Carers and Hermes drivers in HMRC pay probes

19 September 2016

A month after HMRC told Deliveroo that is needs to pay its drivers the minimum wage, two more legal cases further highlight the issue of modern day payment practices.

First, courier company Hermes faces a probe from HMRC over claims that it is failing to pay its ‘self-employed’ workers the minimum wage.

Hermes couriers are considered self-employed contractors by the company. Drivers are signed up on self-employed contracts and this means that the company doesn’t have to pay minimum wage or provide other benefits like pension contributions and holiday and sick pay. 

But as the Deliveroo case highlighted, just because an employee signs a contract that says they are self-employed, it doesn’t mean that HMRC will consider this classification as valid under employment law. 

A report from Labour MP Frank Field found that many Hermes drivers were effectively being paid less than the minimum wage. In one of the worst cases, a ‘self-employed’ Hermes driver was paid as little as £3 on a rural delivery route.

Some drivers quoted in the report claim that they are not properly self-employed because they are required to work to Hermes’s orders, with pick-up and delivery times handed down from on high.

Business Minister Margot James echoed some of the criticism of Deliveroo in her response. She said: “employers cannot opt out of their employment law obligations by defining individuals as self-employed.”

She continued that: “an individual's employment status is established based on the reality of the working relationship.”

The plight of 17 underpaid care workers in north London has also been in the news this week.

Working with the Unison union the carers have launched the largest ever legal claim against the care sector. The union described the pay breaches as one of the worst they had ever seen.

An investigation from the BBC appeared to show that Sevacare was paying some staff in the borough of Haringet £3.27 an hour – less than half the minimum wage.

Sevacare says that this is not correct and it pays its workers an average hourly rate that is in excess of the minimum wage.

The outcome of this legal challenge could have a huge impact on the care sector and could massively increase costs.

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