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Employee Benefits

Business Owners – Are your employment practices taking into account the gig economy?

By July 27, 2017 October 22nd, 2020 No Comments
Employee Benefits

Business Owners – Are your employment practices taking into account the gig economy?

By July 27, 2017 October 22nd, 2020 No Comments

The Resolution Foundation has recommended that some workers currently classified as self-employed should be entitled to earn the national minimum wage. The independent think tank, which aims to improve the standard of living for those on low and middle incomes, has found that around half of the UK’s 4.8 million self-employed workers are earning under £310 a week.

The Resolution Foundation has submitted their idea to the Taylor Review, which is examining modern employment practices following the rise of the gig economy through businesses such as Uber and Deliveroo. Those carrying out short-term or casual work through these companies are currently classified as self-employed, which means they are not entitled to the minimum wage. However, the think tank has said that as they do not have the chance to set their own wages, these people should be classified as workers, entitling them to wage protection and other worker benefits.

In a statement for the Resolution Foundation, Conor D’Arcy said that the government should extend minimum wage protection, “to those self-employed people whose prices are set by a firm. This would mean that self-employed people in the gig economy would be given protection against extreme low pay for the first time ever.”

However, the Institute of Directors has cited evidence of increased workplace participation for those who statistically struggle to find employment – such as single parents and the disabled – thanks to the easier routes into self-employment created by the gig economy. They have suggested that imposing a minimum wage could threaten these benefits as taxi, delivery and cleaning services are unlikely to be able to justify paying workers at times of low demand.

The change could also impact on those taking the lead on employment practices within their companies, such as finance directors. One suggested change for the future by The Social Market Foundation is the introduction of “hirers’ national insurance contribution” to ensure that gig economy companies are not avoiding making payments by classifying those using their platforms as self-employed. The SMF has proposed that these could start at a low figure of 2% with a gradual increase to the 13.8% national insurance rate paid by employers.

If you feel this topic affects your business in any way then please contact your Creative consultant to discuss further, or get in touch at info@creativeeb.co.uk.

Sources

https://www.accountingweb.co.uk