There are varying definitions of the gig economy. A 2018 UK government report says that it involves people who find work specifically through digital platforms on a short-term and payment-by-task basis.
Using this definition, the term usually refers to working through apps such as Uber, Bolt, TaskRabbit and Deliveroo.
But others use the term more broadly to refer to work that’s defined by zero-hour contracts, short-term contracts and freelancing.
Because there’s no formal definition of the gig economy, there aren’t official statistics that show its size. However, a 2021 survey conducted by the University of Hertfordshire and BritainThinks estimated that 4.4 million people in England and Wales were working for gig economy platforms at least once a week.
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What is gig work?
Gig work varies widely, so it isn’t always easy to pinpoint. Common examples include:
- renting out a room or property through a short-term rental site
- driving for a rideshare company
- making deliveries for a delivery company such as Evri or Yodel
It could also include jobs like freelance writing, tutoring, design, caregiving and many more. You could find gig work like this if you are looking to make extra money, particularly if you already have a particular hobby or skill.
While a gig is generally a short-term task, project or job that a person takes up to make extra cash, many do gig work long-term or as a main source of income. Some gig workers get paid per task or assignment. Others earn an hourly rate.
What is a gig worker?
A gig worker is someone who works within the gig economy on a task-by-task basis. It could also include people who work as independent contractors or freelancers. Gig workers are typically classified as self-employed, rather than employees, for tax purposes. For this reason, they don’t usually receive regular employee benefits such as health insurance, a workplace pension or paid time off.
However, some gig workers may have certain rights, such as entitlement to the national minimum wage and holiday pay. It depends on your employment status. If you’re classed as a ‘worker’, you have more rights than someone who is ‘self-employed’, but less than an ‘employee’.
You’ll have to check the specifics of your contract, if you have one, as well as the actual working relationship that you have with the platform or client.
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What to know about working in the gig economy
Working in the gig economy can come with flexible hours, quick cash or the ability to set your pay, depending on the job. However, if gig work is your primary income source, it can also mean irregular pay, a lack of benefits, and complicated taxes. You’ll also need to set up your own self-employed pension if you’re not enrolled in an employer’s scheme. If you’re considering gig work, keep a few things in mind:
Research the pay
Rates can vary by location, experience and demand. Plus, the platform you get gig work through may take a cut of your earnings. It’s also a good idea to find out how often you get paid, so you’ll know when to expect to receive your earnings. Check the company’s website and reviews for details.
Be aware of potential costs
Some gigs require you to pay for certain expenses related to the job. For example, you may be on the hook for insurance, fuel and car maintenance if you transport goods or people.
Budget for taxes
Employees get tax and National Insurance taken out of their salary automatically through Pay As You Earn (PAYE). Most gig workers, on the other hand, are responsible for working out how much they owe through a self-assessment tax return.
Make sure your budget allows you to put money aside to pay your tax, so you don’t face a surprise bill when it’s time to file each January.
Watch for scams
Gig work is high in demand – and scammers know this. Be on the lookout for red flags. If you’re asked to pay money upfront, or a position promises to pay more than your skills and experience warrant, it’s probably a scam.
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