The labour market is undergoing a broad transformation related to how work is done. New ways of working are currently giving many people new opportunities to do work. However, there is a great deal of uncertainty and somewhat false information surrounding the phenomenon, concerning things like who is responsible for handling the statutory insurance and taxation for the work. This transformation of ways of working is an international phenomenon.
The transformation of work is not slowing down
New ways of working are growing at an increasing rate, and at the same time, there are now more different platform solutions available on the market. Digital platforms are provided by both Finnish and foreign operators.
A typical “light entrepreneur” using the services of an invoicing company is a self-employed person who offers a service, such as cleaning, transport, or construction via a digital platform. They are not listed in the prepayment register and do not have their own trade name. Usually, their remuneration is based on the amount of work the person has carried out and does not require expensive investments in devices. This kind of work can also be a person’s secondary work or a risk-free opportunity to test out a new business idea.
In the platform economy of the future, work will become fragmented into small units, and, in its current scope, no statistical information is available on the phenomenon. Based on the number of customers registered with the biggest companies providing invoicing services, it has been estimated that there are already almost a hundred thousand “light entrepreneurs” in Finland.
<h2>The platform economy offers a place in the market</h2>
<p>In the platform economy, a digital platform can be used to offer work to an unlimited customer base. The platform is essentially a place in the market. Different platforms operate differently and have different rules for how work is transmitted and carried out. This way, they can be used to do work in various positions, as an employee or entrepreneur. With respect to the employee’s position and the rights and obligations of the platform transmitting or commissioning the work, it is important to consider what the parties involved have agreed upon as well as whether the arrangement constitutes an employment relationship. These factors determine whether the platform has the obligations of an employer as laid down in the legislation on social welfare.</p>
<h2>Invoicing service companies take care of the statutory duties on behalf of “light entrepreneurs”</h2>
<p>Invoicing service companies are operators that offer invoicing services to entrepreneurs and market this so-called “light entrepreneurship” as a kind of low-threshold path to entrepreneurship, where entrepreneurs can test out the feasibility of their business ideas, for example. The invoicing service takes care of matters related to invoicing and taxation on behalf of the “light entrepreneur” and transmits the payment for their work. Taxation is generally handled centrally by the service, which decreases the rate of work carried out in grey areas. There has, however, been uncertainty related to insurance.</p>
<p>Debtors in enforcement take advantage of invoicing services when attempting to avoid the seizure of their income. Some invoicing service providers offer the option to withdraw income as virtual currency. Invoicing services can be used to get around a disqualification from engaging in business operations, because a “light entrepreneur” is considered a salaried person rather than an entrepreneur when it comes to taxation.</p>
<h2>In the sharing economy, goods are exchanged for remuneration</h2>
<p>In the sharing economy, anyone can share an available or underused resource they own with others in exchange for remuneration using a digital platform. The platform is maintained by professionals, but the people offering their time, services or property on the platform are typically private individuals operating in non-professional capacity. The uncertainties related to interpreting the position of the employer are the same in the sharing economy as in other forms of the platform economy.</p>
New ways of working pose challenges for official monitoring measures
New ways of working create challenges for the authorities when it comes to interpreting whether work is being carried out by an employee or an entrepreneur according to the current legislation. In individual cases, the line is not always clear. In some situations, authorities have different interpretations of a person’s legal position. That said, authorities also collaborate when investigating individual cases related to the status of employers.
The information required to investigate the shadow economy and economic crime is becoming even more fragmented. It has become more difficult to identify responsibilities because work may involve several contracting parties.
Communication about the employers’ and entrepreneurs’ obligations set by employment, social welfare and taxation legislation is the most effective way to prevent the grey economy.
Read more about how to act.
