DeliverooLast week’s news was dominated by the Budget and the Class 4 National Insurance contributions’ increase which was announced and then, within 24 hours, kicked into the long grass. An interesting fact which emerged in the news is that the UK workforce now includes 15% who are classed a self-employed for tax purposes. However, as I have reported this month (in the Pimlico Plumbers case) many of these people are nonetheless classified as workers in the context of employment law and therefore have rights which can be pursued in employment tribunals.

On 22 February The Work and Pensions Committee heard evidence from executives from Uber, Deliveroo, Amazon and courier firm Hermes UK as part of its investigation into modern employment practices. It is estimated that there are now some five million workers in the “gig economy”, of whom some 910,000 are on zero hours contracts, an increase of 100,000 from 2015 to 2016 (ONS Labour Force Survey). UK and Ireland managing director of Deliveroo, Dan Warne, said that flexibility is important to its riders, adding:

We cannot offer that amount of flexibility to those riders if we’re forced to pay a given wage and a given hour to every single rider.

However, it emerged recently that Deliveroo had a clause in its contracts that banned workers from contesting their self-employed status in employment tribunals. Under questioning, Mr Warne acknowledged that the Company needed to “revise the contract”. He said:

This is not something that’s enforced, so there’s no need to have it in there… In practice, if they wished to contest their [self-employed] status they could do so and we wouldn’t challenge them on that.

Although the clause would almost certainly not have been enforceable, it is easy to see how it could operate as a powerful disincentive to low-paid riders with no guarantee of work.

Meanwhile, it has emerged that DPD, which deliver parcels for Marks & Spencer, John Lewis and River Island, fines their couriers £150 per day if they cannot find cover when they are ill. This has resulted in drivers being forced to work when they are sick. The fine, which is described as “liquidated damages”, means that couriers who earn on average £200 a day, lose £350 if they cannot work through illness and are unable to find a substitute. Chair of the select committee, Frank Field, commented:

The gig economy is producing wave after wave of evidence on the grim reality of life at the bottom of Britain’s labour market…A group of companies now controls the working lives of an unknown number of people, and yet evades its own responsibilities as employers and taxpayers by labelling those people as self-employed… This move [by DPD] makes the rest of the gig economy look as though it operates in the Garden of Eden.

A local example of dubious working practices came to light a few weeks ago. Mooboo Bubble Tea, a cafe chain, has a branch located in Liverpool One. New staff reported that they were being made to work a 40-hour trial shift with no pay and no guarantee of a job, apparently in direct breach of the minimum wage regulations. A spokesman for the chain said the programme was for training purposes and that it is an important step in properly preparing staff. People who raised the issue on the Company’s social media sites were blocked. However the issue was raised by lobbying group 38 Degrees and started a petition which attracted more than 40,000 signatures. The result is that Mooboo has backed down and it announced on social media on 2 March that all trainees will be paid. A similar campaign forced restaurant chain Las Iguanas, with local branches in Liverpool One, Cheshire Oaks and Chester, to do likewise.

Failures to pay the minimum wage continue to come to light. High Street stores including Debenhams, French Connection and Monsoon Accessorize have been “named and shamed” by HMRC, while Argos (now owned by Sainsbury’s) has been required to pay more than £3 million in back pay and fines, affecting 37,000 employees.

We appear to be in transition. Many international new start brands, such as Deliveroo and Uber, are trying to implement standard working practices with very few (if any) employment rights, largely without regard to local laws. At the same time, the courts are readily classifying the people contracted to them as workers, with rights including the minimum wage and paid holidays. From the perspective of SMEs, current advice must be to start from the assumption that people who provide regular, defined services, could well be workers. Government information concerning their rights is available here.