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Has Hermes created a new type of employment?

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Has Hermes created a new type of employment?

In a landmark step for workers’ rights, Hermes have struck a deal with their couriers and the GMB Union to create ‘self-employed plus’, a way for their couriers to remain self-employed, but with many of the basic employment rights enjoyed by contracted workers.

 

What are workers’ rights?

 

From day one of any employment, all people that work are entitled to:

 

  • National Minimum Wage or, if over 25, National Living Wage
  • Working time rights which include breaks, paid holiday and a limit to weekly working hours
  • The right to join a union
  • Health and safety protection
  • Protection from unlawful discrimination
  • Data protection rights

 

Currently, freelancers and self-employed people are not entitled by law to these rights, and are also not covered by workplace pension schemes which include contributions from their employer. Contractors do still benefit from health and safety and discrimination rights, as well as the individual rights set out in their contract with the company purchasing their services, but this move from Hermes raises the bar a little higher for companies running similar operations.

 

The Hermes ruling and the subsequent development of a new employment model

 

Hermes, Deliveroo and Uber have all found themselves facing legal battles in recent years, with workers demanding a change to their employment terms and job classifications. An employment tribunal ruling last year found that Hermes drivers should be considered ‘workers’ and not self-employed, and thus were entitled to workers’ rights. This decision by Hermes is the first of its kind to offer a middle ground between employments and sub-contracting, offering couriers the opportunity to receive benefits traditionally enjoyed only by those on the payroll, with holiday pay available pro-rata up to 28 days per year, and pay rates of at least £8.55 per hour - 9% higher than the current national living wage.

 

Drivers may choose to retain their current self-employed status but, if they do decide to take the self-employed plus option, in return for these benefits they must follow a specific route as decided by Hermes, instead of making their deliveries on their own schedule as they have been doing until now. This will ensure that workers are more closely monitored and working the hours that they need to in order to get paid what is deemed to be a “fair” wage.

 

Hermes UK CEO Martijn de Lange said: “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.”

 

Tim Roache, GMB union general secretary, said: “Other employers should take note: this is how it’s done”

 

Whilst Hermes has managed to negotiate a deal that pleases all parties, most crucially union representatives, other companies have not fared so well.

 

In December of last year, the Court of Appeal upheld a ruling that Uber drivers should receive workers’ benefits including holiday pay and minimum wage. Uber said that the tribunal "fundamentally misunderstood" how the company operates and is further appealing to the Supreme Court.

 

Whilst Uber claims that their current system allows drivers to choose their own hours and work in a flexible way that has historically been successful, the approach by Hermes has demonstrated that there is another way of offering workers both the flexibility that they require and the rights they feel they deserve.

 

For a long time ‘gig economy’, where workers get paid for individual jobs rather than a set rate of pay, this has been a controversial subject, with two wildly differing schools of thought on the issue. On the one hand, it is thought to offer a great way to work flexibly around other commitments, making it ideal for students and people with young families. Meanwhile, employers benefit from only paying for the work that is done, and not incurring staff costs when there is no demand for the service. However, many feel that individuals employed in this way get a raw deal, with no sickness or holiday pay, no protection against unfair dismissal, no redundancy payments and often left with not enough work or money to get them through the month.

 

This step by Hermes not only benefits independent contractors, who get all of the benefits with none of the drawbacks but, for employers, a move such as this could help with staff retention and overall job satisfaction. These factors traditionally make for happier employees, who in turn will generally provide a better service and help businesses to continue to improve.

 

A glimpse into the Governments “Good Work Plan”

 

The Government supports this move under its Good Work Plan, which aims to improve the rights of those on unstable contracts. The plan proposes changes such as written statements of entitlement offered to all staff when they begin working, and improved rates of pay.

 

The Good Work Plan has a clear focus on contractor’s rights, reflecting that the Government has recognised the value of flexible workers as the gig economy has risen sharply over recent years. Many casual workers are struggling to make ends meet despite working as many hours as possible. Others are relying on benefits, which pulls into focus the need for changes to the current system. Hermes’ decision is likely to influence this proposal further by showing ways that employee rights can be improved to the benefit of the employer and employee, and offering a positive role model for other companies to follow.

 

Not only this, but the European Union has revealed a brand new directive aimed at shaking up the gig economy yet further. Under new regulations, employers will need to give all casual workers a statement of their duties, a formal start date and an indication of what they will be paid. Workers will also have a right to compensation for last-minute cancellations of work, and will no longer be forced to abide by ‘exclusivity clauses’ which forbid workers from working more than one job.

 

Whilst the UK may not end up taking on these new rules, depending on how long Brexit is delayed for, this move shows that the self-employed are starting to be taken more seriously by employers and parliament alike, with Hermes leading the way and others set to follow.


 

Talk to TFMC about workers’ rights today

 

Legislation can sometimes take decades to reflect changes in society, as is the case here with the changes in how we work, spurred by the development of the digital economy. Indeed, workers’ rights and employment law has always been a difficult area for business large and small to navigate and this is set to become even more so with developments like the Hermes decision.

 

Why not let us focus on your payroll and your advisor on employment matters, while you focus on the running of your business. Speak to TFMC’s helpful advice team today to find out how we can assist you in this respect. Call us on 0800 470 4820 or email info@tfmcentre.co.uk.