Recently, transport and distribution, an industry as old as time has become entangled in discussions about the gig economy.
What is the gig economy?
The BBC recently suggested that it includes markets that have a prevalence of short-term contract or freelance work. A simpler and possibly more appropriate definition is a labour market or pay structure that is characterised by individual payments for individual activities. For example a single comedy gig, a taxi journey on Uber, or a takeaway delivery to your door by a Deliveroo rider. With these examples it’s easy to see why being paid for each delivery or taxi journey is likened to a ‘gig’.
Gig Economy & the Logistics Industry
Recently, and as a result of the huge rise in App based activities, businesses such as Uber and Deliveroo have found themselves in the employment rights limelight across the world. But how did the likes of Parcelforce, Amazon Logistics, DPD and Hermes find themselves embroiled in the discussions?
Did you know that many of the courier firms use self-employed owner drivers? Probably. But did you also know that a proportion of these self employed drivers are paid a rate for each parcel they deliver not for each hour they work? According to the Guardian about a quarter of the 3,000 Parcelforce drivers are self-employed, they are expected to provide the van and fuel from their own pocket, and when they are not available can be ‘fined’ £250 by Parcelforce to cover the cost of a replacement.
The Parcelforce example is not unusual, until recently DPD charged a £150 penalty for each day that a self-employed courier was unavailable.
The benefits of gig work
However, it’s not all a stick to beat couriers with. The carrot for many is flexibility. Flexible hours, 3, 4 or 5 hours a delivery round, a flexible start and finish time and the ability to earn more than minimum wage whilst being your own boss. At least this is the case with Hermes couriers, but is the Hermes model unusual?
Its ‘gig’ workforce was founded in the 1970’s on the back of the catalogue industry. Lifestyle or neighbourhood couriers would often deliver clothes, household items and many other goods to their neighbours during or after the school run or in the early evening. Admittedly in those days the courier was more like a local catalogue representative, they took your orders and collected your weekly payments as well.
Do all couriers offer true flexibility?
Do Parcelforce, DPD and Amazon Logistics offer this flexibility? A recent Parcelforce job ad wanted couriers to be ‘in a position to provide services 7 days a week’, that doesn’t sound like flexibility although the Amazon Flex service offers work blocks of 1, 2 or 3 hours so that definitely fits the bill.
Amazon, Parcelforce, Hermes and a range of smaller courier businesses have lost tribunal cases this year, the couriers in these cases have been found to be ‘workers’ rather than self employed suppliers. DPD recently announced that all of its couriers will be offered ‘worker’ status and therefore have access to basic employment rights. It has also dropped the £150 a day fine for missing work.
Government definition of a 'Worker'
A person is defined as a ‘worker’ by the GOV.UK if:
- They have a contract or arrangement to do work or services personally
- They receive a reward for the services - money or a benefit in kind
- They only have a limited right to send someone else to do the work (subcontract)
- They have to turn up even if they don’t want to
- Their employer has work for them throughout the contract or arrangement
- The work is not part of their own limited company and the employer is not actually a customer or client
It is clarified by the Employments Rights Act 1996 s230 (3) text,’
“WORKER” means an individual who has entered into or works under (or, where the employment has ceased, worked under) –
(A) a contract of employment; or
(B) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.
The Gig Economy Challenge
This seems a little vague, how can you have a contract or agreement to supply work to a third party and they not be your client or customer? So, other than being a limited company, wouldn’t the above apply to any self-employed person; a plumber, gardener or comedian making them all ‘workers’?
However, the fact is that if self-employed suppliers continue to be found to be ‘workers’ then they are entitled to the National Minimum Wage (an hourly rate), holiday pay, statutory breaks and so on. In this instance, part-time flexible roles are highly likely to become less lucrative and less flexible for the individual and less attractive for the contracting business.
As this is already the case with DPD, Parcelforce, Amazon Logistics and Hermes the future delivery model across these major courier networks is unlikely to change.
The Future Delivery Model
We will probably see a mix of ‘self-employed workers’ and ‘employees’ based upon the geography, economics and the service levels that are being offered. It is likely the large percentage of self-employed workers who enjoy the flexible arrangements will be unhappy when a workforce of tens of thousands of self employed couriers reduce to a few thousand employees on Minimum Wage with zero flexibility, a small number of workers on Minimum Wage and a select few self-employed couriers.
It’s not a funny gig when workers’ rights are abused or when the flexibility to fit work around the school run, another job, studying and so on is taken away. Surely we will need the legislators to find a happy medium.