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Gig Workers, Platform Workers & Gig Economy

Rashmi Bagri
18 Jan 2022 12:51 PM GMT
Gig Workers, Platform Workers & Gig Economy

When the new labour Codes were introduced, like every other legislation, they invited critique from different quarters because of reasons ranging from lawmakers' lackadaisical understanding of labour policy to increased stringency of provisions making it more difficult for workers to assert certain basic rights. But one aspect of labour codes that was applauded by all stakeholders was...

When the new labour Codes were introduced, like every other legislation, they invited critique from different quarters because of reasons ranging from lawmakers' lackadaisical understanding of labour policy to increased stringency of provisions making it more difficult for workers to assert certain basic rights. But one aspect of labour codes that was applauded by all stakeholders was the inclusion of gig and platform workers in the Code of Social Security, 2020. Gig workers everywhere in India rejoiced, considering the Code on Social Security finally provided them with basic rights like minimum wages, sick leaves, health benefits etc. which all workers are entitled to. And when the delay in the implementation of these Codes was announced, while employers breathed a sigh of relief because they now had more time to change their policies and make them more accommodating to all workers, the gig and platform workers were in dismay, to say the least. This discontentment had reached its zenith in September 2021 when IFAT (Indian Federation of App-Based Transport Workers) filed a PILin Supreme Court to include gig workers under the definition of unorganizedworkers so that they could get covered under the provisions of the UnorganizedWorkers Social Security Act, 2008, and the Senior advocate representing the petitioners cited that it's high time India recognizes them as employees considering we are quite behind at world stage and even the SupremeCourt in the United Kingdom has averred that the short-term contracts withdrivers (referring to uber) are only a subterfuge and the real relationship isone of an employer-employee. But who are these gig and platform workers, why have we only started to hear about these terms in the past few years and how does the Code on Social Security help them?

Origins Of Gig Economy

The word 'gig' was first used by jazz musicians in the early 1900s to refer to live performances where the musicians were paid per show. Then during the great depression in the 1930s, because the economy was flailing and the unemployment rate in the United States was peaking at 25%, workers accepted whatever jobs they could find and this difficult time made gig work a necessity. This was followed by the 1940s when most abled young people were called into the army, the workforce was severely depleted and the opening of big corporates provided for many temporary jobs to fill this gap in the workforce. Although informal work existed all this while, the kind of understanding we have of gig work did not come till the 90s when the internet turned things around completely. With the launch of Craiglist as an online classifieds platform to advertise for different jobs as well as apartment listings in San Francisco in 1995, people became more aware and accepting of informal jobs and short-term jobs became more accessible to people. The late 90s saw the freelancing websites in their nascent stage when Upwork gave businesses access to a global talent pool and in the early 2000s, Amazon contributed to the gig economy by hiring temporary workers for tasks that were too complex for AI. Then came the era of Airbnb, Uber, Lyft etc. which changed the face of the gig economy and brought it closer to what we see today. Renting out houses on temporary contracts and pay per drive with commissions were touted as alternative income sources while people continued to do their 'permanent' jobs. Smartphones aided this process significantly by making temporary work easily accessible and the gig economy has only seen a steep rise thenceforth.

Note – Gig economy: A global, free-market characterised by short-term contracts or temporary positions and flexibility of jobs, usually in the service sector.

At the moment

Gig work has been around globally for more than a century and while the exact numbers around the global gig economy are obscure, Mastercard's 2019 study estimated the global gig economy to grow by 17% (from $204 billion in 2019) in 2023. In the US itself, approximately 40% of the workforce was involved in some or other type of gig work, pre-pandemic. The gig economy has played and continues to play a vital role in the Indian economy which mostly works on personal networks and word-of-mouth recommendations across rural and urban areas. From maids to daily wage labourers to construction workers, India has had a largely informal, unorganized sector for the longest time. 40% of the freelancing jobs globally go to Indians (in 2019) and while the pandemic had initially upended economic activity, India's gig sector is set to expand at least twice as much as the pre-pandemic estimates as per this ASSOCHAM report. And the present pool of Indian gig workers is estimated to be approximately 15 million, which will most likely reach 350 million by 2025. The ASSOCHAM report also points out that India's gig economy will grow annually at a compound growth rate of 17% and will be valued at approximately $455 billion. And globally, as per this report, 43% of businesses surveyed have indicated plans to limit their workforce due to advancement through technology integration, and 41% planned to expand the use of short term contractors for task-specific work.

