Updated: 9/12/19
These blogs post were written by our Founder, Seb Robert, 3 years ago and were based on his thoughts on Uber’s 2016 tribunal ruling. Please keep an eye out for updated opinion pieces on various rulings within the gig industry and how they are set to affect the courier industry.
What the Uber verdict means for Gophr | 16/11/2016
This time last year, I set out our position on the state of the courier industry in my first ever Medium post. So, it feels somewhat circuitous that I find myself a year later writing on the same subject. It also seems topical due to the recent ruling against Uber, and the upcoming tribunals against the ‘Big Four’ courier companies, brought by the IWGB.
I’ve already outlined how both Uber and courier companies might fall foul of HMRC’s guidelines on self-employment ( see my previous post). 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. I also mention how I believe we can continue to build Gophr into a successful business going forwards.
In my first post, I scored Uber and the Big Four same-day courier companies on HMRC’s guidelines on self-employment. As per that post, I’ve taken these guidelines, added comments specific to how we do business, and given them a score. I’ve given 1 point if we are meeting the guidelines, and 0 if we are not.
I’m happy to be challenged by any courier who has worked with us, the IWGB, 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. I believe that it shouldn’t 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. Then, they should 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.
We have seen this in play already with some of the more entrepreneurial couriers getting clients to book them regularly for certain jobs. And, others have brought 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, I’ve split this up into 3 separate points.
What work they do and when they do it.
Similarly to Uber, Gophr couriers can log in and out whenever they want. Most of 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 for doing so. After they accept a courier job they can call us to have the job reassigned to another driver without penalty. The job notification 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 are unable to meet the required deadlines. Any delays are immediately communicated to the customer through ETAs. 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. And, they can 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 do 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, customers will give them a poor rating and complain directly to them or to us. If it is communicated to us, we feedback to the courier and suggest ways they can improve.
Persistent poor performance can lead to having their access to our platform revoked. However, this has only happened a handful of times. Nearly all of the couriers are experienced professionals who’ve worked in the industry for several years and know 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.
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 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, 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. In this instance, 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 aimed at the SME market. They 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. We have also discussed 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 won’t change these without discussing and agreeing it directly with the 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. They can see this at the time of booking and pass that directly to the courier after we take our commission.
For us to stick more closely to this, we could allow couriers to 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. We also thought this might slow 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 and 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…
Gophr – 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 its 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, we are 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 we can fill our jobs. However, as we are a growing business, we may not always have enough work to become the courier’s 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. As we move forward, we want to encourage courier companies to work directly with us, as some already do.
Gophr – 1
Summary
In summary, that makes our score (according to us) a 7.5 out of 9. Putting us 3.5 points ahead of Uber and 5 points 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 designed to be that way from the start. We were in contact with the IWGB before we even launched.
More importantly, how has this tactic of sticking to the self-employment guidelines, as well as working with The Living Wage Foundation and the IWGB*, worked for us?
The main challenge has been the market itself. This industry sector is in a race to the bottom when it comes to setting rates. So, trying to stay competitive is difficult, particularly whilst building a highly complex tech platform that needs to be engaging enough for couriers and customers 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 moment; the one 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 is finally onto 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 had one global blue-chip company get in touch to work with us. The Living Wage was one of their three core pillars/values for the year. They made it clear at the beginning that the rates were much higher than they were used to. Due to their size and level of activity, they usually receive huge volume discounts. We worked with them every day for 5 months without any major issues. However, our ties were recently cut. We have reason to believe it was because our client was constantly being asked 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 it’s buying the Fair Trade bananas versus regular bananas, or buying Ecover versus any other washing up liquid, when it comes down to it, price is the driving factor. We totally get it.
For the vast majority of SMEs, 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 doesn’t bode well for the large courier company tribunal rulings. If the result means that everyone will need to put their prices up to pay couriers more for their work, 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. We believe the main driving factor for change is technology. As we’re seeing from all the recent political turmoil, 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 will provide excellent customer experiences as a result. Sadly this will only happen if these guidelines are properly enforced. We cannot do it on our own.
*For full disclosure: we used to have IWGB accreditation. Eventually, we asked them to remove this as it was proving too difficult to meet the extensive and expensive requirements they had for meeting the accreditation. Nonetheless, we wish them every success with their case.
If you’ve worked with us, or you are an industry professional, and believe what we’ve written is inaccurate, please get in touch or start a discussion in the comments.
