“A totaljobs survey of nearly 5,000 workers and more than 100 businesses found that 90% of employees and 87% of employers said that more regulations were needed to protect the rights of gig workers.” *source HR Magazine 13th November 2017
Unless you’ve been living under a rock, you will have heard about the landmark cases of Uber and Deliveroo and the impact the rulings have had on workers’ rights. The gig economy is growing exponentially and employers need to be ready to ensure that they don’t fall foul of the legislation. Further developments will also have major impacts for UK businesses who have existing arrangements with contractors.
What is the gig economy and why is it on the rise?
In the gig economy, workers get paid for the ‘gigs’ they do, rather than being paid a regular wage. Typically an example might be food delivery or a taxi journey, but more and more, the term is being used to cover all types of workers who neither work 9-5 nor get paid the same each month.
It is currently estimated that in the UK 5m people work in this way. People are becoming increasingly disenchanted with the rigidity of corporate lifestyle; long days and no work/life balance and workers are choosing to work around family, domestic responsibilities and life choices. Smartphones and technology now allow people to work from almost anywhere and working as a freelancer can address some of these issues and allows workers to take the control back as to when and how they work. The terms freelancer and contractor are generally used interchangeably.
Why would I hire a contractor?
There are many benefits and few drawbacks to engaging a contractor. Benefits include little or no overheads – typically contractors provide their own ‘tools’ such as a laptop – and will deliver the work at their own premises. Employers are not obliged to pay contractors holiday or sick pay, nor do they have to enrol them on pension schemes. Additionally, you only engage a freelancer when the work is available so there are more efficiencies and less ‘downtime’. Employers report they value freelancers for their energy, fresh ideas and networks. Disadvantages include that employers may be less engaged with the contractor and that they may, in turn, be less committed than an employee (say if they see staff members being treated to drinks and away days).
I want to hire a contractor – What steps should I take to protect my business?
The essence of hiring a contractor is that they should not be comparable to one of your employees.
You should ensure that:
- You only use them when you need them (they don’t have a regular working pattern)
- As far as possible you exclude the from ‘normal’ employee activities (such as staff training, end of year parties)
- You allow them to come and go when they please – within reason (not working the same hours as your employees and allow them to deliver the work as they wish within an agreed timeframe)
- You don’t give them the ‘tools’ to do the work (a regular desk, a company laptop and a direct dial)
- Allow them the right to substitute another worker to deliver the work (slightly more complicated but critical if you wish to argue the individual is an ‘independent contractor’ delivering on a piece of work rather than offering a ‘personal service’)
What do the recent cases mean for my business and hiring contractors in the future?
The rulings for Deliveroo, Uber and City Sprint, whilst separate cases with their own individual circumstances, have paved the way for contractors to demand more rights and protection and in effect have given rise to the term ‘independent contractor’. It is our prediction that in the next few years, we will see an increase in the regulations around engaging these types of workers.
The best way to protect your business is to engage freelancers without creating an ‘employment relationship’ – that is – engaging them for delivering ad-hoc work on a project basis without the requirement for regular work.
The facts don’t lie; it is estimated that ½ of workers are expected to be freelance by 2020 so gen up and get ready!
People Business can help you with any and all concerns – Get in touch today!