CIPD Voice: Issue 9
The growing gig economy highlights the need for greater clarity over and enforcement of employment rights.
New CIPD research shows 4% of UK working adults aged between 18 and 70 are working in the ‘gig economy’, and nearly two-thirds of them (63%) believe the Government should regulate to guarantee them basic employment rights and benefits such as holiday pay.
That means approximately 1.3 million people are engaged in ‘gig work’, according to ‘To gig or not to gig: Stories from the modern economy’. The report is based on a survey of 400 gig economy workers and a wider survey of more than 2,000 other workers, as well as 15 in-depth interviews with individual gig economy workers. It is particularly focused on gig economy workers who trade their time and skills through the internet in some form of paid employment.
Examples of these ‘gig’ workers include Uber drivers, Deliveroo couriers, as well as people who use online platforms to bid for and provide secretarial, translation and proof reading services. Other gig economy workers include people who provide gardening, house cleaning or home improvement services, for example, through platforms such as TaskRabbit. The research provides new insights on the gig economy from the perspective of individuals engaged in this type of work and CIPD will be using the findings to inform its response to the Government-commissioned review of modern working practices being led by RSA Chief Executive, Matthew Taylor.
The research finds the most common reason for taking on gig work is to boost income (32%), followed by to achieve a short-term goal such as saving for a new car or holiday (25%) and because it provides a back-up so people don’t have to worry about having the security of a regular income (21%). Just 14% of respondents saying they do gig work because they cannot find alternative employment. The report also reveals that only a quarter (25%) of gig economy workers say it is their main job, underlining the finding that most gig economy workers use it as a supplement to their income or to enable them to earn money if they cannot or don’t want to take on a regular job. This finding also came through strongly in the case study interviews with gig economy workers.
However, 60% of gig economy workers say they don’t get enough work on a regular basis in the gig economy, and the research shows that income earned from gig work is typically low, with median reported income ranging from £6 to £7.70 per hour.
Despite the typically low earnings reported by gig economy workers they remain, on the whole, satisfied with their income, with 51% saying they are satisfied and 19% dissatisfied with the level of income they receive. This is significantly higher than the level of satisfaction with pay reported by other workers, where 36% are satisfied and 35% are dissatisfied. This is very likely to reflect the fact that gig workers’ motivations and expectations around the level of reward they receive are very different from workers in more traditional forms of employment. Most gig workers regard their gig work as a useful way to add to their income rather than something they must rely on to pay the rent or mortgage.
However, there were concerns raised by some workers interviewed for the report about the level of control exerted over them by the businesses they worked for, despite them being classified as self-employed. This is supported by the survey data, as just four in ten (38%) gig economy workers say that they feel like their own boss, which raises the question of whether some are entitled to more employment rights.
Together, the research findings highlight why finding the correct public policy response to providing sufficient flexibility for gig economy businesses and protection for individuals is not straightforward. Imposing excessive regulation risks restricting business innovation and employment opportunities, while an approach that is too light touch potentially leads to workers being exploited. In addition, the variety of business models within the gig economy, the many different types of working arrangements and the varied circumstances of individuals engaged in providing services in different ways mean finding the right regulatory changes to make is extremely challenging. However, the CIPD believes the Government should launch a consultation to consider whether a clearer basis of demarcation is possible between ‘employee’, ‘worker’ and self-employed’ which maps clearly across employment rights, tax and benefits.
There are also a number of steps the Government could take to provide greater awareness and understanding of issues around employment status and rights, that help ensure working practices in the modern economy benefit both organisations and individuals. Firstly, there is a clear need for gig economy and other atypical workers to have more information and clarity over their employment status and associated rights, including whether they are eligible for the National Minimum Wage (NMW). The Government should work with bodies such as the Citizens Advice Bureau, Acas, trade unions and professional bodies such as the CIPD to run a ‘know your rights’ campaign, which would set out information on the different types of employment status and the associated employment rights people should expect as well as where to go if they have concerns or want to make a complaint. In addition, we believe that there should be an amendment to the Employment Right Act 1996, requiring employers to provide all workers and not just employees – as is currently required – with a written copy of their terms and conditions after two months of employment. This, at least, would mean that individuals categorised as workers would have a written record of the details of their contractual arrangements.
There is also the need for better guidance for gig economy businesses and other employers using atypical workers which sets out the underlying principles of good work and responsible employment, as well as the HR and people management practices organisations need to think about when resourcing their business models to ensure flexibility works for all stakeholders. The recent employment tribunal case involving Uber and the adverse publicity and share price experienced by Sport Direct, following controversy over its use of zero hours contracts, highlights the reputational risk organisations face if they fail to consider the downside for their people of atypical working practices.
The CIPD has been conducting research investigating the principles of ethical and sustainable work and is currently refreshing its professional standards framework for HR practitioners to reflect this. In the context of the Taylor Review, we will continue to use insights from this work to help and encourage more organisations to work in ways that benefit both the business (in terms of productivity and sustainability) and people (in terms of their well-being and development).
Furthermore, the CIPD believes that in light of the growing challenges that technology and new business models are creating for the UK’s employment rights framework, there is a strong case for the Government to bolster the mechanisms available to it to crack down on poor practice and to proactively support organisations in improving their working practices before the find themselves in court. The recent decision by the Chancellor to raise taxes for the self-employed highlights the concerns the Government has about the consequences of atypical working practices and what this means for both the Treasury’s tax take and rights for those in non-traditional employment.
Consequently, it is crucial that the new Gangmasters and Labour Abuse Authority (GLAA) is given sufficient resources so it has the scope to meaningfully monitor and enforce compliance with existing employment rights across the economy where there are abuses and ensure people are not being falsely categorised as self-employed, for example.
In addition, the CIPD believes there is a strong case to increase the resources available to Acas so it can work proactively with organisations to improve their working practices if they are in danger of falling foul of the law through a lack of resources or ignorance. This would also allow GLAA inspectors to refer organisations to Acas to work with them to improve working practices, which in many cases will be a better solution for all stakeholders than enforcement activity and fines.
Ben Willmott, Head of Public Policy
Ben leads the CIPD’s Public Policy team, which works to inform and shape debate, government policy and legislation in order to enable higher performance at work and better pathways into work for those seeking employment. His particular research and policy areas of interest include employment relations, employee engagement and wellbeing, absence and stress management, and leadership and management capability.