Headline grabbing actions against bogus self-employment represent a “new model” for workers struggle, but is it already too late?

At the end of October, the London Industrial Tribunal ruled that two Uber drivers — who had brought a case against the ride-hailing company on behalf of a group of 19 fellow workers — must not be classified as self-employed. Uber, which has around 40,000 drivers in the UK and one million worldwide, plans to appeal the ruling because, according to a report from the Reuters news agency, it “threatens the taxi app’s business model by forcing it to pay the minimum wage and offer holiday entitlement.”

Which, of course, begs the question of whether Dickensian business models have any place in the 21st century.

The unions helping Uber drivers and others, whose starvation wages and false status as self-employed help their employers make fortunes, don’t think so. Maria Ludkin, legal director of the British GMB union who funded the drivers’ case,  was delighted by the tribunal ruling. “This is a monumental victory that will have a hugely positive impact on drivers,” she said, “and for thousands more in other industries where bogus self-employment is rife.”

An estimated 460,000 workers in the UK alone may be falsely classified as self-employed, resulting in an annual loss of £314m in national insurance payments to the Treasury. Although the tribunal ruling only affects two drivers directly, it threatens to establish a precedent in practice.

What is Uber?

Uber claims it is a technology company not a transport company, receiving a royalty from each use of its ride-hailing app by self-employed drivers. The tribunal rejected Uber’s arguments. The two plaintiffs gave evidence that Uber controlled their rates and would penalise drivers who failed to work enough hours, even to the point of blocking them completely from the app. “Drivers do not and cannot negotiate with passengers…, they are offered and accept trips strictly on Uber’s terms,” the judges concluded. “It is not real to regard Uber as working ‘for’ the drivers … the only sensible interpretation is that the relationship is the other way around.”

The UK ruling is only the latest in a wave of similar judgements in Argentina, Belgium, Denmark, France, Germany, the Netherlands, Spain, China and many cities and states in the US. In September, the International Transport Federation (ITF), to which the GMB is affiliated, held a two-day meeting in Antwerp, Belgium, to plan strategy with regard to Uber.  Attending were 37 trade unionists from ITF affiliates in 19 countries in Europe, the Americas and Africa. They were joined by representatives of the employers’ organization, the International Road Transport Union (IRU), and the European Parliament.

Speaking during this meeting, Frank Moreels, president of BTB (one of the ITF’s Belgian affiliates) and vice-chair of the ITF’s road transport section, said that Uber and other app-based models promoted themselves to passengers as innovative “but are based on deregulation, destabilisation, disrespect for workers, ignoring legislation, not paying taxes or contributing to social security”.

Governments are concerned about the spread of bogus self-employment, but companies like Uber have a habit of ignoring the authorities wherever they operate. Frankly, the operations of so-called gig-economy companies are frequently difficult to monitor and much of the impetus for action against bogus self-employment comes not from government but from grass roots organizations, often working through independent unions, campaign groups, the press and legal specialists in employment law and labour rights. Gregor Gall, Professor of Industrial Relations at the UK’s Bradford University, believes this represents a “new model” of worker action outside conventional union activities.

To the extent that this is true, conventional unions are adapting to encompass less conventional areas of work and even members. “In addition to… [independent unions like the Independent Workers Union of Great Britain (IWGB) who have successfully organized bicycle couriers in London], Unite and GMB are using this model…,” Gall wrote in a private email dated 24 October 2016.  “Unite has certainly spent much time trying to interest journalists in its ‘stories’…. The other concerned parties are those NGOs like Oxfam and anti-poverty groups who have run with these ‘stories’ and given the unions support over the ‘working poor’.”

Court cases and tribunals, like the one against Uber or Unite’s legal action against Sports Direct earlier this year, can be particularly effective in generating public awareness and the political climate. Ultimately, they may help change company practices. EU regulations and directives can be highly effective in modifying corporate behaviour in areas like privacy, taxation and employment. Last year a Spanish judge referred the critical decision on whether Uber is a transport or a technology company to the European Court of Justice (ECJ) in Luxembourg, which will deliver its judgement within weeks. That may make a huge difference to the unregulated operations of companies like Uber in Europe.

