Does Hermes’ Union Deal Predict the Future of Gig Economy Workers’ Rights in the UK?

Does Hermes’ Union Deal Predict the Future of Gig Economy Workers’ Rights in the UK?

In a deal reached earlier this month with one of the UK’s largest trade unions, the courier company Hermes is offering its self-employed drivers the option to obtain some of the rights enjoyed by regular employees, including a guaranteed minimum wage and holiday pay, the Guardian reported:

Under the agreement with the GMB union, Hermes’ 15,000 drivers will continue to be self-employed but can opt into contracts with better rights. The deal comes after almost 200 Hermes couriers won the right to be recognised as “workers” at an employment tribunal last summer in a case backed by the GMB. Under employment law, “workers” are guaranteed rights including holiday pay, the legal minimum wage, minimum rest breaks and protection against unlawful discrimination.

The GMB has been active in advocating for the rights of British workers in the gig economy, also backing similar labor tribunal cases against other companies operating on an independent contractor model, including Uber, which lost a landmark case in 2016. Other British unions and union federations have also supported claims regarding the rights of gig economy workers, with tribunals ruling in favor of the workers in most of these cases. The settlement reached this month means that Hermes will drop its planned appeal against the ruling last year, while the GMB will refrain from pursuing further litigation against the company.

The “worker” classification in UK employment law defines a space between employees and the self-employed, but the tests for classifying workers as such are primarily defined by case law and increasingly unclear as technological shifts have brought about changes in the way people work. The Taylor Review of modern working practices recommended in its 2017 report that the government relabel “workers” as “dependent contractors,” write a clearer definition of this category into law, and make it the default status for companies that have a self-employed workforce above a certain size. The government said last year that it would adopt most of the review’s recommendations, but did not commit to writing this “worker by default” model into law.

Yvonne Gallagher, A partner at the London-based law firm Harbottle and Lewis, commented to Personnel Today that the Hermes deal would raise some questions about these drivers’ tax and national insurance obligations:

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UK Unveils Labor Reform Package Based on Taylor Review Recommendations

UK Unveils Labor Reform Package Based on Taylor Review Recommendations

The UK on Monday enacted a sweeping series of reforms to its labor laws, raising fines on employers for deliberately harming their workers and obliging them to give employees details of their legal rights from their first day on the job, among other changes. Based on the findings issued last year by the Independent Review of Employment Practices in the Modern Economy, led by Matthew Taylor, a former advisor to Tony Blair, the reforms are intended to strengthen the rights of agency workers and those participating in the gig economy, as well as to step up enforcement of existing labor protections. According to Personnel Today, the new legislation will:

  • repeal the Swedish derogation, which allows organisations to pay agency workers on cheaper rates than permanent staff;
  • extend the right to a written statement of rights from a person’s first day in their job to workers, going further to confirm their eligibility for sick leave and pay, as well as other types of paid leave including maternity, paternity and shared parental leave;
  • quadrupling the maximum fines handed out at employment tribunals to employers that have shown malice, spite or gross oversight from £5,000 to £20,000;
  • extending the holiday pay reference period from 12 to 52 weeks to ensure that those in seasonal roles are able to take the time off they are entitled to; and
  • lowering the threshold required for a request to set up information and consultation arrangements from 10% of employees to 2%.

In a report called the “Good Work Plan,” the government also pledged to enact further legislation so that employment classification tests “reflect the reality of the modern working relationships.” The Taylor Review had recommended that the employment status currently known as “worker” be renamed “dependent contractor” and that workers in this category be entitled to employment protections like the minimum wage, sick leave, and holiday pay. It also recommended enacting legislation to clarify the legal tests for different employment classifications, rather than relying on case law as the UK currently does.

