—Overall, while courier work is a perfect fit for a lot of people and their lifestyles, for some it might not make as much sense. Self-employment means having to sort out mundane things like taxes and pension contributions, while work volume can shift depending on customer demand. Having said that, couriers benefit from a very unique level of independence which allows for greater flexibility around their schedule, while the nature of the job means that no day is the same and you’re always meeting new people.
They’re in business for themselves, are responsible for the success or failure of their business and can make a loss or a profitLike 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 itAgain, 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 courier 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 workWe 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 timeThis 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 finishWe 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 workYes, 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 clientAbsolutely. 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.
Given we’ve had a lot of questions about it since the news broke, I thought I’d 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 and which will come into even greater focus once the verdict of the upcoming CitySprint employment tribunal comes around, with more of the big London courier company employment tribunals taken to court by the IWGB to follow.
Given we have feet in the ‘on-demand’ tech as well as the courier industry camps I feel we’re in a pretty good position to comment on this, and should hopefully 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 around the exploitation of the so-called tech-driven ‘gig-economy’ 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 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 another post.
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 but I think I’m being fair when it comes to the reality of what a the average courier or Uber driver experiences when in the field.
Also, I don’t profess to be a legal expert in employment rules but 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 giving either courier companies or Uber a point if they are meeting HMRC’s guidelines, and a zero 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
(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 because the drivers success or failure depends on how much work they want to do. The simple fact of the matter is that 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 very likely to have further work held back from them. Uber don’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’, meaning 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 that courier companies and even Uber pay to ‘guarantee’ the rider or driver can make a minimum amount of money to cover certain shifts, which 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 then 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 that bill by the hour but can also receive bonuses for delivering projects on budget or ahead of time. This however relates directly to point 1; being “responsible for the success or failure of their business”.
Putting guarantees aside for the minute 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. Where the courier does the work is generally not dictated by them. Uber gives the rider or driver an indicator on a map within their app of where the action is, its 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 the radios and XDA’s (big, chunky handheld computers) needed to work. We’ve even heard of one company who 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 appear to have fallen by the wayside for anyone below Uber Exec (at least in my experience). 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, possibly because of well publicised stories around drivers taking advantage of sleeping customers. Uber Eats riders don’t even know what their final destination is and simply have to follow the road outlined on their phone screen (which needs to be placed directly in front of them) 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 is able to have multiple other riders or drivers earning money for them through Uber, or one of the big established courier companies. There are examples of drivers getting to a point where they are able to buy fleets of vehicles for other drivers and make money that way, but they do not 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 packages that have not been delivered properly or get lost. Packages tend to get lost at delivery and is 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 consultation with those it affects first. Without the types of repercussions that would be felt by a full-time employer if they were to do the same. As for the bit about not ‘depend[ing] on how long the job takes to finish’ …anyone who’s employed a dodgy builder is likely to be wincing reading that particular sentence. 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 ultimately seen as a massive stick to beat the gig economy with, this is where Uber and courier companies are only too happy 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. Examples of courier companies letting couriers work for other courier companies at the same time are few and far between and certainly not rubber-stamped unless there’s a formal arrangement between those two companies which would have nothing to do with the courier. Competition is pretty thin on the ground for Uber over here, however they have plenty of competitors in other markets and they seem to okay with drivers riding for other companies. Although the aforementioned ‘sin-binning’ doesn’t make it as easy as easy for riders as it should be for a self-employed person.
Uber – 0.5, Courier companies – 0
So out my totally subjective, entirely unscientific scoring system the Courier industry has scored 2.5 out of 9 points, with Uber scoring 4 out of 9. A 4 out of 9 score still doesn’t meet HMRC’s fairly wooly 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 manage to 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 CitySprints tribunal verdict which is due on the 22nd of November, or for the rest of the ‘big four’ same-day courier companies (made up of Addison Lee, CitySprint, eCourier and Excel) who’s verdicts are due shortly after. 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? And what are the challenges we’ve faced since launch and the industry faces 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. It was pointed out to us by a courier that the court found that Uber were going against the guideline of drivers ‘fixing any unsatisfactory work in their own time’ as 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 meet HMRC’s criteria of ‘most’ of the guidelines.]
Two years ago I had an idea that would change my life.
At the time I never stopped to think how this thought would lead me to quit my job to go and work in an industry sector I didn’t have the first clue about. Nor that I’d end up doing a bunch of ancillary stuff I’d normally run a mile away from.
The idea was to build a platform for businesses to order a same-day delivery directly with the individual courier who would be doing the work. It was designed to spell the end for courier companies as they currently exist.
The burning desire to wipe them off the face of the earth came as a result of me taking time off work to wait for a package to turn up, only for it to miss its delivery window by hours. more
Note from Seb: The first courier I ever met in London after I first had the idea for Gophr was Clarence Takunda Chodofuka. I got introduced to him after walking into Full City cycles asking them who the best person to speak to would be. We’ve now had the good fortune of being able to hire Clarence to come work for Gophr. Four weeks ago he got into a crash whilst on the job so we brought him in to work in the office, to monitor at how our automated dispatch system worked and to give us feedback on it. Whilst he was there he offered to write a blog post on what it’s like to work with the Gophr system and the glimpse it’s given him into future of couriering. Here it is…more