An American Lawyer

In the US last April, a class action in California and Massachusetts won $100m for 385,000 Uber drivers who’d sued the company for misclassifying them as freelances rather than employees. The driving force behind this and many other actions against Uber’s US employment practices is a Boston lawyer called Shannon Liss-Riordan, “Sledgehammer Shannon” as she’s become known.

Liss-Riordan cut her legal teeth on recovering skimmed tips for restaurant staff waiting tables, baristas in Starbucks coffee houses, and porters (known as “skycaps”) working for American Airlines. She also fought against bogus self-employment among FedEx drivers who had been expected to buy or lease their own delivery trucks and pay for their own fuel. She did the same for office cleaners and “exotic dancers” in strip clubs whose bosses hired them under contracts of self-employment which, as she says, “denied the obvious”. Cleaners work for cleaning companies, not themselves; strippers work for strip clubs, they are not incidental attractions; and — since 2012 — she’s argued that “Uber is obviously a car service”. Now other app-based companies, like the grocery retailers, Instacart, and the shipping company, Shyp, are beginning to convert contractors to full employees — driven in part, no doubt, by the burgeoning threat of legal enforcement and action by unions and other civic and campaigning organizations, but also by the realization that workers with all the benefits of employment are typically more reliable, harder-working and pleasanter to customers. That can be critical to the success of service providers.

Uber in Britain

The British Uber case is important for two reasons: first it involves one of Britain’s largest unions in support of Uber workers, and second it seems to support initiatives by the British government ostensibly aimed at tackling the burgeoning problems of  low pay and insecure employment.

The growth in real or bogus self-employment is a challenge to governments. It means a worrying loss of income from taxation and social insurance and a growing concern that technology-driven companies — typically without allegiance to any nation — flout regulations, avoid tax on a massive scale, and benefit from unfair, anti-competitive behaviour that hurts more responsible companies.

Typical of Uber’s cavalier approach is its behaviour in Argentina. Despite receiving a court order suspending its activities in April this year, while the court considered  granting an operating licence, the company was illegally running cars six months later. The court’s concerns were its belief that the app-based service could facilitate tax evasion, and might encourage the use of drivers without professional licences or public transport insurance. Even fines of $5,000 for every vehicle disobeying the ban had no effect, according to Argentina’s ITF affiliate, the  FNSCT (Federación Nacional de Sindicatos de Conductores de Taxis), which is seeking to have itself represented in court hearings.

The engagement of other taxi drivers in the struggle against “Ubernomics” is critical. Bhairavi Desai of the New York Taxi Workers’ Alliance, which recruits Uber drivers, told the ITF’s Antwerp meeting that it was vital to win the trust of taxi workers to develop union campaigns against Ubernomics, which destroys full time work and replaces it with “sub-minimum poverty gigs”.

Hermes and HMRC

The news that the British tax authority, Her Majesty’s Revenue and Customs (HMRC),  is escalating its investigation into the courier company Hermes may represent an important move in the fight against the exploitative gig economy. Hermes is one of the worst practitioners of bogus self-employment, and the campaign against Hermes employment policies is typical of Gregor Gall’s new model of union action which has led to the HMRC’s announcement.

In this case, the Hermes couriers have been struggling for years against their poverty pay and conditions of employment. Hermes has an estimated 10,500 couriers driving their own cars or vans, delivering parcels for many big-name retailers, including John Lewis, Asda, Next and Arcadia. “Estimated” because Hermes does not publish statistics about its workers, all of whom, according to the company, are self-employed. They have been dubbed “lifestyle couriers” by the company, but a joint investigation by Buzzfeed and the Guardian newspaper in July 2016, which involved an undercover reporter, led to 78 couriers submitting written complaints against Hermes to Frank Field MP, a senior Labour Party politician and chair of the UK Parliament’s Work and Pensions Select Committee. The complaints included no rights to paid holidays, sick pay, parental leave or pension contributions; the use of penalties if prevented from working by ill health or domestic emergencies; problems with car insurance the drivers have to arrange and pay for; fuel costs the drivers have to meet; and promises of flexibility with their working hours which turn out to be sham. A further 20 couriers simply said that they felt they should be considered employees not self-employed workers. Field contacted the Treasury and HMRC, and sent David Gauke MP — the Chief Secretary to the Treasury — and Edward Troup — the Executive Chair of HMRC — the dossier of the 98 cases.