Thoughts on the Uber ruling and its consequences for the courier industry | 09/11/2016
Given we’ve had a lot of questions about it since the news broke, I thought I would take the time to write up my position on Uber’s recent tribunal ruling. It’s an issue that cuts to the very heart of our business. What’s more, it will come into even greater effect once the verdict of the upcoming CitySprint employment tribunal comes around. Followed by more of the big London courier company employment tribunals taken to court by the IWGB to follow.
As we have our feet firmly in the ‘on-demand’ tech sector and the courier industry camps, I feel we’re in a pretty good position to comment on this. Hopefully, we should be able to provide some insight into what’s going on, and where there’s room for improvement.
One area that seems to be getting overlooked in the discussion, is that couriers are the original “gig economy” workers, and have been working to the “Uber” model long before Uber ever came along. It’s somewhat interesting that the courts have ruled against Uber now when the courier industry has been perpetrating far greater infractions against the status of the ‘self-employed’ workers for decades, without any form of punishment.
I thought it might be a useful exercise to break down what determines ‘self-employed’ status according to HMRC, and where Uber and the current courier industry (specifically same-day) could be seen to be falling foul of this. I’ve outlined what Gophr’s position has been since our inception, and how that’s played out when faced with the realities of the industry we are working in, in another post.
Self-employment status
The following guidelines on self-employment have been taken directly from HMRC’s website. My comments on how Uber and the courier industry may or may not fall foul of these are in brackets. This is not meant to be seen as an outright attack on Uber or the courier industry, but a balanced account of the realities of working with these companies.
If anything I’ve outlined here is considered erroneous please respond in the comments below. However, please allow for the fact that I’m talking in general terms. There are always exceptions that will run counter to what I’m saying. However, I believe I’m being fair when it comes to the reality of what the average courier or Uber driver experiences when in the field.
Also, I don’t profess to be a legal expert in employment rules. I’m merely sharing a point of view based on knowledge gained working in this industry for the last two-and-a-bit years. And, I’m still learning.
For the sake of clarity, I’ve implemented a points system. It gives courier companies or Uber 1 point if they are meeting HMRC’s guidelines, and a 0 if they are not.
Here we go:
Someone is probably self-employed and shouldn’t be paid through PAYE if most of the following are true.
The use of the words ‘probably’ and ‘most’ in this introductory sentence is a bit wooly, but let’s give them the benefit of the doubt.
They’re in business for themselves, are responsible for the success or failure of their business and can make a loss or a profit.
In the strictest sense, Uber could argue that they are sitting within the bounds of the rules here. This is because the driver’s success or failure depends on how much work they want to do. The simple fact of the matter is, neither a driver working for Uber, nor a courier working for a courier company, has much control when it comes to drumming up new business for their respective companies. Much less get directly rewarded for doing so.
Neither company has a clear path to progression that could allow for greater fiduciary rewards, which could be another (admittedly very loose) interpretation of the definition ‘success or failure of their business’.
So on this one: Uber – 0, Courier companies – 0
They can decide what work they do and when, where or how to do it.
Okay, this is a big one. Let’s break it down to its constituent parts and give a point for each.
What work they do and when.
On a pure ‘paid-per-job’ model, courier companies tell couriers what time to show up for work and what jobs they need to take. If a courier refuses a job, they are likely to have other work held back from them. Uber doesn’t tell drivers what time to show up. They can log in and out of the app whenever they want. But, they do apply a similar mechanic: if an Uber driver rejects too many jobs they will get ‘sin-binned’. This means they also get work held back from them.
Things start to get more complicated when ‘guarantees’ are brought into play. This is a per-hour charge. This is a charge that courier companies and Uber pays to ‘guarantee’ the rider or driver can make a minimum amount of money to cover certain shifts. These are generally broken down by the hour. If the total of all the jobs they’ve done within that shift constitutes more than the agreed ‘guaranteed-per-hour’ rate, they are paid the additional money made. Although guarantees had nothing to do with the Uber ruling, it does beg the question as to whether they should be considered a wage, and therefore treated as an employment contract?
There are lots of self-employed drivers that bill by the hour but can also receive bonuses for delivering projects on budget or ahead of time. This relates directly to point 1: being “responsible for the success or failure of their business”.
Putting guarantees aside as they are not the subject of either tribunal:
Uber – 0.5, Courier companies – 0
Where they do the work.
Courier companies split their couriers into areas so they can arrange pick-ups before moving to make their deliveries. Couriers don’t usually dictate where they work. Uber gives the rider or driver an indicator on a map of where the action is. It’s entirely up to them to decide whether they want to go there.
