Written submission from Evri (ERB0016)
Make Work Pay: Employment Rights Bill
Written evidence to Business and Trade Select Committee
About Evri
Evri (formerly Hermes) is the UK’s largest dedicated parcel company. We deliver parcels for some of the largest retailers, both online and on the High Street, including John Lewis, M&S, Next and Asos, as well as SME’s and small independent sellers.
In 2023/24 Evri handled over 730 million domestic and international parcels. We have three parcel sorting hubs in Warrington, Rugby and Barnsley and a dedicated returns hub. From these hubs all our parcels feed into our network of 25 depots across the UK, for onward distribution to around 500 delivery units, from where our couriers collect parcels for final mile delivery to consumers. We have an out of home network of over 14,000 pick-up and drop off points, including shops and lockers.
Evri has circa 8,000 employees and contracts with around 20,000 self-employed couriers who deliver parcels across the UK.
Employment Rights Bill – employment status
Evri welcomes the publication of the bill and the aim of the government to extend employment rights and protections to more people and provide stability and security in work.
We work closely with the GMB union and USDAW, who represent our self-employed couriers and employees respectively, and know the importance of businesses and trade unions working together to ensure workers have a strong voice. We strongly support day one rights for employees and have already introduced flexible working as a day one right for our staff. We also welcome the establishment of a single enforcement body to ensure workers can navigate and understand their rights and to support employers and create a level playing field.
Evri has a keen interest in employment status and has a network of around 20,000 self-employed couriers who deliver our parcels to homes across the UK. Evri has operated a self-employed courier network since 1974 when it started out as a small company delivery catalogue parcels in Bradford.
Evri has the UK's only union backed self-employed courier network having developed our Self Employed Plus (SE+) model with the GMB union in 2019, which provides couriers with guaranteed rates of pay, holiday pay and auto enrolment pensions while ensuring they retain the flexibility and autonomy of self-employment that they have told us is so important to them.
our ground-breaking SE+ deal provides a blueprint for both policy makers and other businesses, demonstrating how business and unions can work together to create something new, providing the stability and security of important employment protections while still preserving the flexibility and autonomy of self-employment. We believe that providing our couriers with this flexibility provides a welcome boost to the UK’s economic activity, enabling people to balance their work around other life commitments. A third of Evri’s couriers are women, unusual for our sector, and we know this is largely due to the flexibility of the work, which can fit in with their lives alongside caring responsibilities, such as childcare. This flexibility is not easy to replicate in employed roles.
Employment status: Single Worker Status
Prior to the election the Labour Party set out it’s plans to Make Work Pay and one feature of this was to reform employment status, merging employee employment status and Limb (b) worker status into a single ‘worker’ status and having a second status for self-employed people.
While the bill does not contain measures on employment status, this is a significant policy proposal which forms part of the Make Work Pay agenda and will impact employers and individuals, affecting the rights they are entitled to and the tax they may pay. The government says it is still committed to introducing a single worker status and will consult on this.
As a large user of self-employed labour, this is an area where we have expertise. We understand the desire to simplify employment status by moving from three to two employment statuses and the need to tackle bogus self-employment, however, we think there are other ways to provide security and certainty to workers and employers, as we set out below. We hope that the committee inquiry process will consider this proposal, examine whether the government should consider other options to reform employment status and look at how it might work alongside other employment bill measures, given that they were presented as a package of measures prior to the election.
The cost of the improved rights and benefits that employees will receive because of the measures in the Employment Bill will be borne by employers, who will already carrying an increased National Insurance burden. A later change to employment status definitions so that more people fall within employment will increase the burden on businesses considerably and will force a reaction that sees a greater move to self-employment resulting in an increase in the number of people that have less employment rights. Therefore, status cannot be divorced from the measures in the bill
Fabian Society research on employment status
As part of our interest in this area, we commissioned research from The Fabian Society to examine how well the current employment status framework is working, consider options for reform and understand the experiences of those working in a variety of atypical roles, including in the gig economy. As a company seen as operating in the gig economy with a large self-employed workforce, we know our couriers choose the flexibility and autonomy of this work but wanted to understand if this is true more widely.
There is a ‘visible’ gig economy of drivers and food delivery riders, but this is only part of the picture. The other part is hidden and often desk based; from high-end work such as web design, to lower paid work such as social media moderation. The research we commissioned from the Fabian Society indicates that over half of gig economy workers are desk based. Outside the gig economy, many others have long worked self-employed roles too: hairdressers, construction workers and camera operatives. They might seem like employees but are technically self-employed because they can send a substitute in their place and/or don’t have to accept work when offered.
