Hermes couriers win landmark employment status case

  1. Francois Badenhorst

    Francois Badenhorst Business Editor, UKBF & AWEB Staff Member

    91 18
    6 |

    Another day, another tussle over employment status. In the latest round, an employment tribunal in Leeds has ruled that a group of Hermes couriers are workers, not independent contractors.

    The decision means that the group of 65 workers are entitled to the National Minimum Wage (NMW) and holiday pay. And crucially, the Hermes couriers can now reclaim the unlawful deductions from their wages, made when they were classified as self-employed.

    The case is the latest to be brought by the GMB union over the gig economy. The union has been active in its campaigning against what it sees as disguised employment by gig economy firms like Uber and Deliveroo.

    This ruling affects the 65 Hermes couriers who have already brought claims, but is also likely to affect the wider network of 14,500 Hermes couriers who are engaged under the same contracts as the couriers.

    There will now be a further hearing in the Employment Tribunal to calculate the exact amount of holiday pay, national minimum wage and any unlawful deductions due back that the couriers should receive.

    Commenting on the decision, the GMB’s general secretary Tim Roache said, “This is yet another ruling that shows the gig economy for what it is - old fashioned exploitation under a shiny new facade.

    “Bosses can't just pick and choose which laws to obey. Workers' rights were hard won, GMB isn't about to sit back and let them be eroded or removed by the latest loophole employers have come up with to make a few extra quid.”

    Dave Chaplin, the CEO and founder of ContractorCalculator, an online portal that provides free advice and information to freelancers and contractors, noted that the decision won’t resolve the persistent problems around employment status.

    “New judgements like we have seen today with the Hermes case, alongside the recent Pimlico Plumbers case, demonstrate a major problem whereby firms have forced workers into false self-employment.

    “Perversely, the newly proposed reforms to tax the self-employed – known as Off-Payroll Working – will introduce rules that enable firms to classify self-employed workers as ‘employed for tax purposes’, whilst circumventing their obligation to give them employment rights. This directly opposes the intentions of the Government’s ‘Good Work Plan’ and is wholly unacceptable.

    “To prevent this, Parliament must enact a very simple rule: self-employed workers classed as ‘employed for tax purposes’ should automatically receive full employment rights.”

    The Hermes decision follows hot on the heels of the Supreme Court decision involving Pimlico Plumbers and a former worker named Gary Smith. Smith had worked worked as a well remunerated sub-contractor until a heart attack inhibited his ability to work.

    Smith retroactively claimed worker status, enabling him to get sick pay. When he announced the decision, Lord Wilson said Pimlico’s terms “enabled the company to exercise tight administrative control” over Smith “to impose fierce conditions” on when and how much it paid to him.

    Crucially, though, none of these judgments have laid down new principles in law. The confusion persists and it increasingly looks like a matter that only government legislation can untangle.

  2. Employment Law Clinic

    Employment Law Clinic UKBF Big Shot Full Member - Verified Business

    3,205 1,509
    And a case in the Employment Appeal Tribunal, deciding that there was no employment status (as had been incorrectly determined by the employment tribunal) - a case that is favourable to employers or SMEs (the target audience of this site) that engage people on a contractual, non-worker status - gets no coverage?

    In Hafal v Lane-Angell:

    1. SUMMARY

      CONTRACT OF EMPLOYMENT - Whether established

      JURISDICTIONAL POINTS - Worker, employee or neither

      The Tribunal erred in concluding that there was an overarching contract so as to give rise to an employment contract. The terms of appointment, which were not properly taken into account, provided that there was no obligation to provide or accept work, and the other features of the relationship were not inconsistent with those terms. Accordingly, the Claimant was not an employee of the Respondent.

    Karl Limpert
    Posted: Jun 28, 2018 By: Employment Law Clinic Member since: Aug 10, 2009
    JEREMY HAWKE likes this.
  3. Employment Law Clinic

    Employment Law Clinic UKBF Big Shot Full Member - Verified Business

    3,205 1,509
    And of course, there's the Deliveroo case from last year (which was considered on a different area of law - it dealt with whether riders were workers for the purposes of trade union recognition, but felt the law was comparable), again not recognising worker status.

    The judgments are not all going against the gig-economy, despite the publicity for those that do.

    Can we have a more balanced commentary on here?

    Karl Limpert
    Posted: Jun 28, 2018 By: Employment Law Clinic Member since: Aug 10, 2009
    JEREMY HAWKE likes this.

    JEREMY HAWKE UKBF Legend Full Member

    3,794 1,213
    I welcome this ruling
    For far too long in this industry it has been too competitive with companies getting an edge over traditional independent businesses .
    The addiction of offering the cheapest method of deliveries has gripped the industry .
    The desperation has driven large companies to turn self employment from a lucrative method of running your own show into a last resort where contractors earn the minimum wage with all the liabilities of running their own company but without the opportunities from other sources that a normal person with their own enterprise would enjoy .

    This makes the industry less competitive for other businesses . Parcel rates are now the same as they were 25 years ago
    25 years ago I had two vans in Business Post (now another company) I was billing £750 per week in 2018 they are still billing £750 a week across the whole industry and the only way to make any profit is to slave work the contractor and not allow them a chance to make a profit !

    I don't see these companies actually making any changes I feel that the government will offer them protection as some would have to shut down if they had a payroll
    Last edited: Jun 29, 2018
    Posted: Jun 29, 2018 By: JEREMY HAWKE Member since: Mar 4, 2008
  5. Pembroke99

    Pembroke99 UKBF Newcomer Free Member

    18 5
    I assume that this ruling means that HMRC will be rubbing their hands with glee at the thought of all the extra tax, NIC's and no more deductibles they can now persue the Hermes couriers for. Presumably they will be looking to backdate their claims as well.

    I hope the GMB union have looked at all this rather than just rushing in to condem a sector just because it gives workers a bit of freedom to run their own lives rather than being good little drones in the workers 'system'.

    What I can't understand about the gig economy though is why the revenue rule IR35 that plagued my life when I was a computer contractor doesn't still apply to the gig economy, when that rule was applied it was very easy to see if you were self employed or a disguised employee and no amount of personal service companies could hide it.
    Posted: Aug 9, 2018 By: Pembroke99 Member since: Oct 2, 2017

    ÜZEYİR UKBF Newcomer Free Member

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    Posted: Jan 25, 2019 By: ÜZEYİR Member since: Jan 25, 2019