Employ Respons Rights J

https://doi.org/10.1007/s10672-018-9318-8

Independent Workers: Growth Trends, Categories,

and Employee Relations Implications in the Emerging
Gig Economy

Teresa Shuk-Ching Poon 1

# Springer Science+Business Media, LLC, part of Springer Nature 2018

Abstract The major objectives of this paper are threefold. First, the paper captures and
explains the recent growth trends of independent workers, working as freelancers for corpo-
rations, and offering on-demand services for various types of clients mediated by App-enabled
platform companies. Second, the paper discusses different terminologies used to describe
independent workers and highlights the emergence of a new category of independent on-
demand workers, the employment status of whom is a subject of current empirical and
academic debate. Finally, the paper discusses the emergence of an increasing number of
collective actions recently taken by on-demand workers against platform companies over
worsened level of wages, undesirable terms and conditions of work, and inadequate workers’
protection, and examines their implications for the discipline of employee relations.

Keywords Independent workers . on-demand work . employee relations . gig economy

The Changing Workforce

The nature of the workforce that we have seen today is very different from what we used to see
just a decade or two ago. There has been a phenomenal rate of growth in the number of
independent workers or freelancers, particularly in developed countries. In a recent annual
study commissioned by the Freelancers Union & Upwork, it was found that 57.3 million
Americans were freelancers, amounting to 36% of the U.S. workforce in 2017 (Freelancers
Union 2017). In another study carried out by Mckinsey Global Institute (MGI), it was found
that about 20 to 30% of the working population in both the US and the European Union-15
took up independent work. Independent workers are defined in the study as those people who

* Teresa Shuk-Ching Poon

tscpoon@gmail.com

1
Lee Shau Kee School of Business and Administration, The Open University of Hong Kong, 30 Good
Shepherd Street, Homantin, Kowloon, Hong Kong
 Employ Respons Rights J

possess a high degree of autonomy at work, receive payment by assignment or sales, have a
contract of less than 12 months if there is one, and have only a short-term relationship with
their clients (MGI 2016). A very important finding from the MGI’s study was that 70% of
these independent workers went independent by choice, engaging in it either full-time or doing
it part-time for supplemental income (MGI 2016). Similar results were found in the Freelancers
Union’s 2017 study. Around two-thirds (63%) of the respondents surveyed said that they
became freelancers by choice, of whom 69% had a positive attitude towards making
freelancing a career (Freelancers Union 2017). In the same study, it was also found that
47% of the freelancing workforce in the US in 2017 was millennials (Freelancers Union 2017).
In another study carried out by Deloitte in 2016, it was found that 66% of the 7700 millennials
surveyed across 29 countries were expected to leave their organizations and work indepen-
dently by 2020 (Deloitte 2016).

Reasons for the Growth of Independent Workforce

There are several important reasons accounting for the phenomenal growth of the number of
independent workers in developed countries. On the supply side, many people who value
freedom and flexibility that comes with independent work choose to become freelancers
(Freelancers Union 2017). In a survey conducted in 2017 by MBO Partners which provides
back office support to independent workers, it was found that Bto be my own boss^ (77%) and
Bflexibility^ (74%) were high on the list of reasons for people to go independent (Pofeldt
2017a). With the demographic trend of rising millennial population in developed countries
such as the U.S., the work values of millennials and its impact on the growth rate of
independent work should not be taken lightly (Cilluffo and D’ Vera 2017). Millennials had
a great concern about flexibility at work, which was perceived to be an important element
sustaining their health, well-being and happiness (Deloitte 2017). They valued the availability
of a healthy work-life balance environment, flexible work hours, vacation, and personal time
and, above all, the appreciation of their needs as a person (Alton 2017). Should an organiza-
tion’s values go against the values of these millennials, it was highly likely that they would
choose to leave this particular organization and go independent (Deloitte 2016).
On the demand side, corporate leaders have been increasingly aware of the fact that hiring
freelancers or independent workers wisely can make the companies more proactive in handling
changes and uncertainties (Pofeldt 2017a). Rapid changes in product/service demands from the
global markets, driven by innovation and digital disruption, have fueled the emergence of a
dynamic talent model, which is open to configuration and reconfiguration and is increasingly
adopted by organizations. This dynamic talent model has been examined in detail in Deloitte’s
study of the open talent economy seen as Ba collaborative, transparent, technology-enabled,
rapid-cycle way of doing business^ (Liakopoulos et al. 2013). It was found that the more agile
and flexible organizations searching for on-demand skills were eager to move from the closed
towards the more open end along the continuum in the open talent economy. From the closed
end, a company used full-time, statutory employees, employees for partnership business or
joint ventures, and employees for the contractors in an outsourcing relationship. Moving
towards the more open end, the company took on independent workers and the Bcrowds.^
The crowds was the most novel type of workforce in an increasingly digitalized economy as
they had no formal ties with the organizations concerned but were willing to provide them with
free services, either as an individual or as part of a community (Liakopoulos et al. 2013). In
Employ Respons Rights J

