A Flex too Far?

EXCLUSIVE CONTENT - Chris Cook, partner and head of employment at SA Law explores the implications of the gig for recruiters.

Accountant firm PwC predicts that the UK gig economy will be worth £2 billion by 2020. As a result, it is likely that a significant number of employers will want to make the most of this opportunity given the growth potential of the market. This will mean an increase in contract work, as opposed to permanent, full-time roles, and potential movement towards the use of online platforms to engage freelancers, as has been successfully put into practice by companies such as Uber and Deliveroo.

The surge in these online platforms may be a cause for concern for recruitment professionals, as it could encourage individuals to sell their services on these platforms rather than go through the process of instructing a recruitment agency to act as the go-between.

Adapting to a change in working arrangements

Moving forward, recruiters will need to adapt to the new styles of working practices in order to maintain a competitive position within their industry. For example, Santander has recently kick-started a new trend by entering into 'one-hour contracts' with its on-call customer service assistant (CSA) employees. Amidst a booming gig economy, Santander is just one of many companies to seize the opportunity to enter into flexible working arrangements with its staff and therefore maintain a competitive advantage in a heavily populated market. Santander contends that their one-hour contracts significantly differ from zero-hours contracts, as they require workers to work a minimum 12 hours a year with full employment rights, as opposed to zero-hours contracts which do not guarantee workers any work at all and have previously been criticised for failing to provide workers with employment rights.

However, whilst it may appear that non-traditional contracts and working arrangements are the way forward in terms of ensuring flexibility within a workforce, particularly for larger organisations operating across a wide geographical area, workers are increasingly ready to challenge their employment status if they feel they have not been treated fairly. The landmark Uber decision last year served as a reminder to employers that they cannot get away with labelling their workers as being self-employed in order to avoid providing employment protection, when in fact the reality is quite the opposite. The decision emphasised the fact that contractual provisions in relation to employment status may not be definitive and could still be open to a different interpretation by a tribunal.

Small businesses may consider it useful to hire workers seeking flexible contracts through increasingly popular digital work platforms, as it has the benefit of minimising the time and cost of outsourcing this to a specialist recruiter. Likewise, workers themselves may embrace the opportunity to find work and sell their services directly to companies, dealing with price and other job details at the outset, rather than relying on a recruitment professional to negotiate on their behalf. As many freelancers will have grown accustomed to managing their own business, they will most likely have gained an extensive skillset in respect of negotiation, budgeting, marketing and project management.

The potential threat of the gig economy to recruiters

As mentioned above, the surge in the gig economy has meant that gig workers are able to choose from online platforms to market their expertise and businesses can then sift through potential candidates based on categories such as price, ratings, skillsets and timescales (for example, if companies require niche projects to be completed within a specified timeframe). This mode of recruitment would be particularly useful if a company had a tight deadline to meet and therefore needed to recruit workers on an urgent basis.

However, the primary disadvantage of this form of recruitment is that businesses will not be able to undertake the additional methods of pre-recruitment vetting that would normally be carried out by recruitment agencies. For example, medium-sized and large organisations may consider it vital to pre-screen candidates (perhaps in a face to face meeting with a recruiter) to ensure that they are the right fit for the business, in both a personal and professional capacity, and that they have the necessary skillset to undertake the particular role.

In particular, gig economy companies pose a competitive threat to contingent recruitment agencies as gig economy companies typically have lower overheads given that they operate on a self-employment basis. However, the gig economy has faced increased scrutiny recently and continues to be criticised by politicians, therefore potentially leading to increased regulation which, in turn, might create more of a level playing field.

How recruiters can make the most of the gig economy

Instead of fearing the consequences of being sidelined by an influx of digital work platforms, recruitment professionals should try to get up to speed with the latest technology and ensure that they have the most effective resources to reach their talent pool and job search habits. Making use of technologically advanced systems may also assist in fast-tracking professionals with niche skillsets, which will enable recruitment agencies to target their services towards individuals that are less readily available for work (i.e. those that would be more likely to be lured in by digital work platforms) and are seeking positions that are more “high-end”.

In order to remain ahead of the curve, recruitment agencies will need to be flexible and adapt to the changes that have been triggered by the rise in the gig economy. After all, these trends don’t appear to be going away anytime soon.