MPs demand review of self-employment law in light of Hermes' practices
Delivery company Hermes has been accused by The Guardian newspaper of employing couriers for less than the national living wage, while hiding behind the fact they are technically self-employed. Frank Field MP, who chairs the House of Commons work and pensions select committee, has called for a review of the criteria governing contracts for self-employed staff. The number of such workers in the UK has risen by 800,000 to 4.7 million since 2008. Recent figures indicate that up to two-thirds of self-employed drivers, including those working for Uber, earn less than the national living wage.
The prime minister has been urged to open an investigation into the growing use of self-employed workers after the Guardian found some couriers contracted to Hermes were struggling to earn the national living wage.

Frank Field MP, chairman of the powerful House of Commons work and pensions select committee, said the government should review HM Revenue and Customs (HMRC) criteria that allow companies to contract work to self-employed individuals rather than hire them as employees.

Referring to Theresa May’s first speech as prime minister, in which she said she would legislate for “families who are just managing” and people who “have a job but … don’t always have job security”, Field said: “Given what the prime minister said about the nature of her administration, I would hope that she would now ask the HMRC to review whether their criteria are adequate.”

“This is a really good chance for [May] to start this new approach. This [issue with self-employment] is undermining government policy which is to raise wages at the bottom.”

The Guardian obtained information about the earnings, hours and expenses of couriers for Hermes, which delivers parcels for retailers including John Lewis, that indicated some were earning below the national living wage of £7.20 per hour for people aged 25 and over. However, because the couriers are self-employed and not covered by the national living wage, the arrangement is legal.

The general secretary of the TUC, Frances O’Grady, has also called for reform. “This isn’t just one company,” she said. “The rise of bogus self-employment is hitting people’s incomes and job security across the country.

“Common sense would tell you that these people deserve the pay and security of regular employees. The law should be reformed to ensure that people working in these conditions get the rights they deserve. This is the kind of working practice we want to see shrinking, not growing.”

Field’s call came as the Citizens Advice Bureau revealed a marked increase in the number of people coming forward with concerns about self employment and employment status.

It said 1,900 people sought advice in the year to March - up 12% on the previous year. One case involved a childminder who worked set hours, five days a week but was hired on a self-employed basis and told she needed to start saving up for her own holiday pay and sick pay. Another case involved a pub employee whose landlord had told him his work was finished unless he switched to self-employment. The man was worried he would no longer receive holiday and sick pay or a steady wage and working pattern.

“Workers from hotel staff to carers are being pushed into bogus self-employment,” said Gillian Guy chief executive of CAB. “As many as 460,000 workers in England and Wales are made to be self-employed when they should have employee status. We want a single definition of self-employment across government departments to make it clearer when people are being bogusly self-employed and make it harder for businesses to get away with this practice.”

Delivery couriers have backed calls for the government to review the rules defining self-employment and employment. Peter, a courier in Kent, who has worked for Hermes, called on the government to give “a clear cut definition” of self-employment.

He said he had seen his parcel rate cut from 60p to 45p. On Tuesday he worked “a reasonably typical day” of about three hours delivering 30 parcels – the equivalent of less than £6 per hour before paying for his petrol, he said.

“There will be some couriers out there who want to stay self-employed, but I think they need to review this,” he said. “In my view we are not self-employed because we can’t dictate how we do our job.”

John, a courier in Yorkshire, who showed the Guardian accounts for the last financial year that indicated he took home around £7.30 an hour, said: “We should be classed as employees.”

Hermes has said that it is “committed to ensuring that our couriers receive earnings that are equivalent to or higher than the national living wage”. It said it monitors estimated rates per hour and restructures rounds or increases rates if they fall below £7.20 per hour. It said that according to its calculations, none of its couriers earn below that level and on average earn £9.80 per hour after expenses.

Self-employed workers are used across the economy by delivery companies, largely serving the booming internet shopping market. They include the taxi app company Uber, which has 30,000 self-employed drivers in London alone. Self-employed workers do not receive sick pay, holiday pay or employer-funded pensions, but enjoy greater flexibility over when and how they work.

The UK’s self-employed workforce has grown by 800,000 to 4.7 million since 2008, according to official figures. The HMRC provides a 14-point checklist to help decide if someone is an employee or self-employed.

Questions include: whether the business provides the materials, tools and equipment for their work; whether they only work for the business, or, if they do have another job, it is completely different from their work for the business; and if a manager or supervisor is responsible for their workload, saying when a piece of work should be finished and how it should be done.

Hermes says its couriers are free to plan their rounds around their personal circumstances and are free to negotiate their own rates, rounds and number of days they work.

The political pressure for a rethink of HMRC’s rules comes as figures show as many as two-thirds of self-employed workers in the transport sector, which includes couriers, delivery drivers and Uber taxi drivers, now earn below the national living wage.

The finding comes from the Social Market Foundation (SMF) thinktank, which assessed detailed information for 1,600 transport sector workers from the 2013-14 Family Resources Survey and extrapolated for earnings growth.

“The government has focused its efforts on tackling low pay among employees, in particular by introducing the national living wage,” said Nida Broughton, chief economist at the SMF.

“But in doing so, it is further sharpening the divide between employee and self-employed. Policies such as the [national living wage] risk making it artificially more attractive for firms to engage contractors rather than employees, and ignore a large section of low-paid workers. The government needs to adapt to a world that is moving away from the traditional employer-employee model of working, and look at how the low-paid self-employed can be supported into higher-paid work.”

Ray Ellis, acting deputy general secretary of the Communication Workers Union, which represents some couriers, said: “We desperately need intervention which rebalances the power of companies and workers in this ‘gig economy’. These delivery workers are employees in everything but name.”

Hermes said it uses “internal and external tax and employment specialists to ensure that the services that our couriers perform for Hermes, and the way that these services are monitored by Hermes, is consistent with self-employment at all times”.