this dynamic talent model, independent workers and the crowds form an important part of
organizations’ diversified workforce. The more a company uses independent workers for
specific and temporary projects and leverages open source talent for free services, the more
the company embraces the open talent economy (Fig. 1).
The growth in the number of independent workers in developed countries would not be so
fast if not because of the quick advancement of technology which enables people to work
anytime, anywhere for any companies or clients which use their services. With the growth in
computing power, speed, and storage, people can now collaborate remotely and work together
even if they are located in different parts of the world. With the onset of digital revolution
fusing various technologies, there has been a significant trend in the growth of on-demand
work and the emergence of a new category of independent workers, as labelled by some
academics (Harris and Krueger 2015), who identify work opportunities available on digital
platforms such as Uber, Topcoder, and Upwork operated within an emerging gig (or sharing)
economy. It is predicted that by the year 2015, some 540 million workers will have already
used one of these digital platforms to find work (Anonymous 2016). Companies, too, have
sourced workers increasingly from platforms such as Freelancer, Upwork, and PeoplePerHour
(Pofeldt 2017b).

Independent Workers: Terminologies and Categories

So far this paper has not defined the meaning of Bindependent workers^ or Bfreelancers^ and
the two terms are used interchangeably. In fact, there are many terminologies used to describe
people taking up independent work for both corporations and individual clients. According to
MBO Partners, a U.S. company offering support services for independent workers, this type of
worker can be classified according to their nature of work arrangement and the amount of time
they devote to their contracting work (MBO Partners 2018). The term Bindependent
contractors,^ in its legal sense, describes a contract-for-service work arrangement between
the contractors and their clients which does not encompass an employer-employee relationship.

Closed Open

Balance sheet Partnership Borrowed Freelance Open source

talent talent talent talent talent
Full-time, statutory Employees that are Employees who are Independent People who provide
employees of your part of a part of your value workers you hire for services for you for
organization. You partnership or joint chain or ecosystem specific but free, either
bear all the carrying venture that are on but who reside on temporary projects independently or
costs of these a related balance someone else’s part
employees sheet balance sheet, of a community—
such as contractors for example, those
who work in who answer
support roles questions about
your products on
the web in an open
source help
function
Fig. 1 Open talent economy continuum. Source: Liakopoulos et al. (2013) The Open Talent Economy: People
and work in a Borderless Workplace. Deloitte Development LLC.p.6
 Employ Respons Rights J