According to the Guardian, Hermes said HMRC had approved the classification of  couriers as self-employed in 2011. The company also maintained that it was “committed to ensuring that our couriers receive earnings that are equivalent or higher than the national living wage”. In fact, several of the couriers produced documentary evidence that, at a maximum of 80p per delivered package, their take-home pay, after expenses like fuel, and car insurance and maintenance, amounted to considerable less than £7.20 per hour, the figure for both the national living wage (NLW) and national minimum wage (NMW). The company’s assurances that it would restructure delivery rounds or increase rates to avoid paying less than the NLW are hollow and although Hermes falls back on the excuse that workers enjoy the freedom of self-employment and that, in any case, they are not obliged to pay the NLW to self-employed workers, this, too, may be untrue. As Edward Troup, wrote to Frank Field: “It is possible to be self-employed for tax purposes, but still be classed as a worker for National Minimum Wage”.

Field’s Hermes dossier has been referred to the “appropriate compliance teams” for consideration. While refraining from commenting on the tax affairs of any individual company, Troup issued a clear general warning. “Individuals cannot be opted out of employment rights and protections simply by calling them ‘self-employed’,” he said. “We are committed to tackling false self-employment.”

While some couriers enjoy the work, very few of them actually believe they are self-employed. The common-sense view is that if a company sets your pay rates and controls your hours, and there is no possibility of negotiation, then you are employed.

“I work for hermes (sic) as a delivery driver, and have for the last 6 years,” wrote one courier on the Mumsnet blog several months ago. “I am classed as self employed for reasons that elude me, along with the other 10000ish couriers nationwide. The only way we can get any time off is by supplying a replacement person to do our work if we’re away. This is ridiculously hard since you have to find someone with a large enough vehicle, with appropriate insurance who only wants very sporadic work, so mostly people get very very little time off. You also usually have to work when ill, although if someone is really very ill we will try to help each other out. Hermes won’t help at all and just threaten to withdraw our work.”

Blogs and forums such as Mumsnet, the Courier Owner Driver forum, or the Lifestyle Couriers forum are among the few vehicles for couriers to organize themselves and offer mutual assistance. The traffic on them in recent months seems to confirm that discontent with Hermes’ treatment of its couriers is long-standing and has been growing.

Eight years ago, the couriers approached Usdaw, the UK union for retail and distributive trades, but despite already representing workers among the 1,963 Hermes UK employees acknowledged in its most recent annual report, Usdaw was unable to recruit enough “self-employed” couriers to have any real effect. The disappointment among a few activists seems to have put an end to any attempts at organization until Hermes began to impose swingeing demands on the couriers, including compulsory working on Sundays and public holidays, cuts in selected pay rates (which are calculated on a piece-work basis), and the imposition of compulsory insurance with an Australian company, QBS, which appears not to meet the complicated legal requirements for insuring private vehicles also used for commercial purposes (so-called “Hire and Reward” coverage).

For companies like Hermes, the logic is simple: a substantial and automatic cut in their wages bill — in the UK, it’s an estimated 13 percent — simply by refusing to accept that their workers are employed rather than self-employed. It all helps to undermine worker organization and destroy the conditions by which couriers can afford to work.

The HMRC decision is important because it appears to add muscle to the new UK Prime Minister, Theresa May’s, concern — expressed in her first speech as premier — that too many people with a job “don’t always have job security”. Truly, the political world has turned upside down. In ever more bizarre attempts to curry favour with voters, right wing politicians claim to have the best interests of the workers at heart while the traditional left are desperate to embrace the gospel of business friendliness. The temptation is to shrug this off as a kind of political bipolar condition, but promises — no matter how shoddily manufactured — can sometimes lead to action, and maybe, just maybe, May’s commitment to address precarity will have results. It has certainly generated a great deal of publicity, which can only promote the cause of collective action.

