Hermes’ new deal with drivers expected to cost £10m

COURIER business Hermes is expecting to take a £10m hit from its “ground-breaking” deal to give new rights to self-employed drivers.

Martijn de Lange, chief executive of Hermes UK, said the milestone agreement, sealed earlier this month, to offer its couriers paid holiday and guaran- teed earnings would be a “huge investment”.

But he vowed not to hike prices for clients, with the move funded through the firm’s growth.

“It’s a huge investment compared to the profits we are making. There’s no denying it. But it’s important that clients aren’t impacted,” he said.

The group said the eventual financial impact would depend on the scale of the take-up among its 15,000 couriers in the UK.

It is estimating the cost at around £10m, but the hit could range from £5m to £12m.

Hermes is expecting around 20% to 30% of its drivers to take up the offer of “self-employed plus” status swiftly, but said as many as half — some 7,500 — could sign up to the deal.

The firm is holding talks on an individual basis with its self-employed drivers with a view to putting the new status into place at the end of the summer.

The deal was hailed by the GMB union as “ground-breaking” for gig economy workers when it was unveiled at the beginning of February, offering self-employed workers a degree of security while still retaining their flexibility.

It was also welcomed by political figures, with MP Frank Field, who chairs the Work and Pensions select committee, saying it should become the “cornerstone of a new contract for workers across the gig economy”.

It came after Hermes lost a case against the GMB last year, when a group of 65 couriers were found to be workers entitled to basic rights, instead of self-employed contractors. Mr De Lange said Hermes decided against appealing the decision.