For some, the autonomy and flexibility of self-employment outweighs the benefits and protections of employment status. There is a genuine upside to having a high level of flexibility and autonomy over how you work, and many people make a conscious, well-informed choice. The Fabian Society research revealed that 90% of self-employed people surveyed had a great deal of influence over how they worked and 84% had high levels of influence over the speed and order in which they carried out work tasks.
Risks of single worker status
Moving people to employee status is not a silver bullet which will solve all bad practice. The Fabian’s research found that when looking at the experience of those across all employment statuses, atypical employees were the worst off. These are typically people employed on zero hours contracts and/or employed via agencies.
This group has all the protections of being an employee yet little autonomy and expressed lower satisfaction with their independence, employment rights and pay than the self-employed including those working in the gig economy. Amending employment status alone will not tackle poor practice or exploitation. A move to a single worker status will include everyone currently classed as employees, those with limb (b) worker status (a small number) and some wrongly classified as self-employed (those within bogus self-employment). But many in the gig economy will remain outside the new single worker status. The Fabian Society research found that poor rights, poor enforcement and bogus self-employment all need to be addressed to improve employment rights.
The changes to employer’s national insurance contributions announced in the autumn budget may also impact the single worker status policy. The combined rate increase and lowering of the threshold at which contributions start will increase the cost of employing people and could lead to a slowdown in recruitment or even encourage employers to recruit on self-employed contracts to reduce costs, resulting in less access to employment rights and protections for some.
Other European countries, including France, Germany and Spain have taken action to address bogus self-employment, with some success, but also adverse unintended consequences such as loss of work opportunities and the replacement of bogus self-employment with ‘bogus employment’ - characterised by minimum wage evasion, unpaid working time, lack of paid leave, lack of paid sick days, and lack of social security contributions.
Another option: retaining Limb (b) worker status:
Instead of moving to two employment statuses and attempting to create a new definition of “genuine self-employment”, a better way to extend employment rights without legislative delay and the unintended consequences caused by a ‘cliff-edge’ change would be to retain all three current employment statuses, while seeking to increase understanding of the existing Limb (b) “worker” status and potentially broadening access to it.
The middle-ground worker status provides important employment rights and benefits at a lower threshold than employee status. However, it has been underused, resulting in the use of self-employment when limb (b) worker may be a better option for both parties.
Historically, companies who have a large-scale self-employed workforce may have shied away from limb (b) status for fear that it was too close to employee status and the full suite of employment benefits that come with it and consequential concerns about tax status. However, in Supreme Court cases awarding individuals limb (b) worker status (such as Uber and Pimlico Plumbers) the individuals concerned were found to be self-employed for tax purposes.
Parliament was clear when passing legislation that Limb (b) status was not intended to facilitate weaker employee protections, rather it was set up to create stronger self-employed protections, for those working with a single ‘employer’ with less autonomy than would be expected for fully self-employed individuals. It could play an important role in Labour’s desire to end bogus self-employment and extend employment rights and protections to millions of people, especially those in the gig economy. Certainly, a far greater number than those that would benefit from any move to a single worker status.
It could also help level the playing field in the gig economy. All companies could be brought under a limb (b) worker model, preventing a race to the bottom based on poorer rights and less tax.
While Evri’s union backed Self-Employed Plus model is not Limb (b) worker status, it is very close to it and SE+ was purposely modelled on this so that Evri’s couriers who do not provide personal service and therefore do not fall within the current definition of limb (b) worker, are able to have the security of the protections offered by that status.
Economic impact of employment status:
The UK has a flexible labour market which attracts inwards investment from a range of employers. A move to single worker status and only two employment statuses could reduce
flexibility of the market, make the UK a less competitive labour market and negatively impact growth. In the three months leading up to the budget, UK growth slowed and unemployment increased. This has, partly, been put down to nervousness among businesses about measures in the budget which might impact the cost of business. The changes to business rates and employer national insurance contributions shows employers were right to be cautious.
Retaining a three employment status model and reforming Limb (b) worker as set out in the Fabian Society research allows the government to deliver on its promise of improved employment rights and protections for many workers, while retaining the flexibility which makes the UK an attractive place to invest.
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