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The term ‘gig economy’ burst onto the scenes in 2009. The phrase was coined during the peak of the financial crisis when many unemployed people made extra money by ‘gigging’ or taking on more than one part-time job.
More recently we use this phrase when referring to self-employed people who work for a company. We have also witnessed the rise of Unicorn companies (privately held companies in the venture capital industry) such as Airbnb and Uber who thrive by contracting self-employed people.
Millennials are leading the way and make up the majority of the gig economy which reflects their desire to ditch the 9 to 5 and create a more flexible working pattern for themselves to suit their lifestyles.
With well over 2 million people in the UK (Uber report to have around 50,000 registered drivers in London alone) working this way it is important that they are aware of the modern workers’ rights.
Employee, worker or self-employed?
Working for a company means that the person can be classed as an employee, a worker or self-employed. Let’s explore briefly the meaning behind each of these terms.
An employee will have an employment contract and entitled to at least the minimum wage, breaks, sick pay, holiday pay, a minimum notice period, parental leave and protection against redundancy and unfair dismissal.
A worker is someone who is on a casual or short-term contract. It is usual for a worker to receive at least the minimum wage and breaks, but not usual for them to receive other rights.
Self-employed people run their own businesses and are responsible for completing their own tax returns. They don’t have the rights of an employee or a worker other than to be adequately protected under the health and safety law.
The gig economy
Companies who rely on gig economy workers, instead of recruiting official employees, base their business model on flexibility. They can use their self-employed people for more hours during busy times, but equally cut their hours when not needed.
EU employment rights
Employers in the EU, including the UK, are required to inform everyone who works for them about all essential aspects of their role on the first day in the job to stop them abusing the flexibility in the labour market. This includes:
a job description explaining their duties
information on workers’ pay
explanation of their standard working day referencing hours worked
The employer must allow someone who works for them to take on another job, only give them one probationary period with a maximum of six months and provide compensation for work which has been cancelled at short-notice.
These rules apply to someone who works at least three hours a week on average per four weeks. They do not apply to those who are genuinely self-employed and work for themselves.
UK gig economy reforms
The latest Taylor review of modern workplace practices details reforms came into force in 2020.
The maximum fine for companies who treat people who work for them with “malice, spite or gross oversight” will be fined £20,000. Currently the fine is £5,000.
Companies will not be able to pay someone who works for them less than their permanent employees for the same work.
Companies must give everyone who works for them a statement detailing their rights to sick pay and parental leave on the first day of the job.
If the person is entitled to holiday leave, they must be told on the first day of the job and companies must calculate their holiday pay based on 52 weeks instead of the current 12 weeks.
How we can help you
If you’d like to discuss any of the issues detailed in this blog, get in touch with us today. We’re here to help.
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