How your business can avoid getting the sack from its gig economy workers

gig economy

The ‘gig economy’ workforce is not only a great resource for businesses, but is an increasingly popular option for many.

Providing the flexibility to help cover peaks, the ability to respond to unforeseen needs and even being part of business expansion, more and more workers are joining the gig economy as this demand grows.

However, by simply taking on workers from the gig economy, many organisations are storing up trouble for the future through a lack of planning and processes, which may result in the poor treatment of these workers.

Allowing this to continue within your organisation could result in your gig economy workers ‘sacking you as the client’, thus removing a valuable resource and impacting upon your business success.

So, how can you avoid getting the sack from your gig economy workers? Well, one simple (but surprisingly rare) solution is to pay them on time.

According to our surveys late payment is the number one reason as to why freelancers will ‘sack’ a client.

Whilst employees on PAYE can resign and claim constructive dismissal if you can’t organise paying them on time, gig economy workers are often treated as suppliers and get lost in the payment and credit control cycle.

It’s worth remembering that these ‘micropreneurs’ pay rent, mortgages and bills monthly – just like the rest of us! Your late payment may seem like a simple oversight to your business, but to them it could be a significant stressor.

Below are 5 things you can do to avoid this:

  1. Set up a clear ‘gig workers’ payment system with accounts and line managers from opening the purchase account to payments and make sure they are fast tracked. This is number one, because good processes usually result in fewer issues!
  2. Let your gig economy workers know your normal payment periods when you initially call them for help. This means they are quoting a price with the knowledge of how long they will have to wait for the money.
  3. Review new arrangements before they are finalised and make it plain before work is done if you intend to deduct IR35 (learn more here) or insist they are paid through payroll.  Do not wait for the first invoice and then set it all up.
  4. Have a clear tender/induction pack on how to invoice, when to invoice, what an invoice should contain and who needs to be copied in.  If purchase order numbers are needed then make it clear how to get them.  Make your own cut off dates very clear if you are doing monthly runs and make sure your outsourced team know this is the date their contact has to get the invoice to accounts, not the date they should invoice you.
  5. Brief your managers on the importance of approving invoices (or querying them) in good time for the payment cycle.

HR must shoulder the responsibility as they are responsible for people within a business.  While the traditional focus has been on employees, gig economy workers are an increasing percentage of the workforce and one HR cannot afford to ignore.

Gig economy workers already have many rights and planned legal changes will give them more. We should not have to wait for legal reform to pay people who have done work for us without making them chase us repeatedly.

It seems somewhere along the lines, from big corporations to SMEs, we may have lost sight of the people behind the invoices when it comes to our gig economy workers. Imagine living the next six months knowing how much your net pay is, but with absolutely no idea when someone might transfer it into your bank account. The solutions are simple, so there seems little reason why they can’t be adopted.

Annabel Kaye, employment law and HR specialist, will be speaking at the Natural HR free-to-attend annual conference in Birmingham on 29th November, which this year will support businesses to consider ‘How HR can adapt to the changing workplace’.