Independent contractors are very often taken as meaning the Bself-employed^ when it comes to
describing their tax status. Another term used is Bfreelancers^ which often refers to people who
work for individuals rather than companies and pursue multiple projects at the same time. The
term Bindependent consultant^ describes people undertaking more strategic corporate projects
of a larger scale for a medium- to a long-term. These independent consultants usually work
across fewer companies compared with freelancers. Whereas full-time independent workers
work at least 15 h per week, those who work less than 15 h are regarded as their part-time
counterparts. There are also occasional independent workers who undertake independent work
at least once per month and for occasional hours, including Uber drivers who have registered
with the platform company but driven only every now and then (MBO Partners 2018).
In fact, independent workers who look for work opportunities through App-enabled, digital
platforms, such as Uber, have a rather unclear status of employment. The employment status of
Uber drivers was legally regarded as both independent contractors and employees in various
court cases heard and concluded in different countries or even in different cities within one
single country (Healy et al. 2017). In London, Uber drivers were ruled by employment
tribunals in 2016 as employees (Dearden 2017). In California and Massachusetts, the lawsuit
emerged as a result of a dispute in 2016 between Uber and its drivers over tips and expenses
resulted in the company paying a big settlement to maintain the independent contractor status
of its registered drivers, though with concessions made to increase drivers’ protection
(Kalanick 2016; Wong 2016). In Miami, Florida, Uber drivers are legally ruled by the appeal
court as independent contractors in 2017 (Burke 2017). In the real world, debates on the
employment status of on-demand workers mediated by platform companies are still going on.
In academia, different scholars also have different views on the employment status of on-
demand workers. Some scholars have made an urgent call to take on-demand workers in the
emerging gig economy as a new category of independent workers, reflecting their actual employ-
ment relationship with intermediaries (platform companies) or direct customers (Harris and Krueger
2015). Alternatively, as these on-demand workers are given predetermined rates of pay and their
work performance is assessed by the criteria as determined by the platform companies, other
scholars argued that they should be taken as employees rather than a new category of independent
workers, let alone independent contractors who have not established any formal employment
relationship with the companies/clients using their services (Eisenbrey and Mishel 2016).

The Growth of Independent Workers: Employee Relations Implications

While the employment status of this new category of independent workers is still a subject of
on-going debate, it is clear for many to see a recent trend of on-demand workers, who have
found their wages and conditions of work unacceptable, involved in collective actions against
the platform companies to bargain for the provision of better employment terms and workers’
protection (Healy et al. 2017). Drivers (riders) of Deliveroo, an App-enabled platform com-
pany operating in London, undertook a wildcat strike in 2016 to oppose the company’s
imposition of unilateral change to their contract, adjusting the pay structure from an hourly
wage of £7 plus an additional £1 per delivery to a piece rate of £3.75 per drop (Cant 2017a).
Such a change in pay structure offered the food delivery platform company a higher degree of
flexibility at the expense of the drivers whose pay was no longer guaranteed. They had to wait
for long hours, competed for orders, but could still end up with their level of average wages
significantly lower (Magee 2016). Represented by the Independent Workers Union of Great
Employ Respons Rights J

