Amazon could face £140m bill in employment status row

26th October 2021
Written by Qdos Contractor

Self-employed delivery drivers may be entitled to employment rights 

Amazon faces a potential £140m compensation bill after a number of the digital platform’s self-employed delivery drivers launched a legal bid for employment rights.

This move mirrors the action taken by gig economy workers engaged by a number of online businesses, including Uber, Hermes and Addison Lee.

Leigh Day, the law firm that won employment rights for Uber drivers at the Supreme Court earlier this year, has now lodged an employment rights claim on behalf of Amazon’s delivery drivers. 

Amazon said to control working relationship

These drivers are currently classed as self-employed and make deliveries for Amazon via the online giant’s ‘Delivery Service Partners’ (DSPs).  

However, the way in which drivers are apparently engaged, which Leigh Day said sees Amazon ‘dictate’ how they work, may mean their true employment status is closer to employment than self-employment.

The law firm is suggesting that Amazon asserts control over the drivers it uses. If this is the case, the business could be forced to reclassify drivers as ‘workers’ or ‘employees’. 

Further pointing away from drivers’ self-employed status is that they are given ‘estimated timings between deliveries’, which they are under pressure to meet. 

One unnamed driver was quoted saying: “The work is horrendous because Amazon control everything you do. There were times I was out on delivery, and I’d stop for a few minutes, and they’d ring up and ask why I was parked up.

Confidence gained from landmark Uber ruling 

This case is reminiscent of the high profile Uber ruling in February, where drivers for the taxi hailing service didn’t have the freedom to deliver their services in a manner that reflected self-employment. 

As a result, UK Uber drivers had their employment status changed from ‘self-employed’ to ‘worker’. It means they now qualify for rights such as minimum wage and a workplace pension scheme. At the time, it was reported that Uber drivers may have been entitled to £12,000 compensation each. 

On the face of it, the Amazon case has all the same hallmarks, with Leigh Day claiming that at least 3,000 drivers are eligible for employment rights and could claim up to £10,500 for every year spent working with the online platform. 

Tax implications unclear, as things stand

In recent employment status cases similar to this, when successful, self-employed workers have been reclassified as ‘workers’, not ‘employees’. 

There is a distinct difference between the two employment statuses, with ‘workers’ eligible for certain employment rights but remaining self-employed for tax purposes. 

Employees, meanwhile, receive employment rights, with the employer also managing the employee’s tax obligations – something they are also liable for. 

Currently, the tax implications in the Amazon case are unclear. But if an employment tribunal found that these delivery drivers’ should have been working as employees (not self-employed), Amazon would be left to pay HMRC missing employment taxes. 

As a result, the £140m figure speculated could be significantly higher.

Employment status not limited to gig economy 

There has been a noticeable rise in the number of gig economy employment status cases in recent years – a trend linked to the rapid growth of online marketplaces. 

However, the issue of employment status extends far beyond taxi drivers and couriers. 

Any business engaging an individual as self-employed when, in reality, the contractual conditions and working practices mean the relationship resembles ‘worker’ status or even employment, could face problems similar to those experienced by Amazon, Uber and many others. 

This case, therefore, is another reminder of the importance of businesses carrying out rigorous employment status assessments from the outset.

Qdos Contractor
Written by
Qdos Contractor
Award-winning providers of insurance for the self-employed, Qdos are the leading authority on IR35, offering industry-leading employment status services to ensure the flexible working industry thrive. Qdos are the Best Contractor Insurance Provider 2022 and won the Queen’s Award for Enterprise in Innovation 2022 and 2017. 

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