Gig economy fuelling business growth in Oxfordshire - but employers urged to beware the legal challenges

More than three-quarters (78%) of employers who took part in the latest Oxfordshire Business Barometer – a quarterly survey run by law firm Royds Withy King and recruitment consultancy Allen Associates – said they had taken on workers on fixed-term contracts over the last 12 months; 59% said they had used agency workers, 51% interim contractors and one-third had employed workers on zero-hours contracts.

For the majority of Oxfordshire employers surveyed, these figures represent an increase on the previous year. And if current trends continue, the number of agency workers in the UK could reach one million by 2020, according to recent research by the think tank, Resolution Foundation.

Kate Allen, managing director at Allen Associates, said: “The increasingly popular gig economy is providing businesses with the people and skills they need without the long-term commitment. We have seen evidence of this in our day-to-day work as recruiters, particularly in the second half of 2016 after the Brexit vote and subsequent government reshuffle, together with the US presidential elections, left many businesses feeling unwilling to commit even if their confidence in their own prospects was largely untainted.”

Kate continued: “We have dealt with record numbers of vacancies for workers on fixed-term contracts and our temp-to-perm placements have increased by 62 per cent this financial year, further demonstrating the trend for businesses to try before they buy. There is no sign of any kind of recruitment slow down and it was great to see from the Barometer that businesses are continuing to invest in their people – it’s just that they are finding more creative ways to go about it. The UK continues to struggle with talent shortages and this is even more of an issue in Oxfordshire where we have almost full employment. Using a-typical workers is no panacea but it does provide many businesses with an invaluable short-term solution.”

There are many reasons why Oxfordshire employers are drawn to the gig economy, so-called because it is made up of growing numbers of workers keen to work flexibly on short-term ‘gigs’ rather than in permanent roles. Almost three-quarters of the employers responding to the Oxfordshire Business Barometer said they had taken on these workers to deal with fluctuations in workload, while 45% said it was to handle specialist work or projects; 37% said they helped to cover vacant or hard-to-fill positions and 29% said they brought in specialist skills and expertise.

While concerns were expressed over the challenges of maintaining quality standards and consistency of work and relationships, just 21% of employers said they were concerned with maintaining sound HR practices. Even more surprisingly, 90% said they were unconcerned about recent high profile legal cases involving companies such as Sports Direct, Uber and City Sprint TNT, all linked to the employment status of gig economy workers.

Mark Emery, head of the employment law team at the Oxford office of Royds Withy King, said employers were wrong not to be concerned, unless they have done their homework and are clear about the legal issues. Mark explained: “Whether your staff are employed, or self-employed, is not just a question of what the contract says.  The legal question is what is the ‘reality’ of the working relationship?  For example, do you control where the worker does their work, and how they do it?  Do they have to be at their place of work to do it?  Can they substitute someone else to do their job?  If the reality of the situation is that you have a high degree of control, and the individual can’t in practice substitute someone else to do the job, then it’s possible that the relationship is employee, or worker.”  

Mark continued: “One of the reasons why Uber and City Sprint TNT lost their recent cases, is that the Employment Tribunal looked at the reality of the working relationships and not just the contracts.  They found that the ‘self-employed contractors’ were legally workers and therefore entitled to holiday pay, the national minimum wage and potentially sick pay. Employers should therefore be mindful that employment status can have huge financial, not to mention reputational, implications.”