Head of Employment Law Spencers Solicitors
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The ‘gig economy’: how does HR need to adapt to this new breed of employee?

28th Jul 2016
Head of Employment Law Spencers Solicitors
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Uber car

The “gig economy” has firmly entered employment vocabulary, becoming a catch-all term for anything from Uber taxi drivers and Airbnb hosts to freelance professionals.

But what does this highly flexible way of working mean for HR?

Until recently, the only people who looked to get a “gig” were musicians. The rest of us found “proper” jobs that paid a fixed salary each month, let us take a paid holiday and formed the basis for planning a financially secure future with a range of employment rights.

Today, more and more of us choose (or have no alternative) to try to make a living working for ourselves on one off “gigs” rather than in a traditional full-time job model.

Gone is the time of a career for life let alone a job for life - being replaced by a new economy which recasts full-time employees into temporary workers, independent contractors and people selling their skills through websites like PeoplePerHour, Fiverr, and TaskRabbit.

This kind of workforce, although still relatively small is growing. Making up a mere 2% of the total recruitment market at the moment, it is expected to be worth £2billion by 2020. Between 2009 and 2014, self-employment contributed 732,000 of the 1.1 million rise in total employment.

Since the crash of 2008 the proportion of the workforce working for themselves has grown from 12% to 16% and could soon overtake the number of those employed in the public sector – though income from self employment has fallen 22% since 2009.

Rights of the 'gig' employee

The UK is still some way behind the US where 53 million Americans work freelance in some form, including 21 million independent contractors.

The debate on what this means for workplace protection has already been heard in the debates between presidential hopefuls. And this is the issue here in the UK: longstanding employment rights have developed to reflect the traditional way of employing staff.

Today’s employment laws do not fit easily alongside “portfolio working”

Generally, only employees with two years’ continuous service have a right not to be unfairly dismissed. Those working short-term gigs may never work somewhere long enough to ever acquire the right.

In any case, Tribunals have long followed the principle that those hired on an as “as and when required” basis like zero-hours contracts, are not employed between engagements so rarely have unfair dismissal and many other employment rights.

Today’s employment laws do not fit easily alongside the expansion of the gig economy and “portfolio working” – where people work on a number of different projects for different organisations, sometimes combining it with other traditional forms of employment. Depending on whether they are an employee or a worker, they will have different rights. The distinction is not always that clear cut.

On the front line of the legal challenge of low paid ‘jobs’ is Uber. Facing claims in the UK from drivers, backed by the GMB to establish employment rights, they have already settled 385,000 claims in California and Massachusetts from drivers claiming they are employees for around $100million along with concessions on forming “drivers’ associations” and not being banned or “deactivated” should a driver refuse to take a fare.

Some people think Uber got off lightly. They have, after all recently been valued at $62.5billion

Looking internally

Most HR departments have not got to grips with how to manage this changing way of working.

There is a time and place to use gig workers, but businesses should be looking at the skills within their own organisation too - as many employees already have skills that go beyond their existing role and they are keen to put them into practice.

Nearly half of HR professionals expect at least 20% of their workforce to be made up of contractors by 2020

Identifying, hiring and developing those skills are time consuming and expensive. Knowing your existing employees’ skills can take much of the time and effort out of hiring specialised talent if there is a suitable internal candidate.

PwC in their report “The future of work” found less than one-third of employers are basing their strategies on the rise of the gig and portfolio worker: despite nearly half of HR professionals expecting at least 20% of their workforce to be made up of contractors and temporary workers by 2020. What does this mean for HR?

Additional concerns

Managing the quality of work done by non-permanent staff has been identified as an issue by the CIPD though only around half of employers provide training to casual workers and just a third offered them performance appraisals. The figures were even worse for agency staff and the self-employed.

Despite concerns over workers’ lack of engagement, less than half of businesses include them in internal communications or consider them for any form of recognition award.

Faced with an increasing diverse way of hiring staff, HR will face the task of harmonising contract terms and conditions and offer benefits or rewards to become an employer of choice for “gig workers”.

Less than half of businesses include casual workers in internal communications 

Managing staff will present its own challenges if the burden of increased admin is to be avoided through smooth running processes to automate joining and leaving.

Confidentiality and the use of commercially sensitive information will need to be addressed by putting in place sound risk management and governance for portfolio staff working for multiple employers – possibly including competitors.

HR will need to ensure line managers are aware of working time, health and safety and minimum wage legislation.

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