back drop of a number of gig economy cases where the courts have found individuals labelled as "self-employed"  and "individual contractors" to actually be workers and entitled to workers' rights (see the most recent decision in the Addison Lee case here and the Court of Appeal Uber decision here).

There are also potential tax and national insurance questions that arise as a result of the fact that the Hermes approach seems to merge two groups whose income and benefits currently fall to be treated by HMRC under different regimes. Although still classed as self-employed by Hermes, these individuals could be seen by HMRC as more akin to employees and thus should be taxed as such.  Matthew Taylor, who conducted the Taylor review (see our article on the latest positon on this here), considers that there are potential taxation issues and that HMRC will be "looking at this very closely" although Hermes has stated that it "100% disagrees" with that view.

Notwithstanding the possible tax implications the development could also result in a further vague concept of 'self-employed plus' being introduced into the already murky and complicated waters of employment status. It may also make it challenging for other businesses that don't have the size and scale of Hermes to offer equivalent rights for self-employed workers.

For more information regarding employment status and workers' rights,  contact me on 03303 116 796 or [email protected].