This year there has been a lot of coverage in the media about the ‘gig economy’. According to one definition, it is “a labour market characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs”.
It is estimated that in the UK there are around five million people employed in this way. But is the ‘gig economy’ providing a working environment that offers flexibility or is it a form of exploitation with little workplace protection?
Offering flexibility
People working in the gig economy are classed as independent contractors, common types of work employed in this way are couriers, taxi drivers and video producers. However, it isn’t limited to these roles and is becoming more and more prevalent across industries including tradesmen such as plumbers etc.
Advocates of the gig economy claim that people benefit from being able to work flexible hours. They can control how many hours they work and fit it in with other priorities in their lives such as caring responsibilities.
Having more flexibility and less constraints can certainly be an attractive benefit for some workers. Of course, there are benefits for employers too. They only pay for the work when it is available and required, and don’t incur the normal costs for staff when the demand isn’t there.
Exploitation
There are concerns that similarly to zero-hour contracts, workers in the gig economy are being exploited by businesses. As independent contractors, they have no protection against unfair dismissal, no right to redundancy payments, and no right to receive the national minimum wage, holiday pay or sickness pay.
These are all proving to be highly contentious with some high profile, tribunal hearings, including Uber drivers in the UK, that have gone against employers who are classifying their workers in this way, (as independent contractors). UK, Uber drivers won the right to be classed as workers. This means they are entitled to holiday pay, paid rest breaks and to receive the national minimum wage.
Zero-hour workers and gig economy workers share some similarities in that they don’t get guaranteed hours or much job security. However, those on zero-hour contracts, are seen as employees in some sense, in that they are entitled to holiday pay (but not sick pay).
Department for Business
The Department of Business is holding an inquiry into a range of working practices, as they want to ensure employment rules are up to date and reflect these current ways of working, including the gig economy. They are concerned with how this style of working is cutting into the government’s tax take.
As an employer, we are sure you simply want to do your best by your workforce and are not looking for loopholes or ways to exploit them. Rulings in recent tribunals have shown that legislation will be stamping down on unscrupulous employers who aren’t stepping up to their responsibilities.
If you rely on independent contractors in your business then make sure you know your rights and responsibilities as an employer.