How do we auto-enrol workers in the “gig economy”?



A gig economy is an environment where temporary positions are common and organizations contract with independent workers for short-term engagements. The trend toward a gig economy has begun

The consultancy McKinsey  reckon that some 162 million people in Europe and America work independently. That’s up to 30% of our working-age population. Official UK figures bear this out, with almost five million people in the UK employed in this way.

At one end of the British gig economy are firms like Deliveroo and Hermes. They rely on energetic youngsters to deliver everyday items like parcels and meals. Mckinsey reckon that about 70% of these independent workers are choosing this work-style either as their main job or to top up earnings. The other 30% are either “reluctant”, working this way faute de mieux, or so cash-strapped – this is all they can do to scratch a living.

Frank Field is concerned about the 30% who are in the gig economy because they have no other choice. He’s concerned because they are potentially exploitable and – as Chair of the Work and Pension Select Committee, he feels in the front line.

Frank Field is a Labour MP but he has taken his concerns to Theresa May and she had set up an enquiry – to be headed by another Labour stalwart, Matthew Taylor who heads the Royal Society of the Arts. The Taylor enquiry is going to look into the way we work and will have important messages for Payroll, Pensions and Auto-Enrolment.

Anyone who has been involved in auto-enrolment – whether in-house or as a service provider, knows the difficult surrounding Personal Service Workers, they are the independent workers who contract with employers to deliver services on an “occasional basis”. The point at which “occasional” tips them into being “workers for auto-enrolment is debatable. The Pensions Regulator asks you to test whether they “look, feel and smell like an employee”.

Among other things, the Taylor enquiry will be trying to establish a better definition for these workers. But as importantly, it needs to report on how these workers are served for the kind of benefits and protections that those in regular employment take for granted.

The answers the Taylor enquiry come up with may not make pleasant reading. Most Personal Service Workers do not benefit from a proper payroll system and most are missed from auto-enrolment altogether. Many are self-employed but no-one knows how many are registered with HMRC for tax and national insurance. The worry is that a large number, especially the 30% of independent workers, working this way out of desperation, are barely getting by on gross earnings.

The worry for employers who regularly pay these workers either through payroll or under invoice is that the income tax, national insurance and pension contributions that may be avoided today, become payable tomorrow, and very possibly retrospectively.

I have written to Matthew Taylor as a member of the RSA volunteering to help with the enquiry and I’m pleased to have had a very positive reply! I want Government to understand the problems not just for independent workers (of which my son is one) but of employers ( of which I am one) , of payroll and of pension providers.

Any enquiry that looks at this problem solely from the buy or sell side will fail. That’s why I’m pleased that conservative and labour politicians and thinkers are working together. I hope that payroll software companies, bureaux and in-house payroll managers will be at the centre of Taylor’s research. I hope too that Taylor will look at the adaptability of benefit providers – from flex to pensions – to ensure that these independent workers are integrated into the world of benefits – as part of the world of work.

A friend of mine showed me a pension statement of one of her clients recently. It showed daily contributions of between £6 three years ago and £9.50 today. I asked what drove the increase – the answer shocked , amazed and delighted. The pension company received payment equivalent to the amount the client would have paid for cigarettes, since he had given up. The amount was paid each day by Paypal into his workplace pension. What’s more the client was getting tax- relief at source from the Government!

Where one leads – others will surely follow!


Frank Field


Matthew Taylor


Theresa May

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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3 Responses to How do we auto-enrol workers in the “gig economy”?

  1. Con Keating says:

    I am confused Henry – what does an employee smell like?

  2. Gerry Flynn says:

    They are the ones that smell like they have been “pooped on” from a great height!

  3. Alan Chaplin says:

    My suggestion would be to use the NI system. The test for who pays is those eligible for NI and do not have an employer. They pay a higher rate. They have the option to advise HMRC of which pension scheme they wish their contributions to go to. If they do nothing, HMRC forwards contributions onto NEST. I still think this would work and be much simpler for the whole of AE.

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