Ensuring Workforce Compliance in the Gig Economy

Pablo Baldomá JonesPablo Baldomá Jones

Pablo Baldomá Jones

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There are no immediate measures to stop the growth of the gig economy.

Today, companies of all industries and sizes use freelancers on a scale never seen before. Beyond the classic figure of the “external contractor” who performs tasks with a time limit, the GIG workforce currently operates as if it were part of an organization’s employee base.

Online talent solutions - like Alto- provide companies worldwide with independent experts with unique skills capable of leading entire projects or managing teams of freelancers.

Another peculiarity of this type of economy is that the nature of the work is based on shifts or projects. Therefore, this type of work can represent an additional source of income for a worker or, depending on the tasks and demands, it can become a complete job.

The GIG Economy in numbers

According to a 2015 US Department of State study, 65% of employers anticipated an increase in the use of independent contractors to meet their talent needs.

On the other hand, MBO Partners’ survey found that the full-time freelance workforce increased by 34% from 2020 to 2021, from 38.2 million to 51.1 million.

While freelancers can save money and provide flexibility and staff with unique skills for companies, they must consider the full range of non-compliance and risk issues when assigning tasks to these workers.

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68% of full-time independent workers say that independent work is more secure than a full-time job, according to an Upwork survey.

What aspects should be considered regarding compliance in the Gig Economy

For workers

As the Gig Economy continues to grow, so does the need for compliance among workers in this new area of employment.

Several compliance issues need to be considered in the Gig Economy:

1. Taxation

As more and more people enter the Gig Economy, it is essential to ensure you, as a worker, are paying your taxes correctly. This includes ensuring that the correct tax rate is applied to the income and declaring all of your income from Gig work.

2. Employment status

Another key compliance issue in the Gig Economy is the employment status of workers. In many cases, Gig workers may not be considered employees by their companies, which can have many implications for their rights and entitlements.

3. Health and safety

Gig workers are also subject to the same health and safety laws as other workers. This means that they must be provided with a safe work environment and must be given any necessary training to perform their job safely.

4. Data protection

Finally, gig workers must also be aware of their rights under data protection laws. This includes ensuring that their data is not being mishandled by their employer and that they have the right to access their data.

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Organizations must work with more flexible resources in the gig economy.

For companies

Beyond the direct compliance risks, which can arise from a misallocation of taxes or employment status, there is another range of problems that can occur during the operations of these types of employees; These are classified into three:

1. Regulatory Compliance

If they participate in tasks that are subject to regulatory compliance requirements, company procedural policies, or others that require communication and training.

2. Operational Risk

If they are dedicated to critical tasks that may affect the operational continuity of the business. In this case, operational risk must be managed appropriately.

3. Information Risk

If they handle confidential data, measures must be taken regarding information security, and eventual controls must be established to guarantee computer and data security.

In conclusion

The GIG workforce must be managed appropriately to ensure it receives the necessary training to address risks and compliance requirements.

GIG Workers must be embedded in the company culture to understand privacy policies, tolerance guidelines, and risk limits.

Similarly, their roles, functions, and tasks must be clearly defined. All this is to create and maintain a clear record that indicates the status of the employee and the type of training, communication, and access to which they can access.

In short, the use of freelancers has many benefits, but if it is not managed correctly, the costs that its use will represent will be greater than the benefits it provides.

Balancing risks and rewards is essential to developing an effective management system that enables all parties involved to win.