Investigation by the Guardian finds some self-employed contractors taking home less than £6 per hour

Britain’s second-biggest parcel company, Hermes, which delivers for John Lewis and other major retailers, is paying some of its couriers at levels equivalent to below the national living wage according to a snapshot of information provided by some of those who have worked there.

In common with several delivery firms serving the internet shopping boom, Hermes does not need to pay its couriers the £7.20 an hour living wage introduced in April because they are self-employed. The arrangement is legal and is approved by Her Majesty’s Revenue and Customs.

One self-employed courier for Hermes provided evidence that suggested she took home approximately £5.90 an hour over two weeks of recent work and another showed invoice data that indicated she earned no more than £6.70 per hour.

A third courier provided estimates that she earned £5.50 per hour over nine days. All three of those who delivered parcels said they worked six days a week, from three to six hours per day.

Two couriers also showed the Guardian accounts from 12 months of work. One calculated he earned about £7.30 per hour in the last tax year, albeit without paid holiday, sick pay or pensions contributions. Another earned about £6.90 per hour over the same year.

Hermes said that according to its calculations, based partly on its own estimates of the time needed to deliver parcels, none of its couriers are earning below the “national living wage”. It said it is monitoring several hundred couriers who it believes are earning “around £7.20 per hour to ensure they do not drop further”.

Hermes has contracts with 10,500 people paid on a piece-work basis to deliver parcels using their own cars. Dubbed “lifestyle couriers”, they are self-employed and so do not receive any paid holiday, sick pay, parental leave or pension contributions. They pay for their own fuel and car insurance but are free to take other jobs and have some flexibility over their working day.

They are part of the fast growing “gig economy” in which big companies, including Hermes, rely on increasing numbers of self-employed contractors, who are not subject to the national living wage, to deliver their core services.

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The Guardian also sent a journalist to work as a Hermes courier for a week, and after two days of unpaid training, on his first three days of work, he earned the equivalent of about £6.38 per hour, after expenses.

Hermes said it said it is “committed to ensuring that our couriers receive earnings that are equivalent or higher than the national living wage” and monitors estimated rates per hour and restructures rounds or increases rates if they fall below £7.20 per hour. The average wage for a Hermes courier is £9.80 per hour after expenses, it said.

Trade unions have nevertheless grown concerned about the impact on pay rates of the increasing use of self-employed couriers.

“While some drivers can make decent money, once costs and lack of benefits are taken into account, many see their take-home pay falling below the living wage,” said Ray Ellis, acting deputy general secretary of the Communication Workers Union.

The Guardian also found:

Some Hermes couriers fear losing work at short notice if they need to take time off and cannot find cover.

They are not paid while being trained.

Some said they worked through illness because they receive no sick pay and fear having their rounds withdrawn.

The Guardian took a snapshot sample of a handful of Hermes couriers’ working arrangements after several raised concerns about low pay and working conditions.

Five couriers provided details of recent earnings, hours worked and expenses, which the Guardian used to estimate a rate per hour. Because they are paid by the parcel, earnings are subject to numerous variables, including the speed of deliveries and whether the worker breaks off to attend to non-work matters. Once estimated expenses were deducted, three appeared to have earned below the national living wage and two above it.

Hermes delivers more parcels in Britain than any other company after the Royal Mail and made £36m in profits last year. Unlike the Royal Mail, all of its couriers are classed as self-employed.

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Hermes is ultimately owned by the 73-year-old German billionaire Michael Otto and his family, who own the majority of the Otto Group, one of the world’s largest internet retailers.

Hermes confirmed it recently cut pay rates by 8% on average across 394 of its 16,500 rounds. But it said couriers on 1,750 rounds are set to or recently received an increase in parcel rates.

“All Hermes couriers will receive parcel delivery and collection rates that will give them the ability to earn at a level that is at least equal to the national living wage,” the company said.

Trades unions have complained that piece-work arrangements in the wider parcel delivery industry could amount to “bogus self-employment”, a position supported by some of the couriers but strongly denied by Hermes.

Last year, the Citizens Advice Bureau estimated some 460,000 people in the UK could now be wrongly classed as self-employed, depriving them of almost £600m in holiday pay as well as sick pay and costing up to £314m a year in lost national insurance.

“I don’t feel like I am self-employed at all,” said a current Hermes courier in Yorkshire, who asked not to be named. “Every aspect of this job is dictated to me. The customer says when they want the parcels delivering, Hermes says they want us to work to a set way of doing things. If they are going to treat us like employees, make us employees.”

Hermes said it uses tax and employment law specialists to ensure the way the couriers work and they way Hermes monitors them “is consistent with self-employment at all times”. It said its couriers work on average between three and nine hours per day and said they are free to “fit deliveries around personal circumstances”.

“We provide ideal opportunities that might suit retired or semi-retired people, parents or simply people who opt for flexible working,” a spokeswoman said. “They can provide services to other businesses, not just Hermes, whilst also using substitutes any time they choose.”

It added that two-thirds of its couriers had been working for Hermes for more than two years.

Facebook Twitter Pinterest Cherie Nolan walked away from her job as a self-employed courier for parcel deliver company Hermes. Photograph: Christopher Thomond/The Guardian

Cherie Nolan, 39, a mother of three from Greater Manchester who recently quit Hermes after nine years of making deliveries, said she was earning below the minimum wage.

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She was among several couriers who feared losing their rounds if they could not find cover to take time off. When she gave birth to a child she said she felt obliged to return to work immediately.

“I had him on the Tuesday night and I phoned my field manager on the Wednesday to start back to work on the Thursday,” she said. “I’d already heard they were trying to give my rounds to somebody else.”

Another worker said she lost half her round when she was unable to get cover to take off a Christmas bank holiday day, despite giving Hermes two months’ notice.

A third courier, in Manchester, who recently quit and showed she earned the equivalent of less than £5.50 an hour after expenses over nine days last month, said she worked through three bouts of shingles.

“I couldn’t find someone to cover the round when they saw what I earned,” she said. “I worked six days a week, but if it wasn’t for working tax credits I wouldn’t be able to live. My monthly wages only paid the rent and the phone bill.”

Hermes said the “vast majority of couriers have substitutes that they use to cover rounds during sickness and holidays” and said managers recruit cover in areas where courier numbers are low. It said that it would expect managers to “work closely with pregnant couriers to finalise cover for the time they need off”.

Referring to Nolan’s case, it said: “If this has happened we would agree this is totally unacceptable and we would take the appropriate action internally.” It said that couriers are free to negotiate their own rates and rounds are reviewed regularly to ensure they are “economically viable for the couriers”.