26 Sep 2016
By Alan Price, CEO, Croner Group Limited
Hermes engages over 10,000 couriers to deliver parcels to people’s doorsteps. Hermes hires these couriers on a self-employed basis and pays them per parcel. However, this week the Government has asked HMRC to investigate Hermes in relation to the allegation that they pay these couriers below the National Living Wage. Payment of the National Living Wage is dependent on the employment status of these couriers, as Hermes will only be obliged to pay this wage if it is found that they are in reality employees or workers of the organisation. Therefore, as part of the investigation HMRC will also have to look into the employment status of these individuals.
The Government has called for this investigation after they received over 70 complaints from these couriers regarding the working practices of Hermes and allegations of bullying and victimisation by the middle management within the organisation. Again, without the employment status of being an employee or worker of Hermes, these couriers have been without recourse to the Employment Tribunal to bring such claims.
Hermes robustly denies any wrong-doing and maintains that their service agreements with these couriers are legitimate and they are in fact self-employed. Further and in any event, Hermes maintains that the hourly rate paid to these couriers after expenses is on average £9.80, which is in excess of the £7.20 National Living Wage rate.
However, if HMRC find that the couriers’ employment status is not self-employed, but rather an employee or worker, the ramifications will be wide reaching and significant for the organisation. For example, if the couriers are deemed to be workers or employees, they would be entitled to be paid for the statutory minimum holiday under the Working Time Regulations 1998 and will be able to issue claims at the Employment Tribunal for this and other applicable claims.
HMRC have their own extensive internal manual to provide their officers with guidance when determining employment status, which involves looking beyond the written contract or service agreement and assessing the actual working practices of the parties when making their decision. Therefore, irrespective of the contents of the service agreement and label given to these couriers’, HMRC can still make a converse finding and determine them as in fact employees or workers.
When an organisation engages the services of others on a self-employed basis it will always be prudent to seek specialist advice in relation to employment status to ensure that the working practices are reflective of the service agreements and to be aware of any potential risks of exposure to a finding that the individual is in fact an employee or worker.
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