Hermes delivery service faces inquiry over low pay allegations

‘Individuals cannot be opted out of employment rights and protections, simply by calling them ‘self employed’, HMRC says

Ben Chapman
Thursday 20 October 2016 12:56 BST
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Frank Field has heavily criticised Hermes after employees allege the company paid less than minimum wage
Frank Field has heavily criticised Hermes after employees allege the company paid less than minimum wage

The UK’s top tax official has referred Hermes to HM Revenue and Customs’ compliance department after allegations that it paid workers less than minimum wage and incorrectly classed them as “self-employed”.

Seventy-eight couriers complained to Frank Field, the chairman of the House of Commons work and pensions select committee, stating that they received no holiday or sick pay and that they feared being sacked if they missed a shift due to illness.

Hermes drivers, who are paid per delivery, say the company allocated unrealistically short amounts of time to complete each job so they were paid as low as £5.50 per hour. The National Minimum Wage is £6.70 for over-21s.

Edward Troup said he could not comment on the tax affairs of any one company because of strict confidentiality rules. However, as a general principle, he said: “Individuals cannot be opted out of employment rights and protections, simply by calling them ‘self employed’. We are committed to tackling false self-employment.”

HMRC would take “all necessary steps” to ensure companies pay the correct tax, National Insurance and penalties if they misclassified staff as self-employed, he said.

Mr Troup said anyone who is concerned they are not receiving the minimum wage should contact the ACAS, the body which handles employment disputes.

Jane Ellison, financial secretary to the Treasury said last week: “the government takes false self-employment very seriously and is committed to taking strong action where companies, to reduce their costs, force their staff down routes which deny them the employment rights and benefits they are entitled to.”

The gig economy, where workers are paid per task rather than by the hour is under increasing scrutiny. Uber drivers took the ride-sharing company to court, claiming that they are employees and so are entitled to statutory benefits. The case has been heard and the sides are awaiting a judgement. A ruling in favour of the drivers could have huge ramifications for firms such as Deliveroo, Uber and Hermes which rely on a large pool of casual workers.

Last year the Citizens Advice Bureau estimated almost half a million people could be wrongly classed as self-employed, depriving them of close to £1bn in holiday pay and National Insurance contributions.

Hermes said it would comply with any potential investigation, and pointed out that its own minimum wage standard is higher than legally required.

A spokesperson said: “We are confident in the accuracy of our courier pay model and our records clearly show that our average courier rate is £9.80, 36 per cent above the minimum wage, after all legitimate expenses have been deducted.”

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