The Considerations for Gig Workers in India

By Dev Shroff & Anushree Saxena

Introduction

Since the gig economy has been gaining global traction for a while, India has recently introduced certain state-level and federal-level legislations to protect gig workers’ rights. However, the lack of traditional employment benefits such as social security, health insurance, and job stability has raised significant concerns about worker exploitation and vulnerability. Experts predict a growth rate of 17 per cent each year and an estimated value of $455 billion by 2024. This growth might be twice as fast as experts thought before the pandemic. By 2025, it is predicted that there could be 350 million gig jobs in India.

The need to regulate gig workers

Many people in India join the gig economy to satisfy their financial commitments to their families; in fact, thirty per cent of gig workers say that meeting their families‘ expectations is their main driving force. Twenty per cent of participants say gig work is their only source of income, while twenty per cent see it as a means of augmenting their principal income. Ten per cent of gig workers who value independence are drawn to the autonomy and control over schedules and workload. Another important consideration is making money while studying; twenty per cent of workers take on gig labour to help them combine their financial requirements with schooling.

The current laws and regulations that apply to the gig economy in India

National:

a.     Code on Social Security, 2020 (“SS Code”): The SS Code was the first to formally introduce the concept of gig workers in India. The SS Code expands coverage to non-traditional forms of work engagement, such as gig workers and platform workers, thereby providing legal certainty to such arrangements. According to the Code on Social Security, 2020 [Section 2(35)], a gig worker is defined as someone who performs tasks or participates in work arrangements and earns from such activities independently. As per the Code on Social Security (Central) Rules, 2020 (“SS Central Rules”), aggregators must electronically submit periodic information about their gig and platform workers to generate Unique Registration Numbers or temporary registration numbers on a government-specified portal. Aggregators must link their databases with these unique registration numbers to facilitate worker registration on the specified portal.

b.     September 16, 2024, Ministry of Labour & Employment Advisory Notification: A recent advisory notification dated September 16, 2024, issued by the Ministry of Labour & Employment (“Notification”) seeks to impose certain obligations on ‘aggregators’ concerning the gig and platform workers engaged by them. The Notification defines an aggregator as “a digital intermediary or a marketplace for a buyer or user of a service to connect with the seller or service provider”.

c.      Additional Developments: The Union Labour Ministry is actively working towards the creation of a policy on social security benefits for gig and platform workers, to finalise it by February next year. The policy is expected to be in place before the next union budget. Early indications suggest that the policy will include provisions for issuing unique IDS to gig workers and establishing a mechanism that generates social security contributions from transactions conducted on the respective platforms, as stated by official sources.

The welfare accorded to gig workers

Rajasthan, through the Rajasthan Platform-Based Gig Workers (Registration and Welfare) Act, 2023, provides for minimum welfare benefits to gig workers. A welfare fee is set to be charged to aggregators, calculated as a percentage of the value of each transaction involving platform-based gig workers as notified by the State Government. Failure to pay this fee within the prescribed time results in an interest penalty of 12% per annum from the due date until payment is made. Under the Tamil Nadu Manual Workers (Regulation of Employment and Conditions of Work) Act, 1982, employers engaging manual worker in any scheduled employment (which now includes gig workers), is liable to pay, a prescribed amount within the prescribed time frame, to the respective board, as specified in the scheme. Similar requirements are expected to arise under the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Bill, 2024 and the SS Code once they are implemented, which will provide additional welfare measures for gig workers.

Benefits of unionisation of the Gig Economy Workers

There is a growing trend of union activity among gig workers in recent times. The All-India Gig Workers Union (“AIGWU”), formed in 2020, is a trade union federation representing gig economy workers and advocating for their interests. Other unions like the Indian Federation of App-based Transport Workers (“IFAT”) and the Telangana Gig and Platform Workers Union (“TGPWU”) also represent gig workers.

However, Competition law may have unintended effects on the rights of gig workers to associate, collectively bargain, and strike. A gig worker could fall within the definition of “enterprise” under the Competition Act, 2002 (“Competition Act”). Unlike traditional employees, who are excluded from this definition, gig workers’ actions of association or collective bargaining could attract scrutiny under the Competition Act. If gig workers are considered “enterprises,” any trade union or association formed by them would be seen as an “association of enterprises” under Section 3 of the Competition Act. This means that any agreements or collective actions between gig workers or between gig workers and the platforms they work for could potentially be flagged as anti-competitive.

Benefits to businesses of hiring gig workers

Hiring gig economy workers has several benefits for companies. Engaging freelance, contingent, or contract personnel has several advantages, including cost savings, access to top talent, and flexibility and scalability. Hiring gig economy workers enables businesses to swiftly scale up or down in response to their current needs. This is particularly helpful when there is a rise in demand for a particular service but no requirement for a permanent workforce. The gig economy, which started with lesser-skilled workers, has now developed to the point where the top talent is working on a “gig” or freelance/contingent basis.

The need to classify gig economy workers as Full Time Employees

If gig economy workers are characterised as full-time employees (“FTES”), they would become entitled to all statutory benefits that are provided to regular employees under Indian labour laws. This reclassification would have significant implications for both the workers and the aggregators employing them. Some of the key statutory benefits that gig workers would be eligible for include:

a.      Provident Fund (“PF”): Aggregators would be required to make PF contributions on behalf of the eligible gig workers, including any past dues, as is mandated for regular employees under the Employees‘ Provident Funds and Miscellaneous Provisions Act, 1952.

b.     Employees’ State Insurance (“ESI”): Eligible gig workers would also be entitled to ESI benefits, which provide for medical care, sickness benefits, maternity benefits, and disability benefits under the Employees’ State Insurance Act, 1948.

c.      Gratuity: Once classified as FTES, gig workers would be eligible for gratuity benefits after completing 5 years of continuous service, under the Payment of Gratuity Act, 1972.

d.     Minimum Wages and Overtime: Gig workers would, if classified as FTE, be entitled to minimum wages as per applicable laws, along with overtime payments for working beyond the prescribed hours, just like regular employees.

e.      Other Benefits: Gig workers would also be entitled to other statutory benefits such as leave with pay, maternity benefits, and statutory bonus payments under the applicable laws governing these benefits.

As a practical aspect, India is yet to witness any large-scale misclassification lawsuits involving gig workers, excluding maybe, cases relating to provident fund (social security) and tax. Given the government’s focus on employment generation, some of the recent laws recognising the concept of gig workers have given additional legal certainty to such arrangements.

Conclusion

In many respects, laws must treat gig workers with the same status as regular employees. They ought to be treated as such and granted privileges like the ability to organise unions, universal minimum salaries, and workplace protections more appropriate for the gig economy if the aggregators continue to designate them as non-employees. Policymakers must act swiftly to transform the gig economy, regardless of the path they decide to take. The rights of millions of people are at risk, so the gaps need to be filled as quickly as possible.

Key Words: Gig workers, needs and benefits, laws, employees