These numbers are imperative to comprehend the urgency to implement the Code on Social Security, 2020 at the earliest so that whatever little benefits it offers to this huge underappreciated workforce can be claimed by them. But before we look at what the legislation offers, it's also important to look at the key drivers behind this growth of the gig economy. Of course, the pandemic features are on the list but it's not the most assertive driver. Gig work has stayed in demand for more than a century because it benefits both sides of the spectrum. It's cost-efficient for companies and big businesses, saving them operating and administrative costs and providing them with greater recruitment flexibility and giving them accessibility to a wider talent pool with specialized skillsets. For gig workers, the temporary job means a higher earning potential considering compensation is directly linked to tasks completed, greater flexibility in timings and place of work, better growth opportunities and rids them of the hazard of corporate imposed burnout. In addition to this, the lack of any entry barriers works beautifully for both sides of the spectrum.

Provisions On Gig And Platform Workers In Code On Social Security, 2020

The Code on Social Security, 2020 is one of the four labour codes introduced on the recommendation of the Second National Labour Commission and encompasses The Building and Other Construction Workers' Welfare Cess Act, 1996, The Cine-Workers Welfare Fund Act, 1981, The Employee's Compensation Act, 1923, The Employees' Provident Funds and Miscellaneous Provisions Act, 1952, The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959, The Employees' State Insurance Act, 1948, The Maternity Benefit Act, 1961, The Payment of Gratuity Act, 1972 and The Unorganized Workers Social Security Act, 2008.

Which is "An Act to amend and consolidate the laws relating to social security to extend social security to all employees and workers either in the organised or unorganised or any other sectors and for matters connected therewith or incidental thereto."

The Code makes it clear at the outset that it applies to all workers, organized and unorganized. S.2(86) of the Code defines an 'Unorganized Worker' as a home-based/self-employed/wage worker in the unorganized sector OR a worker in the organized sector but not included by the Industrial Disputes Act, 1947 or in this Code under Chapters on; Employee's Provident Fund (Chapter III), Employees State Insurance Corporation (Chapter IV), Gratuity (Chapter V), Maternity Benefit (Chapter VI) and Employee's Compensation (Chapter VII). This definition is the same definition provided in the Unorganized Workers' Social Security Act, 2008.

A "self-employed worker" is defined under S.2(75) as any person who engages himself in an occupation in the unorganized sector and makes an earning of an amount notified by the central/state government OR holds cultivable land subject to the ceiling notified by the State government.

Coming to the definition of Gig workers, Gig workers have been defined for the first time in Code on Social Security, 2020 under S.2(35) as a person who works and earns in an arrangement that is outside the scope of the traditional employer-employee relationship.

On the other hand, S.2(61) defines "platform worker" as a worker engaged in platform work and "platform work" as defined under S.2(60) as any work arrangement outside of a traditional employer-employee relationship where organizations/individuals use an online platform to access other organizations/individuals either to solve specific problems or provide specific services or any other activity notified by the Central government, in exchange for payment.

To put it simply all gig workers, independent contractors and contingent workers who find work using an app (online platform) or other such mediums via the internet, will be platform workers. So, all platform workers are gig workers but all gig workers are not platform workers. Ola and/or uber drivers, swiggy and/or zomato delivery agents are all covered under both platform and gig workers.

