I set out our position on the state of the courier industry this time last year in my one and my first ever Medium post, so it feels somewhat circuitous that I find myself a year later writing on the same subject because of the recent ruling against Uber, and the upcoming tribunals against the ‘Big Four’ courier companies that have been brought by the IWGB.
I’ve already outlined how both Uber and courier companies could be seen to fall foul of HMRC’s guidelines on self-employment in part my previous post last week. I figured it was only fair to apply a frank assessment of how we stack up against those same guidelines. I also go into what the challenges have been for us when operating in this space, and how I believe we can continue to build Gophr into a successful business going forward, no matter what the future operating environment happens to be.
As per my first post where I scored Uber and the Big Four same-day courier companies, I’ve taken HMRC’s guidelines on self-employment, added comments that are specific to how we do business and then given them a score, giving a point if we are meeting the guidelines, and a zero if we are not. I’m happy to be challenged on this by any courier who has worked with us, the IWGB who we have had many conversations with since we attended their very first meeting in January 2015, or other courier companies who might take issue with what we’ve written below or in our previous post.
Here are the guidelines again:
“Someone is probably self-employed and shouldn’t be paid through PAYE if most of the following are true:
They’re in business for themselves, are responsible for the success or failure of their business and can make a loss or a profit
Like Uber, we could argue that we are sitting within the bounds of the rules here because the couriers success or failure depends on how much work they agree to do. However I don’t believe that sticks to the spirit that this guideline was written in because it should not come down to how many jobs a courier accepts but down to their ability to affect how much work they can win in the first place, and get paid accordingly. A more loose interpretation could be the self-employed person in question has a clear path to progress that unlocks the ability to make more money.
Although we have seen this in play already with some of our more entrepreneurial couriers getting clients to book them regularly for certain jobs, and others bringing in business to Gophr. We intend to encourage couriers to do more in this area. However I’ve never heard of anyone scoring points for good intentions.
Gophr score: 0
They can decide what work they do and when, where or how to do it
Again, as per the previous post this three separate points so I’ve split them up, with a point for each
What work they do and when they do it
Similarly to Uber, our couriers can log in and out whenever they want. In fact most of the them do because for the vast majority of them we are not their primary source of income. They work for other courier or delivery companies. They can reject jobs and incur no penalties as a result of doing so. After they accept a job they can call us to have the job reassigned to another driver, without penalty. The job notification they receive tells them where the pick up and delivery addresses are and exactly how much they will receive for completing the job.
Our system will not assign a job to a courier if their vehicle is not suitable. Neither will the system assign jobs to couriers if they unable to meet the required deadlines unless all other options have been exhausted, usually at times when we are very busy. Any delays are immediately communicated to the customer through ETA’s. The courier receives contact details for the customer and can manage the job directly. They have the ability to refuse jobs at pick up if the items do not meet the specifications described on the booking, or call us to change the specs to reflect the work being carried out, with the results properly reflected in the final price of the job.
We provide the couriers with the most efficient sequence to do pick ups and deliveries to meet their deadlines, however they are free to the deliveries however they feel is best.
If they don’t deliver on time because they haven’t moved quickly enough, or simply bitten off more than they can chew then customers will inevitably give them a poor rating, complain directly to them or to us. If it is communicated to us we feed back to the courier and suggest ways they can improve.
Persistent poor performance can lead to being suspended, however this has only happened a handful of times. Nearly all our couriers are experienced professionals who’ve worked in the industry for several years and know what the job entails and what is expected of them.
We have a couple of couriers on ‘guarantee’ (more on that here) who’ve been with us from day one. They are normally relied upon to cover work that cannot get done by others but they are free to turn us down if they want, and have done in the past.
I think it’s pretty safe to say that we should score a point each for what work they do and when they do it.
Gophr – 2
Where they do the work
Other than couriers on guarantee, whom we pay Living Wage, we have no control over where they do work. That is entirely down to what the customer defines as the pick up and delivery. We don’t even show couriers the areas that are busy at any one time like Uber. Although our couriers have told us they would find it a useful feature.
Gophr – 1
They can hire someone else to do the work
We have a couple of couriers with their own companies who have set up other couriers to work for them on Gophr, and all work gets paid into the overall courier company account. We have no issue with this as long as it doesn’t become an impediment to getting work done and we can still deliver the same level of efficiency and transparency back to the customer as we do with everyone else working directly on the platform.
Gophr – 1
They’re responsible for fixing any unsatisfactory work in their own time
This generally only applies to times when packages have either not been delivered properly or cannot be found at the point of delivery. Couriers generally deal with these issues directly and packages are usually found quickly.
Gophr – 1
Their employer agrees a fixed price for their work – it doesn’t depend on how long the job takes to finish
We have set rates that are aimed at the SME market and enable us to pay what we believe are the best rates in the courier industry. We have discussed our rates with the IWGB to ensure they are fair, as well as shared data with them on average payment per job, per vehicle type. We have not changed these rates to date (apart from the price of cargo bikes and waiting times for motorbikes and vans which rose). We will not change these without discussing and agreeing it directly with our couriers.
In addition, couriers know exactly what they will be paid on the notifications we send them. If a customer sets a short deadline to complete a job (therefore reducing the time they have to do the job, and as a result reducing their ability to accept other work on the way) we charge a premium to the customer that they can see at the time of booking and pass that directly to the courier after we take our commission.
