The growth of the gig economy in the UK has been in the news a lot recently; what does it mean?

The gig economy is defined as a labour market which is characterised by the abundance of short-term contracts or freelance work, rather than permanent jobs. At the end of 2017 around five million people were part of this economy.

Businesses can employ people for only as long as they need them

Having a standard contract of employment gives an employee rights in law including sick, maternity and statutory holiday pay, but it is costly to employers to provide these rights. One way around this is to encourage individuals to classify themselves as self employed ‘sole traders’, or to put them on a zero hours contract. This helps the economy as businesses can employ people at short notice for only as long as they need them.

Being a sole trader in a skilled job works well for some people who factor in their lack of paid holiday and employment protection to a higher hourly rate. There are, however, some situations where the employee may feel the arrangement suits the employer more than themselves. When people in this kind of situation are low paid and low skilled they are easily replaced and so less likely to be able to demand a higher hourly rate to offset the rights they are losing out on.

Those on zero hours contracts are employees, entitled to paid holiday but not to minimum hours. In some situations the individual doesn’t have to take work when it is offered, so this can be a mutually beneficial way of working – for example, students organising shifts around lectures.

In other cases zero-hours contracts require the worker to take shifts but don’t guarantee them any work. This can leave those affected feeling insecure and unable to manage their family finances or domestic duties.

In response to public concerns over the gig economy, the government commissioned the Taylor report and, in line with its findings, introduced some new measures to protect employees.

High profile legal cases such as Pimlico Plumbers and Uber have seen individuals, whose companies had insisted they were self employed, win the right to be classified as workers. Deliveroo won their case as their contractors can send others in to do their deliveries for them and hence cannot class themselves as employees.

There are voices on both sides of the argument calling for change

No doubt there are voices on both sides of the argument calling for change and it will also be interesting to see how Brexit affects this debate. Unions fear that Brexit will result in employees losing EU employment protection.

If you want to check on your employment status (or that of your workers) go to:

www.tax.service.gov.uk/check-employment-status-for-tax

You can also contact the ACAS helpline for free confidential advice: www.acas.org.uk