Hermes’ Gigs and Benefits

March 23, 2019

Category:

Hermes

2 min read

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What's going on here?

Hermes (a parcel delivery company) confirms its “groundbreaking” gig economy deal by offering its drivers benefits more akin to those of a worker.

What does this mean?

Hermes, the UK’s second biggest parcel delivery company, announced that they’ll offer drivers the opportunity to opt into far more favourable contracts. Previously, drivers had been labelled “self-employed contractors”, meaning that they were not entitled to paid holidays or union representation. After losing a case in an employment tribunal last June, Hermes decided to offer these drivers “self-employed plus” status, which includes workers’ benefits.  Drivers are also allowed to opt to retain their current status, which would entitle them to better rates, but without the other benefits.

What's the big picture effect?

Hermes is just one of the firms that operate in the “gig economy”. In this free market system, firms usually don’t hold the position of an employer. They’re simply the middleman between the customer and the service provider. More specifically, they claim that they only link the customer and the provider (the delivery person, in this case) and are not the provider’s employer. In this scenario, the providers can theoretically work as much or as little as they want, but also sacrifice perks such as union representation and paid holiday.

Hermes’ loss in the employment tribunal was only one in a string of court cases concerning the gig economy and workers’ rights (Uber and Deliveroo are other examples). The reason these gig-economy companies are fighting so hard to have these cases ruled in their favour is that a change in classification for their drivers represents a severe threat to their business model. The model for Uber, Deliveroo and the like relies on them taking minimal responsibility for their operatives. If Uber drivers are classed as workers, Uber would not only have to guarantee holiday and a minimum wage, they would also likely have to pay National Insurance (a tax in the UK that is paid by workers and employers). Hermes’ Chief Executive claims that their new deal, “self-employment plus”, negates the need to pay National Insurance as the operatives would still be self-employed, just with more benefits. With that being said, it is clear that Hermes’ deal could revolutionise the relationship between gig economy operators and their “employees” and the HMRC’s thoughts on this arrangement might decide how other gig economy firms such as Uber and Deliveroo proceed.

What would interest law firms is the fact that Hermes and the trade unions seem to have found a happy compromise. This is good for Hermes because they can avoid the negative press that other gig economy firms (such as Uber) have suffered as commentators label their practices as exploitative. Ultimately, it raises the question of whether a public legal battle is really better than a good-fashioned negotiation.

Report written by Luke H

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