Introduction

The rise of the gig economy has led to a significant increase in non-traditional employment, characterized by flexible, short-term engagements often mediated by digital platforms.

Recognizing the unique challenges faced by gig workers, the Union Ministry of Labour and Employment is drafting a national law to integrate them into social security schemes, aiming to provide essential benefits such as health insurance and retirement savings.

Key Features of Proposed Legislation

1. Social Security Fund:
   • Aggregators will be required to contribute 1%-2% of their revenue to a fund for gig workers’ social security.
   • The fund will support health insurance and other benefits.

2. Registration and Protection:
   • Mandatory registration of gig workers.
   • Aggregators must provide a 14-day notice before terminating workers, ensuring transparency in automated systems.

3. Dispute Resolution:
   • Introduction of mechanisms to protect gig workers’ rights and resolve conflicts.

4. Inclusion in Social Security Schemes:
   • Workers registered on the Labour Ministry’s e-Shram portal will be eligible for life and accidental insurance.

Background on Labour Codes

India has consolidated its labour laws into four broad codes, with only the Social Security Code 2020 addressing gig workers.

This code recognizes gig workers as part of the informal sector, emphasizing the need for dedicated social security schemes. However, the existing definitions and protections are insufficient.

The Core Issue: Defining Employment Relationships

The Social Security Code’s classification of gig workers outside the traditional employer-employee relationship raises concerns.

This ambiguity allows aggregators to sidestep existing labour laws, leading to misconceptions that gig workers are independent contractors. Consequently, they miss out on institutional protections that formal workers receive.

1. Institutional vs. Social Security Schemes:
   • Institutional protections (e.g., paid leave, job security) are not available to gig workers, who are instead offered limited benefits through social security schemes.
   • The gap in entitlement between formal workers and gig workers highlights the inadequacy of the current system.
2. Lack of Coverage Under Existing Codes:
   • Gig workers are not covered under the Industrial Relations Code or occupational safety regulations, leaving them vulnerable.

Precedent and Recommendations

A pivotal case in the U.K. established that Uber drivers are employees, thus entitled to labour law protections.

A similar recognition in India would clarify the employment relationship and enable gig workers to benefit from the existing labour codes, streamlining protections without necessitating separate legislation.

Conclusion

For the proposed national law to effectively protect gig workers, it is crucial to clearly define the employment relationship within the gig economy.

Recognizing aggregators as employers will not only uphold workers’ rights but also facilitate their inclusion under comprehensive labour laws. This approach promotes the formalization of the gig sector and aligns with the government’s goal of rationalizing and simplifying labour laws.