The gig economy is growing: Here’s how to stay both compliant and competitive

The way we work is changing fast. The gig economy, once seen as a fringe phenomenon, is now firmly entrenched in the workforce. 

In fact, according to some estimates, more than 250,000 Australians are now engaged in gig work, and that number is set to grow. For business leaders and HR professionals, this presents both a major opportunity and a compliance challenge.

After all, done right, gig work can drive agility, innovation and cost-efficiency. Done wrong, it can lead to legal risks (especially with the Closing Loopholes Acts now in effect), reputational blowback and poor workforce cohesion. 

With that in mind, we thought there was no better time than right now for all businesses to review their contractor and freelancer strategies.

Why organisations are embracing gig talent

For many organisations, the appeal of engaging gig workers is clear. Used properly, they can help a business:

• Scale fast: Projects can ramp up quickly without the delays of permanent hiring.
• Access specialist skills: From data analysts to UX designers, expert freelancers offer niche capabilities, without taking on a permanent employee.
• Control costs: You pay only for what you need. Done properly, there are no overheads, leave entitlements or long-term employee commitments. (But see the catch below.) 
• Support innovation: Agile projects benefit from tapping fresh, external perspectives.
• Bridge skill gaps: Especially in tech, data, and transformation roles, freelancers fill urgent capability shortages.

The pandemic accelerated acceptance of remote, project-based work. Platforms like Expert360, Upwork and Fiverr now make it easy to source, vet and onboard talent globally. 

In many industries, a flexible external workforce is no longer a ‘nice-to-have’, it’s essential infrastructure.

But there’s a catch: compliance is tightening

Until recently, gig work in Australia operated in something of a legal grey zone. That’s now changing. The Closing Loopholes Bill No. 2, which passed in early 2024, significantly reshapes employer obligations and gig work is directly in the crosshairs.

Since August 2024, gig workers on digital platforms can be classified as “employee-like” and be entitled to minimum pay and safe working conditions under orders from the Fair Work Commission. In other words, employers can no longer hide behind the contractor label if the relationship looks, walks and talks like employment.

The new legislation also:

• Introduced a modern test for determining employee status based on the “real substance” and “practical reality” of the working relationship
• Empowered workers to challenge unfair contracts or app deactivations
• Increased penalties for wage theft (up to 10 years’ prison and $7.8 million in fines)
• Set new standards around casual conversion, right to disconnect and unfair treatment.

For HR and legal teams, the legislation means re-evaluating your use of gig workers. Every freelancer relationship should now be assessed against real-world dynamics, not just what’s written in the contract.

The downside of the gig model

While gig work offers flexibility and efficiency, it isn’t without problems, especially for workers. Without paid leave, super, job security or consistent hours, many gig workers face financial insecurity and lack basic protections. 

Exploitation has been well-documented in sectors like delivery, rideshare and low-skill services, leading to overwork, accidents and in some tragic cases, fatalities.

For businesses, this creates both an ethical and reputational risk. Public scrutiny is rising, and the regulatory tide has clearly turned. Short-term savings achieved by misclassifying or underpaying workers can now come at a steep long-term cost.

So how can employers do it right?

The goal isn’t to abandon flexible work models, it’s to manage them effectively. That means blending compliance with capability, and moving from ad hoc resourcing to a structured external talent strategy.

Here’s how we believe your business can get the balance right. 

1. Start with smart contracts

Make sure every gig worker agreement is up-to-date, transparent and fit for purpose. Avoid one-size-fits-all templates. Define deliverables, timelines, IP ownership and review points clearly. Most importantly, avoid creating “employee-like” relationships – don’t set hours, locations or obligations that mirror traditional staff arrangements.

2. Use technology to streamline management

Digital platforms can help automate contractor onboarding, payments and compliance tracking. Some platforms even integrate performance reviews and contractor availability, allowing you to build a trusted freelance “bench” over time.

3. Integrate, don’t isolate

Even short-term workers perform better when they understand your values and ways of working. A basic onboarding process, cultural briefing and inclusion in relevant meetings can boost productivity and reduce friction.

4. Think about performance and learning

Freelancers can play a role in upskilling internal teams through knowledge sharing or by documenting key learnings. Tools like “learning in the flow” – or microtraining embedded into work – can help bridge knowledge gaps between internal and external talent.

5. Build long-term relationships

The best gig workers are in demand. When you find someone good, keep them close. Repeat engagements, retainer-style agreements or minimum-hour guarantees can help make sure they’re available when you need them and signal that you value their contribution. Again, just be careful to comply with the legislation so that you don’t accidentally create an employee-employer relationship. 

A strategic shift, not just a legal one

What we’re seeing isn’t just a compliance update, it’s a shift in how work is structured. In an era where speed, adaptability and innovation define competitiveness, the most successful organisations will treat external talent as a strategic asset, not a cost centre.

That means rethinking procurement, reimagining performance management, and redesigning workforce planning around a mix of permanent, casual and contingent contributors. It’s not just about avoiding legal risk, it’s about unlocking capability at the right time, in the right way.

Want to know more?

Want to build a compliant, high-performing external workforce strategy that turns fair, flexible working into your advantage? We can help. 

Get in touch to find out more.