The 'gig economy' is here to stay. This is what businesses need to know
Many workers are turning their backs on traditional jobs, but not everyone thinks that’s a good thing.
UP TO 162 million people engage in independent work in the US and EU.
Independent work, also known as the ‘gig economy, is defined as work which has a high degree of autonomy; is paid for by task, assignment or sales; and has a relationship between worker and client that is short-term in nature.
Many independent workers depend only on themselves to generate income – they sell goods, they rent rooms or they blog. Others provide services to third parties as freelancers, consultants or independent contractors.
The benefits of the independent work model for organisations are easy to see: independent workers provide headcount flexibility and easy scalability for organisations, the use of digital delivery platforms can mean reduced costs, and the availability of, and access to, experts can result in better quality.
For individuals, the model lets them do what they do best, when and how they want to do it – the epitome of the work-life balance.
That said, there has been much public debate of late around the use of independent workers. The work model has created negative headlines for Uber drivers and Deliveroo couriers and, in particular, their fight for union recognition and workers’ rights.
The debate, and indeed the general concern, tends to relate to the lack of job security, the lack of any form of guaranteed wage and indeed the lack of the most basic employment-related protections.
Changing models
This independent work model challenges the traditional concept of the employer-employee relationship, but approximately 70% of independent workers choose to work as independent workers.
That means the remaining 30% would prefer traditional jobs or are financially strapped and do supplemental independent work out of necessity rather than choice. The fact remains, however, that 70% of the contingent choose independent work over traditional jobs. Indeed, the figure in the UK is nearly three-quarters.
In Ireland, there are a number of ways in which organisations can engage independent contractors as fixed term or specified purpose employees, as part-time employees and/or as agency workers.
Independent workers tend to provide their services as self-employed contractors, either directly or via a special purpose vehicle, usually a limited liability company.
The benefit from an organisation’s perspective is that these individuals are not employees in the traditional sense of the word – they can be engaged and terminated at will, subject to any contractual agreement as to notice, and they are responsible for managing their own tax and social insurance affairs.
The primary risk for any organisation engaging contractors is that those contractors could be deemed to be employees of the organisation and be entitled to the protections of employment law. Furthermore, a misclassification of self-employed contractors can give rise to significant tax and social insurance liabilities for an organisation.
There is no doubt that the number of independent workers across the globe is on the rise. McKinsey says that 14% of surveyed individuals either not working or employed in traditional jobs would like to become independent earners.
The world is changing, organisations and individuals are changing and traditional workplace norms are being challenged. We can either move with the times and embrace independent working, or fight the change in favour of protecting age-old employment rights rooted in an economy which no longer exists.
Melanie Crowley is a partner in the employment and benefits team at Mason Hayes & Curran.
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