Regulation of Gig Platforms and Work Rights in India

With the advent of companies like Uber, Ola and Zomato, there has been a major disruption in the understanding of what constitutes a ‘worker’, an ‘employer’ and the tenets of whether they are entitled to certain rights or not. Hence, we require a proper regulatory mechanism to solve the issue.

The boundaries of legal interpretation are now being tested with technological advancements which have facilitated the emergence of new forms of work organisation. Broadly speaking, the gig or platform economy includes “crowdwork” by which workers and clients connect online, and “work-on-demand via app” by which businesses offer and assign traditional work such as transportation, cleaning, running errands, or clerical work.[1] According to the Economic Survey of India, it is estimated that the number of gig and platform workers in India reached 7.7 million in 2020 which is roughly 18 per cent of the total unorganised working population. The size of this workforce is expected to grow almost three-fold by 2029-30 to about 23.5 million.[2]
India today, stands at the cusp of an unprecedented economic growth, with an ever-increasing number of startups, growth in manufacturing, etc. However, what accompanies this economic boom is an increase in the Indian population to the tune of 1.42 billion people surpassing China as the most populous nation. With this increases the need for more jobs for the increasing young labour market in India. However, the pace of job creation has not gone hand-in-hand with the increase in population seeking them. This phenomenon has become commonplace especially after the Covid-19 pandemic, where the loss of millions of jobs and break down of supply chains and networks due to lockdowns and ack of mobility necessitated the job roles offered by companies like Uber, Ola, Zomato, Swiggy among others with their strong and established delivery chains essentially being classified by regulators as an ‘essential service’. But now with the growing number of disputes between these same companies and the workers regarding their rights to fair remuneration the most recent being a strike organised by Zomato delivery agents in Delhi-NCR over their revised payment structure, new questions arise. Firstly, what is the current status of a gig worker’s rights in India? Secondly, how does the law perceive the status of these platforms presently, as employment providers or mere aggregators? Thirdly, what parameters need to be considered and deliberated on to provide a comprehensive and quality framework? Finally, how does the integration of technology into various industries impact the scope of the gig economy?

In order to answer the above-mentioned questions, we need to firstly understand the functioning of the gig-work business model. Taking the example of Uber, what typically happens is they first identify a problem in the existing market, in this case, the need for safe and affordable transport to commute easily, or deliver packages, etc. Then with use of technology and minimum capital investment, they bring the customers (utilisers of service) and the providers of the service (riders) together on a single platform. This enables the riders to get a ride (gig) as and when they are available and earn on the completion of each task.

The problem however, begins with the nature of contract formulated between the company and the gig workers. Legally, an employee or a worker is a person employed on wages in an establishment to perform work is an employee. Employees are entitled to benefits including minimum wages, bonus, provident fund, gratuity, equal remuneration, medical benefit and maternity benefit under laws such as the Minimum Wages Act, 1948, Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (EPFA), Payment of Bonus Act, 1965, etc.[3] A gig worker, on the other hand, having no fixed employment and their work spread across different organisations, it has often been hard to firstly, describe this as a ‘contract of service’ (employee) or a ‘contract for service’ (independent contractor). Secondly, the self-characterisation of platforms such as Ola, Amazon, and Zomato as mere intermediaries between service providers and customers, they further bring into question if the gig workers require to be granted social security benefits, better remuneration, ability to form unions and negotiate prices for each gig, etc.

This is further corroborated by a study conducted by two researchers with 34 logistics partners or riders from five gig platforms namely, Dunzo, Ola, Zomato, Ekart and Swiggy, determine their working conditions. The results of the study showed that, the companies held significant powers in terms of deciding the service payment, while restricting the workers’ legitimate rights like bargaining power, dispute settlement, accident insurance and compensation for occupational injury.[4] It further brought to light the fact, these platforms labelling them as micro-entrepreneurs, aggregated them with a large number of incentives, flexibility and freedom which gradually was decreased with simultaneous increase in the cost of maintenance of their vehicles, etc. Their inability to shift to any other platform due to similar employment issues, made it very difficult for them to voice out their concerns.[5]

A further impact that was felt as a result of covid-19, was the growing trends of work from home aided by digitalization and which in turn gave rise to a new phenomenon called freelancing. This new domain unlike the ones mentioned above, encapsulates all activities like writing, programming, business analysis, photography, marketing, etc. Factoring this into the scope of gig economy, they look for projects from different organisations, and receive payment on competition of work within the said contract. While the rights of construction workers, migrant workers and unorganized workers are guaranteed to a certain extent by laws such as the Contract Labour (Regulation and Abolition) Act, 1970, Unorganized Workers Social Security Act, Pradhan Mantri Jeevan Jyoti Yojana, Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana, etc; gig workers weren’t taken into account while creation of any of the following laws or schemes.[6] This can be said to have had dual impacts:
(1) Firstly problems of autonomy over the pricing of their services, access to adequate amount of opportunities owing to huge competition, and specificities based on the sector they work in.
(2) On a more fundamental level, for those working in the unorganized spaces, not only does wage and job security become a problem, but also the unfolding impact of inaccessibility to various schemes and policies introduced by the government for workers.

