The Gig Economy - what is it and should we care?

By Jeff Gitter, Senior Partner
020 7490 7766
jeffgitter@lubbockfine.co.uk

 

Definition: a labour market characterised by the prevalence of short-term contracts or freelance work as opposed to permanent jobs.

Yes, the UK now has c. 4.6m self-employed people which represents a genuine explosion, led primarily by part-timers. The very nature of “work” is rapidly shifting, entrepreneurs are testing traditional boundaries and authorities are battling to keep up.

According to the UK Office for National Statistics:

  • Self-employment is higher than at any point over past 40 years
  • Rise in total employment since 2008 is predominantly among the self employed
  • Rise predominately down to fewer people leaving self-employment than in the past
  • Number of over 65s who are self-employed has more than doubled in the past 5 years to reach nearly half a million
  • Self-employed workers tend to be older than employees and are more likely to work higher (over 45) or lower (8 or less) hours
  • Number of women in self-employment is increasing at a faster rate than the number of men (although men still dominate self employment)
  • Most common roles are working in construction and taxi driving and in recent years there have been increases in management consultants
  • Average income from self-employment has fallen by 22% since 2008/09
  • Across the European Union the UK has had the third largest percentage rise in self-employment since 2009

Other than amongst younger, part-time, self-employed men (where their self-employment springs from unemployment and/or they’re unhappy with their part-time status), on the surface it seems that self-employment might be the way forward.  

Many are clearly opting for self-employment through choice; ergo, they’re happy and don’t view it as exploitative. These are the people who are now working flexibly and/or managing their own businesses. There are others though who are low-paid with insecure work taken just in order to survive.

There has been much recent press coverage of various legal cases (Uber, Pimlico Plumbing) which are being brought to determine whether self-employed workers in these sectors are, in fact, a form of employee and so should be afforded all the protections that employees enjoy. There are further legal cases in the pipeline.

Companies hiring self-employed workers on a job-to-job basis need to be very careful.  Are they in fact “workers” (as defined by employment law) or not? In short, where there is a mix of features between employment and self-employment, if some of the fundamental characteristics of employment are present, it could represent a slippery slope for employers. 

Businesses getting this wrong could suffer in terms of cost. More importantly, their reputations could be damaged with the risk of being seen as an employer taking advantage of people who are self-employed out of necessity rather than choice. And with over 4.5m people currently defining themselves as self-employed, you would be well advised to take professional advice before deciding on what basis to use their services.

For advice on any of the above, please speak to your contact partner or to Jeff Gitter.

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