HR · 20 November 2017

Understanding the controversy in the gig economy

Deliveroo contract
The main benefit of self-employment is the opportunity to build a successful business not something gig economy firms can offer
With on-demand platforms Deliveroo and Uber bothat the centre ofhigh profile legal rulings in recent weeks, Grid Law founder David Walker helps Business Advice readers understandthe roots of thecurrent controversy in the gig economy.

The gig economy is once again in the news with high profile legal cases trying to determine the employment status of people working for companies such as Deliveroo and Uber.

The law treats the employed and self-employed very differently and as the gig economy grows, this issue is going to affect more and more people. This makes it a very important issue, not only for those people working in the gig economy, but also for those start-ups embracing it as their business model.

Very briefly, let me explain the main differences between employment and self-employment.

Employees are guaranteed certain employment rights. For example, they’re entitled to the minimum wage, sick pay, holidays and they have rights against being unfairly dismissed. The business is very much in control of the relationship and dictates what the employees do and how they do it.

The self-employed don’t have these employment rights. The only rights they have are those which they negotiate as part of their contracts. When they work, they get paid, but when they’re not working, for whatever reason, they don’t have an income. However, they are (or should be) in control of what they do.

Looking at these differences, it’s easy to see why the gig economy creates such controversy and why some people love it while others hate it.

Read more:?Deliveroo legal victory set to safeguard future of the gig economy

Personally, Ive always preferred self-employment. Im in control and I can agree terms with my clients. In theory, I have flexibility and can choose the hours I work. (In practice, I probably work far more than if I was employed.)

However, the main reason I choose to be self-employed is that ultimately, the success of my business is down to me. I can make a clear business decision about whether I take on a particular piece of work for a client and whether it’s likely to be profitable or not.

Just like every other industry, as a solicitor I work in a competitive market so I have to choose the clients I work for very carefully. it’s important to me that I make a difference, that I actually solve a client’s problem and at the same time, deliver great value for money. To me, this is the very essence of being self-employed and this is what makes my business a success.

But let’s say I chose to work in a different industry.

Let’s say I was trying to build a successful business with only one or two clients and both were loss making tech startups. What if I had no opportunity to compete on the quality of my services? What if the terms my clients offered were take it or leave it What if the work from these clients was limited because of the sheer volume of freelancers they have on their books?

Could I build a successful business on these terms?

I think my chances would be very slim indeed.

The tech startups in the gig economy are promoting flexibility as the main benefit of self-employment but that’s not true. Flexibility is not the main benefit of self-employment because employment can be flexible too.

The main benefit of self-employment is the opportunity to build a successful business and that’s not something they offer. But they’re not offering employment and all the benefits that go with it either. This is why there are so many problems with the gig economy.

So, what’s the solution?


 
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ABOUT THE EXPERT

David Walker is the founder of Grid Law, a firm which first targeted the motorsport industry, advising on sponsorship deals, new contracts and building of personal brands. He has now expanded his remit to include entrepreneurs, aiding with contract law, dispute resolution and protecting and defending intellectual property rights.

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