Better Gig Economy Jobs Are Good Business

(Bloomberg Opinion) -- Hermes, the U.K.’s second-biggest parcel delivery company, has made history in the gig economy by granting its so-called self-employed couriers a guaranteed hourly wage and paid vacation time. Other companies operating under the same pretense should follow.

The offer is the result of a deal with the GMB labor union. In June, it won a case against Hermes in an employment tribunal, which ruled the company’s “lifestyle couriers” – people who deliver packages on a flexible schedule using their own cars – should be classified not as self-employed contractors, but as workers. Under U.K. labor law, the latter don’t enjoy quite the same rights as employees, but are still entitled to some protections, such as the minimum wage and paid holidays.

So Hermes has now agreed to let the couriers opt into contracts giving them 28 days paid vacation and at least 8.55 pounds ($11.16) in hourly pay, slightly more than the national minimum wage. Couriers will, however, also have a chance to retain their current status and “earn premium rates.”

This looks to be a reasonable compromise: those who want more stability and protection can have it, while others can maximize their earnings and get no guarantees.

Hermes isn’t part of the tech-driven wave of gig economy companies – it is part of a German group founded in 1972. Its executives made a point of that while defending its employment model.

“All rate discussions are done in person, not through a faceless app, not set by a pitiless algorithm,” Hugo Martin, the company’s director of public and legal affairs, told an employment forum in 2017. “Our self-employment is of a traditional kind, we’re not part of the gig economy.” 

But of course the “lifestyle couriers” are part of the same gig economy in which the likes of Uber, Deliveroo or, say, Amazon Mechanical Turk also operate.

Nothing is new under the sun, and trying to pass off workers as unprotected independent contractors, working in their free time and happily taking on all the risks, isn’t a technological innovation.

It matters not if these workers get orders through an app or come to a warehouse to load up their car with parcels; their living is equally precarious in both cases. It’s just that the tech firms managed to avoid employee protections by dazzling regulators with their glitzy narratives. Now, techlash means that’s much harder to do – but it doesn’t mean a company can hide behind its traditional character.

That Hermes is no longer trying to do it should serve as an example to Uber and its peers. In 2016, the ride-hailing company lost a labor tribunal case similar to Hermes’s – but instead of changing its practices, it continued the legal battle, losing one appeal after another. The latest ruling against it came down in December.

Even under Chief Executive Officer Dara Khosrowshahi, who has sought to improve on founder Travis Kalanick’s record of contempt for rules and restrictions, Uber still isn’t ready to admit the obvious. It’s taking the case to the Supreme Court in the U.K. and simultaneously fighting similar challenges in the U.S.

Another gig economy firm, Deliveroo, has successfully fought off a demand to allow collective bargaining on behalf of its riders.

Eventually, though, the providers of these precarious jobs will have to recognize they use workers and not independent contractors, simply because the nature of the work fits the official definition. Fighting it is a demonstration of considerable legal resources rather than any kind of argument for the truth. 

But perhaps the best way to convince firms to do more for their workers would be to show them that it is good business, and provides an opportunity.

According to the latest annual poll by MoneySavingExpert.com, 42 percent of those who rated their experience with Hermes said it was “poor.” It’s the second most negative rating among the big U.K. players; only 10 percent of market leader Royal Mail’s reviews were “poor” and 13 percent of those for Amazon Logistics.

These ratings matter because almost 40 percent of British consumers say they will never shop at an online retailer again after a negative delivery experience, according to a recent Metapak survey.

We’ll see if a more secure, and presumably happier, workforce improves Hermes’s ratings. If it does, that would be a strong argument for others to take better care of their workers. Intuitively, it already should be.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Leonid Bershidsky is Bloomberg Opinion's Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.

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