How payroll can adapt to the gig economy?
The gig economy may surely sound new, but it has been around a long time. Commonly known as ‘freelancing’, the gig economy is a free market system in which flexible and temporary jobs are created by companies instead of full-time employment.
As more and more millennials in India are losing interest in 9 to 5 jobs, the gig economy is benefiting them with flexible and freelance opportunities. In fact, gig workers are expected to outnumber traditional employees by the year 2021.
As the gig economy is shifting, continuous in-flow and out-flow of independent contractors is impacting the payroll function of companies. Many companies have had to make serious changes in their payroll department to accommodate gig workers. The growing gig economy certainly has a great effect on the payroll department, but certain things can be done to adapt to the change.
Ensure Data Protection Of The Workforce
The expanding gig economy is causing security gaps and data privacy concerns. With the increase of hiring workers for short-term commitments, companies fail to control the overload of personal data raising its vulnerability to exploitation and hacks. As a result, many companies are opting for payroll outsourcing services to cope up with the pressure.
Most of the gig workers demand immediate payment. In fact, that is one of the reasons people work as independent contractors.
The payment cycle of the corporate world does not match the expectations of gig workers. Freelancers with flexibility in work schedules often expect flexibility in payment. Therefore, as the gig economy is flourishing so is the demand for flexible payment solutions.
With millennials constituting a large part of the gig economy, they demand electrical and flexible solutions for payments. Companies therefore should keep good financial reserves to meet the growing on-demand pay by gig workers.
Social Security For Gig Workers
On papers, India doesn’t seem to be a fire and hire economy, but this segment of the workforce is growing bigger by the day. As these workers are ‘partners’ or ‘independent contractors’ companies don’t consider them their employees in a legal sense hence employment contract. With no social security, the gig economy in India was hit the hardest during COVID.
In India, gig workers are not provided with any social security whatsoever, and the terms they work at are far from a clear contract.
Therefore, giving the same workers’ rights to gig workers as the traditional ones are the changes companies should head to.
Meeting The Expectations Of The Z Generation
The younger generation expects to be paid according to the degree of the work. That means if they are doing four different kinds of things they expect to be paid at four rates.
For the employer, this adds a new complexity on how to calculate the ultimate wage payment. If done within the organization, the company will have to employ different managers of the different departments just to calculate the payment of a mere freelancer. In that case, payroll outsourcing can be a perfect solution for maintaining and calculating the ultimate wage payment.
At one time, ‘gig’ could only be meant as a short performance by an artist. And now it has turned into an economy in itself in contrast with the traditional work environment.
This technology has turned into rapid-money for millennials and side hustle for traditional workers. However, functions like payroll still need to be optimized according to the diverse breed of workers.