A contingent workforce in the GIG Economy: How global employment is shifting
The gig economy isn’t new and is here to stay. In which case we’ll continue to observe a substantial evolution of the way companies do business. That’s especially relevant for those doing business globally. Above all, the projects’ implementation requires human resources. Here’s where hiring comes in to play. The key task is to see the hiring process as a negotiation, with a view to form a partnership, as the article originally published at Vervoe states. Technically, that partnership is between a business and an employee. But in reality, it is a partnership between human beings who need to work together and achieve common goals.
In global hiring, the rise of a contingent workforce signals the above evolution, marking a challenging shift for both employees and employers. If highly-skilled workers seek flexible employment, an alternative to the traditional full-time to maintain their independence, then companies in their turn, are apt to make the most of that talent to meet their business needs. The challenge for businesses seeking the top-notch skills that contingent labor can provide is to pay those workers properly and compliantly. As an employer, you can engage your global workers in different ways. Which, in its turn, determines the worker-organization relationships and therefore the following worker classifications:
- Employees: These are staff employed directly by the company they are working for.
- Independent contractors: These workers stand on their own. They provide services and are paid on completion. They are not employed by any company. At the end of their work they provide an invoice for payment.
- Contingent workers: As such, they are not employees of the firm they are working for, and the business owner has no responsibility to provide continuous work on a permanent basis.
These workers are hired to complete specific tasks under a statement of work (SOW) provision. Generally, it could reduce the cost and strain required to manage more employees, in the form of benefits administration, training/development, etc. Contingent workers are responsible for their own taxes as they work for themselves — not the company. However, using a contingent employment model on a permanent basis can bring lots of trouble for you as an employer: the most significant risks of using contingent workers lie in the legal consequences of misclassifying them. You’ll face significant liability under tax law, wage and hourly regulations, and other employment laws if a court or administrative agency determines that your contingent workers were actually employees. The company can be hit with fines and penalties on top of having to pay the taxes owed to that employee. Another issue is confidentiality. An employer that uses contingent workers has no guarantee that they won’t move on to a competitor. That’s particularly true when workers possess specialized skills and expertise that limit the number of companies for which they can work. The no benefits issue lies in the fact that contingent workers receive no benefits compared to their directly hired colleagues, and it may be tricky to retain this talent, paying him/her only the salary. Some contingent workers even feel as “second-class citizens” compared to regular employees or as if they aren’t a part of the team.
It’s critical for you to understand the differences between these types of relationships, as confusing them causes a growing number of lawsuits. The relationship of the workers to your company is a key concern to federal and state governments, in particular the agencies responsible for collecting payroll taxes. That’s why the worker’s employment status is crucial for both a company and a worker. The contingent or gig workers tend to be classed as ‘dependent contractors’ making them more connected to the company engaging them. But again, it’s up to the HR departments of the companies hiring globally to take that into account when developing their strategies.
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