Employment in the ‘gig economy’: A new worker category?
What does the highly flexible 'gig economy' way of working mean for HR?
At one time only musicians looked to get a 'gig'. The rest of us found 'proper jobs' that paid a fixed monthly salary with holidays and let us plan for the future with some legal rights.
Today more of us have left this traditional job model to try to make a living working for ourselves on one-off 'gigs' –as temporary workers, independent contractors or people selling their skills through websites. The 'gig economy' has firmly entered employment vocabulary, becoming a catch-all term for anything from Uber taxi drivers and Airbnb hosts to freelance professionals.
It is a relatively small but growing workforce. Following the financial crash of 2008 the proportion of people working for themselves has grown from 12% to 16% and could soon overtake numbers in the public sector. And this is the issue in the UK: employment rights were created within a framework of traditional employment methods where only employees with two years’ continuous service have a right not to be unfairly dismissed. Those working short-term gigs may never work somewhere long enough.
Today’s employment laws do not sit easily alongside the expansion of the gig economy and 'portfolio working' – where people work on a number of different projects for different organisations, sometimes combined with being a traditional employee. Depending on whether they are an employee or a worker they will have different rights, and the distinction is not always clear cut.
On the frontline of the legal challenge is Uber. Facing employment rights claims in the UK from drivers, backed by the GMB, it has already settled 385,000 similar claims in California and Massachusetts for around $100 million, along with concessions on forming 'drivers’ associations' and not being banned should a driver refuse to take a fare.
Most HR departments have not got to grips with this new way of working. There is a time and place to use gig workers, but businesses should be looking at the skills within their own organisation too – many already have skills that go beyond their existing role and are keen to put them into practice. Identifying, hiring and developing staff is time consuming and expensive. Knowing your skills resource can take much of the time and effort out of hiring specialised talent if there is a suitable internal candidate.
PwC's report The future of work found less than one-third of employers have a strategy for the rise of the gig and portfolio worker, despite nearly half expecting at least 20% of their workforce to be employed this way by 2020.
What does this mean for HR? Managing quality is an issue. In 2014 the CIPD found half of employers provide training to casual workers and just a third offered them performance appraisals. The figures were even worse for agency staff and the self-employed. Less than half include them in internal communications or consider them for any form of recognition award.
There will be day-to-day challenges to automate the joining and leaving process. Confidentiality and the use of commercially-sensitive information will need to be addressed by implementing sound risk management and governance for staff working for multiple businesses – possibly including competitors. HR will need to ensure line managers are aware of working time, health and safety, and minimum wage legislation for all the different types of workers.
Main Article HR magazine
Professional Manager - Chartered Management Institute
WITH UBER FACING INCREASING LEVELS OF LEGAL ACTION FROM ITS STAFF, WHAT RIGHTS DO FREELANCE WORKERS HAVE, AND WHAT DOES THAT MEAN FOR EMPLOYERS?
The term “gig economy” has firmly entered employment vocabulary, becoming a catch-all term for anything from Airbnb hosts and freelance professionals selling their skills through websites like Fiverr, and TaskRabbit, through to people working on a portfolio of different assignments for a number of businesses.
But what does this highly flexible way of working mean for employers?
The freelance world is still a relatively small workforce. Following the crash of 2008 the proportion of people working for themselves has grown from 12% to 16%. The UK is still some way behind the US, where 53 million Americans work freelance including 21 million independent contractors, but it is a growing workforce and could soon overtake number of employees in the UK public sector.
Despite the growing size of the freelance market, most of us still have “proper” jobs that pay a fixed monthly salary with holidays and let us plan for the future with protected employment rights. And this is the issue here in the UK: employment rights were created to reflect the traditional employment methods.
Those working short-term gigs may never acquire those rights.
On the front line of the legal challenge is Uber, and some 385,000 cases in California and Massachusetts have already been settled for around $100million.
Here in the UK, the trade union GMB is supporting Uber drivers’ claims that they should be paid the National Living/Minimum Wage.
The driver’s status matters, both to the company and to its drivers: some estimates suggest that being classed as employees can make a difference to the employer's costs of over 30%.
The company argues that traditional businesses are based on an outdated model, and that their way of operating is healthy for the market. It also claims that it creates jobs.
But if the drivers are employees, they have the protection of all the rights traditional employees already have - and the associated costs.
When the Uber cases are finally heard, they will highlight the unsatisfactory state of the law.
