Hermes new “self-employed plus” for its gig workers is being hailed as a landmark. A new form of employment status perhaps? But would it work for you?
Self-employed status carries significant benefits for “employers” – no holiday pay, no sick pay, no maternity rights, no national minimum wage,no unfair dismissal rights. Individuals can benefit from more flexibility over their time and the potential to make significant profit. Potentially there are also tax advantages for the individual.
The gig economy taps directly into these latter issues.
Employment offers different advantages for employers. Obligation on the part of employees is a start. Employees cannot, as a general rule, pick and choose when they work. Employees are subject to supervision, obliged to follow instructions, usually work for only one employer and therefore can be expected to be more committed in their work. The employer controls the overheads and can make economies. The individual benefits from more security as well as a raft of employment rights.
Self-employed plus cuts down the middle of these positions.
Hermes workers will retain their self-employed status and will now also benefit from holiday pay and the National Minimum Wage. In return Hermes will be able to instruct them to follow routes prescribed by Hermes.
But the agreement between Hermes and the GMB Union is just that, an agreement. In return for not being faced with expensive legal challenges Hermes have agreed some concessions. It is not a new form of employment status.
The gig economy, and zero hours contracts, are driven by the national minimum wage and employment rights. There is market advantage to be gained by finding innovative ways around employment legislation. The greater the market advantage the more “creative employment” is likely to result. However much the government attempts to regulate the labour market it is a market in the end.
So would self-employed plus work for you?
For the small employer I suggest not. Ensuring your self- employed people are able to make a living is in your interests as well as theirs. But once you start paying holiday pay then I submit that you will be on a slippery slope. It compromises established employment status categories. Genuinely self-employed individuals have virtually no employment rights. Workers are entitled to holiday pay. Although many workers don’t get it, paying holidays to self-employed people makes it much less clear whether they are self-employed or not.
The risks
Workers have more rights than those who are self-employed, not just the right to the national minimum wage but also protection by working time regulations and from discrimination (i.e. the Equality Act).
The established employment status categories are:
- Employed
- Worker
- (Genuinely) Self-employed
When you engage others to do work be clear into which category they fall. To avoid sudden costs or challenges do your best to ensure the benefits you give them match up to the category in which your people are employed or engaged. Employer Solutions can help you to avoid nasty surprises, if you ask us.
Malcolm Martin FCIPD
Author Human Resource Practice