Ask the Expert: Mitigating the Challenge of the Rising Gig Economy
Welcome to another installment of ATCHub’s very own “Ask the Expert”, where experts in recruitment and HR gather to answer your everyday employment/workforce-related queries. Let us know if you have any questions. Leave them in the comments or email them to us, and you might just see it in the next issue of ATCHub “Ask the Expert”!
In 2015, 32 percent of Australia’s workforce participated in some kind of freelance work. That’s more than 4.1 million Australians who joined the ranks of the contingent workforce during the past 12 months. The recent labour force data released by the Australian Bureau of Statistics also showed a continued slide in full-time employment figures while part-time employment has been growing steadily for the past six months.
This has not gone unnoticed at some big organisations such as PwC and LinkedIn, who recently launched new online solutions in the U.S. catering to freelancers and contract workers. Closer to home, Rio Tinto had just announced plans to hire only contractors for its iron ore operations, and this represents a significant change in their recruitment policy.
As the gig economy takes hold, the impact it will have on organisations big or small will be significant and it is inevitable that everyone would have to start looking at how they can tap into this group of talent and consider the value it can bring.
Could you share what are some of the biggest challenges facing organisations today in the light of the rise of the gig workforce and what do you think are some of the ways they can mitigate them to create competitive advantage?
Name – Peter Oreb
Title – Head of Digital Marketing, Australia/New Zealand
Company – CXC Global
Compliance and risk are probably the biggest issues. The concept of ‘you don’t know what you don’t know’ doesn’t hold up here.
This risk factor is particularly pertinent in consideration of the increasing movement towards ‘Total Talent Management’ – streamlining of the hiring and managing of both contingent and perm workers into an integrated system. Having up-to-date knowledge around worker classifications, taxation obligations, legislative compliance, insurances, becomes crucial and having strict rules around engaging contractors must be in place for this system to work.
The lack of cross-pollination of talent from permanent and contract talent pools represent another challenge. Currently, most organisations manage their permanent and contract talent pools separately. So opportunities are missed if, say, a quality perm candidate misses out on a role, and is eliminated from the organisation’s pool by virtue of their ‘perm’ categorisation. And in the absence of knowing EXACTLY what that individual wants from their next role, gig – even career – organisations are missing out on what could be a truly competitive advantage: the migration of talent between ‘perm’ and ‘contract’ in their talent pooling. It’s crazy.
There’re a number of cloud based technology platforms today which offer the opportunity to better manage perm and contract talent in a cohesive sense. And to help mitigate the risks associated with engaging contract workers. These technology platforms, as well as a collaborative approach to talent pooling, are a sure-fire opportunity for organisations to gain a competitive advantage in their workplace.
Name – Stan Rolfe
Title – Managing Editor
Company – ATC Events & Media (formerly Barminco Resourcing Manager)
Having worked in Engineering, Construction, and Mining for the past decade I am a firm believer of the contingent workforce model within these sectors. But there are challenges with such a model.
How do employers track and maintain engagement with current and previous workers to ensure availability of resources as and when required? Could employers provide incentives around upskilling as a retention method to see workers through to completion of scope of work for example? Recruitment headcount and budget constraints ensure internal recruiters are already stretched so will employers need to outsource workforce planning? True workforce planning in the aforementioned industries is in its infancy, if it exists at all. Do organisations begin to adopt a business development CRM approach to talent? Do technologies exist that can manage large contractor workforces effectively?
If your business is about developing and embedding culture how does this occur where contractors make up a large portion of the workforce? This was frequently raised at my previous employer. There was a perception that a contractor workforce would not aid and actually degrade culture. My personal opinion was that if you selected the right contractor, and treated them as an employee then there would be no differentiation. In fact you are likely to have a more productive higher quality worker, keen to secure additional work at a later point in time, as opposed to an employee who knows the next pay check is coming regardless of their performance.
Name – Nick Duggal
Title – Partner, Employment, IR and Workplace Safety
Company – TressCox Lawyers
In my assessment the four biggest challenges of organisations in utilising the gig workforce can be summarised as follows:
Recognising a freelancer
Important legal distinctions exist between employees and freelancers/contractors. If an organisation attempts to engage a worker as a freelancer/contractor when they are an employee at law, significant legal liability can arise for underpayment, unfair dismissal, general protections claims or sham contracting. It is therefore important that organisations understand the legal distinction between an employee and a contractor, and only engage contract labour where it is suitable in the circumstances.
Clear written contracts
A clear contract can help define the nature of the relationship, and who bears the relevant legal responsibilities and risks. Organisations should be aware of the risks that they directly hold, and have a strong set of terms and conditions to ensure the engagement is legally compliant, and that the freelancer themselves accept various legal responsibilities (such as having an ABN, and interposed corporate entity and invoicing).
Separating your workforce
A Contingent Workforce should be distinct from your traditional employment workforce. As the law views these workers as different, your organisation should be seen to be using these forms of labour in distinct ways. Your freelancers should be distinguishable from your direct employees, and only be used in circumstances appropriate for a freelancer.
The nature of a working relationship can change over time. What may have begun as a legitimate freelancer relationship, may have evolved during its course. For example, a freelancer might move onto new projects within the organisation, work increasing hours or be engaged on an ongoing basis. It is important that organisations continue to review whether characterising the worker as a freelancer in such circumstances is legally correct.
All of the above risks can be significantly mitigated by organisations if they understand legally how contract labour should be used in the first place, and have a strong set of written terms and conditions to confirm that the nature of that relationship.
Cover image: Shutterstock
Leave a Reply
Sign up to our newsletter
Get a weekly digest on the latest in Talent Acquisition.Deliver this goodness to my inbox!