During the last couple of decades, with the expansion of technology, internet, urbanization and more recently the COVID-19 pandemic, the debate on ‘what is the future of work’ has been rife among employers. In the 2019 report of the World Bank Group on the ‘Changing Nature of Work’, it was estimated that less than 0.5% of the active labour force participates in the gig economy globally, with less than 0.3% in developing countries. As per the 2022 report by India’s public policy think tank, NITI Aayog, on ‘India’s Booming Gig and Platform Economy’ (NITI Report), the share of gig workers in total workers increased from 0.54% in 2011-12 to 1.33% in 2019-20. The advancement of technology has also enabled the emergence of temporary workers using online platforms thereby amplifying the focus on gig work.
The NITI Report considers ‘gig workers’ as those engaged in work outside the traditional employer-employee arrangement. There are two subsets to gig workers, i.e., platform workers and non-platform workers. When these gig workers use online algorithmic matching platforms i.e., websites or apps like Amazon or Uber to connect with customers, they are known as platform workers. The workers who work outside of these platforms are non-platform workers. These mainly include construction workers, day-job workers and non-technology based temporary workers.
India’s gig economy
Under the Indian labour law regime, workers may be broadly classified as (i) employees; (ii) contractual workers i.e., contract labour and inter-state migrant workers; and (iii) workers employed in the unorganized labour economy. We have briefly explained each of the concepts below.
§ Employee: A person employed on wages in an establishment to perform work is an employee. Employees are entitled to benefits including minimum wages, bonus, provident fund, gratuity, equal remuneration, medical benefit and maternity benefit under laws such as the Minimum Wages Act, 1948, Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (EPFA), Payment of Bonus Act, 1965, etc.
§ Contract labour and migrant workers: A person hired through a contractor to perform work for the employer is treated as contract labour. If a person is employed through a contractor in a different part of the country, then such person is a migrant worker. The welfare and health of contract labour is governed under the Contract Labour (Regulation and Abolition) Act, 1970 (CLRA). They are also entitled to other benefits such as provident fund as per the EPFA. Migrant workers are regulated through the Inter-State Migrant Workmen (Regulation of And Conditions of Service) Act, 1979.
§ Workers in unorganised economy: These workers perform work in the nature of home-based workers, self-employed workers or wage workers. The welfare of these workers is governed under the Unorganised Workers’ Social Security Act, 2008 (UWSSA), providing for various welfare schemes like life and disability cover through Pradhan Mantri Jeevan Jyoti Yojana and health and maternity benefits through Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana.
Gig workers have limited recognition under the current Indian labour laws. As mentioned above, the welfare of migrant workers, building and construction workers and unorganized workers is regulated to an extent under CLRA, UWSSA and Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996. However, these laws were not designed for the modern gig workers such as platform workers. Platform workers are not entitled to any benefits under any labour laws including contract labour[1]. Even if the definition of ‘contract labour’ provided scope for extension of CLRA to platform workers, the platforms do not extend these benefits to such platform workers[2].
As a result gig workers, especially in tech-based platforms where the ratio of employees to gig workers is approximately 1:20[3], are not entitled to any protection or benefits. Some challenges faced by such gig workers include salary shortfall[4], lack of insurance, access to credit and income fluctuations[5]. Furthermore, specific difficulties faced by platform workers are, access to quality internet services, lack of job security, and the contractual relationship between the platform owner and worker being considered other than one of employment[6]. Gig workers have protested and filed cases before the Indian courts demanding social security benefits[7].
Despite the non-recognition of gig workers under law, some Indian corporations such as BigBasket, Flipkart, and Urban Company made a commitment in 2021 to ensure that all gig workers on their platforms earn at least the hourly local minimum wage after factoring in their work-related costs[8]. Furthermore, the Indian Government also developed a web-based portal called e-SHRAM for creating a National Database of Unorganized Workers for optimum realization of their employability and to extend the benefits of the social security schemes to migrant workers, construction workers, gig and platform workers, etc.[9].
Proposed law for the gig economy
Pursuant to the recommendation of the National Commission on Labour to consolidate central labour laws, the Ministry of Labour and Employment introduced the Code on Social Security, 2020 (Code) which recognizes workers such as building workers, contract labour and unorganized workers. Additionally, the Code introduces and recognizes gig workers and platform workers. Pursuant to the enactment of this Code, social security would be provided to all employees and workers, either in the organized, unorganized, or any other sector. The Code replaces various labour and employment legislations which had varied applicability and coverage such as the Employees’ Compensation Act, 1923, the Maternity Benefit Act, 1961, the UWSSA, and the Payment of Gratuity Act, 1972. Currently, the Code is not in effect as the State Governments of each state in India are in the process of finalizing the rules for the purposes of the Code. Recently, the Labour Minister of India indicated that the rules have been prepared by most states and the law will be implemented at an appropriate time[10].
§ Who is a ‘gig worker’ and what is ‘platform work’
The Code defines a ‘gig worker’ as “a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship”. ‘Platform work’ is defined as “a work arrangement outside of a traditional employer-employee relationship in which organisations or individuals use an online platform to access other organisations or individuals to solve specific problems or to provide specific services or any such other activities which may be notified by the Central Government, in exchange for payment”.
Through various judgements[11], the Indian courts have outlined the considerations that will be required to be considered to establish an employer-employee relationship. These considerations include: (i) control exercised by the employer; (ii) supervision of work by the employer; (iii) whether the employer decides the conditions of employment; (iv) disciplinary action by the employer; (v) supply of tools and materials to perform the work; (vi) insurance contribution deductions; and (vii) the mutual obligations between them. The extent of control and supervision exercised by the employer and the extent to which a person is fully integrated in the employer’s organization or remains independent from it, are key considerations among other factors. Consequently, a person who is not bound by any employment contract and works flexibly on an assignment basis with minimal or no control and supervision may be classified as a gig worker.