Uber – 1, Courier companies – 0
How to do the work.
Couriers are generally told to wear the company uniform, which they sometimes have to pay for. They are also charged for the radios and XDA’s (big, chunky handheld computers) which they need to work. We’ve even heard of one company that wanted to charge couriers £8 a week for the use of their mobile app!
Uber has had guidelines on what to wear; Reservoir Dogs style white shirt and black tie that, in my experience, have fallen by the wayside for anyone below Uber Exec. Their drivers also had the freedom to get from A to B however they chose to. These days, my understanding is they are being scored on whether they follow the road according to their SatNav. This might be because of well-publicised stories around drivers taking advantage of sleeping customers. Uber Eats riders don’t even know what their final destination is. They simply have to follow the road outlined on their phone screen until they get to their destination. Although controllers at courier companies don’t give turn by turn directions they do have a lot of control over how couriers do their work.
Uber 0.5, Courier companies – 0
They can hire someone else to do the work.
This one is pretty straightforward. No courier or Uber driver can have other riders or drivers earning money for them through Uber or one of the big established courier companies. There are examples of drivers who have bought fleets of vehicles for other drivers to make money. But, they don’t collect the money that other drivers make directly into their own bank accounts.
Uber – 0, Courier companies – 0
They’re responsible for fixing any unsatisfactory work in their own time.
Not quite sure how this would apply to Uber. For couriers, this sometimes manifests itself in undelivered or lost packages. Packages tend to get lost at delivery and are normally down to bad internal processes or communication at the time of delivery. 99% they eventually get found.
Uber – 1, Courier companies – 1
Their employer agrees a fixed price for their work – it doesn’t depend on how long the job takes to finish.
Both Uber and courier companies don’t strictly fall foul of this. The price tends to be fixed for all jobs. The issue is, that both can and have changed fixed rates overnight, without consulting those it affects first. This has taken effect without the types of repercussions that would be felt by a full-time employer if they were to do the same. As for ‘depend[ing] on how long the job takes to finish’, anyone who’s employed a dodgy builder is probably wincing reading that. One man’s meat…
Uber 0.5, Courier companies – 0.5
They use their own money to buy business assets, cover running costs, and provide tools and equipment for their work.
Although this is seen as a massive stick to beat the gig economy with, this is where Uber and courier companies are only too happy to stick to the letter of the law.
Uber – 1, Courier companies – 1
They can work for more than one client.
The ‘client’ here should be defined as Uber or the courier company, not the consumer that uses those services. There are very few courier companies allowing their drivers to work for competitors at the same time. If there are, they’re certainly not rubber-stamped, unless there’s a formal arrangement between those two companies.
Competition is pretty thin on the ground for Uber over here. However, they have plenty of competitors in other markets and seem to be okay with drivers riding for other companies. Although the aforementioned ‘sin-binning’ doesn’t make it as easy for riders as it should be for a self-employed person.
Uber – 0.5, Courier companies – 0
Summary
So, from my totally-subjective, entirely-unscientific scoring system, the results are out. The courier industry has scored 2.5 out of 9 points, with Uber scoring 4 out of 9. A 4 out of 9 still doesn’t meet HMRC’s fairly vague criteria of “someone [being] probably self-employed […] if most of the following are true”. So, it’s no surprise that the courts have ruled against them. It remains to be seen whether their incredibly deep pockets limit any damages to their business model. Or, whether they will be somehow forced to change it, at least in the UK.
Either way, this ruling does not bode well for CitySprint’s tribunal verdict. Or, for the rest of the ‘big four’ same-day courier companies (Addison Lee, CitySprint, eCourier, and Excel). Courier companies should be thinking very carefully about how to accommodate any changes that are likely to come about as a result.
So what’s our position in all this? How would we score ourselves against HMRC’s self-employment guidelines? What are the challenges we’ve faced since launch? And, what challenges does the industry face as a whole going forward? I cover all this in Part 2.
[EDIT – We’ve had to reduce Uber’s score from 5 points to 4. A courier pointed out to us that the court found that Uber was going against the guideline of drivers ‘fixing any unsatisfactory work in their own time’. This is because Uber settles disputes and pays reimbursements to customers without the driver ever knowing or losing money from reimbursement. So somewhat perversely, they are not following the guidelines here, despite the fact that it’s an overall positive for the driver. This affected the conclusion of the article as 5 out of 9 would’ve met HMRC’s criteria of ‘most’ of the guidelines.]
Feel free to continue the discussion in the comments below and please keep an eye out for our follow-up articles.
