Courier Drivers Face Exploitation In The Gig Economy

Posted on November 4, 2016 by


Courier Drivers Face Exploitation In The Gig Economy


The gig economy is described as firms that take on self-employed workers for short term arrangements and usually involves the firm interacting with workers through an app. This is becoming a popular form of business in the increased use of smartphones and the rise of card payments.

“The gig economy has made it far too easy for companies to unthinkingly exploit the workforce.”

Mr. Frank Field, Labour MP, The Guardian

Since 2008, the British government have praised the amount of people who are self –employed and spun the idea of self-employment as a positive position to be in, however the Resolution Foundation reports earnings for self-employed workers are lower than they were 2 years ago.

How Is The Gig Economy Exploiting Workers?

The gig economy relies on self-employed contractors, initially meaning the workers are not entitled to earn the ‘national living wage’ or receive benefits such as sickness and holiday pay; Resulting in companies paying workers low wages and working long hours, as well as not being liable to pay for any time off.

What Companies Are Involved In The Gig Economy?

Deliveroo

Deliveroo is a service which entails cyclists and scooter or motorbike drivers to deliver meals from restaurants to customers’ homes. All delivery workers are hired as self-employed. Workers have to pay for their own phone, transport and insurance.

In August, Deliveroo workers protested against a new payment scheme that meant all workers were to sign a new contract which meant they would be paid £3.75 per delivery instead of the hourly rate of £7 plus an extra £1 for each delivery. Workers protested arguing they would struggle to make as much as they took home on hourly wages. The new scheme wouldn’t account for the time workers would take returning to the ‘zone centre’ where all the restaurants are. A clause signed by Deliveroo workers states they cannot take the firm to an employment tribunal over their employment status and if they do they are liable for all company costs.

After a week of protests, Deliveroo ruled those who were not happy with the new pay scheme could opt out and continue with the pay per hour as the company decided instead of giving workers new contracts, it would trial the new payment first with workers who were happy to do so.

Hermes

Hermes is a parcel delivery company which hire self-employed couriers to deliver goods to customers’ homes.  78 Hermes couriers have complained to the Chairman of the House of Commons Work and Pensions committee Frank Field, claiming they are paid less than the minimum wage with some workers taking home less than £6 per hour. Currently workers earn money per delivery, rather than per hour.

Legal National Minimum Wage Requirements 

Year 25 and Over 21 to 24 18 to 20 Under 18 Apprentice
October 2016 £7.20 £6.95 £5.55 £4.00 £3.40

HMRC are currently investigating the claims to decide whether any action should be taken. Since the complaints, Hermes has invited its workers who are in the belief of being underpaid to request a review of their parcel delivery rates. However, once the costs of expenses are taken from the delivery earnings, some workers find themselves earning around £3.50 an hour.

Uber

Uber is a private taxi firm among the gig economy. The firm use an app where customers request a taxi and payment is taken from their online Uber account at the end of their journey. Currently in the UK Uber have more than 40,000 drivers in major cities and towns.

The firm are facing an employment tribunal due to 19 claims of the company not paying drivers for sick pay or holidays, as well as claims of drivers earning less than the minimum wage and the firm deducting money from their pay without warning.

As Uber drivers are classed as self-employed, legally Uber drivers don’t qualify for rights that are given to staff, however lawyers argue the drivers are technically not self-employed due to terms and conditions of their work and they should be entitled to a range of benefits they don’t receive. Uber drivers are rated by customers and do not know their passengers drop-off destination before they get in the car.

Uber drivers receive 80% of the fares that are paid by the passengers and the rest of the earnings go to the company as commission. Uber argue in September 2016 UberX (the basic private car service) drivers made an average £16 per hour after Ubers service fees and that only 25% of drivers logged in for 40 or more hours per week. The firm states that being an Uber driver allows a person to be their own boss and work flexible hours with no minimum hours being set.

What Is Being Done To Stop This?

Uber have been defeated in the courtroom after it was ruled that drivers shouldn’t be classified as self-employed and are entitled to receive the national minimum wage, sick and holiday pay as well as getting paid rest breaks. It is expected that Uber will pay out these costs by increasing their commission or increasing fares to their passengers.

The ruling in this landmark case is expected to affect tens of thousands of Uber drivers as well as potentially impacting those who work in the gig economy.

HMRC are creating a new unit to specialise in the gig economy in a crackdown on businesses that exploit workers by classifying them as self-employed to avoid paying tax and meeting the national minimum wage. If the unit is a success companies, like Uber will have to review how much they are paying their staff and if businesses are found to treat self-employed workers as permanent staff they will be forced to change their way of business practice and hire employees on full time contracts.

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