In order for us to stick more closely to this we could allow couriers could set their own rates directly in the app. We thought long and hard about this at the very beginning and were worried this would cause competition between couriers to set low rates, whilst slowing the booking process down for customers who’d need to choose between couriers based on the varying costs. We don’t believe either of these are desirable for couriers or customers.
We have agreed a fixed price for work, our rates compare very favourably to the competition within the B2B space so I think we are good here. However we do charge a premium for how long it takes to finish and so… – 0.5
They use their own money to buy business assets, cover running costs, and provide tools and equipment for their work
Yes, couriers buy all their own equipment and take care of it’s upkeep. We have provided t-shirts and cycle jerseys to couriers but haven’t charged them for them. This is the section that we are all being accused of exploiting for gain however it is strictly sticking to guidelines.
Gophr – 1
They can work for more than one client
Absolutely. In fact we encourage it. We want to have as many couriers on our app as possible so that it’s likely that when a customer orders a job to be done we will have someone in the area. As we are a growing business however we may not always have enough work to become the couriers primary source of income. As we get bigger this will change but we will always be happy for couriers to work with other courier companies and as we move forward we want to encourage courier companies to work directly with us, as some already do.
Gophr – 1
So in summary that makes our score (according to us) a 7.5 out of 9. Putting us 2.5 points ahead of Uber and X ahead of courier companies.
We could of course be accused of being biased, however it’s important to note that we wouldn’t be so close to these guidelines if we hadn’t of designed ourselves to be that way from the start. We were in contact with the IWGB before we even launched.
And of course, if you have worked with us and believe we are being too generous with how we score ourselves please get in touch or simply reply below in the comments section.
So more importantly; how has this tactic of sticking to the self-employment guidelines, as well as working with the The Living Wage Foundation and the IWGB worked for us? (full disclosure: we used to have IWGB accreditation, eventually we asked them to remove it as it was proving too difficult for us to meet the pretty extensive, and expensive requirements they had for meeting the accreditation. We nonetheless wish them every success with their case).
The main challenge has been the market itself. Trying to stay competitive in an industry sector that is in a race to the bottom when it comes to setting rates is difficult, particularly when you are building a marketplace (already a hard task), in a very competitive space, whilst building a highly complex tech platform that needs to be engaging enough that both couriers and customers want to stick around. We’ve done all this whilst sticking as closely as possible to the self-employment guidelines as set by HMRC.
So frankly, between Hermes, Uber and the upcoming CitySprint tribunal I couldn’t be happier that this issue is being highlighted in the mainstream media. Mainly because we’ve been banging this drum for over a year and managed to get about as much press as a Sunday league football team.
We were a bit irked about the lack of any meaningful coverage we received at the time (I’m probably more upset now that it includes a quote from Boris Johnson – a lot has happened in the last 12 months!) however it does bring to mind a Chris Rock stand-up bit about Dads looking for credit for shit ‘they’re *supposed to do*’. Nobody wants to write about you doing the right thing, they want cold, hard facts about what you are doing wrong.
So the press are finally on to it, but what about the punters? Surely courier service customers care if couriers are getting paid enough? Well, from our experience the short and brutal answer is: no. Not even the ones that are on the record for caring about this stuff.
We got in touch with all the Living Wage accredited companies in London to find out if they would like to use the only Living Wage accredited courier company in their city (ideally, Living Wage accredited companies should use other accredited companies as suppliers). Out of the close to 700 we called we got a handful of sign-ups, including the Living Wage Foundation themselves.
We did have one global bluechip company get in touch to work with us as the Living Wage was one of their three core pillars/values for the year. They weren’t happy with their existing service’s performance on one particular job (it was a bit of an awkward one in fairness) and felt it would be a good one for us to take over. They made it clear at the beginning that the rates were much higher than they were used to (because of their size and level of activity they get massive volume discounts) and our client was getting flack from their management about it. We did the job for 5 months every day without any major issues before we were eventually told last month that they no longer wanted to work with us. We have reason to believe it was because our client eventually had to cave under the pressure of constantly being asked about why they were paying higher rates to use us.
This isn’t us whining. The fact is you’ll always find a disparity between how much people believe they will do the right thing versus the stark reality when they are faced with the choice. Whether its buying the Fair Trade bananas versus regular bananas, or buying Ecover versus any other washing up liquid; when it comes down to it the price is the driving factor. We totally get it.
For the vast majority of SME’s, our rates are highly competitive. To the point that other courier companies book jobs through us for the same price customers get. Sadly when it comes to higher volume clients this isn’t always the case.
I believe the recent Uber ruling does not bode well for the large courier company tribunal rulings, and if the result means that everyone will need to put their prices up to cover the additional costs that may come with paying couriers more for their work then we welcome it. If there aren’t guidelines in place then couriers will continue to suffer the brunt of price wars.
We’ve banked our entire strategy on the logistics industry becoming unrecognisable from its current form within the next 5 to 10 years. The main driving factor for change being technology. As we’re seeing from all the recent political turmoil we’re going through here and further afield it appears that economic and sociological forces may also play a significant part.
As such the smart money should be on paying people fairly for their work, sticking to guidelines as much as possible whilst providing a path to progression. It is after all the only way to ensure that the guys doing the work are happy, and provide excellent customer experiences as a result.
Sadly this will only happen if this guidelines are properly enforced. We cannot do it on our own.