Pranjali Rusiya
Abstract:
A gig economy is a labor market that relies on temporary and part-time workers filled by independent contractors and freelancers, rather than permanent employees. This research paper shows the status of gig economy which is rapidly growing. This study tries to figure out the current concern about the emergence of the gig economy. The labors in gig economy often face uncertainty in income, lack of benefits, job insecurity, classification as independent contractors, lack of distinct legal framework, limited access to training and development etc. The Legal landscape for gig workers is evolving, with debates around worker classification, access to benefits and labor rights. Violation of gig workers’ rights including unfair pay, lack of benefits and lack of social security necessitate robust legal mechanisms for recourse. This research paper attempts to find the methods through which gig workers’ rights can be protected. The legislative method is to frame laws & rules and develop a legal mechanism at central level which addresses the rights of gig workers in India. New laws should be enacted and existing laws should be amended to improve the working conditions of workers in gig economy. Given the rapid expansion of the gig economy, gig workers face numerous challenges and to address them it is important to have a robust legal mechanism which would articulate their interest and safeguard their rights from violation.
Key Words:
Gig economy; Gig workers; Independent contractors; Social security; Legal mechanism
Introduction:
The gig economy refers to a labor market consisting of workers who are employed temporarily on a contractual basis, working as freelancers, short term contractors and not permanently employed by their employer, under an employer- employee relationship. The new labor codes of 2019 define a gig worker as “A person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer- employee relationship.”2
Gig economy is engaged in providing a variety of services and jobs to the customers and gig workers across different sectors, respectively. It includes delivery services, ride sharing, freelance writing and editing, handyman services, photography, house cleaning, event planning and catering, software development, tutoring and teaching, virtual assistance, graphic design etc. The gig economy allows people across the world residing in rural or urban areas, having different set of skills or of different age groups to pick up work independently without being tied down to one single project. The gig economy can benefit workers, businesses, and consumers by making work more adaptable to the needs of the moment and the demand for flexible lifestyles.
At one time, where the laborers in the gig economy are enjoying the benefits of flexibility, autonomy, diverse opportunities, supplementary income etc., at the same time they are facing the issues of income instability, job insecurity, legal and tax implications, inconsistent work etc.
The gig economy has significantly altered traditional employment models, presenting changes with both opportunities for flexibility and autonomy, and challenges related to job security and worker rights. The rise of the gig economy has transformed the landscape of modern labor markets, creating new opportunities for flexible work arrangements while simultaneously posing significant challenges to traditional employment protections.
Gig workers, who are often classified as independent contractors, typically lack access to essential benefits such as health insurance, paid leave, and unemployment protection. This classification raises critical issues regarding their legal status and the adequacy of existing labor laws in safeguarding their rights. As the gig economy continues to expand, the need for robust legal mechanisms to address violations of gig workers’ rights becomes increasingly urgent.
Research Methodology:
This paper is of Descriptive nature and the research is based on primary as well as secondary sources for the critical analysis on violation of rights faced by labors in gig economy. The primary sources are based on various Acts, and the secondary sources are based on articles, journals, websites etc.
Review of Literature:
The NITI Aayog report on India’s Booming Gig and Platform Economy has given estimates and projections for gig & platform sector. The report shows that in 2020, 7.7 million workers were engaged in gig economy and expected to expand to 23.5 million workers by 2029-30. The concentration of workers in medium skills is gradually declining and that of the low skilled and high skilled is increasing.3
The article on “Platform workers and social protection: International developments” given by ISSA, explains the issues related to social protection of gig workers. Platform workers, both employees and self-employed should be eligible for at least basic level of social protection. Only about 40% of online workers have health insurance, less than 15% have protection in case of work accidents and unemployment, and about 20% have protection for old age.4
There are labor protections for platform and gig workers which includes adequate pay, working time regulation, occupational safety & health and employment protection.5
Impact after Covid Pandemic:
As the world starts to more fully embrace this new way of working over the past few years, which expand rapidly during the coronavirus pandemic. Their demand got accelerated since the pandemic started, due to which their competition has also increased. It is irrefutable that the gig economy has become an integral part of the workforce, not only in India but the whole world. The gig workers are involved in building their empires rather than someone else’s adds to the motivation and excitement. During the pandemic, millions of workers were pushed out of their jobs, but they got a chance to join freelance work that provide them flexibility and acceptable wages via internet. Many delivery boys were hired by several E-commerce platforms, during the pandemic. Emergence of various intermediaries/online mediation platforms made it possible for people to get jobs from the comfort of their homes, complete their job from anywhere they want via internet connectivity and at any time as per their own convenience. COVID-19’s unparalleled disruption is heightening the need for agility, adaptation, and change.
