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Lifepedia - Medical Coverage - Gig economy

Do gig economy workers need insurance?

09 Sep 2022
Do gig economy workers need insurance?

The gig economy is thriving in Singapore and has resulted in a booming side income (or sometimes full income) for the self-employed.

There’s even a recent story about a food delivery driver who made upward of $8,500 in around a month. So why then is the Prime Minister worried about the labour practices of food delivery apps? The simple answer is protection, and insurance (or the lack of it) may be the bane of any food delivery gig.

Here’s why: 

The gig economy vs. being employed

There are plenty of advantages to the gig economy. You effectively have no boss, you can work the hours you like, and you can usually shift between platforms easily (e.g., if you don’t like working for Grab, nothing stops you switching to Food Panda or some other service).

However, this comes with a major drawback: gig economy workers are not employees. This means that technically, they don’t have a contract of service with anyone (note: if you work on a contract basis, you may have a contract for service, which sounds the same but definitely isn’t.)

Think about this way: when you hire a mechanic to fix your car, you don’t have a “contract of service” for the mechanic. You can’t be responsible for the mechanic’s healthcare needs, working hours, compensation in the event of injury, etc. If that’s how it worked, no one would dare to hire mechanics, plumbers, tuition teachers, and so on.

In all these scenarios, what exists between buyer and seller is a contract to provide a particular service - not a contract of service (i.e. they are not your employees, even though you pay them).

This is a problem for a number of reasons:

●      No regulated hours per week - Under Singapore law, you can’t make an employee work more than 44 hours a week (if work is five days or less per week), and there are strict requirements for Overtime pay. But if you’re a gig worker, this is all on you. Your food delivery app won’t be penalised, just because you need to work 50 hours a week to make ends meet.

●      No public holidays or leave - Employees have the right to a certain amount of leave every year (usually at least 14 days), and public holidays are off days. For gig economy workers though, it’s more brutal: you don’t work, you don’t get paid. The company behind the app doesn’t care whether it’s Christmas, New Year, you’re sick, you’re having a baby, etc. No work, no pay - that’s it.

●      No top-up to your CPF contributions - Most (not all) Singaporeans get an added 17 per cent of their income topped up to their CPF, by the employer. A gig economy worker misses out on this.

●      Perhaps the biggest issue of all, no insurance or health benefits - Most Singaporean employees are at least covered by Workman’s Compensation, the most basic kind of coverage provided for injuries. The majority of Singaporean employees have it even better than that: employers usually provide group insurance, which can include coverage for injury, death, hospitalisation, or even dental (depending on how generous the employer is).

For a gig economy worker, however, their health is their own concern. If you get injured and can’t work, there’s no disability insurance to maintain your cashflow. If you end up hospitalised or disabled, there’s no financial protection other than what you’ve bought for yourself.

White-collar gig economy workers can face similar challenges

White-collar workers, as well as creatives, may find the gig economy traps them in a cycle of contract work. This can give the appearance of greater stability, but a contract is still not the same as employment (it’s still a contract for service, not of service).

Contract workers are often viewed as being more expendable. When a company needs to reduce headcount, the obligation is often to protect employees first - and that may mean contract workers don’t see any renewal.

For those who do contract work as a side-hustle, this can mean a significant loss of income. For those who only do contract work - or worse, have only one contract with a single client - the loss of income can be near total.

As such, even white-collar workers and creatives need to ensure sufficient financial protection for dry spells.

Food delivery jobs: can you eat your cake and still have it?

So can you still have your sweet, flexible-time food delivery job, while not risking your financial protection? After all, you’re zooming up and down our busy roads all day.

To be blunt, financial protection is a bit tougher for gig workers. For example, regular employees can buy disability income insurance, which pays part of their salary when they’re unable to work - but this generally requires you to be an employee.

But the good news is that you don’t have to be entirely without financial protection. You can still buy certain forms of coverage, such as:

●      Private hospitalisation insurance, to complement your MediShield Life. This can be paid with your CPF so you don’t feel the pinch, up to your Annual Withdrawal Limit. This ensures that, if you’re hospitalised, you will be covered on the medical expenses for private or public hospitals (depending on the plan purchased subjected to co-insurance and deductibles); and some come with benefits like daily hospital cash (i.e. if you pick a cheaper ward than you’re entitled to, you can actually get cash for every day you’re in the hospital).

●      Accident coverage, to handle the cost of mishaps that don’t need hospitalisation. For example, if you injure your leg but don’t need to be hospitalised, accident coverage could provide a payout to lower the cost of the consultation or medication.

Incidentally, food delivery workers suffer a lot of injuries such as sprains, which are technically minor but put you in a world of hurt when you need to make 40+ deliveries islandwide. Some accident insurance policies also cover the cost for Traditional Chinese Medicine (TCM) treatments, for these serious aches.

●      Life insurance protects your loved ones. It’s tough to be a gig economy worker when you’re the sole breadwinner in your family, or your children are very young. If touch wood, you pass away or become permanently disabled, your entire family could be in dire straits.

Life insurance can ensure a sufficient payout for your family if the worst happens to you. These policies allow you to pay a premium that’s affordable, while still ensuring beneficiary’s needs are met (e.g., you don’t need to pay high premiums for a million-dollar payout; some – but not all – plans can just provide a payout that will last till your children are 18 or 21, at which point they can start working).

The Singapore government is considering additional rules on food delivery apps, to better protect workers. These should help to improve the lives of a lot of gig economy workers as a whole. Until the time comes, however, you need to ensure you have sufficient financial protection for yourself.

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