Unravelling the World of Gig Workers

Unravelling the World of Gig Workers

India has entered a pivotal, transformative phase in the last few years. From surpassing the UK as the 5th largest economy, we are now marching towards the $10 trillion milestone. This has been fueled by the digital transformation of the economy, with the digital economy itself pushing towards the $1 trillion mark. The availability of low-cost, high-speed internet has resulted in over 800 million online users in the country.

Consequently, these users have led to an exponential growth in demand for online services. From online transportation services to delivering food items, medicines, and other goods, products, and services (pest control, sanitisation, repair, among others), e-commerce/ digital services are everywhere. While service providers are operating online, they still require an ‘on-ground’ workforce to fulfill their services. This is where ‘gig workers’ come into the picture. Whether it’s an aggregator business or an online business, all of them have become dependent on these ‘partners’ that take on the responsibility of last-mile/ on-ground delivery and collection. As per NITI Aayog, over 7 million gig workers are active in the country, with the number set to rise to 23 million by 2030.

There has been a steep rise in these ‘gig projects’ that have little to no skill demand on the part of the workers and are easy to take on. It is also easier for individuals entering the labour market to find gig work than conventional jobs that require specialized skills and work experience. These workers can be further categorized as ‘platform workers’, and those who are day-job and non-technology-based temporary workers are called ‘non-platform workers’. This rising demand for gig workers for specific and continuous gig projects has created a ‘gig economy’ in the country. This sector is now responsible for the livelihood of a sizable portion of the present workforce.

Under the present labour law regime, there is no statutory backing to safeguard the interests of these micro-entrepreneurs who are juggling multiple partner roles.

Employers view gig workers as a flexible workforce devoid of legal responsibilities. Due to the fact that these personnel are not classified as employees nor contract labour, companies are permitted to hire and fire an unlimited number of them in accordance with demand. No provisions are made for social security, a minimum wage, or other benefits. Furthermore, it is feasible for enterprises to decrease the remuneration or make them reliant entirely on the end user in the form of tips and ratings. As a result, these workers are rendered susceptible and dependent on market dynamics.

Under the present labour law regime, there is no statutory backing to safeguard the interests of these micro-entrepreneurs who are juggling multiple partner roles. Only those working as employees, contract and migrant workers, and in the unorganized sector are covered under the legal framework. As such, employees are subject to protection and benefits under various acts and schemes, including the Payment of Bonus Act, 1965, Maternity Benefit Act, 1961, EPF, and ESI, among others. Similarly, contract and migrant workers are protected under the Contract Labour (Regulation and Abolition) Act, 1970, and the Inter-State Migrant Workmen (Regulation of and Conditions for Service) Act, 1979. Workers in the unorganized sector are provided for under the Unorganised Workers’ Social Security Act, 2008. There is no provision for gig workers across all these laws, schemes, and regulations. Shortfalls in salary, lack of insurance, difficulties accessing credit, and income fluctuations are common challenges they face.

While ‘gig workers’ have been defined under section 2(35) of the Code of Social Security, 2020 as a person who participates in a work arrangement and earns from such activities outside a traditional employer-employee relationship, the codes are yet to be notified. The enactment of the labour codes was pivotal as it incorporated “gig workers” into the social security framework. In addition, consideration is being given to integrating the gig economy and the unorganized sector through ESIC schemes and EPFO. The Code establishes the National Social Security Board on Social Security, 2020. Its responsibilities include oversight and recommendation of schemes for contract and platform workers.

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Additionally, fixed-term employees (FTAs) who are contracted for a particular duration are eligible for benefits comparable to those of permanent staff. These employees will qualify for gratuity, notwithstanding their status as fixed-term staff. It will be mandatory for aggregator companies to make contributions to welfare programmes for gig workers.

Moreover, aggregators will compensate gig workers 1% to 2% to 5% of the total revenue. In addition, gig workers are acknowledged and incorporated into social security schemes in accordance with the Occupational, Safety, Health, and Working Conditions (OSH&WC) Code, 2020. This enables them to avail themselves of insurance, provident and pension funds, health and maternity benefits, and skill development initiatives.

Upon successful implementation, the labour codes will serve as a crucial tool in mitigating income inequality and removing a potential obstacle presented by the rapidly expanding gig economy. The intrinsic social mechanisms will facilitate the expeditious acquisition of skills, thereby augmenting the proportion of the labour force engaged in the formal economy. In an effort to raise $10 trillion by the end of the decade, this labour force will be vital to India’s success. Each year, a younger and younger proportion of the labour force enters the workforce. In order for this workforce to be able to contribute to the formal sector and not be confined to ‘gig projects’, policy interventions and technological advancements will need to achieve a harmonious equilibrium.

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Sandeep Agrawal

Director and Co-founder TemleaseRegtech

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Sandeep Agrawal

Director and Co-founder TemleaseRegtech

June 2024

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