It’s been the biggest revolution in the labor market for years, as companies turn to freelancers and contractors to work for them rather than employing their own staff. On the surface of it, there doesn’t seem too much wrong with the concept. Businesses get the work done that they need by effectively outsourcing, and workers get to choose when and how much they work and for whom. The principle is sound, but as the idea has taken hold, an element of exploitation has started creeping in. If you work as a freelancer or want to start, you need to be aware of your rights and the responsibilities of the people who are paying you so that both parties are in a mutually beneficial relationship.
This is essentially a micro business. There might be just you, working from your desk at home, but you still have to look for jobs, market yourself, have a business plan and a budget in place. You can pick and choose who to work for and what you do, and you’re entirely your own boss. It offers you the freedom to select the work you do and charge what you think you’re worth, and the scope for earnings is only limited by your abilities and determination. You need to be self-motivated and have plenty of self-discipline if you want to succeed, because there’s no-one standing over you making you work, and it’s all too easy to procrastinate or fail to prioritize your work. If you do have what it takes, you will enjoy a rewarding career doing a job you enjoy, and plenty of satisfaction from your endeavors.
Zero hours contracts
This kind of working arrangement has several different names around the world, but they all mean the same thing – you are self-employed, but you work for a particular business in a defined role. This model of working is somewhat contentious, as many people believe it is just a way for employers to get the benefits of having workers without the responsibilities of employee rights and expenses. There’s no doubt that for many workers this kind of contract is ideal because they can work the hours it suits them and be flexible to accommodate their other commitments. On the other hand, for people who have to take on these roles because of a lack of other opportunities, it can feel as though they are being treated as an employee without having any of the benefits employed status brings. Exactly what rights you would have as an employee will vary according to the employment legislation in your country or region, but typically you wouldn’t be entitled to sick pay, holiday or holiday pay, pension contributions, welfare services, staff discounts and reward schemes or tax contributions. The problem has been that while this is all perfectly normal if you are genuinely self-employed, some companies are making demands on workers that should only be expected of paid employees. For example, setting rates that workers charge for their services, only permitting certain working hours so you don’t have the flexibility you’d expect from freelancing, restricting who else you can work for, and denying holiday requests. It’s a difficult issue, but some self-employed people are starting to challenge these restrictions as not being in the spirit of hiring self-employed people.
The pitfalls of freelancing
Working for yourself doesn’t have too many problem areas, but there are a couple of key issues you need to bear in mind:
- Self-discipline: as mentioned previously, this is a particular trait that you will need as a freelancer. You have to be able to motivate yourself to get up, get stuck in and work for eight hours – or the length of time you need to – without getting distracted, putting tasks off, or failing to keep up with communications and marketing. This is only a pitfall if you lack the drive to achieve, and many of the skills you require in time management and organization can be learned from a wealth of Internet resources.
- Financial issues: Unlike a regular job, you won’t get paid the same amount every month, and you may well find you have some months where work is scarce, or accounts aren’t being settled, and you face difficulties with your cash-flow. Preparing a realistic and accurate budget and forecast will help you get through these periods, and it’s always wise to have a range of clients rather than just one, who if they no longer require your services will leave you with a very large financial hole to fill. Saving regularly, so you have a contingency fund to tide you over the lean periods is a sensible way of dealing with this issue. If you do run into problems, identify them quickly before they get out of hand. Don’t start borrowing at high-interest rates in the hopes you’ll be able to pay it off as soon as new work comes in because you don’t know how long that might take. Consult a reputable financial service like Bonsai Finance for advice and help to get you out of your slump, and renew your efforts to find more work.
What the future holds
It’s likely that the gig economy will continue to grow and become an established element of mainstream employment options. Internet connectivity enables many different kinds of roles to be successfully outsourced, and indeed the Web itself is a major contributor to the economy, using both writers and tech specialists to supply web content and technical expertise. Whilst it does have many benefits and is ideal for a lot of people, the question of employers who are crossing the line from genuine outsourcing to employing people without accepting responsibility for them needs to be addressed, to ensure the playing field is fair for everyone involved.
Working for yourself is an exciting and fulfilling way to earn your income, and the opportunities to work from home or be self-employed are growing every day. If you have the drive and the skills to make it work for you, then it’s well worth considering, but don’t forget to put your business plan together first to ensure you stand a good chance of success.
About: Dan Cormac knows how to make his money go further. A freelance financial journalist, Dan is passionate about personal finance. Whether you hope to escape the chains of debt, to save for a house, or to retire within a decade, Dan explores the most effective ways you can achieve your financial goals.