What is meant when we say ‘gig’ economy? It is a phrase which is increasingly coming into use and is particularly prevalent in connection with employment disputes.
The definition of a gig economy is “a labour market characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs”.
This can be looked at in two ways. It either means a working environment which offers flexibility in regards to your employment hours or it could be used to explain a working environment which exploits its workers which very little in place in terms of work place protection.
According to official figures, around 3 million UK workers have worked in the gig economy in the last 12 months. In the last year, those who were self-employed are said to, on average, earned more per hour and per day than staff. This offset the lack of employee benefits which are granted to those who are employed, such as pension contributions, paid leave or sick-pay.
However, when 2018 hit, the gig economy really began to skyrocket and now there appears to be a different situation for those who are self-employed. A report conducted by the government found that one in four workers which took part in the survey were earning actually earning less than £7.50 an hour. To put this in perspective, the national living wage to be earned by someone over the age of 25 is £7.83 an hour.
The flexibility of a gig economy
Instead of workers getting paid a regular and consistent wage, in a gig economy, the worker gets paid for however many ‘gigs’ they do. This could be from delivering food for a company like Ubereats or Deliveroo or for making a car journey for a company like Uber or Adison Lee.
Those who favour a gig economy push that workers highly benefit from the flexible hours which it is said to provide. Under a gig-like system, people can choose how much time they work and when they wish to carry it out. In turn, they can have a far more flexible lifestyle and easily juggle other commitments in their life. It is proposed as a great situation for parents with young children as they can choose when to work in order to fit around their children’s schedule.
Worker’s in a gig economy are technically classed as independent contractors. Because of this, they are not protected against things such as unfair dismissal, they have no right to redundancy payments and no right to even receive the national minimum wage, paid leave or sickness pay.
The website WhatIsMyDayRate.com aims to provide a simple structure for freelancers by highlighting what their day rate needs to be in order for them to achieve whatever their desired annual salary is. It is appreciated that moving from a salaried job to a self-employment role can be rather tricky.
Workers who are functioning in a gig economy should aim to protect themselves by charging a fair fee for their work. Many people use the gig economy as a way to label those workers as unskilled labour, rather than recognising them as professionals.
A new way of working?
It is worth noting that there are differences between those working in a gig economy and those who are on zero-hours contracts. Like zero-hour contractors, gig economy workers do not get guaranteed hours or do not receive much security in their employment status from whoever employs them.
However, a zero-hours contractor can expect to be entitled to holiday pay, whereas a worker in a gig economy cannot. Neither is entitled to sick pay, nevertheless.
For employers, a gig economy can be very beneficial. Now, they can get a lot of work done for them without having to commit to taking on actual employees who will demand certain demands. The Independent reports that 75 per cent of UK business leaders have said that there are a significant number of contractors as part of their team. 12 per cent of these say that they use gig workers as part of their overall workforce.
Gig workers can expect to be financially excluded when it comes to obtaining third-party money, such as credit cards or loans. This is because their proof of stable income is lacking and therefore lenders may be more cautious about granting any type of loan.