A Tale of Global Business

But there’s another reason why the HMRC decision is important — because of the nature of the target. Hermes is a significant player in probably the most important global business in the world today — transport and logistics. The UK company is a small cog in the machine but it is part of a German-based transnational, Hermes Europe GmbH, with logistics and distribution operations in Germany, Austria, the UK, Italy and Russia; a sea and air hub in Dubai;  and a global retail sourcing service, Hermes-OTTO International, based in Hong Kong. Hermes Europe GmbH itself is part of the Otto Group, a private company with its roots in a mail-order business started in Hamburg in 1949. The Otto Group is the world’s largest mail order company and the world’s second largest internet retailer (after Amazon) according to Forbes. In the UK, Hermes (formerly ParcelNet) is the second biggest parcel deliverer after Royal Mail.

Global supply chains depend on companies like Hermes Europe GmbH, and increasingly these companies are becoming Uberised — driving wages down through the combination of increasing automation and an increasing reliance on a precarious workforce. Addressing this development — the hollowing out of transportation just like manufacturing has been hollowed out — is critical. The problem is, it may already be too late.

According to a press release from Agence France Presse, late in October an automated 18-wheel truck loaded with Budweiser beer brewed by Anheuser-Busch, part of the world’s largest brewer, AB InBev, and carrying a single human driver, made the 120 mile (200 km) trip from Fort Collins through the centre of Denver to Colorado Springs using only a “panoply of cameras, radar and sensors to read the road”. The human was there to drive the truck to and from Interstate 25 and monitor the journey along the highway. The beer delivery took place a week after Uber launched an automated car hire service, using vehicles developed by Volvo, in Pittsburgh as its first step in shedding its entire workforce of “self-employed” drivers.

The company chiefly responsible for developing the automated truck was bought by Uber last August in an effort to become the world leader in automated motor vehicles. Perhaps it’s more than a spooky coincidence that its name is Otto.

More details

Uber Drivers website.

Hilary Osborne, “Uber loses right to classify UK drivers as self-employed“, Guardian, London, 28 October, 2016.

Costas Pitas, “UK tribunal rules Uber drivers deserve workers’ rights“, Reuters, London, 28 October 2016.

Joint ITUC/ITF press release, “Global union organisations welcome UK Uber ruling“, London, 1 November 2016.

Meet Sledgehammer Shannon, the lawyer who is Uber’s worst nightmare [PDF]“, Uber Drivers/Mother Jones, December 2015.

Diana Kapp, “Uber’s worst nightmare [PDF]“, San Francisco Magazine, San Francisco, 18 May 2016.

Mike Isaac and Natasha Singer, “California says Uber driver is employee, not a contractor“, New York Times, 17 June 2015.

Paresh Dave, “In stinging decision for Uber drivers, appeals court says they must go to arbitration [PDF]“, Los Angeles Times, Los Angeles, 7 September 2016. []

Robert Booth, “Delivery giant Hermes faces HMRC inquiry into low pay allegations“, Guardian, London 20 October 2016.

Gregor Gall, “How relevant are the TUC and unions today?“, The Conversation, London, 12 September 2016.

Gregor Gall, “Hermes inquiry shows how unions are finding new forms of leverage“, The Conversation, London, 21 October 2016.

AFP Relax News, “Driverless truck from Uber’s Otto makes Colorado beer delivery“, Yahoo News, 25 October 2016.

Max Chafkin, “Uber’s first self-driving fleet arrives in Pittsburgh this month“, Bloomberg BusinessWeek, 18 August 2016.

This work is licensed under a Creative Commons Attribution-NonCommercial License.
Author avatar

Gary Herman

Related Articles

Chicken coop private schools for Africa’s kids
Thu Oct 2016 /

Chicken coop private schools for Africa’s kids

Mugwena Maluleke reports on Bridge International Academies, a billionaire-funded company running substandard for-profit schools all across Africa and Asia Bridge International Academies (BIA) is an education-for-profit business. It has plans to sell basic education services for 10 million schoolchildren in Africa and Asia by 2025. But in Uganda its ambitions has been checked by government […]

Read More