City Link's army of self-employed workers count cost

[TrueBlueTerrier]

City Link’s army of self-employed workers count cost of business failure

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More than 1,000 drivers and agency personnel were classed as ‘service delivery partners’ - no guaranteed hours, no sick pay, no holiday pay and no redundancy payment

On New Year’s Eve, more than 2,300 workers at City Link found out their jobs had been axed. But more than 1,000 self-employed van drivers and agency workers who earned a living from the failed parcel delivery firm will not receive a redundancy letter.

John Baginton, a 54-year-old van driver, has had no communication from the company since he found out from a news website on Christmas Day that his job was gone. “It has left a bitter taste in my mouth. I still haven’t had a letter or an email to say my job’s finished. Nothing from head office to say ‘thanks for your loyalty’. They didn’t even send a text message.”

Baginton, not his real name, was never counted as an employee by City Link. Although he worked for City Link, and its predecessor Direct Express, for nine years, he has never been on the payroll. In City Link parlance, he is a “service delivery partner”. In other words, a contract worker with no guaranteed hours, sick pay, holiday pay or entitlement to redundancy. City Link owe him £2,400 for three weeks’ work. But he doesn’t expect to see any of this money: “I very much doubt it, as we will be the last of the last [on the creditors’ list].”

Even after last-minute talks to save the firm failed, City Link was still advertising on its website for “passionate” people who wanted to be their own boss. The firm, owned by multimillionaire Jon Moulton, claimed that drivers could earn £43,000 a year.

Phil Valentine, a contractor who has worked for City Link “on and off” for six years and runs six vans, dismissed the £43,000 figure. Once a driver paid for fuel, insurance and a weekly charge for a van, earnings would be more like £28,000 a year.

Baginton said: “Gross-wise it looks good, but net-wise you are probably looking at around half of that [£43,000].” Officially self-employed, he paid his own taxes and national insurance. Work started at 4.30 in the morning and sometimes didn’t finish until 7.30 at night.

Holidays were rare, because it was hard to find a replacement driver. “If we have two weeks’ holiday, it will take us two months to recover. It is a double whammy. First because you lose your wages and second because you have to pay someone else to do your job.”

Illness was an even bigger problem. Last year, City Link docked him £75 for missing a morning’s work after he came down with food poisoning. “I rang in sick the night before and I said I didn’t feel well. They rang throughout the morning and asked ‘where are you?’” He went in at lunchtime, still feeling unwell, but found out a week later he had been fined. “I asked my boss: ‘What’s this charge for?’ And he said it would have been £150 if I had missed the whole day. So I had gone in sick and I had basically worked for free.

“Before Christmas I had a chest infection for two weeks and my wife was saying I should stay at home. But you can’t. You have it at the back of your mind: ‘I am going to get charged.’”

City Link contract drivers are part of an army of self-employed labour that has boomed during the recession. Around 4.6 million people are self-employed in the UK, 15% of the working population, the highest proportion for 40 years, according to the Office for National Statistics. The biggest growth category for self employment is not consultants tapping away on laptops in cafes, but taxi drivers, carpenters and bricklayers. Delivery workers are not counted separately in the statistics, but there is little doubt their numbers have grown as Britons have embraced online shopping. Around 1.7bn parcels were delivered in the UK in 2012, up from 1.3bn in 2005, according to PWC.

Amid fierce competition for a slice of the £7bn parcel market, costs are being squeezed, especially as big customers, such as Amazon, develop their own delivery networks. “There is constant downward pressure on parcel carriers which they can only deal with by economies of scale,” said one distribution industry source.

Mike Parkinson, a City Link contractor who is owed £7,500 for unpaid work, saw higher payments for early-morning deliveries dropped after Better Capital took control of the firm in 2013. He could be fined if he missed a delivery slot.

Baginton was paid £2.15 per delivery, no matter how many items were going to one house. “I could have 20 parcels and that is classed as one stop and I get paid the same.” Sometimes he delivered flat-pack furniture stamped with “2-man lift” for the same £2.15 rate he would be paid for delivering a T-shirt.

Mike Cain, an employment lawyer at Slater & Gordon, who successfully fought for compensation for warehouse workers and delivery drivers working for the collapsed Comet retail business, said:

“Self-employed contracts are playing a major part in the so-called economic revival. Under such contracts, worker rights and access to legal protection are minimised if not removed altogether and the risk and the costs if a business fails are being shifted downwards.”

Trade unions are worried this model will spread to the whole industry, including the Royal Mail, now in private hands.

“While the parcel market has grown quickly, so too has the number of operators at an even faster rate. The same principle applies to post and the UK’s 650-year-old post operator, Royal Mail, faces intense pressure of its own,” said Billy Hayes, general secretary of the Communication Workers Union. He accuses the regulator, Ofcom, of shirking its responsibilities by failing to apply standards to fledgling companies that will do anything to undercut the Royal Mail. “One of the worst impacts of Ofcom’s current approach to let the free market have its head is the downward pressure they support, to reduce pay and terms and conditions, and encourage a race to the bottom for workers.”

Ofcom said parliament was ultimately responsible for regulating workers’ rights. “Ofcom has a duty to secure the universal service for postal users. We do not regulate terms of employment, which are for individual companies to determine.”

The department of business, innovation and skills said the government was conducting a review into “how to make a person’s employment status clearer and how this affects their employment rights”.

“Workers and businesses should be free to agree the terms of an employment relationship and the government does not want to restrict people’s ability to choose how they work. This ensures a flexible and vibrant labour market, supporting growth and delivering jobs.”

Meanwhile, Baginton is consulting a solicitor friend for advice about his rights. “I don’t think the government realise what this job entails,” he says

[Spedley]

£2.15 per drop is interesting. In a town area with several drops per street you could make a lot of money.

[GT750rider]

£2.15 per drop is interesting. In a town area with several drops per street you could make a lot of money.

Then take away 60% for insurance, fuel, running costs, cover for holidays, fines for being sick.... not for me, thanks.

[Homer]

That seems a lot to me ive heard of Hermes drivers getting 45p per parcel and using their own vehicles.

[savo]

Yep a lot of Hermes couriers ( typically the people who deliver in urban areas ) only get 45p per parcel.

I have worked for them for a few years now, because I do a difficult very rural area, I get £1.60 per parcel + £1.20 per packet ( the smaller stuff ). So overall it averages out at around £1.50. If the percentage of packets increases, that average figure will decrease.

[baldrick]

That seems a lot to me ive heard of Hermes drivers getting 45p per parcel and using their own vehicles.

That's why they leave my parcels on the doorstep under the doormat, even if they are 18" high and clearly visible to any passerby.

[savo]

I see a LOT of parcels left on doorsteps by Posties also..

To be fair ( I do it too sometimes ) I deliver in a rural, very low crime area, so you get to know the places where you can get away with it and where you can't..

[Spedley]

It sounds like they get about £100 per day divided by the number of parcels. :) (less costs obviously)

[Homer]

If they are paying out money like that its no wonder they went bump, they would have been better employing staff and paying them a living wage.