What is the Gig Economy and Why is is so Important?
Developments in technology have brought many changes to the world of work; one of the most significant being the expansion of the gig economy. The gig economy is a labour market characterised by the prevalence of short term contracts or freelance work as opposed to permanent jobs. Many workers in the gig economy obtain their work via apps and they are paid on an ad hoc basis for every job or gig. Some of the most high profile organisations operating in the gig economy are Uber, Deliveroo and Task Rabbit.
Why does this matter?
Recent research from the CIPD shows that 4% of working adults aged between 18 and 70 are working in the gig economy, which equates to approximately 1.3 million people. It is expected that these numbers will continue to increase as the demand for such services rises and the technology develops. While workers in the gig economy are generally more satisfied with their income (51% of gig workers state that they are satisfied with their income compared with only 36% of other types of workers), a number of recent cases have revealed that there is confusion about their employment status and therefore, their entitlement to some of the benefits (such as the national minimum wage and paid holidays) that are due to other workers.
Employment law recognises three main types of employment status; employed, workers and self employed. The rise of the gig economy has blurred what were already quite confused distinctions between these types. Employed and worker status are characterised by a level of control and the requirement to perform the services personally. The self employed are in business on their own account and are free to choose when, where and how they work and to use a substitute or contract out the work.
In many of the recent cases involving the gig economy, courts have decided that people who had been classed as self employed were in fact workers due to the degree of control exercised over them in terms of how they did the job and the fact that they could not negotiate a price themselves for the piece of work.
The recent Government commissioned Taylor Report addressed the issues arising out the new working practices has recommended that those working in the gig economy, particularly those who obtain their work via an App (described as platform based) should be part of a new type of employment status called dependant contractors who would have more rights than the genuinely self employed.
I suspect that many of you reading this may think that this doesn’t affect your workplace, but when I think about it here at People Vision we have been allocating work on a “Gig” basis for over 15 years. A client needs a discrete piece of work and we deliver and charge for just that. I suspect you will have people in your supply network who will be working in this way for your business as well.
What should you do if you have people working for your business in this way?
1. Review the employment status of anyone who is working for you on a self employed basis. Are they genuinely self employed or should they be classified as workers? People Vision would be happy to help with this process.
2. Ensure that any documentation that you provide to your self employed reflects their status. For example, don’t give them an Employee Handbook or refer to employment in any contract with them.
3. Be clear and transparent with any self employed people who are working for you to ensure that they understand their status and entitlements.
4. Keep up to date with developments that may give additional rights to people who work for you in the future.