Couriers for UK-based Hermes will now have the option to take holiday pay and earn guaranteed wages following a ground-breaking deal with the GMB Union.

The collective bargaining agreement is the first ever recognition deal of its type and is designed to support the rights of self-employed people providing courier services to Hermes.

Under the agreement, Hermes’ 15,000 couriers can now choose to become ‘self-employed plus’, which provides a number of benefits such as holiday pay (pro-rata up to 28 days), and individually negotiated pay rates that allow couriers to earn at least £8.55 per hour over the year. 

In addition, the self-employed plus couriers that join the GMB Union will have full GMB representation, the first ever UK deal that provides trade union recognition for gig economy workers.

GMB Union added that new couriers who wish to take up the pay holiday terms will have to follow routes specified by Hermes. The company said that if it is guaranteeing hourly rates of pay, it needs to ensure that couriers are taking the most efficient route.

The agreement is an opt-in model and will not affect those couriers who wish to retain their current form of self-employed status and earn premium rates, as has been the case for the past 20 years. 

The deal comes after a landmark case last summer which saw Hermes couriers ruled as workers and not self-employed and meant that they are entitled to receive the minimum wage and holiday pay. The GMB Union helped bring the case against Hermes.

As a result of the deal, Hermes has dropped plans for an appeal against the tribunal ruling and the GMB will not be pursuing further tribunal cases.

The GMB Union said the new deal “reflects that the world of work has changed and how employers can change with it.”

Martijn de Lange, Hermes UK CEO, commented, “This new option allows couriers to retain the flexibility of self-employment we know is so important to them and gives them the certainty of guaranteed levels of earning, the security of holiday pay and a strong voice.”

"We’re proud to be leading the way with this pioneering development which we hope will encourage other companies to reflect on the employment models they use,” de Lange said. "We have listened to our couriers and are wholeheartedly committed to offering innovative ways of working to meet peoples’ differing needs.”

However, the deal has raised questions about tax implications.

Matthew Taylor, the author of the government’s official review of the gig economy, the Taylor Review, told the BBC that he thinks the HMRC “will be looking at this very closely because if somebody has most of the benefits of being an employee and if the employer has most of the benefits of employing somebody. Then the tax authorities will want the employee to be paying national insurance as an employee, and they'll want the company, in particular, to be paying national insurance on those people.”

GMB national officer Mark Rix also told the BBC that there were tax implications only for those receiving a "full suite" of benefits.

Tim Roache, GMB General Secretary, also commented, “As a result of our ground-breaking agreement, couriers will have a real voice in their workplace as well as the right to holiday pay and guaranteed pay, something GMB Union has long been campaigning for on behalf of our members.”

Neil Carberry, Chief Executive, Recruitment & Employment Confederation, commented, “The deal announced today by Hermes is a great sign that both employers and unions can consider the needs of the flexible workforce in a way that offers staff both choice and protection.”

“We hope this is the start of a deeper dialogue around flexible work that moves away from demonising jobs that don’t conform to a 9-5, permanent employment stereotype,” Carberry said. “Flexible working is hugely beneficial to companies and workers alike – but that flexibility has to be matched with fairness.”