Impact of the gig economy on Indian Labour Laws

Author: Isha Anshul Gupta, Amity University Jharkhand

The gig economy has rapidly gained in India largely because of much-needed technological advancements and changes in worker dynamics. These are defined by a sequence of short-term, flexible jobs often managed through digital platforms, and this economic model has exposed great prospects for the generation of income and employment flexibility. However, it also revealed critical shortcomings in the existing labor laws that are geared more to traditional employment structures. This concept of gig work makes gig workers usually independent contractors, yet hardly enjoy protections and rights at workplaces, such as minimum wages, health benefits, social security, and job security. In response to the growing state of gig work, Indian reforms at the legislative level have been initiated to fill these loopholes. 

The Code on Social Security (2020) is a landmark legislation that takes into account the unique nature of gig work and tries to extend certain benefits to gig workers. The code provides benefits like maternity leave and old-age pensions. However, the enforcement of these provisions has not been uniform, and most gig workers remain ignorant about their rights under this code.

The very nature of the employment status of the gig workers in India throws up numerous challenges for them. First, precarious work creates income that is unstable and difficult to predict, creating problems when making long-term preparations or even securing loans. A gig ranks far below other employees in terms of benefits such as health coverage, retirement savings plans, and paid leave. This is further exacerbated by weak bargaining positions because gig work is decentralized and because collective efforts to attain better terms or conditions can be circumvented. The gig economy also creates an atmosphere that promotes exploitation.

The commission rates or fees might be unusually high, and the penalties unjustly imposed without proper redress for the workers. This kind of scenario does raise ethical questions about the responsibilities that the platform companies have toward the workers and demands oversight from the regulation authorities. All these can be very well addressed by comprehensive legal reforms. To begin with it's a great acknowledgment that gig workers fall under a particular category in labour laws, therefore creating tailored protections relevant to them. It would pave the way for gains in wages with fair compensation for work done. Another side is social security benefits should be extended to cover gig workers, as this would be an important safety net at times of unemployment or health crisis. In addition, collective bargaining rights for empowering giggers are important in order to bring negotiation bargaining power improvements. Permitting them to set up unions and associations may lead to better working conditions and more just remunerations.  

Gig economy, Code on Social Security (2020), Gig workers, Laws.

The gig economy is the form of labor market wherein short-term, flexible labor is commonly provided by independent contractors and freelancers rather than permanent workers. This model allows companies to hire people for a one-time commitment, thus giving them the flexibility to react to changing demands without having the permanent staff overhead costs.

Freelancers, project-based workers, and part-timers are all considered gig workers. They typically interact with clients online. Besides providing flexibility and independence to employees, the gig economy helps companies decrease their cost structure and gain access to a larger pool of talent. It is associated with specific problems, like job insecurity and the lack of benefits for working people. According to the estimates, 15-20 million gig workers reside in India. Projections are suggesting that the figure might touch 350 million by 2025.

The types of workers, which the gig economy in India embraces, include:

- Ride hailing and food delivery people (Uber, Ola, Swiggy, Zomato) 

- Freelance people who work on UpWork, Fiverr

- People servicing through apps like Urban Company

During the last decade, this has literally come to dominate Indian lives with millions of people downsizing and eking out a living through short-term, often non-core work arrangements, across digital platforms. Such change has thrown open new opportunities in the economy but exposed a plethora of loopholes in Indian labor laws created to cater to the traditional employer-employee arrangements.

The gig economy in India has had a significant impact on labor laws, presenting significant gaps in worker protection. Gig workers are often hired as independent contractors with no job rights, including low wages and Social Security benefits. Although the Social Security Act (2020) seeks to address these issues, its implementation is still lacking and does not include comprehensive information on migrant workers. The current lawsuits seek to redefine the status of gig workers, arguing for their recognition as unscheduled workers entitled to social security benefits. A hybrid performance model is recommended to strengthen defenses while recognizing the unique nature of the performance.

Currently, India does not have specific laws to address the specific needs of gig workers. Most of them are classified as independent contractors and are excluded from basic labor rights such as low wages, health benefits, and social security. The Social Security Act (2020) is the first attempt to recognize gig workers, but its implementation is less extensive and without specific results. Current employment law Indian labor laws divide employees into three broad categories: government employees, public sector employees, and private sector employees. Gig workers do not fall into these categories, leaving gaps in their legal protections. They cannot form unions or demand benefits enjoyed by traditional workers.

