The Hermes ‘self-employed plus contract’ has no basis in law. How can this be imposed lawfully?

Posted in : Seamus Says - Employment Law Discussion on 1 March 2019
Seamus McGranaghan
O'Reilly Stewart Solicitors
Issues covered:

Q: Hermes have introduced a ‘self-employed plus contract,’ a category that has no basis in law. How can the unions and management lawfully do this?

Scott: We’ve received a question that reads: "I read about the Hermes deal with the GMB union, where drivers can elect to receive guaranteed hours at more than the national minimum wage, plus 28 days of annual leave on a self-employed plus contract, or presumably remain as self-employed on better rates of pay but without the holidays and guaranteed wages.

"Surely employers and employees or their representatives cannot opt out of law. Either they must meet the definition of a worker or employee or self-employed, or they don't. The courts have ruled that they are workers, not self-employed, and not entitled to full employee status. How can the unions and management lawfully do this?"

Seamus: Well, this is very interesting and I think this certainly is, as an employment lawyer, one to watch and something that will no doubt be of value in terms of discussion going forward.

Background of this case, in case people don't know, is that it relates to a number of couriers that work for Hermes. These couriers were very much viewed as self-employed and they enjoyed flexibility in terms of being able to set their own hours and all the benefits that come along will be self-employed. But a lot of them were of the view of the fact that they were, in fact, being treated and working as if they were employers and should have had rights in terms of holidays.

Scott: In fairness, they were driving around in a Hermes-labelled van, delivering stuff to my house.

Seamus: And wearing a Hermes uniform as well.

The case itself was really looking for a tribunal to declare that they had workers' rights. This was a case that was dealt with by a tribunal in Leeds. They declared that the workers had the right to holidays and all the associated rights with worker rights, essentially.

What has come out of that, essentially, has been that you've had Hermes and then one of the larger unions within the organisation, the GMB union, sit down and try to agree to some sort of deal whereby . . . I suppose it's a best of best worlds type of scenario that they're trying to bring about. But essentially, what the deal is, it's this almost creation of a new type of category for employment and they're calling themselves "self-employed plus". So, it's almost like one of these drugs that you might buy at the chemist.

Scott: I'm over 50. You'll find I do buy those.

Seamus: It's not just a regular tablet. It's something in addition to that that helps you out.

They call them usually self-employed plus, but there's no category in law in terms of a self-employed plus worker or employee, and they can't write law. The tribunal can't write law either... that's not the job of the tribunal. It's the job of the tribunal to interpret the law, essentially.

But this new category has arisen, whereby what they've said to the couriers is, "If you want holidays and you want guaranteed hours, we're willing to work with you in terms of that. We're still not willing to call you employees, but we're willing to a little bit here".

There's also a benefit to the employees by selecting the hours that they want to work and those guaranteed hours. There's also a bit of an increase in salary for them. They've guaranteed payments in relation to their salary. They're not going to be floating around saying, "I've only got 12 hours this week. I'm hoping maybe next week I'll get 30 again like I did the week before". It gives them some certainty, but it has clearly not given them employment rights as you would a full-time employee.

So, there have been some criticisms of this deal. I think, in a way, and we talked earlier about it, the union are sort of looking for a halfway house in order to pacify the employees to give them some additionality in terms of their rights from Hermes.

Scott: That's for those that want the holidays and the employment protections like equality.

Seamus: Yes.

Scott: For the other ones who are self-employed, they want the benefits of paying less tax and the freedom and the flexibility.

Seamus: Exactly.

Scott: So, the union members are squeezing the union, presumably from both ends.

Seamus: From both ends.

Scott: The union have come up with management with this hybrid category, but I suppose the question is, is it lawful . . . I'm guessing from you, you're saying it's dodgy. It's at least open to challenge.

Seamus: I would have concerns about it. I think, just reading some commentary around the deal, you can see the positives. You can also see the negatives. It would be interesting to see what position Revenue and Customs take.

Ultimately, in life, you have death and taxes, and Revenue and Customs want their slice of the pie. They want their tax. There wouldn't be any deductions in respect to tax and national insurance under this scheme. I think it's challengeable from a Revenue and Customs point of view that they will want to investigate and look at this carefully.

Scott: It's not that dissimilar to the dependent contractor status that was put forward by the Taylor Report.

Seamus: Taylor Report, yeah.

Scott: Which doesn't have direct application here, but I think what's happening is that because you have the gig economy and you've got people on platforms and so on, they're trying to get something that reflects reality. I can understand where they're trying to go with this, whether it's lawful as the law stands at the moment. I think it would take Parliament to bring in a new category like a dependent contractor or self-employed plus or whatever in order for this really to be completely legal.

Seamus: Yeah. There are two sides to the argument. There's commentary out there saying that Hermes need to go the whole hog here and declare them employees and treat them in that way. But in saying that, there are workers within the organisation that don't want to be treated as employees. Then there is other commentary saying this is a great idea. It's a hybrid, but very much for me, it's the round hole and the square peg.

Certainly, there are difficulties around it. It may be that, as time moves on, this maybe is a very positive thing and it works very well. It may be that Parliament will look at it and make a further declaration. Certainly, I think it's very challengeable at the minute. I'm interested to see what develops out of it.


This article is correct at 01/03/2019

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Seamus McGranaghan
O'Reilly Stewart Solicitors

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