A recent tweet criticizing the popular food delivery app ‘Swiggy’, by describing how the company gets away with mistreating its delivery people has sparked outrage. This is not the first time that Swiggy and similar apps have come under fire for mistreating their employees, and if the existing legal frameworks are not altered, it will not be the last. To get away with mistreating its employees, the company takes advantage of a labour law loophole. It refers to its workers as “delivery partners” rather than “employees,” thereby avoiding liabilities such as minimum wages, PF (Provident Fund) , ESI (Employee State Insurance), and similar benefits. In this article, the authors will talk about the existence of service aggregator platforms and how they get around the existing labour laws to resist paying fair wages and benefits to workers.
What’s in a name and why label?
Service aggregators all over the world have methodically constructed their relationships with their employees in order to avoid having to provide them with legal perks and protections. It is for this reason that they’re referred to as ‘partners.’ Typical contracts in such situations show that the workers use the aggregator’s technology as merely a service and pay the aggregator a percentage of the money they receive from customers. Such companies claim that their application is essentially an “internet service” or a “platform” that attempts to connect the client, the restaurant, and the delivery person. Consequently, despite hiring 50,000+ delivery executives, companies like Zomato are able to avoid employee retention. This is because, most employee-protection laws will not apply to a majority of people actually working for the platform. Further, the delivery men receive little compensation and are not paid on a regular basis. But, the facade of these apps, which claim to be only “internet service providers” is rapidly being recognized by lawmakers and courts in a number of countries, from California (USA) to United Kingdom. California has passed a legislation requiring aggregators like Uber to treat their workers as employees rather than independent contractors and to provide them with all of the benefits to which employees are entitled. . The Advocate General of the European Court of Justice too has concluded that the conditions imposed by these companies on their workers render them ‘employees’ rather than ‘independent contractors.’
There is a petition pending before the Delhi High Court that similarly seeks for the court to declare Uber drivers as employees in India. If the petition is successful, Uber will be required to formalize and regularize its staff. The judgement will likely apply to other service aggregators like Swiggy and Zomato and will be a much-needed relief. This is essential to prevent jeopardizing core labour rights.
The double standards: Are employers as caring as they show?
Service aggregators have attempted to improve their reputation by implementing voluntary programs for the benefit of their employees. Swiggy, when asked about its treatment of employees, highlights the ‘Hunger Savior Fund’ which it formed in the early days of the Covid lockdown to support its employees, as well as the ‘Swiggy Smiles programme’, which provides accident and medical insurance to its delivery persons. While these are admirable efforts, they are sporadic and susceptible to the whims of the aggregators. Companies like Zomato gain praise for announcing policies like the period leave. However, these initiatives and policies apply to the relatively tiny group of people they consider employees, and has little bearing on the workers who actually perform the primary roles. Hence what is required is policy decisions for a long-term blanket protection for everyone.
What is the current status of the delivery persons and is there good news?
The delivery workers for service aggregators including Swiggy and the like are “gig workers.” The term “gig employment” has a very different meaning now, than it had ten years ago. It is no longer limited to freelancers, possibly creative experts, taking on tasks as and when they please. The rise of service aggregators such as Uber and Ola for cabs and Swiggy and Zomato for food delivery has changed the meaning of the term. It has been repurposed as jargon to characterize the huge number of people who work for these aggregators on a regular basis, putting in up to 12 hours a day, seven days a week, to make a living. While these service providers have undoubtedly made life exponentially more convenient for their customers, a significant proportion of their employees are left at the mercy of their employers in an unregulated system.
A ray of hope comes in the form of the new social security code of 2020. The code has been updated to reflect the inclusion of gig and platform workers. This is the first time that gig and platform workers have been included and defined under the law. The Code, which replaces nine legislative acts (including the Maternity Benefit Act, Employees’ Provident Fund Act, Employees’ Pension Scheme, and Employees’ Compensation Act, among others), aims to provide uniformity and social security to a broader group of workers through the inclusion of new terms such as platform workers, gig workers, fixed-term employment, and more, thereby providing for workers in the unorganised sector. The Code requires platforms such as Uber, Zomato, Swiggy, and Ola to contribute a portion of their annual revenue (1-2 percent) to provide social security to their platform workers. The aforementioned contribution should be made by the 30th of June of each year through self-assessment and the submission of a form stating the number of gig workers associated with it at the beginning of each fiscal year. There is, however, a catch. While the Indian government appears to acknowledge the need for protection for gig workers by including them in the social security code, it fails to provide a reason for not including them in the rules dealing with salaries, occupational safety, or industrial relations. Social security sure is critical, but it is not sufficient. Gig workers must be equipped with job-security and be brought under a universal minimum wage that encompasses all types of employment, in addition to the opportunity to organize legally recognized unions. It is perplexing that the government recognizes the importance of providing life insurance and gratuity to gig workers, but not workplace safety or minimum wages.
Way ahead: One can only hope that enough pressure will be applied to bring about modifications to the new labour law codes to enable expansion of the scope of protection of gig workers. It is unfair to leave an enormous section of the economy unregulated, as if it were a wild west for aggregators. What is needed is a policy framework that recognizes that gig workers are in a position that is similar to traditional employees in several ways, and that if the aggregators insist on treating them as non-employees, they should be recognized as a separate category, with benefits such as the ability to form unions, minimum wages, and occupational safeguards, as well as qualifying conditions that may make them more attractive to employers.
Sanvi Bhatia, a second-year student at, NALSAR Hyderabad and Sanishtha Bhatia, a second-year student at PGDHRM, XLRI Jamshedpur).
Picture credits: Brand Equity
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