Employment in the ‘gig economy’: A new worker category?
Philip McCabe, September 05, 2016
What does the highly flexible 'gig economy' way of working mean for HR?
At one time only musicians looked to get a 'gig'. The rest of us found 'proper jobs' that paid a fixed monthly salary with holidays and let us plan for the future with some legal rights.
Today more of us have left this traditional job model to try to make a living working for ourselves on one-off 'gigs' –as temporary workers, independent contractors or people selling their skills through websites. 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.
It is a relatively small but growing workforce. Following the financial crash of 2008 the proportion of people working for themselves has grown from 12% to 16% and could soon overtake numbers in the public sector. And this is the issue in the UK: employment rights were created within a framework of traditional employment methods where 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.
Today’s employment laws do not sit easily alongside the expansion of the gig economy and 'portfolio working' – where people work on a number of different projects for different organisations, sometimes combined with being a traditional employee. Depending on whether they are an employee or a worker they will have different rights, and the distinction is not always clear cut.
On the frontline of the legal challenge is Uber. Facing employment rights claims in the UK from drivers, backed by the GMB, it has already settled 385,000 similar claims in California and Massachusetts for around $100 million, along with concessions on forming 'drivers’ associations' and not being banned should a driver refuse to take a fare.
Most HR departments have not got to grips with this new 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 – many already have skills that go beyond their existing role and are keen to put them into practice. Identifying, hiring and developing staff is time consuming and expensive. Knowing your skills resource can take much of the time and effort out of hiring specialised talent if there is a suitable internal candidate.
PwC's report The future of work found less than one-third of employers have a strategy for the rise of the gig and portfolio worker, despite nearly half expecting at least 20% of their workforce to be employed this way by 2020.
What does this mean for HR? Managing quality is an issue. In 2014 the CIPD found 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. Less than half include them in internal communications or consider them for any form of recognition award.
There will be day-to-day challenges to automate the joining and leaving process. Confidentiality and the use of commercially-sensitive information will need to be addressed by implementing sound risk management and governance for staff working for multiple businesses – possibly including competitors. HR will need to ensure line managers are aware of working time, health and safety, and minimum wage legislation for all the different types of workers.
Philip McCabe is head of employment at Spencers Solicitors