The Rise of the Gig Economy and the Impact on HR Practice

The Gig Economy is a labour market characterised by the prevalence of short-term contracts and freelance work as opposed to permanent jobs. A Gig is a job that is temporary or has an uncertain future.

The Taylor Review, published in July and the more recent Work and Pensions & BEIS Committees report ‘A Framework for Modern Employment’ published this November, have identified within the Gig Economy, that there needs to be clear definition of a contractor and a review of employment status with primary legislation to set out key principles and secondary legislation to provide guidance.

The Taylor Review has looked at wider worker status including that of agency workers and recommended flexibility, being able to earn the national minimum wage and less emphasis on the requirement to perform work personally. Importantly there should now be a written statement of terms and conditions, extended to workers as well as employees, and an introduction of higher national minimum wage for hours that are not guaranteed as part of the contract. It is advisable now to record periods of continuous employment, despite breaks in service and improve the transparency of information given to agency workers more generally.

Further implications on HR practice include the right to ask for the agency worker to request a direct contract of employment after 12 months of engagement with the same hirer and the right to request a contract that guarantees hours, reflecting actual hours worked, for those who have been in post on a zero hours contract for 12 months.

Employers should be required to report on their employment practices, including their model of employment and their use of agency workers.

A Framework for Modern Employment has sought clarity in primary legislation of the key principles:

• Legislation to introduce greater clarity on definitions of employment status, emphasising the importance of control and supervision of workers and not as focused on the right of substitution.
• Legislation to implement a worker by default model to apply to companies who have a self employed workforce above a certain size.
• Low Pay Commission pilot for workers who work non-contracted hours to receive a pay premium on the NMW and NLW.
• Continuous service preserved for breaks in employment of up to one month.
• Higher, punitive fines and costs orders on employers if they have already lost a similar case.
• Great use of class actions in tribunals in disputes over wages, status and working time.
• Government rules out introducing any legislation that would undermine the NMW/NLW.

And also clarity in secondary legislation to provide guidance:

• Extension of duty to provide written statement of terms and conditions to cover workers as well as employees from day one of the job.
• Lower the ICE threshold.
• End the Swedish derogation for agency workers.
• Deterrent penalties, including punitive fines, for repeat or serious breaches of employment legislation and naming and shaming for all non-accidental breaches of employment rights by business and supply chains.
• Increased resources for the Director of labour Market Enforcement to be both reactive and proactive funded through higher fines on non-compliant organisations.

For more information and support in developing appropriate policies and practice for hiring workers within the Gig Economy, please contact us.