Courier subsidies raise questions
Drivers are snowed under with delivery work but they say they’re earning less
The ongoing plight of contract courier drivers is back in the news. It’s been reported drivers, classified as essential service workers, have been instructed to apply for the Government’s wage subsidy by companies they deliver for — despite not being in their employment. Upon issuing those instructions, RNZ says, companies have then appeared to use the subsidy to complement their own, regular payments to drivers. As contractors, drivers are paid according to deliveries completed.
Notably, reports show that while parcel delivery volumes plummeted at the beginning of the level 4 lockdown, they have since recovered. Workers are now struggling to keep up with demand, with one major company stating it needs to recruit more drivers.
Despite that, drivers say the subsidy arrangement by courier companies has left them earning less at a time of extreme busyness.
Confused? You are not the only one.
Some background to set the scene. Most courier drivers are owneroperators, and are contracted by companies for services. The arrangement is imposed by courier companies, which have strict requirements around how drivers work. In the past few years, problems with fair remuneration and work conditions have highlighted the vulnerability and lack of rights for drivers — with companies holding ultimate control over delivery runs, vehicle and uniform appearance, and even leave periods.
That power imbalance has also been acknowledged by the Government, which has requested public feedback on how to improve protections for workers in this group.
The MBIE discussion document even gives the example of courier driver “Matiu” as a “dependent contractor” who falls in the “grey zone between employee and contractor status”. “They depend on one firm for most of their income and have limited control over their day-to-day work,” it says.
The premise of the model is important to understand when examining what has happened during the Covid-19 lockdown. A contract from a courier company for May, reported by RNZ, outlines how it is using the government subsidy.
“For the 12 weeks that the government subsidy applies, $117 per day of contractor remuneration is assumed to have been received, and the company will contribute the balance up to 90 per cent of run’s listed minimum earnings or tickets redeemed, whichever is greater,” it states.
At face value, it does not seem that bad. In fact, it is in keeping with the Government’s requirement that employers pass on the wage subsidy, and top it up to at least 80 per cent of a worker’s income where possible.
However, as with operations under the contractor model favoured by courier companies, the details get a lot murkier on closer inspection.
First, drivers are not employees of courier companies. They are selfemployed and any wage subsidy they qualify for is not supposed to form a funding pool for courier companies. As with other eligible businesses, the subsidy is there to manage a drop in revenue from Covid-19. By imposing deductions using the Government’s subsidy scheme, some courier companies have automatically forced a drop in revenue on drivers — even though their delivery volumes may be the same, or even higher, than before lockdown.
Second, drivers are reporting other payment reductions by their taskmasters. Ideally, the Government’s wage subsidy would go towards remedying that. However, as companies appear to have claimed the subsidy as part of their payment to drivers, workers are effectively left further out-of- pocket.
One North Island driver outlined the seriousness of her situation. “About 40 per cent of my pay has dropped, but not from the volume of stock. It’s because of what they’ve [courier companies] taken off us from the subsidy and our line haul and contract rates. The stock came down a little bit — for about two weeks we were really, really quiet. But then . . . the volumes doubled and tripled, we’re back where we were, and now this month, even more so.”
Third, as union representatives have pointed out, if drivers are not benefiting from the wage subsidy, and parcel delivery levels are stable, who is getting the extra Covid-19 government money?
Follow the breadcrumbs and you end back at courier companies and the independent contractor model.
The system has never worked. The current crisis has only exacerbated its problematic nature and inherent inequality. As such, the Government must make addressing it a priority.
After all, these are the workers who delivered medicine, food parcels and education resources during one of New Zealand’s toughest periods.
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Drivers are selfemployed and any wage subsidy they qualify for is not supposed to form a funding pool for courier companies.