What is the Gig Economy?

You may have heard of the phrase ‘gig economy’ but may not know what it means. It is a phrase which is becoming more and more popular in the UK, Europe and the wider world and is very prevalent in regards to a variety of employment disputes, employment arrangements and flexible working contracts.

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The gig economy is defined as: ‘a labour market characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs.’ This is very often viewed as the provision of a working environment which allows for very high levels of flexibility with regards to your hours of employment, time of work and contracted hours (if any.)

The gig economy has had its critics in recent times, being seen by some as a working environment which isn’t totally to the advantage of its workers as there are less traditional securities and employment rights within some companies when undertaking ‘gig’ work.
According to official statistics, around 3 million workers in the UK have found themselves working in the Gig Economy over the course of 2017-18. In the last year alone, on average, those who were registered as self-employed were said to have earned more per hour and per day than ‘regular’ employees.
This offsets the lack of benefits which employees are entitled to, such as pension contributions, sick pay or paid leave, as for many Gig Economy workers, the work they perform on a self-employed basis greatly increases and supplements their regular income. Furthermore, there are many companies, including UK umbrella companies who the worker may be signed up with, that can assist with the likes of pension schemes and insurances.

The Flexibility of a Gig Economy

The way a gig economy works is very different to working in a typical company as a run of the mill employee. Instead of being paid a regular and consistent wage, the way they earn their salary and money is based on how many jobs, or as the names lends itself ‘gigs,’ they complete. When it comes to working for a single employer, you will more than likely need some form of umbrella company employment in place to ensure you stay on the right side of the UK Government’s IR35 Legislation.

Someone working within a gig economy could be anything from a food delivery for a company such as Just Eat or Deliveroo or a taxi driver for companies in the UK like Adison Lee or Uber.
If you are working under an umbrella company, you will need to submit your work returns and timesheets to the umbrella company who will then invoice the recruiter or client as necessary. If it is the recruiter or agent that is invoiced, they will then invoice the client who will pay. A fee then goes to the recruiter, who then pays the umbrella organisation who take a small fee from your pay packet for their services.

Benefits of the Gig Economy

Those who see the gig economy as a good thing and favour its existence maintain that workers very much benefit from the flexibility of the hours that are provided. With a gig-like system in place, workers and employees are able to freely choose how many hours they work and when they wish to work those hours.
This allows them to conduct their lifestyle as they wish, making it is easier to juggle other commitments they may have, such as another part time role, family commitments or studies. It is also often a very good solution for those who are parents to young children as they can choose when to work in order to fit their working life around their child care without having to give up work entirely.
Many people throughout the UK are also able to effectively and substantially increase their overall earnings by way of a second or sometimes even third job within the Gig Economy. This helps alleviate potential financial burdens in their lives.

Employees Rights in the Gig Economy

People who work in a Gig Economy are technically classed as ‘independent contractors’ rather than employees in many cases. Due to this, there can be potential issues around their rights and this does put some people off. Gig Economy workers will not always be protected against things such as unfair dismissal and they will have no rights to receive redundancy packages and no right to be guaranteed to be paid the minimum wage, paid leave or sick pay. However, this is sometimes negotiable with each employer.

When it comes to things like loss of earnings due to illness and employer/ employee disputed, an umbrella employer may be able to provide the necessary insurances and tools for protection for the worker.
Workers within the gig economy should take measures to protect themselves by charging a fair fee for their work. Not keeping track of things properly may lead some unscrupulous employers to use the Gig Economy to dismiss its workers as unskilled labourers, rather than recognising them as actual professionals.

The Future of Working?

There is a difference between someone who works within a gig economy and a person who is on a zero hours contract. As with those on zero hours contracts, those who function within a Gig Economy are not always guaranteed hours and do not have as much security in their employment status as a full-time employee.
However, the difference lies in that a zero hours contractor is in fact entitled to holiday pay, whereas those in a gig economy role are not. Nevertheless, neither are entitled to sick pay.
From the perceptive of employers, the gig economy is very beneficial. Due to its existence, they can now get a lot of work done for them without having to take on actual employees which would be a lot more expensive due to having to pay for things like PAYE and pension contributions. Around 75 per cent of UK business leaders have a large number of contractors as part of their teams and 12 per cent of those say that they use gig workers as part of their overall workforce.