Hermes legal action – what this means for the ‘Gig Economy’

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Delivery business Hermes has been taken to tribunal by eight of its couriers who claim they are being denied benefits such as holiday pay and the national minimum wage. This is a landmark case, which will help shape the future for businesses operating in the so-called gig economy.

Hermes argues they are self-employed, as they use their own vehicles to deliver goods, and pays them according to the number of parcels they deliver.

Here’s an article by Croner, the MIA’s business helpline partner, about what the outcome of this case will mean for the ongoing debate on workers’ statuses…

The workers’ status case is around how Hermes categorises their drivers as self-employed, which means they are not entitled to employment rights such as minimum wage, paid holiday or minimum rest breaks. The drivers have commenced employment tribunal proceedings claiming they are actually workers who should receive worker rights.

The claim against Hermes follows a number of high profile cases against other employers within the so-called ‘gig economy’, including Uber and Deliveroo.

In 2016 the ride-hailing firm Uber was told its drivers should be classed as “workers” with minimum-wage rights. Uber, which says its drivers are self-employed, lost its appeal against the decision last year but said it would appeal again. The case could end up in the Supreme Court this year.

The Hermes claim mirrors several other similar tribunal hearings – including verdicts in cases brought against Uber, Addison Lee, City Sprint, Excel and eCourier – where judges have ruled that their staff should be given the legal classification as “workers”, thereby receiving the minimum wage and holiday pay rights.

Expert Opinion

Whilst the majority of these cases have resulted in a finding that the claimant was a worker, there is no guarantee that a similar finding will be made against Hermes. Instead, the employment tribunal will review all the facts of the case including any documentation, whether the delivery driver is subject to control, and whether there is a right to substitute another person to carry out the work.

Importantly, the tribunal will look beyond any documents or labels given to the individual to examine how the relationship actually works in reality. If they find, in reality, the individual is treated as if they were a worker then they will go on to find the correct status is that of a worker.

A decision which finds Hermes have categorised their workforce incorrectly could lead to a substantial financial claim as they will have to reimburse any shortfall in wages or holiday pay, as well as go on to provide these in the future.

MIA members benefit from FREE advice from Croner.  Email alice@mia.org.uk or call 01403 800500 for the exclusive Business Support Helpline scheme number.