Author: Harsheen Kaur Luthra is a third-year B.A.LL.B. (Hons) student at Rajiv Gandhi National University of Law, Punjab.
India’s gig economy is rapidly expanding, with 7.7 million workers in 2020 projected to grow to 23.5 million by 2029-30. Despite this growth, gig workers face poor working conditions, income instability, and lack of social security benefits like minimum wages, insurance, and collective bargaining rights. The Social Security Code, 2020, recognizes gig workers but fails to provide adequate protections due to vague definitions and implementation issues. Legal cases, such as the UK Supreme Court’s Uber ruling, have classified gig workers as employees entitled to rights, sparking debate over similar protections in India. The Rajasthan Platform-Based Gig Workers Act, 2023, offers a model for improving worker welfare, but widespread reform is needed. Advocates propose recognizing gig workers as employees to ensure social security as a fundamental right and address the sector’s growing challenges.
Emergence & Challenges of Gig Economy in India
With rapid technological advancements, urbanisation, a booming economy, and half a billion-labour force, India is witnessing a new frontier revolution. Despite this, a vast majority of India’s labour force—93% according to the Economic Survey of 2007-08—is characterised in unorganised sector. As India transforms into a tech and innovation hub, there’s an evident shift from conventional to tech driven employment opportunities. In 2020, the NITI Aayog Report on “India’s Booming Gig & Platform Economy” revealed that 7.7 million workers were engaged in the gig economy, a number projected to increase to 23.5 million by 2029-30.
Gig economy is often characterised by poor safety conditions, unfair contracts and the lack of essential employment benefits. However, flexible working hours and the potential to earn an additional income are the two most significant factors for a large chunk of the populace to incline towards gig economy. However, it is pertinent to note that the ‘recognition of the needs and necessities’ of the workforce which forms the most basic, yet imperative aspect of any employment is missing in the incentivizing gig economy. This gap has led the gig workers aloof of various social security provisions and welfare schemes.
Employment Uncertainty & Exploitation of Gig Workers
Over 44 labour laws have been assimilated into just four codes: namely the Code on Wages, 2019; the Industrial Relations Code, 2020; the Code on Social Security, 2020; and the Occupational Safety, Health and Working Conditions Code, 2020. Since the inception of the gig economy in India, the status of employment of gig workers has remained unsettled. Many tech companies, food delivery applications, startups etc in India follow an aggregator-intermediary model, portraying gig workers as partners, intermediaries, freelancers, or independent contractors rather than employees. This allows them to circumvent the labour welfare legislations applicable to employees. As a result, gig workers are often unable to access crucial benefits such as minimum wages, payment of bonuses, insurance schemes, right to collective bargaining etc. They are frequently subjected to exploitative practices like long working hours, low pay, lack of bargaining power, lack of formalisation, income instability and job insecurity.
In the Covid-19 pandemic, the grim picture of the gig sector got a wider recognition. To subvert the financial pressure during the pandemic, the aggregators abruptly reduced their workforce rendering lakhs of employees jobless. Ironically, while these platform workers were classified as ‘essential workers’ for their resilience during the pandemic, little heed was paid to their safety, well-being or source of livelihood. In response, many gig workers have resorted to filing petitions, protesting and going on strikes, although the legality of these actions remains uncertain due to their uncertain employment status.
Legal Framework & Implementation Issues
It is worth noting that the Social Security Code, 2020 has categorised and defined gig workers, platform workers and unorganised workers and has formally recognized their existence. However, there is a difference between the recognition of their existence and the recognition of their identity. The latter would have mandated the application of welfare and social security provisions to gig sector workers, resulting in their upliftment and better working conditions which is the need of the hour. Instead of enhancing the social security benefits for these workers, the overlap in the definitions of gig workers, platform workers and unorganised workers in the Social Security Code has increased the complexities and ambiguities in the implementation of specific schemes to different worker categories.
