“Exploitation” and “precarious” are just two labels that have been attached to the gig economy – terms that threaten to tar all contractors with the same brush. It is this perception that a problem exists with regard to employment status that needs to be dealt with and recruiters have an important part to play in educating, advising and supporting their end-clients on how to engage their workforce properly and compliantly.
There has been much confusion about the terminology and the subtle differences between the self-employed, employees and workers. Matthew Taylor’s recently published review of modern working practices proposes that the status of “worker” be renamed “dependent contractor” due to confusion of exactly what “worker” means. However, I very much doubt that renaming worker to something equally nebulous will actually help.
The employment status of worker confers entitlement to some 29 statutory rights (compared to self-employed people who are entitled to none), including holiday pay and minimum wage, but it does not offer as many benefits and rights as permanent employees enjoy. The common thread running through all of the most recent high-profile cases is whether the hiring firm has considered the employment status of its workforce. Many people within today’s workforce expect to be able to choose jobs they are interested in, rather than simply being forced into a position where they have to accept whatever jobs they can find, or are offered. People no longer expect a job for life, nor even a career for life, and there is a growth in so-called portfolio careers, with people shunning working nine-to-five in the same place every day in favour of more variety from splitting their time across several part-time or temporary positions, even spanning different careers.
The consequence is that temporary jobs, contract work and part-time roles are becoming more popular. And of course, hiring businesses benefit from the increased flexibility of the workforce, with each new initiative that they undertake not necessarily requiring an increase in headcount.
However, there are differences in the terminology. Most consultants and interims are self-employed and consider themselves to be knowledge professionals and certainly do not consider themselves to be part of the gig economy. Given that in everyday parlance, most people perceive the gig economy to be a market disruptor – a mechanism of obtaining work (or gigs) using online platforms – then perhaps it would be more accurate to use the term “platform economy.”
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Whatever the definition of online gigs, it is unacceptable for anyone to earn below the minimum wage and employers should treat their workforces properly, whether they are genuinely self-employed or employed. This issue is not about how someone is engaged – whether as a temp, self-employed or employed – but about exploitative employment practices. The Government has shown a commitment to stamping out false self-employment to ensure that everyone who should have employment rights and protections does receive them in practice. It is frustrating that media attention implies that there is something wrong with self-employment or temporary working and it must be remembered that up to 23% of the UK’s workforce is engaged in non-permanent working, such as self-employed, temporary or interim positions, according to the Office of National Statistics.
The growing casualisation of work is a complex phenomenon that is here to stay and the difference between the balance of fairness between a ‘worker’ and the hiring company is crucial. So, it is not surprising that it presents many challenges to policy makers which Matthew Taylor has outlined in his report.
Matthew Taylor believes that quality of work and rights for people in work are both important issues. His recommendations aim to tackle exploitation and the potential for exploitation at work, and help people know and exercise their rights. He is also acutely aware of the issues surrounding false self-employment, believing it to be wholly wrong that some employeescan be told that they are self-employed.
The balance of power currently remains with the hirer who sets the rates for the work being undertaken whereas, with true self-employment, the individual has true independence and can set their own rates for work to be undertaken. Transparency has been under scrutiny by Taylor’s review, with the conclusion that businesses should be required to report on their workforce structure and take adequate steps to ensure a compliant supply chain.
Today, more than ever, a robust supply chain is important to help protect a recruiter’s reputation, and perhaps more importantly the reputation of end-clients. Sports Direct shares lost almost half their value last year when its poor employment practices were exposed. And it isn’t just end-clients’ reputations that are of concern.
Headlines in the mainstream mediahave promoted the view that agencies actively undermine employment rights and drive precarious workers into the arms of exploitative companies, which has damaged the reputation of the recruitment industry. This is further reason to recognise the importance of compliance. Compliance is essential to protect all of our reputations but most importantly to protect those working in the platform economy. We are all in agreement that exploitation should be stamped out so that giggers, workers, self-employed professionals and permanent employees can choose work with terms and appropriate benefits accordingly.
The platform economy is attractive for both employers and employees; it gives employers the freedom to hire highly skilled, qualified individuals on a contingent or ‘as needs’ basis, offering greater control over both resources and budget. It also gives the workforce the freedom and flexibility they desire, allowing them to fit their work around their lives and other personal commitments. Choice is a good thing in life and some might say that today’s technology has a hand in democratising entrepreneurial opportunity. However, the platform economy is currently fragmented and there is a fine line between freedom and insecurity. Laying down new rules and ensuring that they are adhered to will be a challenge.
There is a lot hanging on the findings of The Taylor Review.
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