The gig economy in India – Employment laws

The rapidly expanding gig workforce is steering towards greater economic growth internationally. Due to the demographic dividend of a 50-crore labor force and other factors such as rising urbanization, and speedy adoption of technology, India has been the next frontier of this revolution.[1] Even in the aftermath of Covid-19, the gig economy in India has continued to create millions of employments and maintain community bonds, indicating its durability and promise. The gig economy has an impact on our GDP as well as business practices.

The Gig Economy in India is a marketplace for temporary contract workers who are recruited and fired on an as-needed basis. They are used in businesses where human services must be offered through a web-based platform. Platform owners act as intermediaries for service providers and the agents that offer the services. Amazon, Ola, Uber, Zomato, and Swiggy are a few examples of such platforms. Platform providers are intermediaries who receive a fee from both the service provider and the customer.

Opportunities

A rise in the usage of technology and the influx of modern-day technology in this digital era has caused exponential growth in the gig economy. Each task or assignment completed by workers or independent contractors is reimbursed, and this concept is at the heart of various applications, that utilize this contingent workforce. Many corporations compensate their partners i.e., drivers, delivery executives, or other personnel, on a daily/weekly/monthly basis for the work they manage to accomplish as per the policies.

Furthermore, the availability of “cheap labor” in India allows corporations to reap the majority of the benefits of employees. People of all ages and backgrounds can now work in several industries thanks to the gig economy in India. In light of this, let us take a legal look at the situation.

Legal Implications

‘Definitional’ Change and Impact

To begin with, the Code on Social Security, 2020 has clearly distinguished between gig work, platform worker, and unorganized worker. A gig worker has been defined as “a person who performs work or participates in a work arrangement and earns from such activities outside of the traditional employer-employee relationship.”[2] The formal registration of gig workers was necessary because the concept encompasses a vast number of temporary workers.

Additionally, as an effect of defining ‘gig workers’ under the Code of Social Security, 2020, the Contract Labour (Regulation and Abolition) Act, 1970, can govern gig workers in India, since they generally work under the ambit of ‘work performed by outside contractor’.[3] Thus, employers may be required to follow the provisions of this act, including the welfare and health standards to offer canteens, first aid, and other essentials to employees.

Registration Process and Benefits

The Code also requires gig workers to register on an online portal or at a facilitation center to receive benefits under the Code, as specified by the Central Government. However, this registration is subject to 4 conditions. They are:[4]

1. The person must be 16 years of age or above.
2. The person should have worked for a minimum of 90 days in the last 12 years.
3. The person should submit an electronic self-declaration on the Central government website
4. The person should apply for registration, with all the relevant documentation.

Once these conditions are fulfilled and the application has been approved by the Central government, the gig worker would be entitled to various benefits such as Accidental insurance, Life and disability cover, Health and maternity benefits, old age protection, etc.[5]

Looking Forward

Businesses & Corporations are benefitting from the gig economy in India as they can accommodate temporary workers as per client/operational requirements. This helps them reduce administrative and regulatory costs associated with full-time or permanent staff. This is especially true when the business strategy does not necessitate the hiring of permanent workers. In such cases, both parties are free to explore solutions that meet their requirements in this reasonably symbiotic partnership. They focus their efforts on making contacts and building relationships with their respective populations at the same time.

Furthermore, abolishing customary long-term employment agreements with employees would minimize the strain on the organization. The new ideas would help to create several modest jobs that are properly governed by labor standards and offer people social security. Before making any definitive comments, it is critical to observe how these enterprises are regulated and whatever government programs are in place to help those who work in the gig and platform economies.

[1] NITI Aayog, India’s Booming Gig and Platform Economy, https://www.niti.gov.in/sites/default/files/2022-06/25th_June_Final_Report_27062022.pdf.

[2] Section 2(35), Code on Social Security, 2020.

[3] Section 2(c), The Contract Labour (Regulation and Abolition) Act, 1970.

[4] Section 113, Code on Social Security, 2020.

[5] Section 114, Code on Social Security, 2020.