When you take the gig economy at face-value, it seems to be one of the most desirable forms of employment, with employees seemingly gaining freedom to work the hours they wish, often in a quirky office, and for an innovative, forward-thinking company.
Despite gig economy employers being perceived as some of the most desirable to work for, their business and HR practices are seemingly failing them. The reality is that employees of the organisation are in fact classed as self-employed. Meaning that they aren’t entitled to rights which include paid holiday or the minimum wage; allowing companies to avoid paying for such entitlements and lowering their tax outgoings.
While employees of an organisations carry out their job personally and are granted to a vast range of employment rights, a worker is able to sub-contract work in some cases and has fewer rights. Someone who is self-employed is granted even less employment rights and is only protected against discrimination in some cases.
In fact, the gig economy has become the subject of much negative press attention as of late; you can’t move for want of seeing headlines on Uber and the recent step down of its CEO, Travis Kalanick. For a company which bought the gig economy into the spotlight, it’s now being used as a marker for all that’s currently wrong in the sector.
Uber has suffered sexual harassment claims and questions over working culture, as well as trade secrets theft allegations, and even an investigation into reports it was trying to mislead government regulators. Deliveroo also came under fire after accusations that it developed a vocabulary which was designed to ban managerial staff from talking in an employee-like language to self-employed riders.
While the gig economy was initially cited as organisations who hire self-employed workers to deliver their business product or service, many businesses are similarly enlisting freelance workers – expanding the so-called gig economy outside of its original remit.
Despite a number of high-profile cases which have been damaging to the gig economy, it’s grown 72% since 2010, and PWC predicts that 30% of the workforce will work in this way by 2020.
But with so many issues currently plaguing businesses in the gig economy and its so-called self-employed workforce, it raises a number of points for not only those businesses, but those who are considering offering this type of work too. Not least for the HR department who, as the backbone of a business, is tasked with ensuring that legal obligations are being met and that HR practices are upheld.
The age of on-demand has revolutionised the way businesses operate, and an ‘as and when required’ mindset has since developed in managers. Employees are no longer a necessity when someone who is self-employed can be enlisted at short-notice for a short-term project – meaning there are fewer business expenses involved such as providing equipment, desk space, and holiday and sick pay, etc.
While this, of course, has benefits for many companies, it’s leading some workers to become priced out of a job. A self-employed person in one country may have lower living costs to someone who is say living in the UK, for example. While this is an attractive idea for a business who can pay the lower fee, a ‘race to the bottom’ mentality has begun to manifest. And then there are other issues such as managing an individual overseas.
For example, not only could working hours not match up due to time differences, but workloads could become tricky to oversee and language also become a barrier to communications. While there are of course, a number of digital tools such as Basecamp and Slack which are designed to overcome these problems, it’s another area that businesses will need to consider.
Then there is the issue posed by the onboarding process and legal implications which can occur. With many managers seeking out freelancers without the prior knowledge of HR, important documentation is often missed, alongside traditional HR processes which should be completed in line with company procedure. IR35 compliance is one such piece of compliance which should be checked, as it determines whether a freelancer should be classed as an employee.
Yet, while these are just a few of the operational issues which hiring someone who is self-employed brings, the tribunal cases have often arisen because those in the gig economy are in fact found to be carrying out tasks which determine them to be an employee, not self-employed. With organisations being reminded to ensure that what is stated in a contract, should be implemented in practice. Rather than practice not matching contract – something which has led organisations being found at fault.
Where many seem to take concern is at how the gig economy being used as an intermediary for someone doing the same job. For example, while Uber previously classed drivers who gain work through the app as self-employed, a taxi driver at another firm is granted employment status for doing the same job. A ruling since declared that Uber had lost the right to classify drivers as self-employed in the UK, which they are not appealing.
Of course, it’s not all a gloomy prospect as the gig economy presents a real opportunity for a change in the way businesses are run and how individuals are employed by a company. So, if the trend for outsourcing and freelancing is here to stay, where does it leave HR?
It’s become clear that government policy needs to be adapted to provide greater definition over the gig economy, something which manifestos in the recent general election included reference too. And while the courts have gone some way in determining the rights which should and should not be granted, real change needs to begin before cases reach the courts.