Introduction
Labour laws are welfare legislations[i], enacted to fulfil three crucial roles[ii]–
- Establishing a legal system that facilitates productive individual and collective employment relationship.
- Serve as an important vehicle for achieving harmonious relations based upon workplace democracy.
- Provide a clear and constant reminder and guarantee of fundamental principles and rights at work.[iii]
However, in the Indian scenario, such roles are difficult to achieve, due to the fact that majority of the workforce is employed in the unorganised sector (over 90%)[iv], a sector which faces issues w.r.t coverage and regulation by laws. This problem has only intensified with the advent of the ‘gig economy’. According to a Report by the Boston Consulting Group,[v] the gig economy has the potential to provide 90 million jobs, add upto 1.25% to the Indian GDP, and create new jobs across all sectors.
Platform Workers- Before & After the Code
Platform workers are those workers that provide goods or services, through the use of platform (software-based media). While in most situations, they have been termed as ‘self-employed workers’, many States have also termed them as ‘independent contractors’. Companies employing such workers also agree with the terminology, as this helps them employ these workers in a more-free manner, devoid of ensuring many benefits that they would be entitled to, if they were employees. This category is also at times, termed as ‘gig workers’, and has gained importance for both, consumers and businesses.[vi]
Until the passing of the recent Labour Codes (and specifically, Social Security Code)[vii], such workers were neither recognised nor regulated under any law. This partly arose from the fact that their evolution was very recent, even though their growth has been at an exponential rate. Resultantly, arguments in favour of regulatory framework for such workers rose, with many stating that they could be covered under the category of ‘unorganised workers’, and hence, fell within the framework of the Unorganised Workers’ Social Security Act, 2008.[viii] However, upon a closer examination, it can be found that considering the nature of definition provided under the said Act,[ix] such workers could not be covered under the same. As such voices further intensified, the Legislature decided to recognise and accord legal protection to such workers, under the new Labour Codes.
The Social Security Code,[x] while assimilating (and repealing) 9 Central Laws, has introduced certain new elements into the labour law regime. It recognises and differentiates b/w two new categories of workers- ‘platform workers’[xi] and ‘gig workers’.[xii] Furthermore, these categories have been differentiated from ‘unorganised workers’, a term which retains its definition from the 2008 Act.[xiii] At the same time, the Code also recognises the employers of such platform or gig workers, as ‘aggregators’.[xiv] A list of such aggregators is provided under Schedule VII.
A separate Chapter (i.e., Chapter IX) has been incorporated into the Code, to deal with the social security measures for unorganised, gig and platform workers, and includes provisions for various activities/functions like-
- Central Government to frame and notify social security schemes[xv] for such workers
- Funding of such schemes[xvi]
- Registration of various workers as beneficiaries[xvii]
- Contribution by aggregators and limitations upon it[xviii]
- Creation of a social security fund[xix]
- Creation of a National Social Security Board[xx]
The recently published Draft Rules[xxi] provide more details and clarity upon the functioning of the Code (and the mentioned Chapter), although they have not been finalized as of now.
Issues
While people have applauded the Legislature, for inclusion of platform or gig workers within the Code, several issue have also been raised, which are discussed below-
1. Differentiation between various categories– By creating the various differentiations, the Legislature has only complicated the matter. It has been argued that platform and gig workers are not two distinct categories, but parts of a bigger whole, wherein workers are employed outside the traditional employer-employee relation. An element of similarity can also be found in the definition given under the Code.
2. Absence of timelines– While ensuring social security rights to platform (or gig) workers, the Code, by using terms like ‘may’, ‘from time to time’ etc., has left a lot of leeway for Government, leading to uncertainty for both employers and workers.
In the absence of hard and fast timelines, for introduction and implementation of such schemes, experts believe that it may become a ‘dead letter of the law’, or may be so delayed, as to defeat its very purpose. In contrast, for unorganised workers, the term used is ‘shall’.
