Employment Status at Hyway Logistics
The distinction between employed and self-employed is such an important one. Within our industry the norm is to use a team of self-employed drivers to carry out deliveries. Quality and integrity are at the centre of everything we do and we believe that employing drivers is the only way to operate a logistics company. Every member of our Driving Team is employed, so every vehicle that is moved is done so to the highest standard. This fact gives our customers piece of mind, knowing that we do it properly. Our customers know that our drivers take regular holidays and are paid fairly, which enhances their ability to deliver vehicles safely and professionally. Scroll down this page to discover what it means to be an employee of Hyway Logistics.
Off Payroll Working Rules
The ‘off-payroll working rules’ is legislation aimed at curbing the practice of evading employment laws and taxation by using self-employed or contracted workers incorrectly. HMRC are clamping down to recover the lost revenue of unpaid National Insurance and income tax from those who ought to be classed as employees.
What’s the current state of play in our industry?
The vast majority of vehicle delivery companies do not employ their drivers. This has been the case since Hyway Logistics started trading in 1998 and many years before then. Delivery companies operate this way to keep costs low as they do not need to pay national insurance, sick pay, holiday pay, maternity/paternity pay or the minimum wage. In some ways, this method works well for the drivers too, as their wages aren't subject to the same deductions as an employee (income tax, student loans etc.), however their rights as a worker are none existent.
Should they really be employed?
To us, this is a simple answer of ‘yes’ both morally and legally. However, to HMRC it has historically been unclear; a grey area exploited by delivery companies for decades. In order to maintain a self-employed work force certain assumptions have to be met. For example, legally:
Drivers are able to send a substitute for themselves if they are unable to do the work and delivery companies have no control over who this is.
Drivers are able to dictate how the work is completed - the same way a builder or plumber might operate
Drivers are able to decide when the work is done, in consultation with the delivery company
Drivers are able to consider work from numerous delivery companies and juggle each company’s demands
The reality is, delivery companies want (and need) to maintain consistency and quality of service. Therefore, some operate in a grey area of employee-employer relationship on a self-employed legal basis.
What will the impact be on the vehicle delivery industry?
This is hard to predict for a couple of reasons. Firstly, it depends of how fervent and strict HMRC are in enforcing this new rules from April 2020 and secondly, it depends on the relationship between the delivery companies and drivers; this will be different from company to company, driver to driver. However, we have seen first-hand that HMRC are approaching vehicle delivery companies to uncover their employment practices so we know that they are targeting this market.
Assuming the change is successful (at least, from HMRC’s perspective) the delivery company will have to pay national insurance, as if the driver was employed. Estimates of cost increases are at around 25%. Furthermore, the delivery driver will have to pay income tax and national insurance, as if they were employed. From this point, two things are likely to happen. One is that prices charged by delivery companies will have to increase, and two, drivers who no longer enjoy the tax-based benefits of self-employment are likely to seek the workers rights of being employed.
In January 2020, following the election, the Government announced it would review the rules. The scale of the potential changes has caused many businesses to voice their concerns, suggesting that relationships with contractors will have to end. We understand that this review is focused on the implementation of the changes, rather than u-turning on the changes themselves.
Employment law and taxation are by no means straightforward and simple; several other scenarios may play out. However, we are certain to see changes within the industry that will improve practices.
How will Hyway Logistics be affected?
We are proud to say that these changes have no impact on the way Hyway Logistics operates. We shamelessly bang the drum of driver employment in this industry and are excited by HMRC’s actions. This examination of the industry is long overdue and will level the playing field on which we compete. We hope that when delivery companies adjust to the new rules, working conditions for all drivers will improve, or at very least, more companies will follow our model to give drivers a realistic choice of employed or self-employed.