Opportunities in Gig Economy:
- Variety of Jobs
Gig workers have wide range of tasks with them, from highly skilled professional services to lower skilled manual labor. This diversity allows individuals with various skill sets and interests to find opportunities that resonate with their talents and passions.
- Flexibility in work
The work gig workers perform is very autonomous. They have the freedom to decide their own working hours, timing of work, how much quantity of work they want to do and from where they want to do the work. They are independent in themselves and not bonded to any employer or accountable to anyone.
- Supplementary Income
Gig workers often enjoy the benefit of supplementary income because they can take multiple of task at the same time alongside other sources of income, such as full-time employment or part time jobs.
- Entrepreneurial Initiative
The gig economy fosters an entrepreneurial spirit allowing workers to turn ideas into action and to create their own brand by marketing their services.
Challenges faced by Gig Workers:
- Classification as independent contractor
It is one of the major challenges of workers in the gig economy. The workers are classified as independent contractors and not employees, which deprive them from accessing benefits available to employees under the labor laws, such as minimum wage, provident fund and employee state insurance. Various labor laws protect the employees and rights and advantages including minimum salaries, social security, health and safety, maternity leave, gratuities, provident fund, etc. These rules do not apply to independent contractors, who are instead subject to the terms of the agreements they have in place with their platforms or clients.
- Lack of Distinct Legal Framework for Consistent Protection of Gig Workers
There is no comprehensive nationwide legal framework in the country which recognizes and governs employees in the gig economy. There are laws governing the employees under the traditional employer-employee relationship, but the gig economy has unique circumstances that existing laws may not uniquely address.
- Uncertainty in Income
Unlike other employees who are working permanently for their employers getting a stable income, gig workers are the ones who are paid per task or project. Their income is so inconsistent, and earnings are unpredictable due to the variable nature of their work. This inconsistency is often aggravated by the dependency on demand, which can vary based on time, season or economic conditions. This uncertainty creates financial instability for them.
- Lack of Benefits
Gig workers often face lack of benefits like health insurance, retirement plan, minimum wage requirement, protection against discrimination, paid leaves, protection from tax obligations, paying of compensation, provident fund etc.
- Job Insecurity
Gig workers face the problem of job insecurity because they are engaged in short-term projects rather than long-term employment contracts, once the project has done there is no guarantee of future work. Their work is dependent on the demand which fluctuates based on time, season or economic conditions.
- Limited Access to Training and Development
Gig workers are not able to enhance their skills and develop their potential by their employers. There are very fewer chances for the professional development of the workers. They may not have access to employer-sponsored training programs or professional development initiatives. Their work is very uncertain, and they often focus on completion of the task efficiently, which ignores investment in long term skill development or training.
Present Legal Mechanism for Gig Workers in India:
Currently, there is no comprehensive legal framework which addresses the rights of gig workers in India. The gig workers are typically classified as independent contractors, which excludes them from many labor laws which give protection to rights of employees working under permanent employer – employee relationship. The legal mechanism for laborers in the gig economy is evolving, as many steps are being taken by the legislative and judicial system for the recognition and protection of their rights and to provide security to their growing workforce.
