Hermes ‘trained managers to mislead tax inspectors’

HM Revenue and Customs is considering allegations the parcel delivery company Hermes “coerced” managers into misleading an official investigation into whether the company has paid some of its self-employed couriers below the “national living wage”.

The tax authority ensures employers pay at least the minimum and launched an investigation into Hermes in 2016 after the Guardian revealed some couriers were earning less than £6 an hour, below the £7.20 minimum at the time.

Hermes delivers for Marks and Spencer and John Lewis and relies on about 15,000 “lifestyle couriers” who are paid per delivery and are categorised as self-employed, but many believe they should be classed as workers and earn the national minimum.

A manager at the company has claimed that before a tax inspectors’ visit last year senior Hermes managers coached staff who were about to be interviewed.

“If we gave an answer to the manager we were corrected and told not to say that but to say something more positive,” the anonymous whistleblower said in a letter to Frank Field MP, the chair of the Commons work and pensions select committee, which has also investigated Hermes.

“We were coerced into saying something which wasn’t true. Most of which related to self-employed couriers and how they were treated.”

The manager claims Hermes “went out of their way” to bring in senior staff “to purposely tell us what to say”.

What is the national living wage?

Hermes ‘trained managers to mislead tax inspectors’

The national living wage is the minimum wage that must be paid to workers in the UK, and it came into effect on 1 April 2016.

As of April 2018, the hourly rates are:

25 and over £7.83
21-24 £7.38
18-20 £5.90
Under 18 £4.20
Apprentice £3.70

Hermes said it categorically denies that any coaching or coercion took place and said it told managers tasked with briefing staff who were meeting HMRC inspectors not to “lead the individuals to answer in any particular way”.

Field has forwarded the manager’s allegations to HMRC, saying: “Hermes appears to have coerced its management staff into supplying information to HMRC that is untrue and which offers an inaccurate representation of the couriers’ employment relationship with the company.”

Its chief executive, Jon Thompson, replied: “We value receiving the kind of information you have given us. Clamping down on those who try to cheat the system through evading taxes is a key priority for us … We assess all the information we receive before making a decision on the most appropriate course of action.”

One tax implication of self-employment in this case is that Hermes does not have to pay employers’ national insurance contributions of 13.8% on earnings above £162 a week.

A spokesperson for Hermes said: “All employees were asked to cooperate fully with HMRC as we are confident in our operating model.”

It added: “HMRC is highly skilled at recognising if ‘coaching’ has taken place” and that it urged managers to tell staff “to be open and honest with HMRC”.

Hermes is this week facing an employment tribunal claim from a group of couriers that they are in fact workers, and that as workers they should be entitled to holiday pay and to receive the national living wage.

The rival delivery firm DPD last month offered all of its drivers drivers sick and holiday pay. The move was part of wholesale reforms to its gig working model, sparked by the death of a driver it charged for attending a medical appointment to treat his diabetes and who later collapsed and died.

The Hermes claim mirrors several other similar tribunal hearings – including verdicts in cases brought against Uber, Addison Lee, City Sprint, Excel and eCourier – where judges have ruled that staff should be given the legal classification as “workers”, thereby receiving the minimum wage and holiday pay rights.

Hermes is contesting the claim.

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