A courier working for Hermes was punished after having to leave work when his pregnant partner was rushed to hospital after suffering complications, MPs heard yesterday (October 10) in a select committee hearing on the gig economy.
“That’s it – you’re contract has been cancelled; we’re not using you anymore,” a manager reportedly told the courier. “Parcels come first.”
It was one of the many horrific stories MPs collected as evidence that the gig economy is failing workers.
Representatives from three of the major ‘gig’ companies – ridesharing app Uber, food delivery service Deliveroo and parcel delivery firm Hermes – were grilled by MPs on October 10 over their employment practices which have come under fire from trade unions and consumers alike.
Uber head of public policy Andrew Byrne admitted to the committee, chaired by Labour MP Rachel Reeves, that he couldn’t be sure whether their drivers earned the minimum wage because their earnings estimates of £15 an hour don’t take into account driver costs such as fuel, insurance and car payments.
Dan Warne of Deliveroo and Hugo Martin of Hermes attempted to defend how much their contractors earned but, they too, could not be sure whether they paid the hourly minimum wage because the riders and couriers were paid per parcel or delivery and not by the hour.
Even if these companies did pay below the minimum wage, they are not required to by law because the contractors are classified as ‘self-employed’ and not ‘workers’ so do not receive key entitlements such as a minimum wage, holiday and sick pay.
But Unite and other trade unions have long argued that companies in the gig economy do all they can to maintain their workers’ self-employment status so that they can cut down on national insurance contributions and other costs associated with having employees.
Still, the companies do not always give their contractors the so-called ‘flexibility’ they say their workers enjoy.
Tested in the courts
This argument is now being tested in the courts as all three companies at the select committee hearing face employment tribunals questioning their workers’ classifications.
All three representatives were forced to admit to MPs today that their costs would be substantially higher if they employed a business model using legally classified workers instead of self-employed contractors.
“I don’t have the precise figures … but I’m certain it would be in the tens of millions certainly,” said Uber’s Andrew Byrne, while Hugo Martin of Hermes said that sick and holiday pay in addition to national insurance contributions would bring their total costs to nearly £60m more than they pay now.
The issue of the level of control these companies have over their contractors is a key legal test in determining whether or not they are self-employed, and all three company representatives were forced to admit that they did exert control in some form or another.
Conservative MP Mark Pawsey made the point that, unlike self-employed plumbers, gig economy workers have no control over setting the prices for their services, while Labour MP Rachel Reeves highlighted that Hermes couriers are controlled by having the responsibility of finding their own replacement couriers if they aren’t able to take on a shift.
Labour MP Peter Kyle slammed Uber for its “aggressive” response after TfL ended Uber’s operating licence in London.
He noted the hypocrisy of the company which on the one hand criticised TfL for jeopardising the livelihoods of its 40,000 London drivers – but on the other hand has explicitly said its business model is to eventually automate away all its drivers.
“Your business plan is very well known throughout the globe – and it ultimately relies on automation,” Kyle told the Uber representative. “As soon as you possibly can, your company wants to get rid of all the drivers anyway and replace them with automated vehicles. Will you be crying for your drivers then?”
Unite assistant general secretary Steve Turner said that yesterday’s hearing “exposed these gig economy companies for what they are – businesses whose entire model is built around slashing costs and divesting themselves of any responsibility toward those who create their wealth, the workers, and the society which enables them to operate.
“We note too that the Uber, Hermes and Deliveroo representatives admitted that the quality of their services can suffer because of the loose employment model they use.
“This is not the sort of businesses the UK should welcome – in the shadow of Brexit, the last thing we need is an economy dependent on a race to the bottom for both workers and consumers.”
The hearing also explored the impact recommendations in the Taylor review would have on employment practices and whether more can be done to provide high quality work and improve access to employment rights and benefits.
All three gig economy representatives welcomed some of the measures in the review but made it clear they did not want to be forced to give up their self-employment model.
This business, energy and industrial strategy (BEIS) hearing preceded a joint session today (October 11) with the work and pensions committee, which together questioned Matthew Taylor on his review of working practices which was published earlier this year.
Unite has argued that the Taylor review has failed spectacularly from its stated aim of improving working practices in the gig economy.
Unite general secretary Len McCluskey said the review “does nothing to address the rampaging growth in forced self-employment, which has shot up as the government’s austerity programme bites.
“Neither will it address bogus self-employment, and the unacceptable use of zero hours and agency work to deny someone a permanent, full-time job.
“Instead of the serious programme the country urgently needs to ensure that once again work pays in this country, from Taylor we got a depressing sense that insecurity is the inevitable new norm. We will not accept that,” he added.