It's also important to look at the definition of aggregators before moving ahead. As per S.2(2), an aggregator is a digital intermediary or a sort of marketplace which connects buyers or service users and sellers or service providers. They play a key part in the gig ecosystem and the significance of their role in bettering the policies regarding gig and platform workers shall become more evident in the later provisions.

National Social Security Board

The Code envisages a National Social Security Board to be formed by the Central government which shall recommend the Central Government on framing suitable schemes (S.6(7)(a)) for different sections of unorganized workers, gig workers and platform workers and it shall also monitor such social welfare schemes (S.6(7)(c)). The composition of the Board is different in the case when it has to make recommendations on matters about unorganized workers and when it has to make recommendations on matters on Gig and Platform workers. In case of Unorganized workers, the Board shall consist of forty (40) members to be nominated by Central government, Director General Labour Welfare as ex-officio member-secretary, Secretary to the Ministry of Labour and Employment as Vice-Chairperson and Union Minister for Labour and Employment as Chairperson. While in case of Gig and Platform workers, it includes 5 representatives of aggregators to be nominated by the Central government + 5 representatives of the gig and platform workers to be nominated by the Central Government + Director-General of Corporation + Central Provident Fund Commissioner of the Central Board + Such expert members as the Central Government may consider appropriate + 5 representatives of the State governments by such rotation as Central government considers appropriate + Joint secretary to the Government of India in the Ministry of Labour and Employment who shall be the Member Secretary to the Board.

Everything regarding Board members ranging from the term and conditions of office to the manner of filling vacancies shall be prescribed by the Central government as per S.6(4). Although there is a provision regarding the adequate representation of women, minorities, SCs and STs, there is no further procedural elaboration regarding the same. The Board shall meet at least thrice a year (S.6(6)) and shall have a tenure of three years (S.6(5)). The central government may also constitute an advisory committee (one or more) to advise the government on matters on unorganized workers. The Code also mandates every State government to Constitute a State Unorganized Workers Social Security Board comprising of 31 members to be nominated by State government along with Principal Secretary of Labour as Vice-Chairperson, Ministry of Labour and Employment of the Concerned State as ex-officio Chairperson and 1 member representing the Central government in the Ministry of Labour and Employment.

A noteworthy point here is that while the National Board shall advise central government on administering all three categories of workers (unorganized, gig and platform), the State Board shall only make recommendations to the State government on Unorganized Workers.

S.45 makes this point clearer as it states that the Central Government shall frame schemes for unorganized workers, gig workers and platform workers and their family members for providing benefits under Chapter IV on Employees State Insurance Corporation. But there is no further elaboration regarding how the schemes will be formulated. The provision only says that "the contribution, user charges, scale of benefits, qualifying and eligibility conditions and other terms and conditions subject to which the scheme may be operated shall be specified in the scheme", leaving a lot to speculation. But this does not mean that the benefits referred to in all the other chapters will not apply to gig and platform workers. On a plain reading of Chapter IX, S.114, it becomes clear that the Central Government shall frame and notify suitable welfare schemes for gig and platform workers concerning

  • life and disability cover
  • accident insurance
  • health and maternity benefits
  • old age protection
  • crèche
  • any other benefit further determined by the Central Government.

But again, the manner of administration of the scheme, the agency or agencies implementing the scheme, the role of aggregators in the scheme, the sources of funding in the scheme, any other matter as Central Government may consider necessary for the efficient administration of the scheme, shall be provided in the scheme itself. Furthermore, the scheme notified by the Central government may either be fully funded by the Central government or partly funded by both central and state governments or fully funded by aggregators or partly funded by Central government, state government and aggregators. The scheme can also be funded from the corporate social responsibility fund within the meaning of Companies Act, 2013 or any other source. And the Code specifies in S.114(4) that the contribution paid by aggregators shall be between 1-2% of their annual turnover as mentioned in the Seventh schedule and this contribution shall not exceed five percent of the amount paid by the aggregator to gig and platform workers.

