The plus side of being self-employed

In February Hermes announced a deal, which offers couriers the option of classifying themselves as ‘self-employed plus’.
Seamus McGranaghan

THE UK's gig economy continues to boom, now playing home to an estimated five million self-employed people, and shows no sign of slowing down. The world of work has changed, but the law arguably has been slow to catch up.

Last year, however did see the Employment Tribunal issue a landmark ruling in respect of the status of gig economy workers. In this case brought by GMB union on behalf of 65 Hermes couriers, the Tribunal held that the couriers were classified as workers rather than independent, self-employed contractors. As such, the couriers are entitled to a number of employment rights including holiday pay and the minimum wage.

In February 2019, in an effort to support the rights of the individuals providing courier services to Hermes and fix the troubled relationship with the gig economy workers, it was released that an agreement has now been reached between Hermes' self-employed couriers and GMB Union.

The agreement offers Hermes couriers the option of classifying themselves as ‘self-employed plus'. Couriers who choose to opt in to this model will enjoy a number of benefits including holiday pay (pro rata up to 28 days), and individually negotiated pay rates, which will enable couriers to earn at least £8.55 per hour over the year. In return they will have to follow delivery routes specified by Hermes rather than delivering parcels in any order, as they can do currently. Additionally Couriers who wish to retain their current self-employed status with Hermes do not have to sign the new terms and as such will not receive a guaranteed minimum wage or holiday pay.

Whilst the agreement is welcomed by some, including the GMB union, it does raise concerns in respect of the creation of a new status of employment. There is no legislation which recognises this newly created ‘self-employed plus' category of worker or employee and it is not for Hermes, GMB or the Tribunal to write legislation which therefore raises concerns in regarding the lawfulness of this new hybrid category of worker.

Additionally the agreement does not address the tax implications associated with the new status. It is highly likely that the HMRC will closely investigate this new status of worker and how it will operate in practice. Matthew Taylor, author of the Taylor Review of Modern Working Practices summed up the concerns arising from the tax implications of the new status:

“If somebody has most of the benefits of being an employee, and if the employer has most of the benefits of employing somebody, then the tax authorities will want the employee to be paying national insurance as an employee, and they'll want the company in particular to be paying national insurance on those people.”

It is yet to be seen how the ‘self-employed plus' category of worker will work in practice. The agreement does offer positives to the couriers by enabling them to retain flexibility and receive holidays and guaranteed pay without the employer recognising the couriers as employees. It will be of interest as to whether to government looks further into this new category and makes a declaration, together with the HMRC with regard to tax implications.

:: Seamus McGranaghan ( / 02890 321 000) is director of commercial at O'Reilly Stewart Solicitors

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