§ Social Security for gig workers
Although the Code recognizes ‘gig workers’ including platform workers, it distinguishes between employees and gig workers. The Code provides for mandatory provision of gratuity, employee compensation, insurance, provident fund, and maternity benefit to employees. On the other hand, it has provided for framing of suitable social security schemes (Schemes) by the Central and State Governments for gig workers on matters relating to life and disability cover, accident insurance, health and maternity benefits, old age protection, etc.
The Code further requires the Central Government to establish a social security fund (Fund) for gig workers. It imposes an obligation on the gig employers such as, ride sharing services, food and grocery delivery services or other goods and services provider platform to contribute 1-2% of their annual turnover into the Fund which may be used for carrying out the Schemes. This contribution by the gig employers will be subject to a limit of 5% of the amount paid or payable by a gig employer to gig workers. The Code also mandates the registration of all gig workers and platform workers to avail the benefits of the Schemes.
Conclusion
In general, gig workers who are engaged in part-time jobs and do not fall under the traditional work arrangement are largely unregulated and unprotected by the existing laws. Even more so with the development of technology and the unconventional work approach by millennials, we have observed from the NITI Report that even globally, the regulation of gig workers, and specifically platform workers, has been a global debate. For instance, in the United States, some states consider gig workers as employees unless such gig worker satisfies the following three conditions: free from employer control; performs work outside the usual work of the entity; and is engaged in independently established business. On the other hand, the European Union (EU) has set minimum rights and is looking to allow countries under the EU to implement these rights as per their needs[12].
Given the varied approach globally, there may be implementation challenges once the Code is brought into effect, specifically as to who would fall under the definition of a ‘gig worker’ and a ‘platform worker’. Despite the challenges that may be confronted, the recognition of gig workers and platform workers under Indian law will comfort them. The Code has taken into consideration the increase in short-term or project-based work used by employers to circumvent the labour laws and has provided separate definitions while bringing it into the ambit of social security. On the other hand, the labour costs on the gig employers may increase. Although the Code does not extend all the benefits of an employee such as gratuity and employee provident fund to the gig workers, the state specific rules and welfare schemes once framed may provide additional benefit to them with support from the judiciary and learning from the global best practices.
Authors: Souvik Ganguly and Akhil Ramesh
[1] Fairwork (2020), Fairwork India Ratings 2020: Labour Standards in the Platform Economy, Page 11, https://fair.work/wp-content/uploads/sites/131/2020/12/Fairwork_India_2020_report.pdf.
[2] Malavika Rajkumar, ‘The Law for Gig-Workers in India’, April 2020, https://medium.com/nyaaya/the-law-for-gig-workers-in-india-4163cfaee18b , Accessed on 31 August 2022.
[3] Fairwork (2021), Balaji Parthsarathy et. al., Fairwork India Ratings 2021: Labour Standards in the Platform Economy. Bangalore, India; Oxford, United Kingdom, Page 32, https://fair.work/wp-content/uploads/sites/131/2021/12/Fairwork-India-Report-2021.pdf.
[4] Brinda Sarkar, ‘Almost 90% of gig workers run out of their salaries before month-end: Survey’, Economic Times, March 2022, https://economictimes.indiatimes.com/jobs/almost-90-of-gig-workers-run-out-of-their-salaries-before-month-end-survey/articleshow/89922945.cms, Accessed on 31 August 2022.
[5] Neelanjit Das, ‘Gig Economy Workers Face Many Challenges In India; How Fintechs Are Trying To Solve Them’, Outlook India, April 2022, https://www.outlookindia.com/business/gig-economy-workers-zomato-swiggy-bigbasket-blinkit-uber-ola-face-a-many-challenges-in-india-how-fintechs-are-trying-to-solve-them-news-193217, Accessed on 31 August 2022.
[6] NITI Aayog (2022). ‘India’s Booming Gig and Platform Economy: Perspectives and Recommendations on Future of Work’, NITI Aayog, June 2022, Page xix, 25th_June_Final_Report_27062022.pdf (niti.gov.in).
[7] The Indian Federation of App-based Transport Workers (IFAT) & Ors v Union of India & Ors, W.P.(C) No. 1068/2021 (Supreme Court of India).
[8] Fairwork (2021), Executive Summary.
[9] Registration of Unorganized Workers begins across the Country as Government of India launches the e-Shram Portal, Ministry of Labour and Employment, PIB1749294.pdf (labour.gov.in); https://pib.gov.in/PressReleasePage.aspx?PRID=1749294.
[10] ‘Almost all states prepared draft rules on labour codes; implementation at an appropriate time: Bhupender Yadav’, Economic Times, July 2022, https://economictimes.indiatimes.com/news/india/almost-all-states-prepared-draft-rules-on-labour-codes-implementation-at-an-appropriate-time-bhupender-yadav/articleshow/92892472.cms?from=mdr, Accessed on 31 August 2022.
[11] Ram Singh and Ors. v. Union of India (2004) 1 SCC 126; Balwan Rai Saluja and another v. Air India Limited and others (2014) 9 SCC 407; Workmen of Nilgiri Coop. Mktg. Society Ltd. v. State of T.N. (2004) 3 SCC 514; National Fertilizer Ltd. v. Bhagwan Das Pal Writ Petition No. 2895/2009.
[12] NITI Aayog (2022), Page 83.
This article first appeared on the website of the Employment and Industrial Relations Law Committee of the Legal Practice Division of the International Bar Association, and is reproduced by kind permission of the International Bar Association, London, UK. © International Bar Association.
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