3. Ideals of the scheme and excessive discretion– The Code remains silent upon the basic ideals that should form part of the schemes. Use of the term ‘appropriate’ leaves a wide discretion in the hands of the Government, and such discretion has been questioned by many, arguing that it may be used to defeat the very intent and purpose of the Code.
The Draft Rules further provide that under any such scheme, further qualifying criteria may be put, which could lead to further exclusion of workers.
4. Centralization– A major issue that arises is the centralization of powers and authorities. The Board (tasked with creating schemes) has been setup at the Central level, and so has the funds meant to finance such schemes. Further, registration aspect has also been provided to a Central authority.
However, considering the fact that Labour falls within the concurrent list,[xxii] such centralization may further hamper the effective implementation of such schemes.
5. Aggregators’ contribution– Although a noble idea, but one needs to be conscious of the fact that such aggregators (especially cab services, food delivery services, e-commerce) often show negative to no profit.
Thus, it could lead to a situation wherein, ultimately, the cost is pushed onto the workers, which would result in an erosion in their income, which is already uncertain due to the very nature of the sector.
6. Registration aspect– Registration process under the Code has been largely adopted from the 2008 Act, even though its record has not been very successful. By adding a further step of Aadhar verification, the process has been further complicated.
Another issue in this regard is people’s reservation and resentment towards such registration.
7. Social Security Fund– While the Code mandates creation of such a fund, experiences of a similar fund made under the 2008 Act are not very promising. A CAG Audit, showed that half or even less than that was actually spent from the fund under the 2008 Act.
8. Privacy concerns– In the case of Justice K.S. Puttaswamy vs Union of India[xxiii] (also known as the Aadhar judgement), the Hon’ble Supreme Court, had held that the Aadhar card/number could only be made mandatory for expenditure on a subsidy, benefit or service incurred from the Consolidated Fund of India.
Applying the same proposition here, the mandatory nature of Aadhar for verification, would be violative of the judgement, as the funding of such schemes can be through a variety of sources.
Recommendations & Conclusion
While the Code has been a positive step towards ensuring certain rights for platform (and gig) workers, but certain issues,[xxiv] as discussed above, still remain. Possible solutions for the same include-
- With regard to the definition issue raised above, the Parliamentary Standing Committee had recommended the following-
- Expanding the definition of unorganised worker to include gig and platform workers;
- Making the definition of gig workers more specific to avoid misinterpretation;
- Expanding the definition of platform workers to enable inclusion of future models of work.[xxv]
- With regard to the issue of registration, it has stated that such registration should be incentivised with one-time money transfer to push people for the same. Awareness drives and educating the workers about the benefits of such registration, should also be undertaken.
- With regard to timeline, the Government should provide clarity, by declaring a specific timeline for formulation of such schemes. Further, such timeline should not be a stretched one, so as to defeat the very purpose of the law.
- With regard to the issue of affecting income of such workers, experts have argued that to overcome such problem, the schemes should be made, keeping in mind their income fluctuations, continuity of work etc. rather than a strict, straight forward scheme.
- Such workers are often involved in/working with multiple platforms/employers at the same, and therefore, while formulating any scheme, due regard should be given to such situations.
- Organisational structure, along with Centralization, is major issue of the Act. The Government should focus upon a more simple, integrated and decentralised system, with-
- Central Board, to manage the schemes;
- State Board, dealing with delivery and implementation;
- Local Committees, for identification, registration of beneficiaries and overlooking the ground realities of its implementation.
- While the Government has come forward and stated that people not having Aadhar would not be affected in situations of registration as beneficiary, the express words of the Code and the Draft Rules do show a mandatory nature of requirement of such Aadhar. The Government should work towards creating a uniform approach towards identification and registration of beneficiaries.
In conclusion, it can be stated that while the Code is actually a positive step in the direction for protection and regulation of such platform or gig workers, the fact remains that there are still many issues plaguing the framework. The Government needs to act, to overcome such issues otherwise, the dream of social security for such workers would remain a mirage in the labour law regime.