In order to establish an employment relationship, there are three tests: the individual has to show that she/he is required to perform the service in person; that there is an obligation to be offered and accept work; and that the employer is able to control the way she/he does the job.
A ‘worker’ has to show the first two of these – personal service and mutuality of obligations – but, rather than the employer being in control, the employer is a customer or client of the individual worker.
If the application of these principles were straightforward, however, we wouldn’t have so many cases before Employment Tribunals.
The growth of the gig economy has only exacerbated a pre-existing problem: how do employment judges determine employment status where the evidence is so ambiguous? Judges can often be motivated to protect individuals where they believe that employer falsely claims that the individuals are self-employed, aimed at denying people their employment rights, but this is not always the case.
The government had promised to review the problem and the Department for Business, Innovation and Science is understood to be considering a public consultation on the issue.
And most HR departments have not got to grips with this new way of working.
In their report The future of work, PwC found less than one-third of employers have a strategy for the rise of the gig and portfolio worker, despite nearly half expecting at least 20% of their workforce to be employed this way by 2020.
So there is still some way to go before the gig economy is well and truly part of the mainstream.
Name-blind CVs alone will not stop race bias during recruitment
Home addresses and educational background may need to be hidden too
Private and public-sector employers are being asked by the government to remove names from application forms in an effort to stop unconscious bias against potential recruits from black and ethnic minority backgrounds. A number of major employers, including HSBC, KPMG and the BBC, have already pledged their support.
Tackling unconscious bias makes good business sense and, if it works, then ”name-blind CVs will open doors” not just for black and ethnic minorities, as David Cameron hopes, but for everyone disadvantaged because their name indicates their gender, ethnicity or marital status.
In its simplest form, the system requires applicants’ names to be hidden from recruiters sifting applications or compiling interview shortlists. Studies suggest bias at this stage is significant. In 2009 a study for the DWP (pdf) found applicants whose names appeared to be white needed to send nine applications before getting a positive response from an employer, compared to 16 applications from equally qualified applicants from minority groups. Studies in the US produced almost identical findings and a report from think tank Demos in October, ‘Rising to the top’, found only 16 per cent of British Muslims held professional or managerial jobs compared to a national average of 30 per cent.
Discrimination in the recruitment process is prohibited by the Equality Act 2010 (Section 39:1). What is meant by the ‘recruitment process’ isn’t defined by statute but case law suggests it starts with the decision about how and where to advertise. If a workforce is made up of people who are all the same, advertising internally will do nothing to improve diversity. Advertising externally is wrought with pitfalls though – employers need to be able to show the decision to advertise in a publication seen mainly by a particular group is justified. Getting it wrong could potentially lead to a discrimination claim.
An employer can take positive action to address under-representation in its workforce, such as encouraging applications through targeted adverts or running mentoring schemes to support and give under-represented groups the confidence to apply for jobs, develop in the role and be promoted. Direct action under Section158-9 of the Equality Act allows employers to show preference to a candidate with a particular characteristic (say colour, gender, age, or disability status) over another equally qualified candidate to address an imbalance in the workforce. This is a power given to employers rather than an obligation to meet a quota system, offering a potential defence to what otherwise appears a discriminatory decision.
Anonymous applications could be a positive move, provided they are not used in isolation. Recruiters may not see the applicant’s name but other indicators of background, such as address, school and college, are visible. There are more Jewish, Muslim, Sikh and Hindu faith schools and academies than ever. Earlier this year a study of the 2011 census by the Muslim Council of Britainshowed there are many local authority wards where Muslims make up over 40 per cent of the population. Recruiters who are ‘unconsciously biased’ against names will have to close their eyes to the applicant’s educational background and address too.
There are critics of the scheme, mainly due to the fact it will only apply to the initial sift or short listing stage. While potentially leading to a fairer mix of candidates making it through to the interview phase, the opportunity for bias when recruiters meet the candidate in a face to face interview remains. It is unlikely many employers will go to the effort of one orchestra which concealed candidates from the selection panel by a screen during auditions. Also, while concealing a name is something a large employer can undertake quite easily, it is difficult to implement in SMEs as the person receiving the application is often the same person conducting the interview.
On the face of it, hiding an applicant’s name levels the recruitment playing field. However in practice, complicated problems are rarely cured by simple solutions. If the government’s efforts to address the disadvantages experienced by black and ethnic minorities through name-blind CVs fails, then there is little doubt that further action will follow.