To avail benefits given under Chapter IX for gig and platform workers, the code makes it mandatory for eligible gig and platform workers to register on an online portal which was earlier to be set up by June 2021 but that has not happened till 15 January 2022. And to be eligible, the worker should be a minimum of sixteen years (or any such age as prescribed by the Central government) (S.113(1)(a)) and should have submitted a self-declaration form (S.113(1(b)), electronically or otherwise with such information as being asked for by the Central government. Additionally, every eligible unorganized worker, gig worker or platform worker must make an application with such documents including aadhaar number in such form as prescribed by the Central Government (S.113(2)).

Under S.112, there is also a provision about setting up a toll-free call centre/helpline number by the appropriate government

  • to spread information regarding the applicable social security schemes for the unorganized workers, gig workers and platform workers,
  • to help in filing, processing and forwarding application forms for registration of unorganized workers, gig workers and platform workers and to assist them in obtaining registration
  • to facilitate enrolment of registered unorganized workers, gig workers and platform workers in the social security schemes

Demerits In The Provisions

First and foremost, the overlap in definitions and the general layout of the Code makes it difficult to understand which specific schemes apply to specific categories of workers. While the entire Chapter IX is dedicated to unorganized workers, gig workers and platform workers, only S.112, S.113 and S.114 contain provisions relating to gig and platform workers. And numerous workers could be included in all three categories like an uber driver who is self-employed, taking part-time driving, through an online platform. What benefits apply to him? The lawmakers could have just included gig and platform workers within the definition of Unorganized workers as suggested by the Standing Committee on Labour, 2020. Secondly, the Code fails to address the issues regarding fluctuation in income, for instance; provisions regarding provident funds are only beneficial in the long run but how are workers expected to pay for these from the already dwindling income from these sources? There is a section of gig workers that do not want social security if the workers themselves have to pay for it from their income. Thirdly, although there is a provision in the Code penalizing any deductions by Employers from workers' income, the costs that gig worker employers are expected to pay for the benefits talked about in the Code, 2020, shall eventually impact the hiring of gig workers (as happened in the case of increased maternity benefit leave which instead led employers to hire fewer women employees) and the employers would not show on record the employment of gig workers. It's also apposite to point out that because of the pandemic, many businesses are already facing severe financial losses and may not be able to take a further financial hit in form of social security cover for workers. Furthermore, the provisions regarding contribution by aggregators to the Social Security Fund can potentially drive aggregators to practice selective hiring, further impacting the income of gig workers. The financial backing, implementation and usage of fund money have also created a lot of confusion because there are no provisions in the Act regarding how much money will go into the fund, who will be held accountable and how does this money convert to social security for a worker who classifies as a gig platform worker in the unorganized sector.

Even the language of the Code is mostly recommendations, rather than timelines and reflects little accountability. There are no fora mentioned regarding repercussions in case the schemes are not formulated and the Code mostly reads like a series of suggestions rather a legal statute. Moreover, the registration process mandated for availing benefits was also present in the Unorganized Workers Social Security Act, 2008 and its track record within that Act itself is questionable (at less than 10% according to one estimate), and the Code on Social Security is topped by an unnecessary extra layer of Aadhaar documentation. In addition to this, the registration has to occur on an online portal and nothing regarding that has been mentioned in the Act. To expect several million workers to register on a non-existent platform without incentivizing, without providing so much as a grace period is an impediment on the road to providing social security to gig and platform workers. India's other social security schemes like PDS and MNREGA are already rife with identification issues and no safeguards have been provided in the Code to avoid such issues.

Furthermore, since the advantage of collective bargaining is not available to gig workers, it's even more pertinent that instead of dangling suggestions without any procedural safeguards and modicum of accountability, the Appropriate Government takes a moment to inculcate the recommendations of the Standing Committee on Labour in the Code of Social Security, 2020. Considering, India has the second-largest freelancer population in the world after the United States, it's crucial to simplify the provisions relating to gig workers and provide some clarity on the existing provisions in the Code.

