The courier company DPD is to offer all of its drivers sick and holiday pay and will abolish its controversial £150 daily fines for missing work, as part of wholesale reforms to its gig-working model sparked by the death of a driver it charged for attending a medical appointment to treat his diabetes and who later collapsed.
The announcement came six weeks after the Guardian exposed the case of Don Lane, who was delivering parcels for the company on behalf or retailers including Marks & Spencer and John Lewis.
The retailers both raised concerns with the company over how it was treating couriers. Lane’s treatment caused anger in Westminster, with Labour describing it as “heartbreaking” and the business secretary, Greg Clark, labelling it “a terrible tragedy”.
DPD said on Monday it would offer its 6,000 couriers – more than 5,000 of whom are self-employed piece workers with no employment rights – the right to be classed as workers, with paid holiday, sick pay and access to a pension scheme.
The new self-employed worker contract will offer drivers a choice between being directly employed by DPD or working on a self-employed franchise basis. Drivers who choose direct employment will be paid less per parcel delivered to offset the cost of paid holiday, sick pay and pensions.
In statement, the firm said: “Drivers on this contract will receive some of the protections of being employed, including paid annual leave, pension entitlement and sick pay, but will also be able to realise the benefits of being self-employed, by having a higher earning potential and greater flexibility and choice over how they work.”
Lane, 53, from Christchurch in Dorset, missed three appointments with specialists to treat kidney damage from his diabetes because he felt under pressure to cover his round and faced DPD’s £150 daily penalties if he did not find cover, his widow told the Guardian. He collapsed at the wheel of his van while on deliveries a few months before he died in January.
Dwain MacDonald, the chief executive of the company, which made £100m in profits last year, said: “We recognise that we need to improve the way we work with our drivers. While the self-employed franchise scheme has benefited thousands of drivers over the past 20 years, it hasn’t moved with the times and needs updating. Our plan is to completely transform our overall driver offer, as well as the day-to-day working relationship we have with our drivers.”
DPD is one of several courier companies that rely on armies of self-employed drivers. Others include Hermes, UK Mail and Yodel. It is the first to propose such fundamental reforms amid growing concern at the instability caused by the spread of the gig economy model in the UK, under which an estimated 1.1 million people are employed.
DPD appointed David Watts, the former chair of the parliamentary Labour party, and Iain Wright, the former chair of the House of Commons business, energy and industrial strategy select committee, as external advisers on the reforms.
The changes are expected to be introduced in July as part of a new driver code.