HR · 21 October 2016

Government promises gig economy crackdown following Hermes inquiry

hermes
The Employment Status and Intermediaries Team will address compliance by companies such as Hermes in terms of employment rights

The news that courier company Hermes failed to provide sufficient rights for its workers has led government to announce a wide crackdown on firms using employee status to save costs on benefits.

HMRC has launched a new “Employment Status and Intermediaries Team” that will react to complaints and actively investigate companies that have declared a high amount of self-employed workers, following an inquiry by the Parliamentary Work and Pensions Committee into the so-called “gig economy”.

In a statement, Treasury financial secretary Jane Ellison said the “dedicated resource” would give HMRC appropriate expertise to address compliance by companies such as Hermes in terms of employment rights.

“The creation of a new employment status and intermediaries team to focus on status and employment intermediary risks will allow HMRC to better focus resources and expertise to ensure these issues are effectively tackled,” Ellison added.

Elison continued by stating that government would oversee a “transformation” in the rights of workers in the gig-economy and redefine what is classified as self-employed.

“The government takes false self-employment very seriously and is committed to taking strong action where companies, to reduce costs, force staff down routes which deny them the employment rights and benefits they are entitled to,” she said.

The parliamentary inquiry into the exploitation of workers in the gig economy opened in July this year and was undertaken by the Work and Pensions Committee­ – of which Labour MP Frank Field is chair.

A report was recently submitted by Field to HMRC documenting the complaints of Hermes workers suffering in the gig economy. The report recorded a number of people working for Hermes as couriers, yet not receiving paid holidays, sick pay, and in some cases paid below the National Living Wage (NLW).

The introduction of the Employment Status and Intermediaries Team represents a consensus across government that companies using large numbers of self-employed or agency workers, in order to avoid providing full entitlement of workplace rights, should be recognised and tackled.

HMRC executive chairman Edward Troup confirmed HMRC’s commitment to ensuring firms such as Hermes follow the correct compliance procedures and decease exploitation of workers in the gig economy.

Responding to Field’s report on the gig economy, Troup said in a letter: “If we find that companies have misclassified individuals as self-employed, we will take all necessary steps to make sure that they pay the appropriate tax, national insurance contributions (NICs), interest and penalties.

Classification of such workers remains a point of controversy for other companies operating under a similar business model to Hermes – taxi app Uber, for example, is currently awaiting a tribunal verdict that will decide whether tens of thousands of drivers will be entitled to further workplace benefits, such as sick pay, annual leave and pension contributions.

Find out what self-employed cycling couriers can do to protect themselves.

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ABOUT THE EXPERT

Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.

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