International Status And Suggestions For India

The 2019 Assembly Bill 5 of California was widely quoted by Indian legislators to support the Code on Social Security, 2020. This bill included 'gig workers' in the definition of 'employees' and provided them with the stability and social security benefits that came with it. But during the recent U.S. Presidential elections, with a strong 58% majority in favour of classifying gig workers as "independent contractors" instead of "employees", clearly sending the message that workers preferred flexibility that came with gig work and chose that over benefits providing stability to "employees". This is not to say that workers do not want social security but social security cannot come at the cost of reduced in-hand income. In the landmark judgment of the California Supreme Court in the case of DynamexOperations West Inc. v. Superior Court of Los Angeles, the California Supreme Court laid down the 'ABC test', imposing the burden to prove whether a worker is an employee or an independent Contractor on the employer. The 'ABC test' says that if a hiring entity can establish that it has no control over a worker's work performance; that the work that worker is performing falls outside the usual scope of the hiring entity's business; and the worker is engaged in an independently established trade/occupation/business of same nature as work performed for hiring entity, then the worker is an independent contractor. So, in California, all workers deserve employee benefits unless proven otherwise by an employer.

The EuropeanUnion, in 2019, passed a Directive (a legislative Act is also called a Directive in EU) to improve working conditions and recognize basic minimum rights of short-term independent contractors and on-demand workers in EU countries with only eligibility conditions being that the workers worked for three hours per week or twelve hours per four weeks on an average. This law excluded self-employed persons from its purview on the rationale that self-employed persons self-regulate their working conditions. A few merits of this Directive include mandating employers to inform the workers regarding all aspects of their employment (including job description, beginning date, payment mode, any probationary period and conditions if the workers take any other employment simultaneously) and not prohibiting workers from engaging in other employment and protecting workers from any adverse treatment on the behest of taking multiple jobs. The Directive mandates that member states ensure zero abusive practices against on-demand workers. This directive was followed by anotherdirective that was introduced in December 2021, to specifically improve working conditions and enhance the rights of digital platform workers, by laying down criteria to determine whether a digital platform could be considered an employer, as per provisions in Article 4(2) and workers working for employers would then become entitled to minimum wage, right to paid leave, health benefits, unemployment and sickness benefit, will get increased protection from work accidents and will also receive contributory pensions. This directive further gives the right to contest algorithms as the opacity of the environment created by algorithms that continue to dictate prices and tasks and do not provide any scope for communication or any dispute redressal mechanism. The directive aims to strengthen human monitoring of such systems and provides the right to contest and correct errors and this is something that is urgently needed in India too, considering the stories that have come to light accordingto this article.

These guarantees need to be included in the Code on Social Security, 2020. It needs to lay out provisions for health insurance and maternity benefits, sick leaves and holidays and everything from payment modes to starting date of work and prohibition of adverse treatment by the employer for the multiplicity of work need to be included in the Code. It also needs to be recognized that tracking worker's performance and consequent termination as per service algorithms of apps do lead to an environment of control even in the gig economy and the workers are entitled to as many benefits as other employees without compromising with the very essence of gig work which is the flexibility of multiple jobs and alternative income. With the current Code on Social Security, 2020, lack of clarity has created confusion regarding workers themselves having to pay for the negligent benefits provided and social security mentioned in the Act without any procedural timelines. One look at the PILfiled by the Indian Federation of App-based Transport Workers (IFAT) in the Supreme Court will make one aware of the disadvantageous and vulnerable position they are at, the grey area surrounding the scope of an employer-employee relationship and exactly what are the demands of India's 15 million gig workers. Improved channels for communication, dispute resolution mechanisms and Health insurance feature at the top of the list and only the latter has been included in the Code on Social Security, 2020, that too without any implementation date or procedure.

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