Britain (IWGB), Deliveroo drivers put forward three demands, bargaining for a higher rate
(£5) per drop, a hiring freeze, and no trade union activists’ victimization (Cant 2017a). In the
end, concessions were made by Deliveroo to the drivers, guaranteeing pay for the peak hours
and allowing drivers to opt-in to, rather than opt-out of, the new payment scheme which
replaced the guaranteed time rate by the non-guaranteed piece-rate that could have an adverse
impact to the earnings of the drivers (Magee 2016).
The strike undertaken by Deliveroo’s riders has become a landmark incident in the
emerging gig economy as it has a demonstration effect for on-demand workers registered
with other food delivery platform companies, encouraging them to band together and engaging
in collective actions in cases of unfair and unacceptable treatment. Similar strikes spread from
Deliveroo to UberEats, and to Foodora, from London to other cities across the U.K, and to
other countries including Italy, Spain, France and Germany (Cant 2017b). Trade unions and
political parties in different countries were increasingly involved in the disputes between the
on-demand workers and the platform companies for which they worked. Some governments
also intervened, as in the case of Deliveroo’ s driver strike, to clarify the employment status of
the on-demand workers concerned. These on-demand workers were taken by the U.K.
government as Bemployees^ rather than the Bself-employed^ because they were de facto
workers employed by a company and should therefore be entitled to receive at least a wage
not lower than the national minimum (Magee 2016).
While there has been a phenomenal level of growth of independent workers, especially in
developed countries, these workers are usually not considered as employees having established any
kind of employment relationship with the companies using their services. Independent workers are
therefore seldom the subject matter to be examined by employee relations academics. The
emergence of a new category of independent workers assuming the episodic on-demand work,
mediated by platform companies, could be a springboard encouraging employee relations scholars
to pay more attention to the rights and the responsibilities of this new type of worker (Stewart and
Stanford 2017). The fragmented nature of on-demand work has very much weakened the power of
this category of independent workers, who are in no position to engage in any kind of effort-wage
bargain, as the platform companies are in full control of the coordination platforms and the
algorithms used in the process of distributing work for matching workers with the orders (Cant
2017b). Labor costs, such as those related to the buying and maintaining of a vehicle to perform on-
demand work, are absorbed by independent workers. Other costs of employing workers, such as
workers’ insurance expenses and sick days’ payments, are not borne by the platform companies as
on-demand workers are taken by them as equivalent to the self-employed who are not entitled to
various kinds of employment protection (Magee 2016; Cant 2017a).
While empirical arguments are still going on concerning the employment status of on-
demand workers, employee relations academics should not refrain from paying more attention
to this group of workers who have recently joined together and undertaken collective actions to
fight against the platform companies, perceived as providing them with unfair treatment,
inadequate protection, worsened level of wages and unacceptable terms and conditions of
work. No doubt the power of trade unions has been steadily declining in most developed
countries for quite some time, largely as a result of successful managerial strategies imple-
mented to individualize the employment relationship. Employee relations scholars should be
happy to see more trade union involvement in the strikes undertaken by on-demand workers
against the platform companies as it could well be a sign indicating that collective, as opposed
to an individual, employment relationship will have a chance to make a comeback as an
important research focus of employee relations in the future.
 Employ Respons Rights J

Concluding remarks

This paper examines the rapid growth in the number of independent workers as an important
category of workers in developed countries and explains why such a trend has emerged. This
development has been driven by several important factors. First, there are more organizations
which find it beneficial to hire independent workers for specific projects. This type of
independent worker is perceived as freelance talent located towards the open end of the talent
continuum for organizations using a mix of different types of workers, many of which are no
longer having a clear employment relationship with the organizations. Second, as more
millennials start joining the workforce, their work values treasuring flexibility, work-life
balance, and their appreciation of personal needs over and above commitment to formal work
will certainly fuel the speed and the volume of growth of independent workers. Finally,
technological advancement and the increasing popularity of digital platforms, matching on-
demand workers with customers or companies looking for services in the gig or sharing
economy, has bred the development of what some academics would like to call Ba new
category of independent workers^ (Harris and Krueger 2015). While the definitions of
independent workers are many and a final verdict is yet to be decided on the employment
status of on-demand workers registered with platform companies, employee relations scholars,
however, should pay more attention to examining the rights and responsibilities of, and the
terms and conditions of work given to, both the conventional and the new category of
independent workers whose increasing importance should not be ignored.

Compliance with Ethical Standards

Conflicts of interest The authors declare that they have no conflicts of interest. This article does not contain any
studies with human participants or animals performed by either of the authors. There were no individual
participants in this study and, thus, informed consent does not apply to this study.

References

Alton, L. (2017). How millennials are reshaping what's important in corporate culture. Forbes. https://www.
forbes.com/sites/larryalton/2017/06/20/how-millennials-are-reshaping-whats-important-in-corporate-
culture/; https://www.forbes.com/sites/elainepofeldt/2017/06/13/new-study-why-self-employment-keeps-
accelerating/#59ec49f56ac8 (Accessed on 29 January 2018).
Anonymous (2016). Welcome to the future of work. Management Today. June.
Burke, P. (2017). Former Uber driver not entitled to unemployment benefits, appellate court rules. Local10.com.
1 February 2017. https://www.local10.com/lifestyle/legal-news/former-uber-driver-not-entitled-to-
unemployment-benefits-appellate-court-rules (Accessed on 9 May2018).
Cant, C. (2017a). I’m a Deliveroo rider. Collective action is the only way we’ll get a fair deal. The Guardian, 31
March. https://www.theguardian.com/commentisfree/2017/mar/31/deliveroo-organising-wages-conditions-
gig-economy (Accessed on 30 April 2018).
Cant, C. (2017b). Precarious couriers are leading the struggle against platform capitalism. Political Critique, 3
August, https://blog.p2pfoundation.net/precarious-couriers -are-leading-the-struggle-against-platform-
capitalism/2017/08/24 (Accessed on 30 April 2018).
Cilluffo, A. and Cohn D’ Vera (2017). 10 demographic trends shaping the US and the world in 2017. Pew
Research Centre.http://www.pewresearch.org/fact-tank/2017/04/27/10-demographic-trends-shaping-the-u-s-
and-the-world-in-2017/ (Accessed on 29 January 2018).
Dearden, L. (2017). Uber ordered to treat drivers as workers with full rights after losing appeal in landmark case.
Independent Business News. 10 November. https://www.independent.co.uk/news/business/news/uber-
Employ Respons Rights J

