Gig Economy: Hermes strikes “ground-breaking” pay deal with the GMB Union

The delivery firm Hermes has struck a deal with the GMB Union to offer its couriers paid annual leave and guaranteed wage rates.

This is the first UK deal to provide trade union recognition for gig economy workers and comes after the couriers were successful in their Employment Tribunal claim in June 2018 to be recognised as workers, as opposed to self-employed.

A new so-called “self-employed plus” status has been created at Hermes where couriers can opt to receive up to 28 days of paid holiday annually or the equivalent if they work part-time. Whilst the couriers’ remuneration will still be calculated in accordance with the number of deliveries they make, Hermes will now pay extra when the level of available work has not earned staff at least £8.50 per hour. This is more than the minimum wage of £7.83 per hour, which rises to £8.21 per hour in April 2019.

GMB have said that this collective bargaining agreement is on an opt-in basis and will not affect those who want to keep their self-employed status and earn premium rates.

Whilst some have called the deal “ground-breaking”, others have raised questions about the tax implications of the agreement. There is a concern that HMRC will see Hermes couriers receiving most of the benefits of being an employee and will want them to start paying employee national insurance. However, GMB have said there will only be tax implications for those receiving all of the benefits under the agreement.

With the rise of gig-economy related Employment Tribunal cases, businesses that engage individuals on a flexible basis should be prepared to justify their employment status for the purposes of employment rights and tax liability.

Even if a written contract states that an individual is “self-employed”, if the contract does not reflect the reality of the relationship then they could be considered employees or workers, accruing the rights to things such as minimum wage and holiday pay.