Describing it as a ground-breaking pay deal, the GMB union has announced that leading consumer delivery company Hermes is to offer self-employed couriers the option to take holiday pay and have guaranteed earnings.

Hermes couriers can now choose to become “self-employed plus”, which provides a number of benefits such as holiday pay (pro-rata up to 28 days), and individually negotiated pay rates that allow couriers to earn at least £8.55 per hour over the year.

GMB General Secretary Tim Roache said: “Full credit to Hermes. They’re showing that the gig economy doesn’t have to be an exploitative economy and we look forward to working with them through this ground-breaking agreement.”

This is an opt-in model and will not affect those couriers who wish to retain their current form of self-employed status and earn premium rates, as has been the case for the past 20 years, he explained.

Martijn de Lange, Hermes UK CEO, 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.”

New couriers wishing to take up the new terms will, however, have to follow routes specified by Hermes.

Furthermore, Matthew Taylor, author of the 2017 independent review into working practices, has warned: “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.”

Comment by Croner Associate Director Paul Holcroft

This announcement reaffirms the importance of ensuring that the ability to work flexibly, an increasingly popular option within the modern workplace, is matched with fairness.

Although “self-employed plus” is unique to Hermes and employers are under no legal obligation to introduce something similar, it would seem to be the latest development in the long-running struggle that employers are facing vis-a-vis the gig economy and false labelling of employment status.

Instead of arguing that the relationship between Hermes and its drivers reflects that of an employee or worker, the GMB seems to have decided to negotiate directly with the company for additional rights for the drivers.

While this scheme is likely to be positively received by some self-employed drivers associated with Hermes, other employers should bear in mind that it should not be approached as a way of trying to avoid an accusation of false labelling.

They should remember that the rules surrounding employee status still apply regardless of any compromises or agreements that have been reached with the operatives in question.

They cannot simply pick and choose which rights should be provided to an individual; if people are labelled self-employed but the actual relationship reflects that of a worker or employee, employers will be expected to facilitate their appropriate entitlements.

This includes the right to holiday pay, the National Minimum Wage, rest breaks and protection from discrimination, something not available to self-employed individuals.

Employers should also note that the ongoing debate surrounding the gig economy is far from over, with the Government recently announcing that it intends to evaluate the effectiveness of the current law surrounding employment status in response to Matthew Taylor’s Good Work Plan.

Last reviewed 5 February 2019