Over the past year or so the home delivery sector has been making the headlines as commentators have discussed what the Taylor Review and the Government response might mean for the industry.
The gig economy
The Taylor Review focussed on the ‘gig economy’ – a phrase born as a way to describe a new kind of business that utilises a technology platform to facilitate ‘flexible working’. Paid by the job with ‘workers’ choosing to work when they wanted, it has no guarantee of a minimum wage, holiday pay or sick pay. Depending on your point of view it either describes a working environment that offers much needed flexibility with regard to employment hours, or it is a form of exploitation with very little workplace protection.
Uber and Deliveroo were at the forefront of the initial discussions with both claiming to be a technology platform provider rather than an ‘employer’ and therefore exempt from workplace legislation. A number of other industries, including home delivery, also came under fire despite having a very different and more traditional self-employment model due to its ‘payment for item delivered’ model.
Self-employment key to the sector
One thing that became clear was that there are a number of different operating models in our sector yet many companies are using at least an element of a ‘self-employed’ workforce. It is here that the focus has been with discussions around everything from workers’ rights, taxation, job security and treatment.
It is also true that a number of retailers have utilised the ‘self-employed home delivery’ methodology through either: a structured, nationwide, centrally arranged self-employed framework; or with couple of routes operating out of the store booked and paid for locally. Historically this methodology was light touch and avoided costly fleets that are busy one week and not so the next. It also saved employment costs such as NI and holiday and sick pay.
The reality is that the outcome of the further consultations on key elements of the Taylor Review may mean that either or both of these approaches are less viable for retailers going forward. At the very least they will need to be reviewed in the light of any new legislation.
In fact, a number of major players have already expressed an interest in talking to us because of the potential risks particularly around worker status and the definition of self-employment. They are concerned that any changes are likely to impact them financially, either through changes needed to their own fleets or those of a third party. Whilst trading conditions and profit margins in the UK remain challenging this is another risk they are keen to manage.
So although many retailers have traditionally preferred to operate their own transport and logistics networks in order to directly control the quality of the service, many are now looking at the kind of shared user platform we offer. This approach, which sees us carry numerous products from different retailers within the same delivery vehicle to maximise efficiency, offers companies the opportunity to make considerable cost savings. The fact that these deliveries are being conducted by a dedicated workforce, that is also fully trained, is proving particularly attractive, especially when you also consider the additional benefits of improved flexibility and scalability, access to innovative systems and software, extensive resources and specialist knowledge.
There are a number of external factors and influences around any Government decision and changes to employment legislation are particularly sensitive. However, if some of the recommendations from the Taylor Review receive significant support within Parliament, I believe they will continue to impact our sector moving forward.
By Charlie Shiels, CEO at ArrowXL