Loopholes and Challenges
Out of the four new labour codes implemented in India for workers in the unorganized sector, only the Code for Social Security, 2020, defines what a gig worker is hence, providing them access to social security benefits. In addition to this the government has launched the               e-SHRAM platform to form a National Database of Unorganized Workers for optimum realization of their employability for this purpose.[7] However, other codes like Industrial Relations Code 2020 and Code on Wages 2019 still opens them up to a lot of legal and right volitions.

Firstly, no mention of them in the Code for Wages 2019, implies them being seen outside the protective sphere of minimum wage. This in effect means no legal recourse or remedy is available to them for non-payment of wages within the stipulated time frame. In such a case, gender parity of wages becomes an even bigger issue.[8]

Secondly, their exclusion from the Industrial Relations Code 2020, effectively negates their status as people employed by an organisation, as it puts them outside the purview of ‘workers’ thus taking away all their rights to form a union and demand for better working conditions, etc; exposing them to potentially unfair practices and further exploitation.[9]

Finally, any worker under the law is required to be given adequate health and occupational safety by the employer, re-enforced by the Occupational Health Safety and Working Conditions Code 2020. However, the exclusion of gig workers yet again, makes them vulnerable to many more hazards. For example, Uber drivers have to work 12 to 16 hours a day on an average often jobs conceptualized in a manner which can be detrimental to their health. However, ignoring all the occupational and health hazards, regulations still don’t exist to safeguard the interests of these workers.[10]

Remedy Measures
Pursuant of the worsening situation of working conditions and guarantee of workers’ rights in Uber, the gig workers jointly filed a case in the UK Supreme Court in 2016 demanding the inclusion of gig workers in the definition of ‘workers’ for them to avail all rights and safeguards provided under the Employment Rights Act of 1996. After a prolonged legal battle, the UK Supreme Court, on February 19. 2021, delivered the verdict in favour of the plaintiffs, effectively bringing them under the legal ambit of worker rights and making Uber responsible for provision of all the benefits like social security, minimum wages, better working conditions, etc; for the same.[11] The reasoning of the Court can be summarized as follows:
1. The riders don’t have any control over the fares for each ride they make. It is a decision for of the algorithm.[12]

2. The riders also are obligated to follow strict guidelines for behaviour as fixed by the platforms. For instance, cancelling of many rides continuously can lead to their termination.[13]

3. The Court classified their relationship as that of subordination and dependency, and hence, made them entitled to all rights under their labour laws.[14]

The impact of this judgement has been profound in the Indian courts as well, with multiple groups of gig and platform workers filing similar cases. From multiple judgements in cases like Ram Singh and Ors. v. Union of India (2004) and Balwan Rai Saluja and another v. Air India Limited and others (2014), the various considerations to establish an employer-employee relationship were formulated. These are: (i) control exercised by the employer; (ii) supervision of work by the employer; (iii) whether the employer decides the conditions of employment; (iv) disciplinary action by the employer; (v) supply of tools and materials to perform the work; (vi) insurance contribution deductions; and (vii) the mutual obligations between them.[15] Consequently, applying all these factors to the case of gig workers they can be effectively classified as someone not bound by an employment contract and works flexibly on an assignment basis with minimum supervision and control.

