Parcelforce employees urged to quit and come back self-employed

Drivers who wish to continue working for the loss-making delivery company, Parcelforce Worldwide, are being asked to leave the company on Friday, accepting voluntary severance, and return to the company on a self-employed basis the following Monday.

Parcelforce Worldwide announced the initiative as part of its plans to reduce staff by around 6,700 over the next two years. It has said up to 900 of its employees will have the opportunity to continue working with the company as 'owner-drivers' in line with agreements reached with the trade unions, so long as they work on a self-employed basis.

According to a recent report in The Telegraph: the 'drivers are free to undertake other business but have to provide cover during sickness and holidays. Most own their vehicles through a lease arrangement rather than prejudice their self-employed status by operating vehicles in the Parcelforce fleet.'

Parcelforce stated in March that it intends to have a quarter of its 4,500 routes operated by 'owner-drivers' over the next few years as part of a plan to restore profitability by the end of 2004/05. The company said it was losing £15 million per month by failing to reduce costs fast enough.

James Eadie, a spokesman for Consignia, Parcelforce's parent company, said: "So far the scheme has been a success, 25 people are now working as self-employed 'owner-drivers.' Parcelforce Worldwide staff who become 'owner-drivers' first need to accept voluntary severance and leave the business before they can do so. Therefore, their employee benefits cease and the rules for their national insurance payments become the same as for anyone else who works on a self-employed basis."

The Inland Revenue's 'IR35' press release, released on 9 March, 1999, said: 'It is possible for someone to leave work as an employee on a Friday, only to return the following Monday to do exactly the same job as an indirectly engaged 'consultant' paying substantially reduced tax and national insurance.

'The Government is going to bring forward legislation to tackle this sort of avoidance.'

There had been reports that the Inland Revenue had worked with Parcelforce to produce a package that avoided the drivers running foul of the self-employed regulations. However, Aidan Close, a Revenue spokesman, refused to confirm or deny these reports and declined to speak specifically about the Department's consultation with Parcelforce. He told UKTECH: "We wouldn't show favouritism to one company and not another regarding its workers becoming self-employed. We're totally impartial and we'll judge each case on its merits using status tests to measure whether someone is self-employed or not.

"As long as an individual can satisfy the criteria set out by the Inland Revenue to qualify as self employed then there is no problem. You cannot just decide to be self employed but must meet the conditions set out in our status agreement. Any internal agreements previously made would still come under the spotlight if they are liable to tax.

"It's not up to us to encourage or discourage the Friday to Monday practice, and we're not going to pass judgement over whether it would be advantageous to specific businesses if they come to us wanting to change their workers' status.

"I don't think there's any question of us tipping the balance here regarding IR35 within specific sectors."