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Transforming accountancy for the gig economy’s “job gold rush”

finance
(Image credit: Image source: Shutterstock/wrangler)

The Covid-19 pandemic had a significant impact on everyday work life, not only were employees forced to work from home, but for the first time in a long time, permanent employment faced a stark drop due to unprecedented job losses. Businesses had to cut back on in-house resources and reliance on the temporary labor market has meant this sector has boomed. The ‘gig economy’ is up 25 percent in the last two decades and now includes one in seven UK workers. 

Now, as Covid restrictions are eased, this has triggered a “gold rush” of employment vacancies to fill, with recent research showing demand for workers is at its highest rate for over 23 years, with another sharp growth in the temporary labor market. Industries, like hospitality which have been closed for over a year, are opening their doors once again and need the labor. 

There is no doubt that ‘jobs for life’ are history and the move to a more flexible, dynamic way of working is accelerating across diverse roles, including construction, healthcare and IT, which will support economic recovery. But, as these sectors of employment continue to boom, the systems and processes which are in place to manage them lag behind. 

Technology has been at the forefront of the rise of the gig economy. On-demand companies Uber and Deliveroo are two examples of how technology has been used to create multi-million dollar empires based on the temporary labor market. So, it’s crazy to think the technology needed to pay this hoard of workers isn’t up to scratch. 

A thriving economy powered by contractors  

Employers are now embracing flexibility, in many forms. The traditional working day, with office spaces and set 9-5 hours, has been disrupted and businesses now rely on technology to connect their ecosystem. It’s clear employers also now embrace the idea of using temporary workers to plug the holes in their workforce and drive business forward, as evidenced by the growth in this sector. 

This new flexible way of working breaks work down into its smallest parts, to minutes on a timesheet and this is called Quantum Employment. The people who make up the Quantum Workforce deliver industry-specific skills on demand. This enables businesses to make use of custom-made workforces to fit business needs and allows Quantum Workers to work as and when they want - the exact flexibility which is being demanded by many following the pandemic. 

Imagine a business that requires a coder who writes a specific coding language for three days, or a restaurant that has a particularly busy day, they are now able to access a diverse group of specialists who can lend their skills for a limited amount of time. 

The complexity of paying the temporary labor market  

But, there is a catch. This flexible workforce needs to be onboarded, taxed and paid for their hard work and this has also powered the growth of a layer of businesses that have sprung up between the end client and the temporary worker. Recruiters, Professional Employer Organisations (PEOs) and ‘umbrella companies’ offer solutions to paying salaries to, and taxes on behalf of temporary workers. However, this fast-paced sector of work is growing at a faster rate than legislation. 

The government is trying to regain control overactivity and recently implemented reforms to IR35, the UK’s anti-avoidance tax legislation designed to ensure that  'disguised' employment is taxed at a rate similar to employment. Also, new guidance has been issued for working via an umbrella company by HMRC, which is a monumental moment for the ‘gig economy'. 

But, there are still issues with payroll and compliance - there could be potential problems that arise with everything from holiday pay to taxation - and currently, HR and payroll staff are being let down by outdated systems,  creating unnecessary business risks. There is a need for full transparency to ensure that information is kept up-to-date and accurate so that the Quantum Workers can be paid correctly and quickly.

The eruption of the temporary labor market calls for accounting and payroll to be transformed and be brought into the modern, technological era, to keep up with other fast-paced industries which end clients belong to. Gaining access to real-time information, from CRM systems to accounting ledgers, is key to the success of managing the Quantum Workforce.

Technology to power the Quantum Workforce  

Quantum Employment Design (QED) is the solution to this growing problem. QED is designed specifically for the temporary workforce and streamlines all of the core processes needed to manage it through a cloud-native platform. Not only does it integrate with third-party systems, like CRM systems to make the payroll process easier and more efficient, it also automates timesheets, invoices and bank matching across payslips and tax remittances. This completely cuts the time needed to administer the future of work. 

On-premise systems cannot handle processing thousands of payments a week or onboarding hundreds of new Quantum Workers. But, QED enables businesses to accelerate these processes massively by understanding and adapting to changes. QED also provides protection from legislative changes which might disrupt the market, as it adapts automatically and provides a seamless service. 

Manual, handwritten payslips and timesheets are now a thing of the past. QED works for any business, wherever Quantum Workers are deployed and whenever they need to be onboarded, paid and taxed. 

Quantum Employment Design is the future of payroll  

With QED it’s possible to bring accounting and payroll for the temporary labor market into the 21st century. It’s time for this outdated industry to embrace change and use technology as an enabler. 

As Covid-19 restrictions are lifted, worklife will probably never be the same again and in the future, a more flexible way of work will take its place. Workers will be able to work where and when they want to ensure a good work/life balance - which is now so important. QED means payments will be made on time, taxation will be automatically dealt with and both businesses and employees can benefit from sharing their skills. 

The transformation of the temporary labor market is on its way and QED is pioneering the way.

John Whelan, CEO, My Digital

John Whelan is chief executive of My Digital, a SaaS supplier for umbrella companies, PEOs, PSC accountants and recruiters.