Are gig sector employees the worst affected workers as a result of Covid-19?

Covid-19 News | Economy & Politics | Employment & Skills | Reports

handshake

Workers within the ‘gig economy’ are significant losers from the Covid-19 pandemic, say tax and advisory from Blick Rothenberg.

Robert Salter, an employment and expatriate tax service director at the firm said: “Many of these workers won’t be able to benefit from the various support services that the Government has organized to support the economy (and workers) through the pandemic.

“Whilst a great deal of attention has been given to certain groups, who are not covered by the Government’s support schemes, (e.g. owner-directors of companies, who cannot get Government support for the income that they have historically received as dividends – instead of salary – from their businesses), little or no focus has been given to many of those operating within the wider ‘gig economy’.

“People in this category include those who started to work on a self-employed basis after 6th April 2019 won’t be able to qualify for any support under the Government’s Self-Employed Income Support Scheme (SEISS). In addition, many self-employed people who were self-employed at 5th April 2019, will receive relatively little support under the SEISS, if, for example, they started the business relatively recently (say in 2017/18 or 2018/19 tax years) and the income has been increasing as the business has become more established.

“Moreover, the SEISS is not due to ‘go live’ until late June 2020, so even those workers who qualify for support, won’t be able to receive any funds from the scheme until for potentially three months – which is understandably a major cash flow problem for many people, who have often been classified as just ‘getting by’ financially.

Salter said: “Others typically missing out from support under the Government’s scheme include many employees on zero hours contracts or similar – whether working in shops, as delivery or taxi drivers or cleaning windows or cars.

“Whilst zero-hour workers can qualify for the Government’s Job Retention Scheme (JRS), there is often little incentive for employers of such workers to actually claim JRS grants for such individuals. Similarly, employees working for agencies – e.g. supply workers and similar, agency-supplied, temporary staff – can benefit from the furlough scheme in theory but may not be benefiting in reality. Agencies and other employers are not able to pass on the costs associated with paying such people (and claiming JRS grants) and may in many cases, decide, it is simply better not to formally furlough such employees. After all, if they remain simply ‘idle’, the supply agency would be incurring no costs for these individuals.

“The Government deserves credit for the development of the JRS and SEISS arrangements – developed without any precedents and under extreme time pressure but Gig workers have been left behind and are badly protected thanks to potential flaws and weaknesses within the wider UK economy and tax system.

“Covid-19 could act as a trigger to ensure that the employment tax system is reviewed and amended and genuinely fit-for-purpose in the 21st Century.”

Did you enjoy reading this content?  To get more great content like this subscribe to our magazine

Reader's Comments

Comments related to the current article

Leave a comment

Your email address will not be published. Required fields are marked *