[i] Held in cases like Messrs. Crown Aluminium Works vs Their Workmen (AIR 1958 SC 30); The Assistant Director vs M/s Western Outdoor Interactive Pvt. Ltd. (First Appeal No. 143 of 2012, Bombay HC).
[ii] Labour Laws in India, available at: https://ncib.in/pdf/ncib_pdf/Labour%20Act.pdf (Last visited on June 8, 2021).
[iii] Labour Legislations in the Contemporary World, International Labour Organization, available at: https://www.ilo.org/legacy/english/dialogue/ifpdial/llg/noframes/ch1.htm (Last visited on July 22, 2021).
[iv] S. Sakthivel and Pinaki Joddar, “Unorganised Sector Workforce in India: Trends, Patterns and Social Security Coverage”, 41(21) EPW 2107 (2006).
Dr. Muna Kalyani, “Unorganised Workers: A Core Strength of Indian Labour Force: An Analysis”, 2(12) IJRBSM 44 (2015).
[v] Report by Boston Consulting Group and Micheal & Susan Dell Foundation, available at: https://media-publications.bcg.com/India-Gig-Economy-Report.pdf (Last visited on June 25, 2021).
[vi] Anjali Venugopalan, “Hiring of gig workers rises, but companies delay long-term contracts”, The Economic Times, June 22, 2021, available at: https://economictimes.indiatimes.com/news/company/corporate-trends/hiring-of-gig-workers-rises-but-cos-delay-long-term-contracts/articleshow/83729590.cms (Last visited on June 24, 2021).
[vii] Code on Social Security (Act No. 36 of 2020), available at: https://labour.gov.in/sites/default/files/SS_Code_Gazette.pdf (Last visited on June 8, 2021).
[viii] The Unorganised Workers’ Social Security Act, 2008 (Act No. 33 of 2008), available at: https://legislative.gov.in/sites/default/files/A2008-33.pdf (Last visited on June 8, 2021).
[ix] ibid, Sec. 2(m).
[x] Preamble of the Code reads as: “To amend and consolidate the laws relating to social security with the goal to extend social security for all employees and workers either in the organised or unorganised or any other sector, and for matters connected therewith or incidental thereto”
[xi] supra, pt. vii, sec. 2(60) r/w sec. 2(61).
[xii] supra, pt. vii, sec. 2(35).
[xiii] supra, pt. viii.
[xiv] supra, pt. vii, sec. 2(2).
[xv] supra, pt. vii, sec. 114(1).
[xvi] supra, pt. vii, Sec. 114(3).
[xvii] supra, pt. vii, Sec. 113.
[xviii] supra, pt. vii, Sec. 114(4).
[xix] supra, pt. vii, Sec. 141.
[xx] supra, pt. vii, sec. 6 r/w sec. 114(6).
[xxi] Draft Code on Social Security (Central) Rules, 2020, available at: https://labour.gov.in/sites/default/files/DRAFTCOSSRULES2020NOV.pdf (Last visited on June 8, 2021).
[xxii] Entry 23 (List III), Schedule VII, Constitution of India, 1950.
[xxiii] Justice K.S. Puttaswamy vs Union of India, Writ Petition (Civil) No. 494 of 2012.
[xxiv] Santosh Mehrotra and Kingshuk Sarkar, “Rework Social Security Code for informal workers”, The Hindu Business Line, May 19, 2021, available at: https://www.thehindubusinessline.com/opinion/rework-social-security-code-for-informal-workers/article34599616.ece (Last visited on June 8, 2021).
[xxv] Standing Committee Report Summary on Code on Social Security, 2019, PRS India, available at: https://prsindia.org/billtrack/prs-products/prs-standing-committee-report-summary-3413 (Last visited on July 22, 2021).
Dhruv Gupta, a 4th year student at USLLS, GGSIPU, Delhi.
Picture Credits: Socialists and Democrats.
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