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Government urged to stamp out 'poverty pay' in gig economy

Parcelforce says drivers typically earn £39,400 a year after deductions. Credit: PA

Parcelforce is part of the Royal Mail Group. The company has 700 "owner drivers" who are technically self-employed.

Frank Field is arguing they are nothing of the sort. He has spoken to several drivers as part of his latest report into the "gig economy".

Field says that drivers told him that the vans they own must be red, they have to wear a Parcelforce uniform, a Parcelforce name badge and they don't set their own rates of pay.

Field concludes that, in effect, they work for Parcelforce, not for themselves.

He believes the company insists on "self-employment" to save money - on holiday pay and sick pay in particular.

Field says he's spoken to drivers who claim they don't earn minimum wage once their overheads are deducted.

Others have complained that if they phone in sick they face "fines" of up to £400.

Field has also spotted a clause in the Parcelforce contracts similar to one used, until recently, by Deliveroo.

Field claims that by signing it, drivers not only accept they are self-employed, they also waive the right to challenge their status at employment tribunal - something two Uber drivers did successfully last year.

Field told ITV News that Parcelforce should be "ashamed" of the clause and has called on the company to remove it.

The clause in the contract Field says Parcelforce should be 'ashamed of'. Credit: ITV News

Six months ago Field called on Ofcom to protect Royal Mail from its rival Hermes who he argued was using self-employment contracts to keep its cost low and undercut Royal Mail on price.

He believes Royal Mail is responding to unfair competition by adopting the same bogus practices which he is concerned are becoming more widespread.

Tonight a Royal Mail spokesman told ITV News that it treats "all of our business partners with fairness and respect".

It says three quarters of its fleet of Parcelforce drivers are permanent staff and the typical self-employed driver earns £39,400 a year after running costs.

The company denies there is a fixed charge of £400 for drivers who call in sick, although it concedes it does levy a charge.

"Where a self-employed owner-driver does not fulfil their contractual obligation to ensure continuity of service on their route, they are charged the actual costs of cover provide by Parcelforce", the company explained.

Parcelforce says the clause in its contract if for the benefit of both the company and its owner drivers.

Frank Field is publishing his report days before the publication of Matthew Taylor's review of modern employment practices which was set up by the government.

Takeaway firm Deliveroo has been told it must pay workers minimum wage. Credit: PA

Taylor has been looking at the way companies Uber, Deliveroo, Hermes do business.

He's already said boundaries between self-employment and employment have become blurred. He'll unveil a series of recommendation early next week.

Field has a idea which he's already pitched to Taylor as a simple solution that would stamp out most abuses: reverse the legal burden of proof and compel companies to demonstrate that their workforces are genuinely self-employed. It has a ring to it.

The challenge is to ensure employment law is relaxed enough to make it easy for companies to create jobs, but restrictive enough to ensure workers aren't exploited.