Freelancers in ‘gig economy’ need EPF-like scheme too - Labour Law Blog

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https://www.cljlaw.com/files/mainslide/malaysian-employment-law-banner-brochure.pdf


Oct 15, 2018

Freelancers in ‘gig economy’ need EPF-like scheme too

Thanks to the internet, a growing number of Malaysians turn to freelancing to make ends meet. (Bloomberg pic)

When he was working for an events management firm, Azahari Mazlan used to contribute about RM4,000 annually to the Employees Provident Fund (EPF), money meant for his retirement.

The 29-year-old, now a Grab driver, no longer does this.

Instead, he sets aside RM300 from the over 100 trips a week he makes.

“Come hell or high water, I put in RM300 into a bank account,” said Azahari, who is part of the growing number of people involved in what is known as the “gig economy”.

Azahari said he did not earmark his savings for his retirement.

“It’s just money I set aside,” he told FMT.

The “gig economy” sees individuals offer their services on a short-term or per-task basis.

They include drivers for e-hailing services like Grab.

Azahari hopes there can be some sort of retirement scheme for gig economy workers like him, saying many people only save money if they are obligated to.

Retirement savings is something recruitment specialist Leigh Howard is also concerned about, on top of the wide-ranging implications the gig economy has on job security, income tax revenue, and pension funds among others.

The growth of the gig economy has been spurred by the internet, says Howard, which allows individuals to become freelancers “easier than ever before”.

He said workers in the sector should be protected.

“A robust gig economy underpinned by a modernised legal framework has strong potential to promote economic growth in Malaysia and benefit workers,” he said, calling for laws that would allow freelancers to contribute a portion of their income to a retirement scheme or pension fund.

Under Malaysia’s employment laws, “independent contractors” such as gig economy workers don’t enjoy the same protection as “employees”, especially where termination from work and benefits are concerned.

“This binary classification will increasingly come under pressure as the gig economy offers an array of non-standard work arrangements,” said Howard.

He said Malaysia could look at some options for legislation which balances the interests of businesses and workers.

Some countries have already enacted laws which treat all workers as employees unless an employer can prove otherwise.

Howard has called for the creation of a third category of “dependent contractors” which sits in between the existing two categories of “employee” and “independent contractor”.

The ultimate goal of amending or creating new laws for the gig economy would be to give workers some basic level of protection and for companies, a degree of flexibility, he added.

“Ensuring legislation keeps pace with developments in the real world is important.

“Rather than waiting for new work arrangements to be tested in the courts, I think Malaysia has a distinct opportunity to be ahead of the game when it comes to anticipating the impact of the gig economy.”

He said such laws would be beneficial to the country, especially in attracting talent.

“It’s estimated that only 10% to 20% of gig workers have a formal retirement savings plan. If gig workers had the option to contribute to EPF via the digital platform they subscribe to, this would go a long way to addressing the issue.”

Source : FMT

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