For some growing organisations, freelance is the new employment and they are creating people strategies entirely around the freelance model with no plans to take on a single employee.
Smaller organisations are beginning to source work globally – mostly through a freelance and sub-contract model. Managers who do this talk about avoiding employment law problems and taxes on wages, finding a lower cost base, and achieving rapid resourcing without going through a ‘cumbersome’ HR process.
For purely transactional relationships (“Translate this document”, for example) that can work well. But we are seeing organisations with critical knowledge/systems or customer relationships in the hands of sub-contractors or freelancers with whom the organisation has no proper contract or plan to manage the relationship.
In recent years there has been a strong focus on ‘big data’, compliance and employee engagement, along with diversity and equality. But much of this has ignored the role of freelancers and sub-contractors. We are creating massive two tier workforces with entirely different rights, obligations and expectations.
If we are going to have all our ‘talent’ working for themselves (or other organisations), our way of looking at how we contract and manage people will be fundamentally different from how we look at it if we are dealing solely with employees. Many HR systems do not even cater for freelancers.
European law gives rights to workers, not just employees. Many managers of freelancers are oblivious to this fact and run the risk of triggering claims for minimum wage, statutory holiday, equality and more.
It is hard enough to manage a team of people you see every day – many managers struggle with that. Managing a ‘virtual team’ of people who work for your organisation in diverse locations requires an extra skill set. Add to that the fact your ‘team’ is self-employed with multiple clients and in different legal jurisdictions, cultures and time zones, and you have a heady mixture ready for triumph or disaster. Your ‘team’ may be more imaginary than real.
Technology enables us to work almost globally at the touch of a button, but our managerial and communication skills have not always kept up with that. Freelancers are often given access to data that puts the organisation at risk as managers open the IT doors to collaborate. This can give rise to data protection breaches if individual information is moved around the globe, or sent out to external parties. If the data is not properly handled (regardless of local laws) the reputation risk is huge.
How long will it be before the Fair Trade ethos spreads from agriculture and crafts, through manufacturing, to services? Who wants to be the first corporation to be hounded because of the working conditions of IT workers at the other end of the world?
What role does your HR department play in setting standards and expectations for using freelancers and contractors?
This is happening faster than you think – we can already sit in one country and give a public talk in another, we can send our IT work to almost anywhere if we need to and our phones and emails can be answered from almost anywhere in the world.
Global HR is coming to businesses that never saw themselves as in a global market – and to HR practitioners in medium and smaller businesses who never thought that would be an issue. I hope you enjoy the journey.
Talk to us about ways to contract, manage and consider freelancers and virtual teams in a way that is appropriate for your business. Call us on 08452 303050 (local call rate number).
We founded Irenicon in 1980 to help employers make employment law work for them. We were always a mixed disciplinary practice – something quite revolutionary at the time. Over the years we have worked with some wonderful organisations, pushing the boundaries of how employment law can really be made to work without restricting the flow of the organisation.