28 Oct Is the Gig Economy What it Seems?

With the popularity of working as a self-employed contractor rising, the question of whether or not this ‘gig economy’ is as convenient as it seems must be considered.

It is estimated that there are 1.3 million individuals in the UK’s gig economy. These are workers who are paid for each job or ‘gig’ that they perform, as opposed to being employed by one company on a contractual basis. Many people are drawn to this way of working because of its freedom in terms of working hours and flexibility. With the increasing use of applications such as Deliveroo, workers of the gig economy have the added benefit of using an established infrastructure. This means that they don’t need to create their own client base. Moreover, a self-employed worker can generally expect better daily pay rates than other employees.

However, a new report from the Chartered Institute of Personnel and Development found that a mere 4 in 10 workers in this field of employment actually feel like their own boss. In addition, 38% of gig economy workers believe the government should aim to guarantee basic employments rights and benefits to those who are self-employed. These basic rights, such as holiday pay or sick pay, are not currently granted to many self-employed workers. Evidently, cracks are starting to show within this popular form of employment.

Scrutinized for its apparent exploitation of workers and lack of workplace protection, the gig economy is not as ideal as it is commonly perceived as being. Whilst applications can aid workers in their quest to build a client base, they can also prove hurtful to an individuals pay. Various applications that allow people to sign up for work are prone to locking the user out of the application for not accepting jobs. Moreover, a user may be required to work specific hours or only work in a certain area. Therefore, the ‘flexible’ conditions are not as they seem.

Employing a Contractor

Contractors prove useful to many businesses, offering work at short-notice with less obligations than the typical employee. A contractor can also mean that a company is able to hire a specifically skilled work as and when they are required, saving money from constant employment. However, as the name suggests, these self-employed workers are under less control by the business than regular employees. This means you will have to trust the contractor with their knowledge on how to complete the task. It is also worth noting that you will be subjected to tax implications if you hire a self-employed worker who is also an employee of regular work.

Implications

The implications of the aforementioned pros and cons of the gig business mean that this way of working is probably more beneficial to the employer than the actual employee. With changes to the IR35 set to take place in April 2020, the gig economy will be subjected to a new way of working; contractor employers will be responsible for the tax and National Insurance of workers. This means that, whilst at the moment the benefit falls in the employers hands, the task of taxing and other administrative tasks will be lifted from the backs of the workers.

You can read about the changes to the IR35 here

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