The code on social security, 2020
The objective of this act is to amend and consolidate the laws relating to social security with the goal to extend social security to all employees and workers either in organized or unorganized sector.6 This act is the subsume of nine Central labor legislations including Unorganized workers Social Security Act, 2008. This act for the first time defines the status of gig workers in Section 2(35) as a person who works and earns from activities outside the traditional employer- employee relationship. This officially acknowledged the existence of gig workers and platform workers in the labor market. According to section 6 of this act, a National social security board is formed by central government whose functions are to recommend to the Central Government for framing suitable schemes for different sections of unorganized workers, gig workers and platform workers.7 This code intended to provide various social security benefits to the gig workers. These benefits will include minimum wage requirements, social security.
benefits, accident compensation, health insurance, maternity benefits and others.
State Initiatives
- Rajasthan
On 24 July 2023, the Rajasthan state government passed the Rajasthan Platform – Based Gig Workers Act, 2023. Rajasthan became the first state to introduce platform workers and gig workers at legislative level and an innovative endeavor to address the rights of laborers in gig economy.
The Act has given the definition of Gig worker under section 2(f), “gig worker” means a person who performs work or participate in a work arrangement and earns from such activities outside of traditional employee – employee relationship and who works on contract that results in a given rate of payment, based on terms and conditions late down in such contract and includes all piece rate work. 8
This Act constituted the formation of a welfare board, known as the Rajasthan Platform, based gig workers welfare board. This board requires platform-based gig workers to get themselves registered under Section 9, and to provide the registered workers with the benefits of schemes formulated by the board. Benefits provided by the board are accidental insurance, medical emergencies, health insurance and others.
The board also introduced the Grievances Redressal Mechanism for Platform Based Gig Workers under section 15 of Rajasthan Platform – Based Gig Workers Act, 2023. According to this mechanism, if any registered worker has any grievance arising out of entitlements, payments, and other benefits provided under the Act, he / she may file a petition in person, before an officer, designated by the state government or make a petition through a web portal.
The Act also imposes penalties on employers or aggregators who contravene the provisions of this Act or failed to comply with the rules of this Act under section 17.
- Karnataka
The state government of Karnataka has framed the Unorganized Workers Social Security (Karnataka) Rules, 2009 and constituted the Karnataka State Unorganized Workers’ Social Security Board in 2009.
The Board formulated the Karnataka State Gig Workers Insurance Scheme in September 2023. This scheme provides free insurance benefits to registered gig workers working in the state of Karnataka, for the first time in the country. The workers eligible for this scheme includes Food delivery boys of Swiggy, Zomato etc., and all unorganized gig workers engaged in the delivery profession with e-commerce establishments such as Amazon, Flipkart, Porter, Pharmacy, Blink it, Zepto, Big Basket, Domino’s, etc.9
Chief minister of Karnataka, Siddaramaiah on September 14, 2023, announced to implement insurance for gig workers up to Rs 4 lakh to each. Thus, Karnataka government has taken significant step in providing various social security measures and address the specific needs of gig workers.
Government Regulations Worldwide to Protect Gig Workers’ Rights:
Over the past decade, the gig economy has expanded rapidly worldwide, driven by increasing digital innovation, lower costs for employers, and flexibility for workers. In response, countries are beginning to update their regulations as they attempt to figure out how to govern this new economic sector.
- California Assembly Bill 5 (AB5)
California Assembly Bill 5 (AB5) is a piece of legislation that went into effect on Jan. 1, 2020. Known popularly known as the gig worker bill, it required companies that hire independent contractors to reclassify them as employees.10 The bill regulates companies that hire gig workers in large numbers, such as Uber, Lyft, and Door Dash. It brings the idea of three-pronged test to classify workers as independent contractors. The bill entitles workers to a minimum wage, employee benefits, and other perks.
