The UK’s chief taxman has referred the parcel delivery giant Hermes to HM Revenue and Customs compliance officers following complaints by couriers that they are being paid at levels equivalent to below the “national living wage”.
The move follows a Guardian investigation that revealed some self-employed couriers for the company, which delivers for retailers including John Lewis and Next, were taking home less than minimum wage.
Some 78 couriers subsequently made complaints to Frank Field, the chairman of the House of Commons work and pensions select committee.
They set out how their self-employment meant they received no paid holidays or sick pay. They also said they risked losing work if they were unable to do their rounds because of ill health or for other reasons. Twenty more also claimed they should be considered employees rather than self-employed.
Hermes said HMRC had confirmed in 2011 it was right to class its couriers as self-employed and said it is “committed to ensuring that our couriers receive earnings that are equivalent or higher than the national living wage”.
A spokeswoman for the company said Hermes: “We are confident in the legality of our self-employed courier model and we will cooperate fully with any investigation should there be one.”Edward Troup, HMRC’s executive chairman, on Thursday told Field that he had passed about 100 reports from Hermes workers to “the appropriate compliance teams for consideration”.
He said: “If we find that companies have misclassified individuals as self-employed, we will take all necessary steps to make sure they pay the appropriate tax, national insurance contributions, interest and penalties.”
Troup made clear that he could not comment on individual cases, but 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.”
In a parallel move, Jane Ellison, the financial secretary to the Treasury, said HMRC was also setting up a new “employment status and intermediaries” team and is “transforming its compliance approach” on issues including false self-employment.
She said: “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.”
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Field said: “Clearly the government is girding its loins for a serious fightback against those companies trying to wriggle out of their obligation to pay the minimum wage by enforcing ‘self-employment’ on their workers.
“The prime minister has set companies the task of delivering a decent minimum for their workers, and companies now know they will be caught out if they jeopardise this effort.”
One Hermes courier in Manchester, Marie, 42, who estimates she earns £3.50 per hour after expenses, welcomed the moves. “I feel like we are now being listened to,” she said. “My customers are asking me if it’s true I am earning less than the minimum wage and when I say ‘yes’ they are disgusted.”
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After the Guardian ran its initial investigation, Hermes invited couriers who believed they were being underpaid to request a review of their parcel delivery rates. Marie said she wrote to her bosses six weeks ago requesting a rise on her 45p per parcel rate, but has heard nothing back.
“I can’t be patient,” she said. “I am working for nothing. I am at the bottom end of the parcel rates.”
She said she was now looking for a second job to subsidise the expenses of working for Hermes, which have recently risen because of increases in petrol prices.
Hermes said that there was a system in place that allowed couriers who are not satisfied with the way a field manager handles their request to escalate it.
A Hermes spokeswoman said: “Three out of four of the pay rate cases that were reviewed by the service complaints panel in its first month received a rate increase. We also have an external independent ombudsman service that is able to make an independent decision on matters that are referred to it, and Hermes has committed to always accept the decision of the ombudsman.”
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