Mindful of HR issues in gig economy

The growing number of individuals working on gigs rather than engaged in a full-time job has led to several employment issues in the West.

Gigs are a form of on-demand work using the app on your smart phone. The person sent out to perform the task (driving a cab, delivering meals, cleaning a house) is not classified by the company as an employee and is therefore not entitled to benefits such as medical treatment, holiday pay and annual leave, and insurance. He or she is a contractor who sells a slice of their time and energy to the service company.

This arrangement seems neat and clean – respond to the call, do it, collect money and leave. What could be simpler than that?

At first glance, it looks little different from a situation where you the customer hire a plumber to clear the choke in your kitchen sink. The plumber quotes you how much his labour will cost and how long the repair will take. You agree to his quote. He takes out his tools, gets to work and completes the repair. You check the sink and satisfied with it, you pay him the agreed amount. He packs up and leaves. You hope you won’t see him again for a long time (it’s no fun to have choked sinks frequently). The plumber is not employed by you; he’s an independent contractor.

But if you call a repair firm and it sends the plumber to your house, the arrangement for work is now different: it is between you and the firm, not with the plumber himself.

And usually you pay directly to the firm which is your contractor.

The question of employment arises between the plumber and the company that sends him out to your house. Is the plumber an independent contractor with the company, or does he get all the benefits like those of the full-time employees?

Companies that operate in the gig economy say these individuals providing the service are not employees, just independent contractors with no employment rights and benefits.

But in the UK where doing gigs is increasingly common, the authorities have decided in several cases that the individuals providing work on behalf of the company were indeed workers, not independent contractors, and so were entitled to basic rights like holiday pay and insurance.

For instance, in January this year, a tribunal in London found that a courier doing deliveries for logistics firm City Sprint should be classed as a worker. A month later, the Court of Appeal ruled that plumbers working with Pimlico Plumbers were also workers.

Last October, Uber drivers in the UK won the right to be classed as workers, rather than independent contractors, according to a BBC news report.

In Singapore, according to a Straits Times report (December 28, 2016), the rapid growth of the gig economy raises questions about how the Government should help ensure security for rising numbers of gig workers and what responsibilities companies should have. According to the Ministry of Manpower, there were almost 170,000 "own account workers" (self-employed and not employing any one else) last year.

Deputy Prime Minister Tharman Shanmugaratnam said in October: "I'm not yet a fan of the gig economy." Hiring such workers "serves the interest of the company", he added, which is "pushing risk onto the contract worker" – and that does not make for a good social model.

"We've got to avoid a continuing drift – risk being passed from companies to workers, who actually can't take much risk – the risk of instability in wages, and the risk of not being prepared for retirement because of a lack of social security contributions."

HR professionals in Singapore should be mindful that as the gig economy spreads in Singapore, these and other work-related concerns would surface sooner or later.