The gig economy – are gig workers right for your business?

Firstly, what is it?

With so many new terms and phrases banded about, you could be forgiven for not even knowing what a gig worker is.

In simple terms, a gig worker is someone who works on short-term contracts or provides freelance work. It stands in contrast to a full time employee both in flexibility, and cost to the employer.

The term gig itself refers to the short-term jobs the workers do. Wages are often irregular and not guaranteed. These types of jobs could be food deliveries, courier service, some taxi drivers (such as Uber), or video producers to name but a few. Having said that, gig workers enjoy flexible hours, controlling when, where and what they do for work.

Employers also benefit from this flexible working style; only paying for work when it’s needed, not incurring costs during quiet periods. The gig economy working model appears to benefit both the employer and the worker.

So are gig economy workers right for your business?

Although not a traditional choice, gig economy workers can be just as beneficial as full-time employees. It was found that a substantial 57%¹ of SMEs believe that gig economy workers provide more flexibility for their business. While a further 38%² believe that employing this type of worker allows for better workforce management. In fact, SMEs even reported that gig workers proved to be more efficient in completing assignments. This was considered due to the tighter deadlines they had to meet.

Furthermore, in a recent survey carried out by leading insurer Zurich, business owners employing gig economy workers in the past year, confirmed the importance of flexible workers to their business. More than 70%³ agreed that gig economy workers contributed to their company’s profitability.

Is there a downside?

There appears to be a great number of positive benefits to hiring gig workers. However, hiring gig economy workers can pose some disadvantages. A temporary workforce often means a lack of rapport between employer and gig employee. It can also result in a lack of adequate training and supervision.

Jelf is a trading name of Jelf Insurance Brokers Ltd (Reg No. 0837227), which is part of Jelf Group plc (Reg No. 2975376) and is authorised and regulated by the Financial Conduct Authority (FCA).  Registered address: Hillside Court, Bowling Hill, Chipping Sodbury, Bristol BS37 6JX (Registered in England and Wales).  Not all products and services offered are regulated by the FCA. JIB222.09.17

A quite sizeable 40%⁴ of SMEs reported that they were concerned that the gig economy created a less motivated in-house workforce.Another consideration is your legal obligation to provide these individuals with a safe working environment and employment rights. While some gig economy workers may be independent, you should avoid labelling them as self-employed. If you do, you could violate their employment rights. By correctly classifying your employees, you will avoid a negative impact on your employer’s liability (EL) insurance.

Summary

There are a good number of reasons why gig economy workers could benefit your business, as well as a few negatives to consider. While there is money to be saved, if you decide that gig workers are the way forward then you must ensure all your employees are protected as required by law. The Government requires most businesses, with a few exceptions, to have at least a £5 million EL policy⁵. This rule is enforced by the HSE, and can fine your organisation up to £2,500 daily if you do not have the appropriate level of insurance.

For information or advice or to check you have the right insurance for your business contact Lee Gwilliam.

1  Zywave Commercial Insurance Profile July 2017

2  Zywave Commercial Insurance Profile July 2017

3  zurich.co.uk/en/about-us/media-centre/general-insurance-     news/2017/more-than-a-quarter-of-uk-smes-rely-on-gig-     economy-workers

4  Zywave Commercial Insurance Profile July 2017

5  Zywave Commercial Insurance Profile July 2017

Other sources:

    bbc.co.uk/news/business-38930048