Besides this, four major parameters could be looked at by the Parliament to define a gig worker, vis-a-vis the drawing of bright line rules, approaches of objectivism and subjectivism, the balancing of stakeholder interests and the overlap of technology with other areas of law:[16]

  1. While setting up the bright line rules, they need to be mindful of balancing the universality (generality) and selectivism (specificity) in law making which is capable of responding appropriately to different situations. A very general definition of employee, might allow for inclusion of many groups but may lead to loss of specific measures to be taken for more vulnerable ones while a very selective approach may create many different codes making it confusing to apply which ones to whom in different situations.
  2. The definition of an employee might be subjective or objective, whereby an objective one would establish a set of precise criteria to be applied only in situations where such criteria can be established to define who an employee is and make a similar gig worker specific framework, versus a subjective line of definition where the onus is on the judge and not the legislator to define the specific criteria of employment, an example being the Code of Social Security 2020.
  3. There has to be an appreciation for not only the potential effects of a legislation-such as implications for labour protection, consequences for the pace of innovation and its resultant quality of service delivery to consumers-but also the interplay between these effects. A move towards regulating gig work could ultimately hamper growth driven by the aggregators in the digital space. Hence, while formulating laws, an essential balance needs to be realised between all stakeholders in order to not hamper the interests of one over the other.
  4. Everyday growth in technology in different sectors necessitates the need for greater consideration for the impact of technology law in this space and its interplay with labour law. In the case of Uber, its use of technology made it more than just a mere intermediary service provider and similar could be said for other platforms.

My Opinion
When I think about this entire situation four things come to my mind broadly. Firstly, the fact that in foreign jurisdictions the rights of gig workers has been defined under their respective labour laws definitely makes me conclude that these workers do have a valid claim to security benefits similar to normal employees and workers. Secondly, contrary to my previous points three things can be said from the company’s perspective: (1) that a company providing a platform for customers and service providers to connect and transact for services was the primary model on which their foundations were based; (2) Their primary objective being profitability and survival in the long run by providing quality services to their customers means them setting up a standard code of conduct in line with that country’s laws, for instance, traffic laws in India for Ola and Uber drivers, and the like becomes a legitimate practice for them to follow; (3) When we come to their use of technology and algorithms to decide prices for each assignment or having the control over the same in the case of freelancers, it ultimately boils down to two things. In the former the competition in service provision often focuses on economical pricing in order to capture more of the market, and in the latter, the better the skills of the person at their job ultimately raises their value which being a case-by-case assessment is difficult to regulate.

Thirdly, the realisation of interplay between technology law and other facets like labour law, contract law and business law are required to address the concerns of all stakeholders. And finally, the point on subjective-objective and universal-selective defining terms like an employee needs to be properly looked at as to not alienate various intersections of worker groups affected by diverse parameters like economic and social conditions, etc.

Overall, what can be seen is that with the advent of technology and factors like Covid-19, the structure and nature of work and employment has changed fundamentally in the global economy and so in India, creating a diverse class of workers looking for more than just the traditional job roles and following the age-old organisational hierarchy to earn a living. Hence, formulation of appropriate regulations for the same needs to be kept as the primary concern in order to harness their full potential while keeping their fundamental rights like right to livelihood alive with the transition to a dynamic economy.

[1] Isana Laisram & Ravi Shankar, Navigating Labour Law in the Gig Economy, 14 NUJS L. REV. 1, 1 (2021) (Defining gig economy briefly)

[2] Kingshuk Sarkar, The Status of Gig and Platform workers in India, 12(1) IMI Konnect 39, 40 (2023) (Giving a basic picture of number of gig workers in India)

[3] Souvik Ganguly & Akhil K Ramesh, India: Rules Governing the Gig Economy, Lexology, Jan. 25, 2023

[4] See Bighnesh Dash Mohapatra & Chandan Kumar Sahoo, Employee Relations in Gig & Platform Economy: Emergence of Legal Framework in India, Indian J. Ind. Relat. 571, 576-578 (2023) (Pointing out a study to corroborate previous arguments)

[5] See Id. at 578

[6] Souvik Ganguly & Akhil K Ramesh, India: Rules Governing the Gig Economy, Lexology, Jan. 25, 2023

[7] See Id.

[8] See Kingshuk Sarkar, The Status of Gig and Platform workers in India, 12(1) IMI Konnect 39, 49 (2023) (Describing the negative impact of exclusion of gig workers from labour codes)

[9] See Id. at 49

[10] See Id. at 49

[11] See Id. at 45 & 50

[12] See Id. at 50

[13] See Id. at 50

[14] See Id. at 50

[15] See Souvik Ganguly & Akhil K Ramesh, India: Rules Governing the Gig Economy, Lexology, Jan. 25, 2023

[16] See Isana Laisram & Ravi Shankar, Navigating Labour Law in the Gig Economy, 14 NUJS L. REV. 1, 9-12 (2021) (Parameters for Rule Making for gig workers)

6 thoughts on “Regulation of Gig Platforms and Work Rights in India

  1. I do not even know how I ended up here, but I thought this post was great. I don’t know who you are but certainly you’re going to a famous blogger if you are not already 😉 Cheers!

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