Gig Economy and platform workers under labor laws in India | November 2nd, 2020

What is the Gig Economy and platform work economy?

  • It is characterized by short-term contracts or freelance work as opposed to permanent jobs. It often involves connecting with customers through an online platform. Example: Delivery boys of app-based food, consultants, bloggers.
  • The platform work economy is sometimes referred to as the gig  worker economy, but Gig economy is a broader term that includes platforms
  • In India, there are about 3 million gig workers that include temporary workers including independent contractors, online platform workers, contract firm workers, and on-call workers.

Provisions for gig and platform workers in labour laws of India

Code on Wages, 2019 expands the definition of an employee by using  ‘wages’ as the primary definition to define who an ‘employee’ is. But it doesn’t explicitly mention or cover the gig workers, platform workers under this definition.

Important features of Labour Code on Social Security & Welfare, 2017

  • Platform workers: For the 1st time Code on Social Security bill attempted to define platform workers in the following words;

“Platform work means 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.”

  • Universalizes social security: Social security has been extended to those working in the unorganized sector, such as migrant workers, gig workers, and platform workers.
  • National Social Security Board: It proposes a National Social Security Board which shall recommend to the central government for formulating suitable schemes for different sections of unorganized workers, gig workers, and platform workers.
  • Gig Workers: The bill states that the central or state government may notify specific schemes for gig workers, platform workers, and unorganised workers to provide various benefits, such as life and disability cover.
  • Social Security Fund: Government will establish a social security fund that will be funded by central or state governments, gig worker and aggregator contributions, the corporate social responsibility fund, or other sources.
    • Contribution of Gig/platform companies has been capped at 1-2% of their annual turnover but contribution should not be more than 5% of the amount payable to gig workers.

Need for providing benefits to the gig workers

Unemployment and low consumption:

  • Periodic Labour Force Survey released in 2019 from the Ministry of Statistics and Programme Implementation shows the unemployment rate at a 45-year high, at 6.1%; the highest levels of joblessness is among urban youth.
    • It also reported that domestic consumption has reduced, industrial growth has flatlined, private investments are lower, and market volatility has hit drivers of employment. Thus, many undergraduates and diploma holders are looking towards the gig economy as a solution to get employment.

High employment provider

  • As per Human resources firm TeamLease estimates, in the 2nd half of 2018-19, 13 lakh Indians joined the gig economy.
  • Despite becoming the biggest job provider, Most of these workers don’t see the gig economy as a full-time option due to job insecurity, amplified by complex contracts, the changing rates of incentives, and the lack of control over impossible targets.
  • Gig economies work outside the traditional employment structures excluding them from minimum-wage protection and social security.

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Important role played by gig workers during a pandemic

  • Platform workers were responsible for the delivery of essential services during the pandemic at great personal risk to themselves. They have also been responsible for keeping platform companies afloat despite the pandemic-induced financial crisis.
  • This has cemented their role as public infrastructures that also sustain demand-driven aggregators. The dependence of companies on platform workers merits a jointly assumed responsibility by public and private institutions to deliver welfare measures.
  • Despite all this, gig workers faced a continuous dip in pay and no rewards for being essential workers. The base pay of Swiggy workers was reduced from Rs. 35 to Rs. 10 per delivery order. All India Gig Workers Union formed to protest against this discrimination.

Financial dependencies of workers on the gig economy

Workers require existing assets like vehicular assets for entry into the platform economy, thus they have to rely on intensive loan schemes provided by workers rely on intensive loan schemes. It creates a dependency of workers on Platform Company.

It removes the flexibility benefit provided by the economy to its workers and make him liable to work under their terms and conditions.

Issues in Labour laws coverage for gig workers

  • Even though platforms are part of the idea of how work will evolve in the future, the current laws do not see them as future industrial workers.
  • Due to the absence of clear provisions in the labour codes, Platform delivery people can claim benefits, but not labour rights. The terms ‘gig worker’, ‘platform worker’ and ‘gig economy’ only appears in the Code on Social Security but not in other labour codes.
  • This makes them the beneficiary of the programs released by the state, but not of labor rights.
      • It doesn’t provide them a right to move the court to demand better and stable pay or regulate the algorithms that assign the tasks.
      • This also means that the government or courts cannot pull up platform companies for their choice of pay, or how long they ask people to work.
  • Though gig workers are covered under social security schemes none of these benefits are secure, which means, the Central government, from time to time, can formulate welfare schemes that cover these aspects of personal and work security, but they are not guaranteed.  All these benefits will be dependent upon the will of the state government.
      • For Ex; in some states like Karnataka, where a platform-focused social security scheme was in the making last year, will possibly offer some financial assistance by the Centre.
  • The Social Security Code states the provision of basic welfare measures is a joint responsibility of the Central government, platform aggregators, and workers. But doesn’t mention which measures will be provided by which stakeholder.

What should be done?

  • Amendments to labor laws in Ontario and California have shown a move towards granting employee status to platform workers, thus guaranteeing minimum wage and welfare benefits.
  • This is the view propagated by international agencies in the EU, including the European Trade Union.
  • The government in India should also consider granting the gig workers the status of employees of the aggregators. That would automatically provide them all the labor benefits like PF and ESI.
  • The government should consider providing a loan scheme to the platform workers, to end their dependency on the platform aggregator companies.
  • To mitigate operational breakdowns in providing welfare services, a tripartite effort by the State, companies, and workers to identify where workers fall on the spectrum of flexibility and dependence on platform companies is critical.
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