HR Support company myHRdept look at the latest development in the 'self employment' saga.
It’s not just gig economy companies like Uber and City Sprint that have seen ‘self-employed’ workers claim entitlement to employment or worker rights, it’s happening all over. Hermes, a delivery company, have come up with a novel solution endorsed by the GMB union. ‘Self-employed plus’ staff will enjoy enhanced benefits if they want them, is this the scalable solution that employers with self-employed staff have been waiting for?
Hermes were amongst the many companies last year whose test case self-employed workers were judged by a tribunal to be workers and therefore entitled to holiday pay and certain other benefits. Not one to give up on self- employed status, Hermes has instead offered its staff 2 choices:
- Remain self-employed on an enhanced rate of pay,
- Opt for a lesser rate of £8.50 an hour & 28 days paid holiday per year.
Staff can ‘opt in’ to the latter option, dubbed ‘self-employed plus’ or choose to stay as they are, with greater flexibility which, we presume, would enable Hermes to justify genuine self-employment in future cases. In doing this Hermes has created 2 new categories of work, rather than simply roll over and accept that all its drivers are workers. Whether either of these 2 new categories will stand up against new legal challenge is perhaps a moot point given the GMB union endorsed the deal and are unlikely to raise a legal challenge of their own.
Whilst Hermes’ solution gets around the holiday issue, it isn’t clear on the impact on employer’s national insurance contributions. If Hermes argue that they are not due, because they regard the worker to be self-employed under both options, it is highly likely HMRC will disagree and will apply their own legal challenge on the applicability of employer’s NICs.
Aside from the National Insurance question, the Hermes option to provide paid holidays will at least offset any future holiday back pay claims in the case of future legal decisions that the ‘self-employed plus’ people are in fact workers (though of course it won’t for the other category.) Indeed Hermes’ solution eradicate the possibility altogether for ’self-employed plus’ people since a worker (if that’s what they are in future judged to be) has only 3 months to bring a claim, and the 3 month clock starts ticking at the date of the last failure to pay holiday. If Hermes has been paying holiday then the claim for back pay must surely fail.
If you’re unsure as to whether your self-employed contractors are really 'self-employed’ then it may well pay to follow Hermes and start paying holiday pay. myHRdept provides HR support to employers and can assist with deciding on self-employed status and with mitigation strategies.