6 tips for managing the Gig Economy
The so-called “gig economy” has changed the way we think about our workforce.
As a consequence of COVID-19, the world of work has become more flexible and many professionals are opting to become independent contractors who market their skills to businesses, often on short-term contracts.
Those businesses that are best able to tap into this growing talent pool will be able to access skills that may previously have been inaccessible to them. For example, some contractors may have broad experience gained from working on projects with multinational firms that can be of great benefit to a business.
However these professionals tend to want more flexible working arrangements and work-life balance. They are agile and don’t want to be tied to the traditional 9-5 working day. This type of employee can create a set of challenges for businesses to manage and employers need to change how they think about working arrangements. Below are six tips for managing the gig economy.
1. Plan ahead
If you want to use contractors and flexible workers, you will need to create a plan for how you intend to allocate costs associated with them. In addition, you should both agree a process by which you can set objectives, track deliverables and key milestones.
2. Work with the right partners
If you’re going to use a recruitment agency, look for agencies that truly understand the flexible employment market. Do your due diligence and make sure they have experience of working with firms in your industry.
3. Cost drivers
Contract workers can help you to lower talent costs. As well as employment agencies, there are various online resources available such as Freelancer and Upwork. These platforms allow independent contractors to pitch to work on your projects. This can help give you access to some of the best talent around, at a more competitive cost.
4. Utilise technology
Technology plays a key role in managing a flexible workforce. Contractors will need to access your systems and data. Consider whether they will use their own computer or whether its best that they are allocated a company-owned laptop or device for the duration of their contract. You also need to consider security. Ensure that company data held on any contract worker’s devices can be managed remotely if required.
5. Employment rights
There are still a few grey areas when working with contractors. The Uber case classified the test case drivers as workers which meant that they had some statutory employment rights, including minimum wage. Care is therefore required when looking at the contractual arrangements. The Uber test case drivers were ‘self-employed’ rather than using personal service companies.
The IR35 landscape changed on 6 April 2021 in that medium and large companies are now required to assess the “employment” status of their workers using personal service companies. Forcing the large companies to make this assessment appears to have been successful for HMRC as if there are any grey areas the large companies are likely to go for the less risky assessment of saying that workers are caught by IR35. The cost of making individual assessments of their workforce has also led to the suspicion that a number have taken a blanket approach. Individual workers would then have the right to appeal that assessment.
The Chancellor has hinted on making the system fairer in terms of how “employment” income is taxed so it will be interesting to see whether there is a change to the way that self-employed/PAYE/dividend income from personal service companies are taxed in the future.
If you would like to discuss any aspects of this further, please get in touch with our Business Services team on 01903 234094.