The COVID-19 pandemic had a disruptive impact on the Indian economy as it exposed the vulnerabilities of the labour market. A staggering 122 million jobs were lost in April, 2020 as per estimates from the Centre For Monitoring Indian Economy (CMIE), albeit, the pandemic was also characterised by rapid expansion and resilience displayed by the gig or platform economy in India as well as the world. Fundamentally, gig economy is “a labour market that is characterised by independent contracting that happens through, via and on digital platforms”.

The digital platforms act as an interface that connect consumers and gig workers. Gig workers engage in short-term work arrangement outside the purview of the traditional employer-employee relationship and encompass cab drivers, delivery agents, freelancers etc. This burgeoning sector is expected to employ 23.5 million workers by 2029-30, constituting 4.1% of the country’s total livelihood.

The precarities weathered by gig workers stem from a unique relationship they have with the digital platforms. The workers are given the status of ‘independent contractors’ and not of  ‘employees’ by the digital platforms who prefer to call themselves as ‘aggregators’ instead of ‘employers’. By reason of this classification, gig workers are not entitled to basic employee benefits such as minimum wages, overtime pay, provident fund, gratuity, et cetera under the existing labour jurisprudence. However, in practice, the workers are not truly ‘independent’ and are subject to substantial control exercised by the aggregators. The nature of control has undergone drastic transformation and is exercised through the algorithmic management of workers. It is the algorithm that determines the number of gigs to be completed, rating scores to be maintained by the worker so that he continues to be allocated more gigs through the platform. The aggregators have bestowed upon themselves the power to unilaterally hike the commission fees and arbitrarily reduce the incentives given to gig workers. The workers are expected to make the initial capital investment and bear operational costs, while they receive no vocational training. About 80% of workers are dependent on platform-based work as their sole source of income. This asymmetrical distribution of  financial risks and rewards exacerbates the vulnerabilities of the gig workforce.

ONGOING LEGISLATIVE EFFORTS

In India, the legislative framework governing gig workers is still at a nascent stage. The Code on Social Security, 2020 was the first legislation that envisages social security benefits for the gig workforce. It contemplates life cover, accident insurance, health and maternity benefits as well as a social security fund for the welfare of gig workers. On June 29, 2024, the Karnataka Government notified the draft Karnataka Platform Based Gig Workers (Social Security and Welfare) Bill, 2024 on the lines of Rajasthan Platform Based Gig Workers (Registration and Welfare) Act, 2023. The Karnataka Bill provides for the establishment of a Welfare Board and a Welfare Fund to implement social security schemes for the benefit of registered platform based gig workers. The Welfare Fund will comprise welfare fees charged from the aggregators, contributions from individual platform based gig workers, grants-in-aid from the State and Central Government, gifts, bequests, donations, among others. The Bill also proposes a time bound grievance redressal mechanism and mandates the aggregators to enter into an elaborate, unambiguous written contract with the gig workers. However, the Bill is silent on core issues like minimum wage and regulation of working hours. These legislative efforts are premised on the welfare board model and are a step in the right direction but they fail to recognise the employment relation that exists between workers and the aggregators.

INDIA’s EMPLOYEE V. INDEPENDENT CONTRACTOR CONUNDRUM

The prevailing labour law regime classifies workers either as an employee or an independent contractor. The factors determining the employment relationship were stipulated by the Supreme Court in Balwant Rai Saluja v. Air India Ltd. and include:

(i) who appoints the workers;

(ii) who pays remuneration;

(iii) who has authority to dismiss;

(iv) who can take disciplinary action;

(v) continuity of service;

(vi) extent of control and supervision.

Extending employee status to gig workers is implausible as they are not paid by the aggregators and there is no continuity of service. Moreover, recognising these workers as employees will have severe implications on the work-time  flexibility associated with gig work. The contemporary classification of workers into the binary of ‘independent contractor’ and ‘employee’ is not in congruence with the transformed labour relationship in the rapidly evolving economy.

THE THIRD CATEGORY: DEPENDENT CONTRACTORS

‘Taylor Review of Modern Working Practices’ commissioned by the UK Government recommends recognising an intermediate category of Dependent Contractors that will enable gig workers to work in a  flexible environment and at the same time entitle them to certain rights available to employees such as, minimum wages, overtime pay, provident fund and health insurance. Recognition of this third category will enhance stability of platform-based businesses and ensure that innovation is not hindered by overregulation.

Canadian labour legislations provide for an expansive definition of “employee” that incorporates the intermediate category of dependent contractors. The legislative intent behind this is to extend labour protection to those workers who are economically dependent on a single enterprise.

The Spanish Legislature has also carved out a third category of workers referred to as the TRADE or economically dependent self-employed workers. For a worker to be categorised as a TRADE, he must amongst other criteria, have economic dependency of at least 75% on a single enterprise. These workers are endowed with certain legal protections enjoyed by regular employees like minimum wage, annual leave, entitlements in case of wrongful termination, collective bargaining, among others. However, due to onerous procedural requirements, the majority of self-employed workers could not get themselves registered as TRADE.

THE WAY FORWARD

In light of insufficient availability of stable jobs in the organised sector, the number of gig workers is only expected to multiply manifold. Unfortunately, since the majority of gig workers belong to underserved communities, their adversities often go unnoticed. Under India’s G-20 presidency, member countries had committed to ensuring adequate social protection and decent working conditions for gig and platform workers. This objective cannot be realised in the true sense without recognising the employment relationship that sustains the emerging platform-based business models. The time is opportune for the government to initiate the formulation of a uniform pan-India legislation recognising the evolving modalities of work. It will be appropriate to carve out a hybrid category of workers who are entitled to certain labour protections enjoyed by employees. The third category must be well de ned and distinguished to prevent possible misclassification of employees by the aggregators. This shall ensure that the possibility of arbitrage among the classes of workers is kept in abeyance. Such a legislative exercise ought to be carried forward only after extensive consultation with all stakeholders including the workers, aggregators, consumers, government departments and must reciprocate the aspirations of an evolving workforce.