November 12, 2018

The Gig Economy Explained

The Gig Economy Explored

What is the ‘gig economy’?

The ‘gig economy’ has become the go-to phrase for journalists and other commentators in recent years in describing the changing nature of working practices. In fact, its broad use has sparked some debate within the corridors of power about exactly what the term means and when it should be applied.

When commissioning a major piece of research into the size and scope of the gig economy earlier this year, the Government fixed upon the following definition:

‘The gig economy involves the exchange of labour for money between individuals or companies via digital platforms that actively facilitate matching between providers and customers, on a short-term and payment by task basis.’

This definition reflects the convention that the true gig economy is that which is made possible through the use of digital exchanges; coining the alternative, and perhaps more accurate expression, ‘platform economy’.

However, gig economy and ‘gig worker’ are often used far more generally, to describe that broad section of the workforce not on permanent contracts with their employer, including many types of short or fixed-term contract.

How many people are involved?

Even using the Government’s narrow definition, the number of workers involved is huge. Its research report  (.PDF) completed in February 2018, found that almost three million people in Great Britain had worked in the gig economy in the last 12 months. If we include all workers on non-permanent contracts the number is far higher.

The research also discovered, perhaps not surprisingly, that over half of those involved in the gig economy (56 per cent) were aged 18 to 34 and that 24 per cent were based in London. In terms of level of education, there was no significant difference between those working in the gig economy and the rest of the population.

Satisfaction of workers in the gig economy was found to be relatively high, with over half stating that they were either fairly or very satisfied. ‘Independence’ and ‘flexibility’ were key factors in delivering this overall level of satisfaction.

However, one important area where these workers were far less content with their lot was ‘work-related benefits’.

Objective justification 

By law, employers are not allowed to treat workers on fixed-term contracts less favourably than permanent employees doing the same, or largely the same, job.

Employers must ensure that fixed-term employees get:

  • the same pay and conditions as permanent staff
  • the same or equivalent benefits package
  • information about permanent vacancies in the organisation
  • protection against redundancy or dismissal

That is, unless the employer can show that there is a good business reason for treating the two groups differently. This is known as ‘objective justification’.

The Government’s own webpage on the topic cites the following example of where objective justification might be applied:

Sam is a fixed-term employee on a 3-month contract. A permanent employee doing the same kind of job has a company car, but Sam’s employer may choose to not offer him one for such a short period if the cost is too high.

So, the law allows employers to treat contract workers differently to permanent employees. But, by doing this they run the risk of a sizeable proportion of their workforce being dissatisfied with their benefits.

The rise of flexible benefits

The Government’s company car example reflects a somewhat out-dated view of the level of flexibility that’s now available in employee benefit provision.

For example, the development of solutions such as CLM’s own Mini-lease product, alongside more traditional short-term hire, means that any worker can now be given access to an employer-provided car. As cars remain one of the most highly valued benefits, this can provide a real advantage when competing for skilled short-term workers.

Mini-lease provides the perfect bridge between short-term hire – which is usually only cost-effective up to around three months – and normal vehicle leasing that requires a much longer-term commitment.

Traditional short-term rental terms go up to 28 days, while Mini-lease offers highly competitive pricing up to 12 months, providing better value for money and simplified budgeting.

There are other advantages too. There is usually the scope to choose a specific vehicle – and maybe even the colour  – rather than just selecting a class of vehicle.

As well as having its own pool of long-term rental vehicles, CLM works with all of the major rental providers in the UK, between them operating over 2,500 outlets and hundreds of thousands of vehicles.

With the increase in interest in more flexible vehicle solutions, CLM has launched a dedicated Mini-lease website to help customers search for and select from a range of vehicles from small cars to large vans. Visit to find out more.

If you’d rather speak to someone about how Mini-lease can help with your business needs and your employee benefits packages, call 0800 7765940.