The BBC have reported that Hermes have struck a deal with the GMB union to create ‘Self-Employed Plus’ status for its workers.
There has been an ongoing dispute over the status of Hermes staff with a number of couriers working for Hermes as self-employed contractors successfully arguing that they are indeed workers in the Leeds Employment Tribunal. To read more about what happens in this case click here.
What does this mean?
The new status means that Hermes couriers can move to ‘Self-Employed Plus’ status which gives them:
- 28 days paid leave
- Hourly rates of pay
This deal is ground breaking and no doubt other employers will follow suit. It is a way for Hermes to attract candidates who wish to retain self-employed status but still offer an extremely competitive package which negates the main downfalls of being self-employed. Is it too good to be true?
What are the issues?
This employment status has no legal basis at the moment and it is unclear how it will be perceived by HMRC in terms of tax. Until this is clear we wouldn’t recommend that employers recognise this status.
The BBC reported that Matthew Taylor, author of an independent review in 2017 into working practices, raised concerns about this and said: ‘I’m afraid.. I think the HMRC…will be looking at this very closely because if somebody has most of the benefits of being an employee and if the employer has most of the benefits of employing somebody, then the tax authorities will want the employee to be paying national insurance as an employee and they’ll want the company in particular to be paying national insurance on those people.’
Interestingly, the BBC article tells us that new couriers wishing to begin ‘employment’ on these terms will have to follow routes specified by Hermes to ensure that they are working as efficiently as possible on the hourly rate. This degree of control is an integral element of determining employment status, so we’re unlikely to see the end of the employment status debate with gig economy workers.
Matthew Taylor did address this issue in his Good Work Review by suggesting that gig economy workers should be paid the National Minimum or Living Wage.
A person’s employment status is a notoriously difficult thing to define and each individual case turns on its facts. Employment experts can, in some circumstances, only use past case law to predict the status of an individual.
The Government’s Response to Matthew Taylors Report – the ‘Good Work Plan’, indicates that it will legislate to clarify the employment status tests, which could be good news for employers as the current tests can be hard to attribute to modern working relationships, such as the gig-economy.
If you would like to read more about the Good Work Plan and the changes coming in to effect over the next year then read our article The biggest package of workplace reforms for over 20 years.