Earlier this month, the Staffing Industry Daily News reported [1] on a “ground-breaking” deal between Hermes, a parcel courier company, and its independent workers represented by one of the largest unions in the UK [2], the GMB. The resulting collective bargaining agreement is designed to support the rights of self-employed individuals providing courier services to Hermes.
Hermes couriers can now choose to become “self-employed plus,” which entitles them to benefits such as holiday pay (pro-rata up to 28 days), and individually negotiated pay rates that allow couriers to earn at least £8.55 per hour over the year. In addition, those self-employed plus couriers that join the GMB Union will benefit from full GMB representation.
This agreement giving self-employed workers rights to join and be represented by a union in workplace negotiations and disputes is a first in the UK. However, it is all the more remarkable because in June 2018, an employment tribunal found [3] that several couriers working for Hermes Parcelnet Ltd. were “workers” rather than self-employed contractors, and thus would be entitled to holiday pay by law.
Contract design. In the case, the tribunal judge took issue with Hermes’ contract with the independent workers, saying “the written contract was not a true or full reflection of the contractual agreement between Hermes and the couriers.” Although the contract stated that the individuals provided their services as a self-employed person and were not under any obligation to perform the services personally, the judge found “the whole written agreement has the hallmarks of being designed with the principal purpose of presenting the couriers as falling outside [the definition of worker] rather than its principal purpose being to set out fully and accurately [the relationship] between them and Hermes.”
The tribunal judge had “no hesitation” in finding that there was mutuality of obligation and that the right to substitute another courier in their place was fettered. As such, the couriers were workers, and could bring claims relating to national minimum wage, annual leave, and unlawful deductions from wages.
No precedent. On the face of it, this case could not have been clearer. But the decision was only a first instance decision and it only related to a small group of couriers. Class actions are currently barred in the UK, so the ruling is not a legal precedent and cannot be relied upon by other claimants. As many other gig economy employers, such as Uber and Pimlico Plumbers, have found in recent years, seeking to define employment status through the UK courts can be a fool’s errand resulting in a damaged reputation and significant legal fees.
So, rather than rely on the legal system and current law, which is fact-specific and lacks clarity, it seems both parties decided to negotiate their own arrangement giving workers both freedom of choice and enhanced benefits, while agreeing to follow the routes set by the company.
New life. Unions in the UK have seen dwindling revenues, with the TUC (Trades Union Congress) claiming membership had fallen to an all-time low of 6.2 million in 2017 due, in part, to the rise of the gig economy. However, the fragmentation of the workplace also presents an opportunity for the unions who have, for some years, been pursuing the cause of workers in the gig economy.
The newest union, the Independent Workers’ Union of Great Britain was set up in 2012 specifically to represent mainly low-paid migrant workers, such as outsourced cleaners and security guards; workers in the so-called “gig economy,” such as bicycle couriers and Uber drivers; and foster care workers. It has already backed several high-profile cases on behalf of such workers. By contrast, the GMB union, which negotiated the agreement with Hermes, is a broad union representing all workers, with a 130-year history. Both unions are claiming victories against Uber.
The agreement with Hermes may well be “ground-breaking” if it ushers in a new era of collective bargaining that recognizes that all parties have something to lose by relying on the law, and something to gain by reaching consensus.