This blog is written by Aqsa Mirza a Third-year law student of Dr Panjabrao Deshmukh College of Law, Amravati

The Legal Status of Gig Workers in India: A Socio-Economic Analysis

The gig economy, moving with the help of platforms like Uber, Ola, Zomato, and Swiggy, has now become an intrinsic component of the Indian labour market. Services by gig workers-usually independent contractors, freelancers, or part-time workers-are short-term in nature and, while availing flexibility, are thinking about legally and socioeconomically high challenges. Their status remains ambiguous under the law in India; hence, the issue is one of immediate urgency as far as both regulatory clarity and social recognition are concerned.

The Rise of the Gig Economy

This is because, with growing demand for on-demand services, coupled with the expansion of digital platforms, the gig economy has grown at a fast clip in India. By 2024, it is estimated that the valuation of the gig economy will rise to $455 billion and have millions employed both in urban and semi-urban regions, according to a recent report from Boston Consulting Group. Of course, gig work has its merits too: firms save money from not having to employ people for the long term; flexibility to the workers it means anything.
With this flexibility comes a cost in terms of job security, social protection, and employment benefits accrued in terms of health insurance, pension schemes, and annual leave amongst others. Many gig workers are usually classified as independent contractors; they therefore get excluded from protection accorded to regular employees under labour laws.

Legal Framework for Gig Workers

Indian labour laws were enacted, such as the Industrial Disputes Act, 1947, and the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, during a period when the concept of 'gig' work did not exist. These usually cover workers who are employed in formal sectors and leave gig workers without protection. This lack of a particular legal framework builds ambiguity concerning the employment rights and entitlements of gig workers.
The Code on Social Security, 2020 was another giant leap towards providing recognition to gig workers in legislation. According to this law, gig workers have been defined as those workers who engage themselves in non-traditional work arrangements that fall outside of the relationship of employer and employee. In addition, extending social security benefits in the respect of provident funds, insurance, and maternity benefits to gig and platform workers is proposed under it. However, how to implement it is still a challenge because the extent and nature of benefits and mechanisms of enforcement have not been well explained.

Socioeconomic Issues Faced by Gig Workers

Gig workers of India face many socio-economic challenges due to a lack of legal recognition. Major issues are:

1. No Social Security: Since gig workers are defined as independent contractors, they fall outside of facilities that may be available to regular full-time workers, such as pension schemes, gratuity, or insurance. This nullifies social security in periods of depressed economic conditions or personal crises related to accidents or sickness.

2. Income Volatility: Since gig workers operate on commission, their incomes are occasional. This in itself extends financial instability to workers who want to experience at least a decent living standard. According to a report by Flourish Ventures, 90% of Indian gig workers faced income volatility, whereas many of them earned less than ₹25,000 every month.

3. Exploitation and Loss of Bargaining Power: The gig workers remain at the mercy of these digital platforms, which unilaterally dictate the payment structure, the hours of work, and the terms of service. Still further weakened in their position without unionization or collective bargaining, gig workers have very little redress to contest the working conditions.

4. Lack of Legal Redress: Some pretty major barriers exist against the use of operation of law by gig workers against any given digital platform. For one thing, they are considered employees and hence largely deprived of the ambit of protection under employee law. This means that avenues remain at a minimum legally in cases related to unfair dismissal, dues not being paid, or workplace harassment.

International Experiences: Lessons for India

The legality of gig workers vis-а-vis their status has been debated through various countries. The UK, for one, came to rule in the seminal judgment in the case of Uber BV v Aslam, 2021, that Uber drivers were "workers" entitled to elementary rights, including minimum wage and paid leave. AB5, or the Assembly Bill in the US, tried to bestow just that: employee status on gig workers. It has since then been seriously curtailed in its reach after a spate of judicial pronouncements.
There are, however, a couple of critical lessons that international experiences hold out for India: the differentiation between genuinely independent contractors and workers who are economically dependent on the platforms. The introduction of an intermediary category-already done in the UK with the category "worker"-might be able to give basic labor rights to gig workers while retaining the flexibility that most workers are attracted to in gig work.

The Way Forward

Given this, the legal framework dealing with gig work in India needs to evolve urgently. In this direction, some steps that can be taken include:

1. Unclear Legal Classification: The ambiguous status of gig workers needs resolution. A compromise classification offering basic labour protection would balance, without taking away the flexible nature of gig work. Clearly define the legal status of gig workers in a manner not to deprive them of basic rights.

2. Social Security Net: The Code on Social Security, 2020 is indeed a step in the right direction. What is most crucially needed is the effective implementation of the same. Appropriate machinery will be provided wherein gig workers will actually get social security benefits like health insurance, maternity benefits, and pension schemes.

3. Collective Bargaining Rights: The rights of collective bargaining should be granted to gig workers in order to give them an opportunity to be organized into unions or associations that have the potential for bargaining for better working conditions and better pay structures along with other benefits. The enabling of collective bargaining has the propensity to reduce cases of exploitation while at the same time helping workers stand up for their rights.

4. Technology and Policy Support: Most likely, the governments and the platforms will deploy technology to bring in more transparency in the payment systems and work allocation. Enabling policies will develop skills and financial literacy, hence enabling gig workers to build economic independence.

Conclusion

While the gig economy has provided opportunities for employment and income generation, it has also presented serious legal and socio-economic challenges to the workers. As the Indian gig economy continues to grow from strength to strength, it should fall upon the government to fill the existing legal lacunae so as to guarantee gig workers social protection, job security, and fair treatment in their place of work. A well-defined legal framework, together with enabling policies, creates conditions whereby the gig economy can grow in a sustainable manner while protecting the rights of the workers constituting its backbone.

Resources

1. Ministry of Labour and Employment, Code on Social Security 2020 (Government of India 2020) https://labour.gov.in accessed 7 September 2024.Boston Consulting Group Report on Gig Economy in India (2021).

2. Industrial Disputes Act 1947 (Government of India 1947) https://www.indiacode.nic.in accessed 7 September 2024.

3. Boston Consulting Group, Unlocking the Potential of the Gig Economy in India (BCG 2021) https://www.bcg.com/publications/2021/unlocking-the-potential-of-the-gig-economy-in-india accessed 7 September 2024.

4. Flourish Ventures, Gig Economy Insights Report: India (Flourish Ventures 2020) https://www.flourishventures.com accessed 7 September 2024.

5. Uber BV and others v Aslam and others [2021] UKSC 5, [2021] ICR 657.

6. California Assembly Bill No. 5: An act to amend Section 3351 of, and to add Sections 2750.3 and 3351.6 to, the Labor Code, relating to workers (California State Legislature 2019) https://leginfo.legislature.ca.gov accessed 7 September 2024.

7. International Labour Organization, World Employment and Social Outlook: The Role of Digital Labour Platforms in Transforming the World of Work (ILO 2021) https://www.ilo.org/global/research/global-reports/weso/2021/lang--en/index.htm accessed 7 September 2024.