Rise of ‘gig economy’ has led to many freelance workers negating to plan for themselves, and their families’ futures, warns a leading Liverpool solicitor. Andrew Wright reports

 

The ‘gig economy’ is a term that has been bandied about a lot in recent times.

By definition, the gig economy is ‘a labour market characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs.’

In the UK, the ‘gig economy’ has risen by 70% since 2010 in London alone, which could be seen as a reaction to disenchantment over zero-hour contracts and uncertainty over long-term futures in the workplace.

There are many noted advantages to working freelance, and ‘gigging’ from job to job, such as more control over schedule and an easier line of communication with clients, through smartphones and social media.

However, uncertainties are also abound, which include worries over where the next clients or jobs will come from.

John-Paul Dennis, of law firm Kirwan’s, has also warned that members of the gig economy are leaving their clients and family members vulnerable by failing to prepare for their own death.

He has voiced his concerns about the lack of succession planning taking place by freelancers who don’t fully understand the complex web of legal issues that could emerge should they die unexpectedly.

He says: ‘Imagine a situation in which a single person business contracted to several clients dies or becomes mentally incapacitated without warning.

“Several questions immediately emerge; where does that leave the client? How can they access confidential documents relevant to them that may be stored on the freelancer’s computer?

“If the freelancer concerned had taken on a project management role, how will their death or incapacitation affect the project as a whole? What are the ramifications of that?

“For family members, the problems could be more acute. How do they access the freelancer’s business account to ensure they have a continued income?”

Here, John-Paul, along with Kirwans’ corporate and commercial solicitor James Pressley, lists the top succession plans that members of the gig economy should make.

Create a list

Write a list of all the people, both in a personal and professional capacity, who would be affected by your unexpected exit from your business, and the ramifications it would have on them.

Look at actions that can be taken while you’re still around to guide people through the relevant processes in the case of your death. Whatever the potential problem, now is the time to find a solution.

Arrange for a trusted person to take over your business affairs

Arranging a property and financial affairs lasting power of attorney (LPA) means appointing someone to make decisions on your behalf. That includes dealing with business matters, and ensuring that suppliers are paid and drawings can be made to joint accounts you may share with your spouse or dependant.

Leave your trusted representative a guide

To assist them your trusted representative in handling your affairs, it is crucial to leave them a guide as to the actions they’ll need to take.

Directing them to HMRC is a start; they will be able to advise on tax matters, including any tax that needs to be collected or repayed, and whether they need to fill in a self-assessment on your behalf.

The tax office’s bereavement tool will also prove invaluable in helping your representative to understand which forms they need to fill in, while the NI Contributions Office should also be contacted.

Your representative may also need to check with a solicitor as to whether inheritance tax is due on your estate. In addition the Department for Work and Pensions (DWP) should be made aware of your death so that they can cancel your state pension.

Create shared drives

For a smooth handover, upload documents to a shared online drive for your representative and clients and regularly upload all the files they may need to help operations continue smoothly upon your exit from the business. This could include ongoing records of client and supplier invoices, or key pieces of information about projects.

Get any data protection issues ironed out

If you are simply doing short-term project work for a larger organisation, then that organisation will be classed as the ‘data controller’ and, as such, will be responsible for the data. However, if you also have your own clients, and keep a homemade database of their personal data, then you are the data controller and, as such, should be registered with the Data Commissioner’s Office.

According to the seventh principle of the Data Protection Act 1998, the Information Commissioner’s Office would expect all ‘data controllers’ to have a policy in place with regards to how that data will be dealt with in the event that you die or become incapacitated; however, the likelihood is that most gig economy workers will not spend the time or money becoming embroiled creating such a plan.

If a person dies, leaving a database of clients’ personal information on their computer, there does not seem to be a clear picture on who is responsible for dealing with it.