Gig economy work on the rise

Gig economy work on the rise

The Trades Union Congress recently published findings that the number of people working for gig economy platforms has nearly tripled in the past five years.

What is the gig economy?

The gig economy is a term which is used for temporary workers who carry out irregular and short-term work. Gig economy workers famously include individuals who work for Uber, Deliveroo or Amazon. This often includes working via an App and does not require individuals to work under a fixed contract.

When did the gig economy start?

The gig economy came to the fore following the financial crash of 2008. Many individuals began working in several part-time or freelance jobs simultaneously in order to compensate for lost income. The rise of the gig economy was also facilitated by the continued improvement of technology, allowing individuals to find work irrespective of their location.

Engaging individuals only when they are needed to carry out work has allowed employers to save on costs, particularly where such workers are classed as self-employed contractors. Not only do employers only need to pay the individuals for the hours they are carrying out tasks, they also do not need to pay them sick leave, holiday pay or contribute to their pensions.

What is the employment status of a gig economy worker?

Gig economy workers fall within section 230(3)(b) of the Employment Rights Act 1996, which is why they may often be referred to as “limb (b) workers”. They are not employees and do not benefit from employee rights including the right to paid annual leave, statutory sick pay, parental leave and redundancy pay, as well as the right to bring unfair dismissal claims.

However, the line between worker and self-employed status can often become blurred, which has resulted in an increase in cases concerning those in the gig economy coming before the Employment Tribunal. Employers need to be wary of classing individuals as self-employed when they are, in fact, workers, as this can often give rise to these individuals bringing successful claims in the Tribunal for arrears of payments such as holiday pay. Most recently, the Supreme Court ruled that Uber drivers are workers and should be provided with the appropriate rights.

How many gig economy workers are there in the UK?

There are now 4.4million individuals who work within the gig economy at least once a week in England and Wales. This equates to around 1 in 7 adults, up from 1 in 20 in 2016.

Furthermore, 22.6% of workers have at some point worked within the gig economy in the last year and 7.25 million are estimated to work in the gig economy in 2022. Of these workers, 60% are between the ages of 16 and 34, suggesting that it is primarily younger workers within the gig economy.

Why is the gig economy growing?

During the pandemic, the demand for gig economy workers has increased substantially. Most notably, this has been seen in food delivery services, such as Deliveroo and UberEats. This has been due to fewer in person hospitalities being available throughout the pandemic. Conversely, the number of certain gig economy workers, such as Uber and taxi drivers, decreased due to a sudden decrease in demand throughout the different lockdowns across the UK.

With constant changes in the job markets throughout the pandemic, following changes in demand and economic pressures, many workers have chosen to turn to gig economy jobs as a safety net to provide either a boost to their income or an alternative to the work they were doing prior to the pandemic. Working within the gig economy provides workers with an independence and flexibility not otherwise available under fixed-term roles. Flexible hours allow parents to work around their children and can allow workers to chose how many hours they work depending on their availability at any given time.

Many companies also turned to using gig economy workers to provide certain services in an attempt to cut costs during the pandemic, further adding to the demand for such work.

What does this growth mean for employers?

The increase in gig economy workers has opened up increasing challenges for employers. This is particularly notable following the Supreme Court’s decision that Uber drivers are classed as workers. Employers need to be sure that they have the correct contracts and procedures in place for all their staff to avoid being subject to claims such as unlawful deduction of wages or unfair dismissal. If you are in any doubt of the employment status of any of your staff, you should seek legal advice to ensure that all are being given the correct rights required by law.