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Freelance boom creates fresh employer challenges

The number of British workers making the switch to freelance employment is booming, with one popular online platform reporting its biggest rise in registrations for more than a decade.

More than 227,000 people applied to use PeoplePerHour in 2020, a 60% rise from 136,000 in 2019, as the pandemic forced workers to find alternative income streams. The highest increase was in London (67%). Globally, it was a similar story, with a 61% jump in freelancer registrations on the website.

A survey of 1,000 UK freelancers conducted in March reveals one in four who signed up during the last year said they decided to go freelance after losing their job. Almost 40% had become full-time freelancers, nearly 30% are part-time and close to one fifth are freelancing alongside a permanent job.

Further, the research highlights how men and women are driven by different motivations. In the UK, a third (32%) of the women questioned cited flexibility as the main reason for turning freelance in 2020, while just one in five men cited flexibility as their top priority, versus 44% who said it was to increase their income.

One in 10 new freelancers were furloughed

The research also reveals one in 10 made the move to freelancing because they had been furloughed with 52% of this group saying they'd done so to earn more money and one in six (17%) aiming to take their career in a new direction.

The freelancing boom coincides with an increased focus among employers on contingent workforce management, as the IR35 off-payroll rules come into effect for the private sector next week.

The decision by Uber to give 70,000 of its UK workers access to the minimum wage, pension contributions and holiday pay, following a Supreme Court ruling that deemed its drivers are classified as ‘workers’ under UK employment law, has also raised plenty of questions for organisations which rely on a large contingent workforce.

Simon Blockley, CEO at contingent workforce management specialist Guidant Global, urged employers and HR teams to ensure that truly compliant worker classifications and flexible workforce management processes are implemented across the entire talent supply chain to prevent exposure to sudden and unexpected fees or pension contributions.

Agile work creates ‘grey areas’ for employers

“While every business is different and will therefore tap into external workforces to varying degrees, it is apparent that the flexible segment of talent pools is not only growing, but also being increasingly utilised by businesses,” Blockley said. “We do expect this to constantly change – that is simply the nature of the agile world of work today. However, the latest developments relating to Uber and the recent ruling that its workers are employees and should be treated as such really highlights that there are some ‘grey areas’ for employers when it comes to clearly identifying worker classification. And as we near the deadline for IR35, this complexity is only going to increase.”

“One of the greatest challenges organisations face when compliantly engaging flexible workers is having complete transparency across the supply chain in order to truly identify if compliant employment models and contracts are being deployed and classifications are correctly made. And while there is no one-size-fits-all solution to this, the Uber ruling is likely to be the first of many challenges that we’ll see to the structure of the gig economy.”

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