The gig economy has become a popular topic in the media over the last 18 months, from the Taylor Review into Modern Working practices, to high profile Employment Tribunal cases handing down crucial verdicts. The way we work has never had more variety than we have at present, with some commentators going so far as asking whether the traditional 9-5 is coming to an end. What’s obvious is that employment is changing, with technology opening up flexible and remote working options, as well as the myriad of legal options available to engage staff. With all this change, it could be very easy for all employers to revolutionise how they employ staff – but should they?

Embracing the gig economy

The gig economy, by its very definition, provides a great deal of flexibility, both for organisations and individuals. Employers can cover seasonal variations in workload through the use of zero-hours, or temporary contracts, or they can choose to outsource certain tasks to a freelancer or self-employed contractor or consultant. For individuals, it provides the opportunity to facilitate their lifestyle commitments, such as family or caring responsibilities, studying or a new change in career.

You may also see competitors embracing the gig economy as a way to cut costs through changing the way they engage staff. They may be able to take advantage of more part-time or self-employed workers to cover workload, reducing their wage bill and giving them a competitive advantage in the marketplace. If this is happening in your industry, can you really afford to be left behind?

As an employer you may also be able to use the benefits of the gig economy to attract and retain new talent. Recent research by Deloitte has shown that millennials are increasingly ‘opting out’ of traditional employment, instead opting for self-employed opportunities that offer variety and flexibility. By being able to offer work on a more flexible basis, you may be able to recruit more highly-skilled workers than if you only offer permanent contracts.

Is the grass always greener?

You may be about ready to metaphorically tear up permanent contracts and dive straight into the gig economy, but you do need to understand the implications if you go down this route.

The government has recently consulted with industry on proposals put forward as a result of the Taylor Review of Modern Working Practices. Until the results of this consultation are published, employment law around the gig economy remains fluid. This means that whilst you might make changes to your workforce that are legally acceptable right now, once the recommendations are published you may find yourself making further changes to comply with new legislation. You may want to consider waiting before you make substantial changes to your employment practices and how you engage staff to work with you.

Employers also need to be aware of potential changes afoot in respect of the tax status of self-employed contractors, with future changes to the IR35 rules. HMRC is contemplating the rules so that they will be looking much more closely at the status of self-employed workers in the private sector and whether they truly are ‘self-employed’. These tax changes may be implemented quickly, and as soon as August 2018, so businesses need to be prepared to respond quickly, to minimise the risk of non-compliance within their business. Alongside this, you need to ensure that you are contracting staff appropriately and providing them with the workers’ rights they are entitled to under legislation. Much of the news around the gig economy lately has focused on companies like Uber and Deliveroo getting this wrong. Since then a number of these organisations have revised what they offer their ‘self-employed’ staff and providing certain rights usually given to workers.

It’s also important to acknowledge Brexit, and the potential impact that it may have on employment law in the UK. Much of our legislation around workers’ rights stems from EU legislation, and it remains to be seen what may, or may not, post Brexit. At the present time we are envisaging no immediate changes.

The flip side for many organisations considering moving towards flexible employment, is the opportunity for businesses to maintain a competitive edge in recruitment by offering permanent roles. In certain industries, where flexible conditions are standard practice, a permanent contract can now be viewed as a perk of the job – something that could be an incentive if a candidate is choosing between two employers.

So, where does this leave employers?

With so much happening with the UK’s labour market, it’s easy for HR managers and business owners to get confused about the right way forward for their businesses. We would urge employers to consider the type of contract they are offering and weigh up whether it suits the nature of the role, the type of person they want to recruit, and the skills needed to perform the role. If you’re considering wider changes to your workforce, you may also need to go through consultation – something you should get advice from an employment lawyer on first.

There’s no one size fits all approach here, and employers may well find they adopt a mix of practices across their business. The best solution is one that ensures the needs of the business are met while still recruiting and retaining the best people for the job.

The UK’s workforce and its approach to employment is changing, but the most innovative businesses will be those that can be dynamic, integrating and adopting new working practices quickly and efficiently, and in a way that provides them with a competitive edge.

*Pam Loch is Managing Director of the Loch Associates Group and Managing Partner of Loch Employment Law. www.lochassociates.co.uk