31 May 2023

When it comes to employment reform, the Government needs to see the gig picture

By Marcus Foster

We’ve seen a lot in the news recently about the Government’s ‘bonfire of EU regulation’, and reforms to employment law are still on the table.

But if ministers really want to make a difference for firms they should be looking at regulation created closer to home. In particular, by reforming rules around gig work we can unleash a sector that has the potential to boost our economy and transform participation in the labour market.

This sector, which has grown hugely in recent years, could be a route back to work for people currently excluded from the workforce who don’t want the traditional 9-5. What those would-be workers and companies need more than anything is certainty. That’s why we at Coadec have been calling on the Government to proactively clarify employment status in a way that startups understand, building on guidance released earlier this year, rather than relying on court decisions.

Just as importantly, they should promote this information through an online tool, so those thinking of gig work know what their status would be. At the same time, if changes to the Working Time Directive are made, they need to reflect situations where a platform earner is paid per-job, rather than per-hour.

The gig economy isn’t  a new idea. Your hairdresser may rent their chair in a salon and choose when to work; your personal trainer probably used your gym to connect with you even though they are not employed by them. What’s changed is that, thanks to startups, more types of work can be done in this way, where platform earners choose who they work for and when. It’s work on their terms, when they want, for how long they want. It’s increasingly disrupting traditional employment and becoming an ever more popular and important part of the economy.

So why is it so popular?

In polling Coadec has released this week, 66% of the public saw the ability to set their own hours as important when considering a job, and a majority of those we polled saw flexible hours as a key advantage of the gig economy. In the same way the pandemic changed our approach to where we work, its aftermath has changed people’s relationship with how we work – and it’s clear that more and more people now value flexibility in their lives.

Unlocking the potential of those outside the workforce could lead to a vital boost to growth: 41% of the public, and a majority of those under 55, would be interested in selling their skills and services via an online platform – including 68% of 18-24 year olds and 73% of 25-34 year olds.

So what is needed to help people take advantage of gig work?

A majority of our poll told us that they would be interested in support to better understand how they could get into gig work, and 35% said they would be encouraged if they had more information about the roles available. It’s clear therefore that there is an information gap – and our outdated employment rules don’t help.

Another problem for startups is many feel they can’t offer more benefits to people earning through their platform. They want to do this in order to compete amongst themselves, they feel prevented from doing this in case the earners on their platform get classed as full employees. Such a ruling would crush their business models.

At the same time, the current system for determining wages, and therefore tax, is based on a paid-per-hour mode, whilst platform earners are normally paid-per-job. This means that any gig work done in the UK has an additional layer of complexity that puts potential earners off.

The gig economy could be a route back to work for people currently excluded from the workforce who want to work on their terms – but the Government needs to solve these issues. That’s why we’ve been calling on the Government to clarify employment status and, just as importantly, promote this information through an online tool so those thinking of gig work can understand what their status would be and set out how it could ensure compliance.

This wouldn’t just help platform earners. It would also provide certainty for firms and potential investors, creating the conditions to underpin the Government’s ambition to attract more investment and drive economic growth. Proactively addressing this issue, and just as importantly enforcing rules where they already exist, is how the sector can continue to grow and attract investment.

The Government has an opportunity to open up routes to flexible work for hundreds of thousands of people – and boost the UK’s standing as a place to invest in new parts of the economy – by ensuring employment rules today match these new ways of working.

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Marcus Foster is Campaigns Lead at Coadec.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.