drivers-employees-full-rights-court-appeal-lose-ordered-treat-ride-sharing-app-taxi-a8047316.html
(Accessed on 10 May 2018).
Deloitte (2016). The 2016 Deloitte millennial survey: Winning over the next generation of leaders. Deloitte
Touche Tohmatsu Limited.
Deloitte (2017). The 2017 Deloitte millennial survey: Apprehensive millennials: Seeking stability and opportu-
nities in an uncertain world. Deloitte Touche Tohmatsu Limited.
Eisenbrey, R., & Mishel, L. (2016). Uber business model does not justify a new Bindependent worker^ category.
Economic Policy Institute, Washington, DC. http://www.epi.org/publication/uber-businessmodel-does-not-
justify-a-new-independent-worker-category (Accessed on 9 May 2018).
Freelancers Union. (2017). Freelancing in America: 2017. In Freelancers Union & Upwork.
Harris, S. D. and Krueger, A. B. (2015). A proposal for moderning labor laws for twenty-first-century work: The
Bindependent worker^. A Discussion Paper for the Hamilton Project, December.
Healy, J., Nicholson, D., & Pekarek, A. (2017). Should we take the gig economy seriously? Labour & Industry,
27, 232–248.
Kalanick, T. (2016). Growing and growing up. UBER Newsroom, 21 April. https://newsroom.uber.
com/growing-and-growing-up/ (Accessed on 16 August 2016).
Liakopoulos, A., Barry, L., & Schwartz, J. (2013). The open talent economy: People and work in a borderless
workplace. Deloitte Development LLC. pp., 1–12.
Magee, T. (2016). The Deliveroo drivers strike: a milestone in the sharing economy. TechWorld, 22 August, IDG.
https://www.techworld.com/apps-wearables/deliveroo-drivers-strike-collective-action-in-uncharted-waters-
3645346 (Accessed on 30 April 2018).
MBO Partners (2018). https://www.mbopartners.com/blog/whats-my-type-defining-the-independent-worker
(Accessed on 14 April 2018).
MGI. (2016). Independent work: Choice, necessity and the gig economy (pp. 1–134). McKinsey Global Institute:
October.
Pofeldt, E. (2017a). New study: Why self-employment keeps accelerating. Forbes https://www.forbes.
com/sites/elainepofeldt/2017/06/13/new-study-why-self-employment-keeps-accelerating/#59ec49f56ac8
(Accessed on 3 January 2018).
Pofeldt, E. (2017b). The powerful trend that will soon make the freelance life easier. Forbes https://www.forbes.
com/sites/elainepofeldt/2017/09/27/the-powerful-trend-that-will-soon-make-the-freelance-life-easier/2
/#4148edf54e3f (Accessed on 3 January 2018).
Stewart, A., & Stanford, J. (2017). Regulating work in the gig economy: What are the options? The Economic
and Labour Relations Review, 28, 420–437.
Wong, J. C. (2016). Uber reaches $100m settlement in fight with drivers, who will stay contractors. The
Guardian, 22 April. https://www.theguardian.com/technology/2016/apr/21/uber-driver-settlement-labor-
dispute-california-massachusetts (Accessed on 16 Aug 2016).