It’s thriving like never before, but, in light of recent court rulings on employment status, should firms adopt a less casual approach to using freelance workers and contractors?
EMMA STEWART (pictured), co-founder and joint CEO at Timewise, a support network for flexible and part-time workers
The recent Pimlico Plumbers and Hermes court cases have shone a spotlight on the need for business leaders to think more carefully about how they manage people and to improve the terms and conditions for their workers (see panel, right). It’s prompted a conversation that hasn’t occurred in the British jobs market for a long time.
The rise of the gig economy has shown that many people do want to work flexibly. Indeed, studies suggest that many people would prefer flexible working above a pay rise, while our own research indicates that about 87 per cent of the UK’s working population either work flexibly or wish that they could. Yet many businesses still think of work as a nine-to-five, five-days-a-week concept. By embracing flexibility, these businesses could gain an edge in the war for talent.
If you’re a small firm, do you really need someone five days a week? At Timewise we say that flexible working can get you a £40,000 person for £20,000. There’s a lot of evidence to show that, if you give people flexibility, you will see an improvement in their engagement, performance and productivity. Just look at financial services: we have some clients who’ll work really intensively at the end of their firms’ fiscal years and then take all summer off.
People crave both flexibility and security, so they can earn a decent wage and also fit work around other commitments. At the hard end of the gig economy, this means thinking about contractual terms and conditions. It’s important for businesses to get this right if they want to keep good people. Finding this sweet spot can unlock the benefits of flexibility in many other industries, not only those in the gig economy.
When we think about the gig economy, the image of Uber drivers and Deliveroo riders may spring to mind. But other industries also need to consider the benefits of flexibility, as well as the risks of the gig economy. timewise.co.uk
Head of external affairs at the IoD
When people discuss the gig economy, they tend to focus on “rogues’ gallery” firms, where they ask questions – rightly – about whether these have outstripped the regulators with their practices. But it’s important not to paint the gig economy as a universally bad thing. The sharp rise in self- employment over the past 15 years hasn’t been propelled by low-wage, low-skilled work – quite the opposite. Many firms that have started in that time have grown partly because they have used highly skilled self-employed contractors, especially during periods of inconsistent cash flow.
Most IoD members want greater clarity in employment law. We hope the government’s response to the Taylor review will tighten up the definitions and rules. For their part, employers need to ensure that workers understand their rights in contractual terms.
The gig economy is not an unalloyed evil where big firms are exploiting legal loopholes. The reason most SMEs use self- employed workers is not that they want to avoid stumping up for holiday pay. Instead, it’s about entrepreneurship and the need to access a flexible pool of talent. iod.com/policy
Associate specialising in corporate and employment law, Gannons Solicitors
One of the biggest lessons that directors can learn from the Pimlico Plumbers case is to be clear in your contracts, especially those for non-permanent staff. There are three tiers of employment status: “employee”, “self-employed” and, between them, “worker”. The plumber in this case, Gary Smith, worked on a contract that had described him as self-employed when he was technically a worker who should have been given rights such as holiday pay.
If your company relies on freelancers, ensure that all of their contracts are drafted properly. Everyone should know their rights, irrespective of their status. For example, if you want personal performance, you’re getting into the territory of whether someone is a worker or not. You need to ensure that everything matches in terms of the relationship you’re working towards, which is where errors usually arise.
If other employment status cases follow the Pimlico Plumbers ruling, firms could find it difficult to use genuinely self-employed people. Until then, directors should be as fair and clear as they possibly can be. gannons.co.uk
Founder and CEO of eMop, a domestic cleaning service
Directors should be worried: start-ups will die if the government decides to strangle them with extra costs. The use of freelance workers enables new enterprises to grow, as it removes a significant financial burden while they’re trying to expand their consumer base.
When we started eMop last summer, we received only four cleaning orders a day. If we’d employed only permanent staff at that point, they would have got very bored and we’d have incurred some serious costs.
Like many gig-economy workers, our cleaners register with several providers – including our competitors – so who should be paying for their holiday or sick leave? More than 100 cleaners have registered with us. Unlike many of our rivals, we provide them with training, assessment, uniforms, cleaning materials and so on. If workers are available only on demand, taking one job a week, they cannot be considered permanent employees. It’s irrational to expect companies to give them annual leave.
My advice to other firms in the gig economy would be to ensure that all contracts are up to date and that every worker is insured. emop.world
Director of 1948, a creative communications consultancy
It’s an age-old question: if a tree falls in a forest and no one is there to hear it, should you call in a freelancer? Part of growing a successful business is knowing when to hire people for the long term and when to outsource certain work.
The use of contractors can provide you with affordable access to expertise, keep your workforce lean and save your business money. But the Pimlico Plumbers case seems to have thrown a spanner in the works. If it’s now possible for someone self-employed to retroactively claim worker status, should everyone who hires contractors be worried?
The answer, in short, is no – unless you’re committed to wilfully misunderstanding the parameters of employment law and human decency (they might not be the same, but there’s certainly a big overlap on the Venn diagram). While contractors don’t expect complete security, they do deserve to be treated fairly. Be honest about the nature of the work involved, maintain an open dialogue and always offer them a slice of cake if someone in the office is celebrating their birthday. think1948.com
Charlie Dinkin is a member of IoD 99
YOUR FLEXIBLE FRIEND?
The term “gig economy” refers to the estimated 1.1 million people in the UK who depend on short-term contracts/freelance work for a living.
It’s boomed in recent years, thanks to on-demand services such as Uber and Deliveroo. But MPs have suggested that firms have been exploiting legislative loopholes, which prompted the government to commission the 2017 Taylor review (to which Emma Stewart contributed). This called for a new legal category of worker, which would give freelancers certain employment benefits.
On 13 June 2018 the Supreme Court ruled that one
long-serving “self- employed” plumber at Pimlico Plumbers was entitled to rights such as holiday pay. Days later, couriers at Hermes won their case to be treated as workers instead of contractors. Deliveroo has also since faced a parliamentary inquiry about couriers’ pay and conditions.
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