Maximising the Gig Economy: implications on your business insurance
Over the past two years, the UK’s “Gig Economy” - a labour market characterised by short-term contracts or freelance work - has boomed and looks like it’s here to stay. Research has recently found that over a quarter of all SMEs have employed at least one freelance worker in the past 12 months[i].
Whilst this flexible new method of managing employment has been proven by some to increase profitability, many business owners are unaware of the implications this could have on business insurance policies. Here, Bryan Banbury, explains the importance of having the correct cover for every worker, regardless of contract.
Companies operating within the so-called ‘Gig Economy’ have undoubtedly received some bad press in recent months; with cases such as Uber, Deliveroo and Pimlico Plumbers making the headlines for all the wrong reasons. That being said, recent research suggests that small and medium enterprises (SMEs) are embracing this new-found way of flexible employment and when managed in the right way, it can provide a whole host of benefits for both employers and workers.
It’s now essential for companies operating within this new economy to review the protection they provide for ‘self-employed’ workers to avoid potential law suits.
For example, a recent case against Uber ruled that drivers were entitled to paid holiday, rest breaks and standard minimum wage, despite being labelled as self-employed. Royal Mail was also caught out recently and is now launching a review into holiday and sick pay for self-employed staff as a result of an employment tribunal, after a freelance contractor broke his wrist in an accident whilst working.
Businesses are also required to provide short-term contract workers with the same health and safety training and liability cover as employees. In fact, the Health and Safety Executive has recently stated that the terminology businesses use to describe their staff is irrelevant – every person working for the company must be covered by Employers Liability insurance, irrespective of their contract.
Other policies may also need to be taken into account by Gig Economy employers such as unemployment cover and health insurance to pre-empt potential future legislation.
Amidst fears that businesses are not providing sufficient cover for Gig Economy workers and are even exploiting them as cheap labour, Brussels has recently announced that it aims to increase social security of these workers to ensure people are not cut off from these standard work privileges across the EU.
When it comes to the individual, the 2015 Labour Force Survey has found that freelancers account for 6% of the UK workforce and many are now expected by employers to enter the market with their own insurance in place. From energy assessors to personal stylists, the self-employed have varied and specific needs, sometimes making it difficult to get the exact cover that is required. If you fall into this category, the answer is to look for a bespoke package that can be tailored to your individual needs by a specialist insurance broker.
For workers, the Gig Economy can fulfil the growing demand for self-employment, independence and flexible working hours and locations. For business owners, it can support entrepreneurship and job creation. For both parties however, it means potential new legislation and unavoidable obligations in the future.
Whether you see this new economy as a threat or a goldmine, it needs to be considered when reviewing your business insurance. If you have any queries about the insurance policies of your workers or full-time employees, or if you’re a freelancer, pick up the phone and arrange an informal chat to explore your options.