- European Union Platform Workers Directive
In April 2024, Parliament voted in favor of new rules to improve the working condition of gig workers. Under the new directive, all European countries have to set up National rules which limit the algorithm system. EU also provide fair minimum wages, improve transparency, and regulate the use of algorithms and data in taking decisions about platform workers.
- Rider’s Law in Spain
The Rider’s Law was introduced by Ministry of Labor and Social Economy along with Spain’s most representative trade unions and employers’ organization in 2021. The law has introduced the way for addressing rights and conditions for platform workers in the country through social dialogue and collective bargaining. The law allowed the workers to gain access to social security systems including sick leave, protections against work-related accidents, unemployment benefits, pensions and maternity leaves.
Suggestions and Conclusion:
The implications of these findings are significant for understanding that it is important to ensure that gig workers have the same rights and benefits as traditional employees, which leads to a more equitable and sustainable gig economy. The steps to be taken in this field involve, Implementing clear legal frameworks that ensure gig workers receive basic employment protections, such as minimum wage, health insurance, and retirement benefits; Providing access to training and development programs which enhance their skills and career prospects; Encouraging gig platforms to offer more fair and transparent management practices, including dispute resolution mechanisms and rating system fairness.
Labors in the gig economy should form labor unions for improving their working conditions and protection of rights in this evolving gig economy. A Union can amplify their voices and make it to be heard and taken more seriously, by joining together in a union workers can negotiate for better terms & conditions, fairer wage structure, health and safety measures, protection from unfair treatment, stable employment terms etc.
Through public pressure and advocacy groups, gig workers can attain more spotlight which highlight their issues in front of general public. Advocacy groups and public campaigns can bring attention to the challenges faced by gig workers, which can help shape the labor policies and laws for the protection of gig workers’ rights. Ultimately, gig economy companies will start adopting fair policies for the labors and giving them fair treatment.
The enactment of new laws and amendment of the existing laws are extremely important for gig economy. Comprehensive surveys and studies should be conducted to understand the present working conditions of labors in gig economy. Also, the evaluation should be done to check the effectiveness of existing laws and whether the enforcement mechanism is complying with labor laws or not.
This research underscores the evolving status of gig economy and opportunities which gig workers have over the other traditional employees. They do not, however, have the same rights and protections as ordinary employees, they suffer abjectly due to neglect and miserable working conditions. As we’ve seen, while there are some existing laws in India to protect the violation of gig workers’ rights, they are insufficient in addressing their unique problems. Thus, there is a need of comprehensive regulatory framework to articulate the interest of gig workers and safeguard their rights. By strategically tackling current legal weaknesses and reviewing current legal situations, we can conclude that as gig economy expands there must be a robust legal mechanism to address the violation of rights of labors in gig economy.
1Faculty Of Law, Banaras Hindu University
2The Code on Social Security, 2020, §2(35), No. 36, Acts of Parliament, 2020 (India)
3NITI Aayog,
4Deraeve, P, Platform workers and social protection: International developments, International Social Security Association, https://www.issa.int/analysis/platform-workers-and-social-protection-international-developments
5International Labor Organization, https://www.ilo.org/media/366091/download (May 22, 2024, 7:27 PM)
6The Code on Social Security, 2020, §2(35), No. 36, Acts of Parliament, 2020 (India)
7The Code on Social Security, 2020, §2(35), No. 36, Acts of Parliament, 2020 (India)
8Rajasthan Platform Based Gig Workers (Registration and Welfare) Act, 2023, §2(f), No. 30, Acts of Rajasthan State Legislature, 2023 (India)
9Karnataka State Gig Workers Insurance Scheme, https://ksuwssb.karnataka.gov.in/info-2/Karnataka+State+Gig+Workers+Insurance+Scheme/en (May 19,2024, 7:30 AM)
10California Legislative Information “Assembly Bill No.5, https://eginfo.legislature.ca.gov/faces/b
ilTextClient.xhtmI? bill_id=201920200AB5. ”