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Rules governing India’s gig economy
Acuity Law, Mumbai, Maharashtra
Acuity Law, Mumbai, Maharashtra
During the last couple of decades, with the expansion of technology, internet, increasing urbanisation and most recently, the Covid-19 pandemic, the debate on ‘the future of work’ has become a hot topic for employers. In the World Bank Group’s 2019 report on the ‘Changing Nature of Work’, it was estimated that less than 0.5 per cent of the active labour force worldwide participates in the gig economy, with less than 0.3 per cent in developing countries. According to India’s public policy think tank, NITI Aayog’s 2022 report on ‘India’s Booming Gig and Platform Economy’ (NITI Report), the proportion of gig workers has increased from 0.54 per cent in 2011-2012 to 1.33 per cent in 2019-2020. The advance of technology has also enabled the emergence of temporary workers using online platforms (‘platform workers’) thereby increasing the focus on gig work.
The NITI Report considers ‘gig workers’ as those engaged in work outside of the traditional employer-employee arrangement. There are two groups of gig workers: platform workers, and non-platform workers. When gig workers use online algorithmic matching platforms (websites) or apps such as Amazon or Uber to connect with customers, they are known as platform workers. Workers who work outside of these platforms are non-platform workers and mainly include construction workers, day-job workers and non-technology based temporary workers.
India’s gig economy
Under India’s employment law regime, workers may be broadly classified as: employees; contractual workers ie, contract labour and inter-state migrant workers; and workers employed in the unorganised labour economy. These categories are explained below.
A person employed on a salary in an establishment to perform work is an employee. Employees are entitled to benefits including minimum wages, bonuses, provident funds, gratuities, equal remuneration, medical and maternity benefits 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 a person is a migrant worker. The health and welfare 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 funds in accordance with the EPFA. Migrant workers are regulated through the Inter-State Migrant Workmen (Regulation of and Conditions of Service) Act 1979.
Workers in unorganised economy
Workers in this final category perform work in the nature of home-based workers, self-employed workers or waged workers. These workers’ welfare is governed by the Unorganised Workers’ Social Security Act 2008 (UWSSA), providing for various welfare schemes such as 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 current employment laws. As mentioned, the welfare of migrant workers, building and construction workers and unorganised 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. 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 workers.
As a result, gig workers, especially in tech-based platforms where the ratio of employees to gig workers is approximately 1:20, are not entitled to any protection or benefits. Some challenges faced by such gig workers include shortfalls in salary, lack of insurance, difficulties accessing credit, and income fluctuations. 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. Gig workers have protested and filed cases before the courts demanding social security benefits.
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. Furthermore, the Indian government also developed a web-based portal called e-SHRAM for creating a National Database of Unorganised Workers for optimum realisation of their employability and to extend the benefits of the social security schemes to migrant workers, construction workers, gig and platform workers.
Proposed law for the gig economy
In accordance with 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 recognises workers such as building workers, contract labour and unorganised workers. Additionally, the Code introduces and recognises gig workers and platform workers. On the enactment of this Code, social security would be provided to all employees and workers, either in the organised, unorganised, or any other sector. The Code replaces various labour and employment legislation 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. The Code is not currently in place, as the state governments of each state in India are in the process of finalising the rules for the purposes of the Code. Recently, India’s Labour Minister indicated that the rules have been prepared by most states and the law will be implemented at an appropriate time.
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 a 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 judgments, India’s courts have outlined the considerations that will be required to be taken into account to establish an employer-employee relationship. These include: (1) control exercised by the employer; (2) supervision of work by the employer; (3) whether the employer decides the conditions of employment; (4) disciplinary action by the employer; (5) supply of tools and materials to perform the work; (6) insurance contribution deductions; and (7) 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 organisation 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 recognises 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 for gig workers by central and state governments 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 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 platforms to contribute one to two per cent of their annual turnover to the fund which may be used for carrying out the social security schemes. The gig employers’ contribution will be subject to a limit of five per cent of the amount paid or payable to their gig workers. The Code also mandates the registration of all gig workers and platform workers for social security benefits.
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. Furthermore, with the development of technology and the unconventional work approach by millennials, we have observed from the NITI Report that the regulation of gig workers, and specifically platform workers, has been under debate in many jurisdictions. 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 within the EU to implement these rights according to their needs.
Given the varied approach globally, there may be implementation challenges once India’s 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 which may be confronted, at least the recognition of gig workers and platform workers under Indian law will be of help to them. The Code has taken into consideration the increase in short-term or project-based work used by employers to circumvent employment laws and has provided separate definitions while bringing it into the ambit of social security. On the other hand, gig employers’ costs may increase. Although the Code does not extend all the benefits of an employee to the gig workers such as a gratuity and employee provident fund (conventional social security), the state-specific rules and welfare schemes once framed may provide additional benefits to them with support from the judiciary and learning from the best practices in other jurisdictions.
 Fairwork (2020), Fairwork India Ratings 2020: Labour Standards in the Platform Economy, p 11, https://fair.work/wp-content/uploads/sites/131/2020/12/Fairwork_India_2020_report.pdf accessed 16 September 2022
 Malavika Rajkumar, ‘The Law for Gig-Workers in India’, Nyaaya, 28 April 2020, https://medium.com/nyaaya/the-law-for-gig-workers-in-india-4163cfaee18b accessed 31 August 2022.
 Fairwork (2021), Fairwork India Ratings 2021: Labour Standards in the Platform Economy, p 32, https://fair.work/wp-content/uploads/sites/131/2021/12/Fairwork-India-Report-2021.pdf accessed 16 September 2022.
 Brinda Sarkar, ‘Almost 90% of gig workers run out of their salaries before month-end: Survey’, Economic Times, 1 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 31 August 2022.
 Neelanjit Das, ‘Gig Economy Workers Face Many Challenges In India; How Fintechs Are Trying To Solve Them’, Outlook India, 29 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 16 September 2022.
 ‘India’s Booming Gig and Platform Economy: Perspectives and Recommendations on Future of Work’, NITI Aayog, June 2022, p xix, https://www.niti.gov.in/sites/default/files/2022-06/25th_June_Final_Report_27062022.pdf accessed 16 September 2022.
 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).
 See n 3 above, Executive Summary.
 ‘Registration of Unorganized Workers begins across the Country as Government of India launches the e-Shram Portal’, Ministry of Labour and Employment, 26 August 2021 https://labour.gov.in/sites/default/files/PIB1749294.pdf accessed 16 September 2022.
 ‘Almost all states prepared draft rules on labour codes; implementation at an appropriate time: Bhupender Yadav’, Economic Times, 15 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 31 August 2022.
 Ram Singh and Ors v Union of India (2004) 1 SCC 126; Balwan Rai Saluja and another v Air India Ltd 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.
 See n 6 above, p 83.