The legal face of the contingent workforce

As project-based, freelance, and gig work become increasingly de rigueur, the laws surrounding such arrangements have come under increasing scrutiny.
By: | May 14, 2018

The contingent workforce has arrived, and it’s only going to get bigger. The idea of using freelancers or temporary staff is nothing new, but in the era of Uber, online tools like Upwork have gained immense traction. In fact, job seekers themselves seem to be deliberately seeking out on-demand positions as contractors or consultants.

Persolkelly’s recent Asia-Pacific Workforce Insights survey – which involved almost 9,300 hiring managers and candidates across a wide range of industries and nine countries in the region –found that almost two-thirds of Generation Z respondents (born between 1995 and 2005) are actively seeking out short-term roles, far more so than any other age demographic.

That survey also found that Hong Kong has most embraced the free agent trend in Asia-Pacific, with 55% of its workers agreeing that there is a preference for more flexible employment. Vietnam (50%), Thailand (48%), and Singapore (47%) are close behind.


How does the law view contingent workers?

The contingent workforce includes gig workers, but it also includes part-timers, freelancers, and contract employees. In the eyes of the law in Singapore, there are slight nuances differentiating each.

“Gig workers can be employees or freelancers,” noted Lim Swee Say, Singapore’s Minister for Manpower, during a speech last year.

“For example, if a private car driver joins a transport company with an employment contract and takes on jobs offered via apps, he is in the gig economy, but is still an employee protected by labour laws because there is an employment contract with the car rental company, even if he is on a short-term employment contract with (it). There is no difference from other workers who are employed under what we call ‘contract of service’,” he explained.

“But if he provides a service in return for a fee without entering into any employer-employee relationship with any party, and at the same time, he is not overly constrained by conditions imposed by the ‘platform’ owner or service buyer, then this is no different from any freelancer that we know today under ‘contract for service’.”


The legal minefield

But even as the contingent of contingent workers becomes bigger, so too have calls become louder and more prevalent for existing labour laws to be updated.

The Australian Council of Trade Unions (ACTU) has called for employees who have put in six months of regular work to be given the option of converting to a full-time, permanent position.

However, Australia’s Fair Work Commission already rejected similar proposals last year – though it did grant casual workers in certain industries (including retail and hospitality) the right to request permanent employment if they work regular hours for 12 months. Employers are allowed to refuse to enact the conversion if they have one of a wide range of “reasonable” grounds.

“There have been too many loopholes; too many ways for employers to get around ensuring people have rights and security at work,” says ACTU secretary Sally McManus.

In an increasingly mobile world, companies also need to be mindful of the grey areas involved when hiring gig workers or freelancers from different countries.

As Mark Graham, a professor of internet geography at the Oxford Internet Institute told The Atlantic, “if you are an online worker in Kenya and the client who is giving you the work is based in the US, it’s not fully clear to either parties whose rules should be governing that relationship. Should you be following Kenyan labour laws?”

“More needs to be done to enforce rules that are on the books in the first place. Then, more needs to be done to figure out how we make rules and guidelines and regulations that make sense in a world of digital work,” he added.

“That’s obviously a difficult task that relies on regulators from all over the world asking, ‘How do we both encourage work but protect our workers?’ That’s a hard balancing act.”

In Singapore, the matter of social security contributions has become a particular sticking point.

“Can we have a new form of contribution? We may have to be one of the first few (in the world) to design something,” said Ang Hin Kee, the director of the Freelancers and Self-Employed Unit at Singapore’s National Trades Union Congress, during a conversation with local media.


Government actions so far

The Singapore government has already started addressing the challenges posed by the rise of the contingent workforce – one step has been the establishment of a tripartite working group specifically dedicated to it.

Established in March last year, the workgroup recently released a “first-wave” report of recommendations that address issues facing freelance and other self-employed workers. The Singapore government has reportedly already accepted these recommendations.

They include the development of special insurance schemes to help compensate for short-term income loss during injury or illness, as well as a ‘contribute-as-you-earn” Medisave model which mandates contributions to the health insurance fund that all regular workers compulsorily contribute to.

Additionally, the workgroup has recommended the development of a Tripartite Standard to require written contracts when engaging freelancers. The contracts would cover payment timelines, amounts, the obligations of each party, and how disputes can be resolved.

Another recommendation calls for sector agencies to provide more mediatory support in the case of disputes – for instance, the Land Transport Authority and the Infocomm Media Development Authority presently provide such support.

Over in the UK, Prime Minister Theresa May has announced a wave of labour reform – with millions of workers reportedly standing to benefit from so-called “day one” rights.

The “Good Work Plan” reform package aims to ensure “[accountability] for good quality work as well as quantity of jobs,” May said. It includes holiday and sick pay entitlements, a right to payslips for all workers (including casual workers), and a right for all workers to request more stable working arrangements.

“We recognise the world of work is changing and we have to make sure we have the right structures in place to reflect those changes,” said May.

“We are proud to have record levels of employment in this country but we must also ensure that workers’ rights are always upheld.”

A key case has also gone to the UK’s Supreme Court discussing the exact nuances of employment status and workers’ rights, and how these apply to gig workers and other members of the contingent workforce.

It is likely that Singapore, and other countries in Asia, will take a page from the gig economy rulebooks laid out in the UK, as well as other established markets. In the meanwhile, organisations will likely need to proactively work with regulators and workers associations to ensure that the tenuous legalities around the contingent workforce don’t end up biting them in the back.