Employment status and tax: what has Hermes delivered?
David Whiscombe wonders if Hermes has crossed the line.
It is reported that the parcel delivery firm Hermes has struck an agreement to offer its couriers enhanced rights including paid holiday and a guaranteed hourly rate under a status that is described as “self-employed plus”.
For tax purposes, the only important distinction is between employment (the principal tax effect of which is to lumber the employer with a payroll tax aka National Insurance Contribution) and self-employment. The status of “worker” that has been in issue in the assorted “gig economy” cases that have been through the courts has no relevance for tax purposes: and of course “self-employed plus”, while a useful shorthand for the status being offered by Hermes, is not a term of art with any defined meaning in law.
So, should Hermes, or any company thinking of following its lead, be concerned about the status for tax purposes (as well as at general law) of workers taking up the “self-employed plus” option?
To state the obvious, the position is not determined by the label the parties choose to attach to the arrangement: if the relationship is one of employment, it is not prevented from being so by being called “self-employment plus”. Hermes will, if well-advised, have sought reassurance from HMRC as to the characterisation of the new status, though news reports are silent as to the result. Certainly paid holiday, an hourly rate of pay and—probably most compelling of all—the concomitant obligation to follow delivery routes determined by Hermes are all strong pointers towards employment. As ever, changes in terms of engagement need to be thought through very carefully to avoid unexpected results.
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