Whether they’re delivering takeout, chauffeuring passengers, or fixing leaky sinks, most gig workers in Canada don’t get benefits.

Classified as independent contractors rather than employees, they’re excluded from employer contributions to Canada Pension Plan and Employment Insurance, they may not be protected under worker’s compensation and they can’t participate in tax-advantaged benefits programs like registered pension plans and employee life and health trusts.

Read: Uber Canada sharing details of self-directed benefits fund for gig workers

So even if an employer offered dental benefits today, its gig workers would have to pay tax on money received for cleanings and fillings. Under current tax laws, a gig worker’s dollar can’t go as far as an employee’s dollar.

One solution is to classify gig workers as employees. Some workers’ rights groups are advocating for this change, while others are setting the classification issue aside and negotiating benefit contributions from platform companies instead.

There’s a concern that gaining these benefits will require making a larger concession in terms of status. For example, in April, Washington state legislated minimum per-minute and per-mile earnings for gig worker drivers and required platform companies to provide paid sick leave, but effectively cemented drivers’ status as independent contractors.

Read: U.S. SEC proposing gig workers paid in company stocks

The classification debate is important and if gig workers were recognized as employees, they would gain significant workplace protections related to minimum wages, hours of work and overtime, parental leave and the right to unionize. While platform companies still wouldn’t be required to provide benefits, some want to do so. Uber has proposed laws requiring all platform companies to establish individual benefits accounts — funded by earnings-based company contributions — that gig workers can cash out to buy health insurance or paid time off.

Governments are also interested in benefits for gig workers. Ontario has established a portable benefits advisory committee and in its 2020 platform, the British Columbia New Democratic Party pledged to develop a benefits fund for workers without employer-sponsored coverage. Before the 2021 election, the Liberal Party of Canada promised to amend CPP and EI legislation so that platform companies would make employer contributions on behalf of its workers.

With this interest from governments and platform companies, this is a good time to design an efficient and tax-effective plan that maximizes benefits for gig workers — a labour force that may work for one or multiple platform companies on a full- or part-time basis and with fluctuating hours and earnings.

Read: B.C.’s NDP developing benefits, pension supports for gig workers

While individual savings accounts are easier to administer, they offer limited benefits and continue to shift economic precarity onto workers. They also often come with higher investment management fees. It’s therefore essential that a benefits plan for gig workers is based on a pooled-risk model.

An efficient plan should cover gig workers engaged by all platforms so they can consolidate their benefits and aren’t stuck paying fees on multiple platform-specific plans. Further, the larger the group, the lower the administrative and overhead costs per member.

One option may be to establish a central fund into which all platform companies deposit contributions, and which oversees three separate funds: a pension plan; an extended health plan and; a fund for leaves guaranteed by employment standards legislation. The pension and health funds would offer group plans that pool risks and drive down costs. Generally, tax laws prevent a single fund from providing pension, health and other benefits.

Read: Ontario mulling implementing new ‘portable benefits’ for precarious workers

Contributions for each worker could be divided between the funds according to a pre-determined split, or workers could allocate their contributions among the funds as they see fit.

The plan should be administered by a government or a non-profit organization with a legislated fiduciary duty towards plan members. In 2017, Washington state considered a bill that would create portable benefits for gig workers. The bill required non-profit benefits providers to administer the funds, capped administrative fees at five per cent of contributed funds and mandated that at least half of the administrator’s board of directors be gig workers and that all directors have a fiduciary duty towards the members.

Benefits funds could be funded through contributions from platform companies, gig workers and customers. In the U.K., Uber drivers contribute to a defined contribution pension plan. Uber puts up three per cent of qualifying earnings, while drivers put up five per cent. In New York state, ride-sharing drivers can participate in the Black Car Fund, which provides workers’ compensation, dental and vision care and telemedicine. The benefits are funded by a three per cent surcharge on all trips made by its drivers. A gradual increase in employer contributions every year may help get platform companies on board.

Read: 81% of gig workers uncertain, worried about retirement: survey

No matter how gig workers are classified, the federal government must ensure that tax legislation allows them to participate in tax-advantaged benefits schemes on a basis that is equivalent to employees.