Hermes and Uber - exploitation or welcome flexibility?
Last week, The Guardian reported that parcel delivery company Hermes is paying some couriers below the National Living Wage. Hermes’ response to the allegations is that the couriers are self-employed and that they enjoy the flexibility of being able to fit deliveries around personal circumstances, providing opportunities for retired people, parents and others who wish to work flexibly.
Meanwhile, Uber is currently fighting an Employment Tribunal claim from two of its drivers backed by the GMB union in which the drivers are arguing that they are employed rather than self-employed. The drivers are complaining that they are not given full employment rights, including the National Living Wage, holiday pay and sick pay. Uber argues that it is a technology company, not a transport provider, working with its "driver partners" and giving them the flexibility to control how much and how often they work.
What are the issues?
The central issue in these two cases is the question of the legal status of the individuals.
To be entitled to the National Living Wage, individuals must be able to show, as a minimum, that they are "workers". Workers are people who carry out work personally under a contract. In the Hermes situation, the couriers are allowed to use substitutes to do their work – so, for example, a courier who wishes to go on holiday can arrange for someone else to fulfil their deliveries for them. This enables Hermes to argue that their couriers are not "workers" because they are not providing personal service, and therefore they are not entitled to the National Living Wage.
In both the Hermes and the Uber scenarios, the couriers/drivers are said by the companies to be self employed. This means that they are not entitled to basic employment rights such as paid holiday, paid sick leave, maternity pay and leave, pension contributions and the right to bring an unfair dismissal claim. Whether or not someone is an employee is decided by a court or tribunal by considering a number of factors, including:
- who provides the "tools" for the job – such as the car, insurance, petrol, phone;
- whether the individual can work for other organisations;
- whether the individual is undertaking any financial risk;
- who decides when and for how long the individual works.
Hermes and Uber both argue that their arrangements are above board and that the couriers/drivers are properly self-employed. For example, Hermes points to the fact that their couriers use their own cars, pay for their own fuel and car insurance, are free to work for other companies, and have some flexibility over their working day. At the Employment Tribunal hearing, Uber’s barrister argued that drivers had a choice about their work and were free to work with other taxi companies – they were essentially their own bosses.
Legal or not?
On the face of it, there are many factors in both situations which point to self-employment. If that is the case, it is perfectly legal for the individuals who choose to work under these arrangements to be paid less than the National Living Wage, and for them not to receive normal employment benefits. Both companies argue that these are essentially lifestyle jobs, where individuals can choose to work as much or as little as they wish, and to fit their work around their other commitments or activities. Time will tell whether the arguments from those complaining that the rewards for these roles are inadequate and unlawful will prevail. However, one thing that is certain is that the world of work will continue to change as individuals look for opportunities that enable them to balance their work and their other lifestyle choices.
If you would like to discuss any issues raised in this article, we have specific employment law expertise in advising in this area. For further advice, please contact Louise Connacher