Collective bargaining and strikes, vital instruments for workers to voice their concerns and rights, still remain a distant dream for gig workers, as these rights find no presence in the Industrial Relations Code, 2020. Platforms argue that allowing collective bargaining for gig workers could lead to trade unions becoming ‘interlocutors’, thus rendering the process ‘political’. While the 2022 NITI Aayog report on the gig and platform economy recognised the limited potential for collective bargaining, as platforms are unwilling to recognise and negotiate with worker associations, it failed to address this issue adequately. The report did not recommend granting representation and bargaining powers to platform workers within the framework of Industrial Relations Code, 2020.
Most countries around the globe have classified gig workers as either self-employed or as having the potential for an employment contract. However, according to the findings by PwC Legal, only three countries—namely UK, Spain and Italy—have provided workers with the third possibility which is an intermediate status that provides these workers with basic protection and more flexibility. The gig economy is a relatively recent development, advancing in symphony with technological advancements. In many countries, the identification of the status of gig workers as either self-employed or as workers—who receive legal entitlements—has been determined through court rulings. The courts have based their decisions on factors such as the ability of the recruiter to discipline, terminate, or suspend workers, the requirement for personally performed services, the provision of capital and equipment for work, and the mode of remuneration.
Global Standards & Legal Precedents
The globally approved test for determining the employer-employee relationship is the ABC test. This test examines three factors: whether the worker is free from the control and direction of the employer, whether the worker performs work outside the usual course of hiring entity’s business, and whether the worker is customarily engaged in an independently established trade of the same nature as the work performed. In the landmark Pimlico Plumber case, the key rationale for classifying self-employed plumbers as employees was the direction and control exerted by the employer over the workers. Applying the first two parameters of the ABC test precisely, gig workers may not typically fit the category of employees due to the volatile and ‘to an extent’ boundless nature of their working conditions. However, this does not suggest that there is no direction and control at all exerted by employers over gig workers. This notion formed the basis of the well-established Uber driver’s case, where UK Supreme Court ruled that the Uber drivers are employees. The court observed that Uber has the authority to set fares for each ride the drivers carry out; imposes contractual terms on drivers with no input from them; monitors driver performance; and can terminate drivers if they do not meet performance standards. The court also emphasized that, for many Uber drivers, the company is their primary or sole source of income. This judgment rejected Uber’s long-established practice of classifying Uber drivers as self-contracted employees and thus resulted in Uber workers gaining legal entitlements under various labour legislations. The application of the above judgment could also support gig workers in India, potentially bringing them under the protection of labour legislation.
Final Reflections
Indian Federation of App-based Transport Workers (IFAT) in partnership with the International Transport Workers’ Federation (ITF) conducted a study titled ‘Protecting Workers in the Digital Economy’. One of the key findings of the study was the complete absence of social security and protection for gig workers. An alarming 95.3% of the surveyed workforce reported having no form of insurance—accidental, health or medical—the rest had access to the bare minimum in form “accidental insurance”. The dismal situation of gig workers was further reflected in the Fairwork India Ratings of 2023 which scored 12 platforms including Amazon Flex, Swiggy, Zomato, Ola, Uber etc. No platform in the study managed to score more than six out of the maximum 10 points. The study found that workers of even popular food delivery options and e-commerce platforms like Zomato, Swiggy and Amazon Flex still suffer from problems of fair pay and fair representation. In response to these dire conditions, IFAT has taken a significant step by filing a Public Interest Litigation (PIL) in the Supreme Court, advocating for the creation of social security schemes for gig workers. The petition emphasizes the social security of these workers as a fundamental right.
Inspiration could be taken from The Rajasthan Platform Based Gig Workers (Registration and Welfare) Act, 2023 which mandated the registration of all the ‘platform-based gig workers’ and also levies transaction-based fees on the aggregators. This act provides for the creation of a Welfare fund and a Welfare Board responsible for implementing welfare measures and grievance redressal for workers in Rajasthan. This legislation represents a progressive step towards social security schemes accessible to gig workers.
Considering the challenges faced by gig workers and necessity of the social security schemes, it is proposed that gig workers should be categorized as employees. The implementation of the Social Security Code is yet to come into the picture. This has provided us with an opportunity to reflect onto the challenges and seize them timely. Recognizing social security as a fundamental right for gig workers would ensure that the Social Security Code secure its intended purpose rather than remaining merely as a paper tiger.
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