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The Indian Gig economy and the Code on Social Securities, 2020

The word gig by its very definition means a job, especially one that is temporary or that has an uncertain future.[1] As the name suggests a gig economy is a labour workforce which is based on non-conventional temporary jobs mainly stemming from the service sector unlike the traditional forms of employment known to us. A gig worker in section 2(35) Code on Social Securities, 2020 is defined as:
A person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationships[2].

Freelance workers, independent consultants and contractors usually are a few examples of gig workers. Platform workers are the other set of important stakeholders arising out of the gig economy and are defined in section 2(55) as:
A form of employment in which organisations or individuals use an online platform to access other organisations or individuals to solve specific problems or to provide specific services in exchange for payment[3].

Delivery agents from online aggregator companies such as Swiggy, Zomato, Dunzo and cab/auto drivers from companies such as Ola and Uber are example of platform workers.

These on demand part time work has turned out to be a very attractive and lucrative option for lot of people to escape the soaring unemployment in India. India's gig economy currently consists of around 10 million workers and is projected to grow to another 90 million in the next 8 years[4]. The Associated Chambers of Commerce and Industry of India has found that the gig economy in India is growing at a CAG rate of 17% and will reach $455 billion by the year 2023.[5]

This tremendous growth rate of the gig industry coupled with the absence of a strong legal/stautory framework governing the gig economy will inevitably make things complicated, in fact there have already been instances where drivers in Delhi have vehemently protested against major aggregator companies, Ola and Uber.

Delhi Commercial Driver Union Vs Union Of India & Others
The drivers in Delhi claimed that they are "being subjected to exploitation everyday with respect to their pay and service conditions, and denied benefits under several labour laws as well as their fundamental rights by Uber and Ola"[6]

A writ petition filed by a Union comprising of 1.5 lakh drivers who were protesting against the concerning legal gaps in the Aggregator business model used by companies such as the Ola and Uber. There were fundamental problems which needed to be addressed in this case like whether these cab drivers were employees by the definition, of Ola and Uber, will there be security compensation in case of accident or death.

It was noted that there exists 'arbitrary and whimsical alteration in payment terms and service conditions of the drivers on daily basis without prior notice' the petition also read 'Once the customer makes a booking, respondent no. 5-6 [Uber and Ola] by using their internal systems, searches for registered drivers available around the customer's location.

The respondent no. 5-6 exercise their sole discretion in selecting a driver to service the ride. The element of freedom and independent decision-making on part of the driver is non-existent in the entire sequence of actions. The chargeable fare keeps varying on a daily basis on the whims of the respondent no.5-6. No prior notice is given to the driver in this regard. Drivers' also have to suffer arbitrary deductions in their payments on vague and unsubstantiated grounds, without even giving them a chance to respond'[7]. The petition was eventually withdrawn before the court could even form an opinion

Dynamex Operations West Inc. v The Superior Court of Los Angeles County
Also known as the Dynamex case was not only a landmark judgment but also was one of the foundational acts of regulating the Gig economy in the USA. This judgment seeks to identify the gig and platform workers as employees by the way of a 3-tier test, it ruled that a worker is an employee and will only be called an independent contractor if the hiring entity can prove that the worker[8]
  1. In connection with the performance of the work, the worker is free from the hiring entity's control and direction.
  2. The worker generally performs work which is outside the ambit of the work prescribed by the hiring entity.
  3. When the worker is involved in a typically self- established business, trade or occupation

Code on Social Securities, 2020
The Code of Social Securities, 2020 is one out of the 4 new proposed legislations as a form of massive labor reforms done to consolidate the current 44 laws governing the labour sector, out of which 9 of these laws have been condensed into the Code of Social Securities itself. As the name suggests the object of this code is to universalize social security and employment and protect workers from financial and social vulnerability. The code aims to extend the coverage of benefits under the non-traditional forms of employment to the gig workers and platform workers. This is the first instance where India has formally acknowledged the existence of the new age gig economy.

Further it mandates the union and state government to frame welfare schemes extending the benefits such life and disability cover, accident insurance, health and maternity benefits, old age protection, creche facilities or any other benefit deemed necessary by the central government. These schemes will be partly funded by the union and state governments and also by collection contributions of aggregators which should be more than 1% but less than 2%.

The code also mandates all the workers both platform and gig to compulsorily register themselves with the government vis a vis an online portal to claim the aforementioned benefits, further stipulating a criterion to be eligible for such registration,[9]
  1. should have completed 16 years of age and less than 60;
  2. The worker has worked for not less than ninety days during the preceding twelve years;
  3. Submitting a self-declaration containing all the details electronically or by any manner prescribed by the government.
  4. Application of all the workers (platform, gig, unorganized) with documents and compulsory attachment of Aadhar.

Way forward

The gig economy in India is booming and has a massive potential to generate employment and contribute to the economy. There are a number of start-ups popping up due to multiple advantages of the gig economy. The code on social securities was definitely the need of the hour, but the regulatory framework of the gig economy has still a long way to go.

The lack of acknowledgement of gig workers in other codes is problematic for effective implementation and creates ambiguity when it comes to minimum wages and other forms of protection. There is also an overlap of definitions making the process even complicated.

Unlike the Dynamex case, the code also refrained from giving gig and platform workers the employee status. Moreover, there isn't a definitive timeline of accountability in place. The governments and the judiciary sooner or later have to come up with a viable framework to regulate the gig economy, as the Code on Social Securities is just a start.

End-Notes:
  1. Gig (Dictionary.cambridge.org, 2021) accessed 29 October 2021
  2. Code on Social Securities, 2020
  3. Code on Social Securities, 2020
  4. Prashant Nanda, India's gig workers may service 90 million jobs in next 8-10 years mint (2021), https://www.livemint.com/news/india/gig-economy-may-service-90-mn-jobs-in-non-farm-sector-11617098463776.html (last visited Oct 29, 2021).
  5. (2021) accessed 29 October 2021.
  6. (Images.assettype.com, 2021) accessed 29 October 2021.
  7. 'Dynamex Operations West, Inc. V. Superior Court - S222732 - Mon, 04/30/2018 | California Supreme Court Resources' (Scocal.stanford.edu, 2021) accessed 29 October 2021.
  8. Code on Social Securities, 2020


    Award Winning Article Is Written By: Mr.Rahul Jayapala Reddy
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