Employee or Worker… or Self-Employed?

A piece of investigative journalism carried out by the BBC has shed light on the working practices of the largest online retailer in the world, Amazon.

Over the last few years, Amazon has built its own logistics company under the name of Amazon Logistics. Traditionally, Amazon had subcontracted companies like Royal Mail to deliver its parcels in the UK. These companies would directly employ delivery drivers in the traditional sense. The delivery drivers would therefore benefit from employment status.

In recent times, these contracts moved from Royal Mail and other companies to less traditional logistics providers such as Hermes (to use but one example). These companies utilised a very different way of working. The traditional employee-employer relationship was thrown into the long grass, replaced by the concept of subcontractors who were said to be self-employed.

In a move to cut the cost of these expensive contracts, Amazon recently decided to move its logistics in-house. Amazon Logistics was created. In its current structure, Amazon’s parcels are delivered by Amazon Logistics which uses agency workers who are described by Amazon as ‘self-employed’.

This ‘self-employed’ label is very important from Amazon’s perspective. It means that the company is not required to pay its agency drivers in the same way as it would its employees. There is no requirement to pay the national minimum wage, sick pay or holiday pay for example. The worker completes their own tax return and the company need not concern itself with PAYE. This sort of arrangement has been informally described as the “gig economy” by many commentators.

To be entitled to various employment rights, a worker or employee generally needs to satisfy a series of very loose definitions. So loose that it can often prove very difficult to work out. A worker or employee is generally said to be placed under an obligation to perform the services personally, experiences control exerted upon it by the employer and the employer is normally obliged to offer work and the employee to accept this. Generally, the structure utilised by companies such as Amazon attempt to tick these boxes, however, the reality is quite often very different to what might be written on paper.

What the BBC report found was that its reporter received a fixed rate of £110 per route or set of deliveries. The deliveries were programmed into a handheld scanner by Amazon. The driver was given the handheld scanner and required to finish these deliveries in order to claim the fee with some deliveries taking in excess of 11 hours. At first glance, this approach appears consistent with the role of any employee, however, on closer inspection, there is no ‘mutuality of obligation’. This approach is reminiscent of the much discussed ‘zero-hours contracts’ which recently saw Sports Direct get into so much trouble.

Taking into account various deductions (including deductions for vehicle rental, insurance and admin charges), the BBC’s reporter was paid an hourly rate equivalent to £2.59 per hour for the first week and £4.76 per hour for the second week.

Considerably below what Amazon would be expected to pay direct employees, also allowing significant costs to be recovered from the ‘self-employed’ contractor.

These are issues that are not exclusive to Amazon. Many companies are struggling to determine the employment status of those that carry out work for them. It is made all the more difficult by changing working practices that challenge conventional norms.

Amazon isn’t the only company to have faced severe media scrutiny. We had the ongoing and highly publicised Uber litigation together with similar cases involving CitySprint, Excel, Addison Lee and eCourier. HMRC are also looking into the practice of delivery company Hermes. Couriers at delivery service Deliveroo have also made headlines with recent strike action.

The government has announced a review of worker’s rights and practices as a direct result of these issues. It seems clear that companies have created a grey area and that neither UK nor domestic law is well equipment to fill that gap. It will be interesting to see what becomes of the various Employment Tribunal cases working through the Courts and the government’s eventual response.

If you would like to get in touch with regards to any empoyment issues, please contact our team on 01245 584515 or at [email protected].

Credit – blog post written by Lawrence Adams.