The rise of the gig economy has led to questions around people’s employment status and whether or not they are employees of the business they work for. Employment law has seen a seismic shift in recent years towards recognising the rights of flexible workers, but the ways in which this has been achieved have been far from perfect. This article is going to analyse Hermes’ employment status move and what it means for employment law.
Hermes’ Employment Status
Hermes couriers were granted ‘self-employed plus’ status this month after a pioneering deal was struck with the GMB union. The deal entitled couriers to receive the statutory annual minimum of 28 days paid holiday and the option to receive hourly pay rates of £8.50 over the year.
That sounds great, right? Almost.
Hermes’ collective bargaining agreement required couriers to opt-in. This meant workers could choose whether or not to receive this new, more complete, employment status, or continue as a gig worker, according to Mark Rix, GMB’s national officer.
Tax experts argue that this could mean new national insurance obligations for the workers in question, but this is refuted by Rix, who says only those who receive “a full suite” of benefits (namely full employment status) would be liable to contribute in this way.
All those who do opt to become ‘self-employed plus’, will be subject to more stringent rules from Hermes – for example they will have to take the most efficient delivery routes, and software will be put in place to monitor this.
The move, which is effectively the creation of a new employment status, has been described as “muddying the water” by critics including Simon McVicker, the director of policy and external affairs at the Association of Independent Professionals and the Self-Employed. He argues the drivers in question should instead simply be given the full range of benefits they are entitled to.
It follows Hermes’ defeat in the Employment Tribunal in June 2018, when it was ruled the claimants were not self-employed but ‘workers’ and therefore entitled to holiday pay, minimum wage and other similar benefits.
Workers vs Self-Employed
Elsewhere, in a similar case last December the High Court held that Uber drivers were workers as opposed to self-employed. Furthermore, changes in the law relating to employment status have recently been the subject of government consultation, which follows the Taylor Review on Modern Working Practices to clarify the position, and a commitment to commission independent research relating to the issue. These may well have proved the catalyst for Hermes to alter arrangements, in anticipation of changes.
How Many Employment Statuses Does the Future Hold?
Looking forward, the Hermes decision leaves law-makers with new questions to be answered, both from employment law and tax perspectives. One can only speculate as to where the new ‘self-employed plus’ category will sit within the current classification framework of self-employed, worker and employee. And given that the entitlements of a ‘self-employed plus’ worker are most closely aligned to those of a worker, is the name not a little deceptive?
In tax terms, it is surely highly likely that HMRC will have to take the tax implications of the new employment status into account, and may consequently assert that the ‘self-employed plus’ workers in question should be taxed as employees (which would mean they would also be subjected to National Insurance contributions).