Brave new (digitised) world
THE “GIG ECONOMY” IS NOTHING NEW, BUT THE DIGITALISATION OF THE WORKING WORLD IS FORMALISING THE SECTOR – EVEN IF LABOUR LAW ISN’T KEEPING PACE
The digitalisation of the working world has had several 21st-century spin-offs, most tellingly a shift in the relationship between employers and employees. While the 9-5 working day will continue to be a reality for many, the digital-driven decentralisation of workspaces, places and jobs themselves has given rise to an entirely new economy. A McKinsey report entitled Independent Work: Choice, Necessity and the
Gig Economy found that up to 162 million people in Europe and the USA – 20-30% of the working-age population – engage in some form of independent work and are contributing massively to the rise of the “gig economy”.
It’s an economy which sees workers paid per job, rather than receiving a regular fixed salary. If the first example that comes to mind is Uber, you’re not far wrong – though the ongoing debate about whether the company’s a transport service or a transport facilitation service makes it difficult to define the nature of its business and the resulting relationship it has with the people performing services on its behalf around the world.
The gig economy, in effect, allows workers to be paid per unit of work, with increased flexibility and no need for them to visit an office – meaning they can work for companies anywhere in the world, from anywhere in the world, increasing earning potential and allowing their niche skills to shine. This means that the gig market for IT professionals, marketing specialists and many other typically professional, degreed roles is booming too – rather than “just” employing workers to complete odd jobs.
Two of the major gig-driven marketplaces for the new economy are Upwork and Fiverr, both of which connect freelancers and companies. Both offer online workspaces to facilitate the collaboration and both charge service fees on billings, with Upwork claiming
that its platform is currently facilitating upwards of $1 billion in payments to gig workers every year.
While platforms like these have thrown open the global world of work to people who – make no mistake – still need to be at the top of their game and have excellent time management skills, there are some inevitable downsides for both employer and employee. The employer needs to test freelancers’ competence at the tasks it’s seeking to hire them to complete before engaging them. Conversely, it can also drop them without consequences if they don’t measure up. Freelancers receive few of the benefits available to full-time employees, such as company contributions towards retirement savings and medical aid.
According to Raoul Kissun, Senior Associate at Norton Rose Fulbright SA, lawmakers around the world are struggling keep up with this technological revolution and courts are grappling with defining new forms of employment in terms of traditional
THE GIG ECONOMY MEANS PEOPLE CAN WORK FOR COMPANIES ANYWHERE IN THE WORLD, FROM ANYWHERE IN THE WORLD, INCREASING EARNING POTENTIAL AND ALLOWING THEIR NICHE SKILLS TO SHINE.
laws, leaving workers open to a certain level of manipulation by unscrupulous employers. “SA’s no different, in that there are no laws specific to gig economy participants, who are defined as either employees or independent contractors, depending on various factors,” says Kissun. “In deciding which definition applies, our courts commonly use the ‘dominant impression test’ and take into account factors such as whether the employer exercises control over the employee, the employee’s role within the organisation and the extent of their economic dependence on the employer.”
He cites the example of a recent CCMA ruling on South African Uber drivers who had been deactivated from the service by the local company. The CCMA found that the drivers were employees because they offered a personal service, in terms of an indefinite arrangement. The ruling found that the drivers were under the control of Uber and subject to its standards and performance requirements, and were also financially dependent on Uber. (Likewise, Uber relies on the drivers for its service to function.) However, this ruling was later set aside by the Labour Court as Uber BV (the Netherlands-based parent company) wasn’t joined to the arbitration.
The crux of the matter in the gig economy is that if the participant’s an independent contractor, they’ll stand or fall by his contract. “In other words, his rights and obligations will be dictated by the contract. If he’s an employee, SA’s labour laws will apply regarding issues such as leave and unfair dismissals,” says Kissun. That said, there doesn’t appear to be any legislation – even in the draft phase – to clarify the status of the relationship between a company and a “gig” employee, so the merits of both are up for discussion on an individual basis.
With most gig economy participation platforms hosted outside the country, Kissun warns that pursuing cases against them or the company that contracts a worker via the platform can be challenging. “If the employer’s entirely based outside the country with no South African assets, then
South African courts may not have jurisdiction, which leaves those unfairly treated in the unenviable predicament of litigating overseas, which would be prohibitively expensive for most,” he says. “This
illustrates that jurisdictional issues can be an insurmountable hurdle.”
A report called The Risks and Rewards of Online Gig Work at the Global Margins, produced by researchers from the Oxford Internet Institute and the Gordon Institute of Business Science, University of Pretoria, found that the benefits of online gig work included higher incomes for some (68% of respondents said online gig work was important or very important to their household income, citing it as one of their main sources of income), as well as greater autonomy and task diversity. The downsides included an over-supply of participating workers, employment insecurity, discrimination (towards those on the margins because of their country of origin), social isolation (due to working across different time zones, as well as not being able to interact with others), overwork (due to lack of balance), opacity (not knowing the person who employed them), taxation (not understanding the tax implications of gig work) and intermediation difficulties (respondents said that intermediaries could complicate the flow of information from clients to workers, potentially hindering skills development).
Despite all this, the current 27,7% unemployment rate in SA makes the gig economy appealing through sheer necessity, if not choice, with many people willing to do any job in order to earn even a glimmer of a living. On the upside, the relative weakness of the rand against major currencies means that even South Africans with specialised skills could present a costeffective option for overseas-based employers, leading to more opportunities for those in the South African market who are willing to take on a 21st-century working challenge.
Raoul Kissun,Senior Associate: Norton Rose Fulbright SA