The government’s reform package did not, however, ban the controversial practice of zero-hour contracts. Taylor had concluded that abolishing these contracts would do more harm than good, though his review also recommended that workers in zero-hour arrangements be entitled to request guaranteed hours after working for their employer for 12 months. The government of Ireland, in contrast, has said it plans to end most zero-hour contracts with a bill expected to pass the legislature in the spring. Whitehall’s decision not to ban zero-hour contracts drew criticism from unions, the Guardian reported on Sunday, with Trades Union Congress general secretary Frances O’Grady saying the government had missed an opportunity to strengthen the rights of a vulnerable segment of the workforce:

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UK Supreme Court Upholds Plumber’s Claim in Key Gig Economy Case

UK Supreme Court Upholds Plumber’s Claim in Key Gig Economy Case

UK plumber Gary Smith has won his case against his former employer Pimlico Plumbers in the Supreme Court, which rejected the company’s contention that Smith had been self-employed and upheld his claim to basic workers’ rights like paid leave, Jo Faragher reports at Personnel Today:

Smith’s case against Pimlico Plumbers, which has been running since 2011, is the latest in a long line of legal challenges on employment status, and “is in line with a number of recent decisions relating to gig economy workers”, according to Jeremy Coy, an associate in the employment team at law firm Russell-Cooke.

He said: “The judgment of the UK’s highest court underlines the point that simply labelling workers ‘self-employed’ does not guarantee the corresponding legal status. The nature of the relationship and the degree of bargaining power and obligation between the parties is crucial in determining workers’ rights.”

Smith had prevailed in the Court of Appeal last year, but Pimlico challenged that ruling in the high court, which took up the case in February. The company considered Smith a self-employed independent contractor, and he was described as such in his agreement with Pimlico and in his tax filings. Smith did not claim to be an “employee” of the company, but rather a “worker”—a designation specific to UK law that falls between “employee” and “contractor” and entitles an individual to certain rights like a minimum wage and paid annual leave. The Court of Appeal had ruled in Smith’s favor largely on the basis that his contract with Pimlico required him to provide his services personally, such that he could not re-subcontract the work out to someone else.

In ruling for Smith, however, the Supreme Court stressed that its decision rested on the unique facts of the case and did not establish any new legal guidelines for employers to follow in determining whether they could safely classify workers as self-employed, much to the dismay of UK employers and their attorneys:

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Amazon Hit With Labor Lawsuit Over UK Delivery Subcontractors’ Conditions

Amazon Hit With Labor Lawsuit Over UK Delivery Subcontractors’ Conditions

Amazon has become the latest company to draw fire from labor advocates in the UK over alleged mistreatment of independent contractors: The GMB, a general trade union representing a wide swath of the British workforce, announced on Monday that it was suing three delivery companies that contract with Amazon to fulfill orders in the UK: Prospect Commercials Limited, Box Group Limited and Lloyd Link Logistics Limited. The union alleges that delivery drivers working for these companies were incorrectly classified as self-employed, denied statutory rights as employees, compelled to work unsafely long hours, docked pay for failing to meet impossible quotas, and in some cases retaliated against after raising concerns about their conditions.

The claimants all worked for the companies as couriers, delivering parcels for Amazon. GMB say the drivers were employees, and the companies used the bogus self- employment model to wrongly deny them employment rights such as the national minimum wage and holiday pay. The drivers were required to attend scheduled shifts that were controlled by Amazon, meaning they did not have the flexibility that is integral to being self-employed. In this situation, the couriers were treated like employees in terms of their working hours, GMB Union contends they should be treated as employees in terms of their rights too.

Two of the members are also claiming that they were dismissed because of whistleblowing, saying that their roles were terminated because they raised concerns about working practices[.] … These whistleblowing claims are also being brought directly against Amazon on the basis that it was Amazon who determined the way that the drivers should work.

Tim Roache, general secretary of the GMB, tells TechCrunch’s Natasha Lomas that the union considers it “absolutely galling” that Amazon subjects these workers to “unrealistic targets, slogging their guts out only to have deductions made from their pay when those targets aren’t met and being told they’re self-employed without the freedom that affords.” Amazon, for its part, said in a statement to TechCrunch that the practices alleged in this lawsuit are not representative of the dozens of contractors the e-commerce giant uses to provide delivery services in the country:

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UK Appeals Tribunal Upholds Courier’s Classification Claim

UK Appeals Tribunal Upholds Courier’s Classification Claim

The UK’s Employment Appeal Tribunal ruled last week in favor of a bicycle courier working for Addison Lee who sued claiming that the taxi and courier company had incorrectly classified him as a self-employed contractor rather than an employee, Jo Faragher reported at Personnel Today:

The Independent Workers’ Union of Great Britain (IWGB) represented Christopher Gascoigne, who first took the taxi and courier firm to an employment tribunal last August. … The tribunal heard that Gascoigne had to re-sign his contract every three months, terms of which included: “You agree that you are an independent contractor and that nothing in this agreement shall render you an employee, worker, agent or partner of Addison Lee and you shall not hold yourself out as such.”

In dismissing Addison Lee’s appeal against Gascoigne’s claim, the EAT referred to the fact that Gascoigne had claimed he could get into a “tricky situation” for not accepting a job, and that his location was often tightly controlled so he was well placed for future deliveries during the day.

Gascoigne’s successful suit is the latest in a series of decisions to come out of the tribunal system against gig economy companies with businesses built on the contractor model, beginning with a ruling for Uber drivers in 2016 and for another bike courier for CitySprint in January 2017. Uber lost its appeal of the 2016 ruling last November, though the company said it would appeal again to higher courts, including the Court of Appeals and the Supreme Court. The Supreme Court is currently hearing an appeal by Pimlico Plumbers, which had lost a case brought against them in which one of their former plumbers was deemed a worker (a classification in UK law with more rights than “contractors” but fewer than “employees”), not self-employed.

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California Supreme Court Adopts Tighter Standard for Contractor Classification

California Supreme Court Adopts Tighter Standard for Contractor Classification

In a ruling handed down on Monday, the California Supreme Court found in favor of drivers for the last-mile delivery service company Dynamex, who claimed to have been misclassified by the company as independent contractors when they were really its employees. Gizmodo’s Brian Menegus outlines the facts at issue in the lawsuit, first filed in 2005:

Starting in 2004, drivers were required to provide their own vehicles—and pay for all the incurred costs that came with that, like gas, maintenance, insurance, and tolls—while being “generally expected to wear Dynamex shirts and badges […] and/or the customer’s decals to their vehicles when making deliveries for the customer.” … They were converted from employees to this new, more precarious classification “after management concluded that such a conversion would generate economic savings for the company,” the ruling states, creating a deeply lopsided power dynamic.

The court’s decision will have far-reaching consequences, as it ruled not only on the merits of these drivers’ complaint, but also on the manner in which the distinction between employees and contractors should be drawn. The judges significantly reinterpreted their predecessors’ ruling in the 1989 case of S. G. Borello & Sons, Inc. v Dept. of Industrial Relations, which had historically been cited as establishing a standard for classifying workers as contractors based largely on the degree of control a company exercised over their work. The court instead favored the “ABC” standard used in other jurisdictions like Massachusetts and New Jersey, which treats workers as contractors only under the following conditions:

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UK Proposes New Laws on Worker Classification, Employee Rights

UK Proposes New Laws on Worker Classification, Employee Rights

The UK government has issued a series of policy proposals designed to bolster the rights of workers in the country, hinting at new legislation on how workers are classified as employees or contractors, new rights for agency workers, and updated minimum wage and living wage policies, Emily Burt reported at People Management last week:

The government said it would look to amend the Agency Workers Regulations 2010 to remove the opt-out for equal pay, preventing organisations from recruiting workers on extended agency contracts that keep them on low pay through the ‘Swedish derogation’ loophole for businesses recruiting through agencies. This followed a recent report into agency workers, published in March by the TUC, which found that six in 10 agency workers were employed for more than a year in the same role at the same workplace, driving pay levels down. …

The government responded to calls by MPs to bolster the position of precarious workers by exploring a pilot of a pay premium to the national minimum wage and national living wage for workers on non-contracted hours, assisted by the Low Pay Commission.

The proposals come less than a year after the Independent Review of Employment Practices in the Modern Economy, led by Matthew Taylor, a former advisor to Tony Blair, released its findings and recommendations on how regulators should handle the gig economy. In its proposals last week, the government adopted some of these recommendations and indicated that it was considering others:

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