The gig economy has opened lines between traditional employment and independent contracting. They often do not carry the same legal rights of protection as full-time employees, and thus call for clearer definitions of rights under labor laws. 

Gig workers face unemployment and lack access to basic benefits such as health insurance and retirement plans. Without a well-defined working position, they are weakened in bargaining together or finding solutions to their grievances. As fast as it grows, the gig economy has already overpowered current labor laws. It requires the hybrid model: a model that would treat the gig worker as a separate sector and balance flexibility with appropriate protections. Increased overcrowding leads to a decline in full time positions, modifications in the employer-worker relations, and definitely to anxiety over the long-term viability of labor rights in India. Recent litigation redefines worker comp rights. For example, in a PIL, the Supreme Court requested the creation of "illegal workers" that confer social security. The second national element presents itself in the form of the Rajasthan Platform-Based Gig Bill of 2023; it applies only to some areas and does not have a framework that cuts across the country as a whole. 

Now, while flexibility and innovation streamed from every nook and corner of the gig economy, it presents a big challenge to Indian labor law; there is a pressing need to reform in favor of the rights and protection of the workers. Unfortunately, under Indian labor law, gig workers are not considered "employees" and thus do not have any rights to form unions or bargain collectively or to avail themselves of the protection offered by the law. Current law does not clearly define the status of full-time workers. Generally, enhancing protection for workers under such obscure rules is relatively hard. Gig jobs can be considered variable and unpredictable because of income uncertainty, along with the inability to budget employees. In addition, workers are prone to job insecurity because they tend to work on a project-to-project basis and do not classify as permanent employees. Workplace injuries or health risks usually have no coverage or insurance. In this case, the COVID-19 pandemic deepened the problem: many died during the lockdown. Studies have shown that 90% of unemployed workers still faced financial hardship. The lack of safety net exposes them to economic vulnerability and hardship.

Gigs or gig work are very informal and consequently lead to ineffective work practices. Many gig workers report hours and hours of work for free or, at best, with poor benefits-including no health insurance or retirement plan. Such lax regulations also enable companies to offer workers unfair contracts.

Gig workers also suffer, especially in the delivery and transportation sectors. The pay-as-you-go or incentive pay models used by many platforms result in lower wages and longer hours. 

Gig workers often fail to maximize their skills and career development. Many people face social stigma, as gig work is still seen as a short-term or low-paying option.

Gig employment gives workers the freedom to pick where and when they work, something that regular occupations do not. However, because many full-time workers lack the funds to do so, this comes at the expense of job security and full-time employment perks. Companies are increasingly relying on gig workers to complete project-related tasks, which may reduce the number of permanent positions available. This move will allow businesses to save costs but may result in less work in the long run. The increase in overwork has encouraged an interactive relationship between workers and companies, which has weakened trust and loyalty. This shift affects the training and integration of employees into their culture. 

Gig work allows individuals to take on different projects, enhance skill development and provide job independence. Employees can pursue a variety of opportunities, unlike previous jobs, which may have been limited to certain jobs. Third, the gig economy worsens income inequality and tax revenues since the gig workers, depending upon the nature of work, are mostly registered as independent contractors and do not enjoy the same benefits as the contract worker does. down. Long-term economic sustainability of this tight workforce remains a worry.

The system will result in higher loyalty and satisfaction, and freelancers will have an enhanced financial experience through real-time payments as it overcomes major cash flow problems. RTP helps freelancers get their pay immediately following the completion of work, and it helps keep their finances more effective by not using credit or debit cards frequently for payment of usual expenditures. Because 55% of freelancers live paycheck to paycheck, instant payments can alleviate stress related to money and make it possible that financial obligations will be met sooner. Generally, faster payments will improve the work experience, thus increasing productivity and loyalty. Generally, employees will return to platforms when instant payments are available, thus lowering employee turnover. RTP provides full-time employees with a variety of payment options which they can exercise at their will and convenience-to be paid either on a specified date or while in motion using digital wallets or direct bank transfers. Instant payments bring working employees under control of their finances to plan and proper cash flow management.

Indian labor laws have evolved with the rise of the gig economy through a series of significant developments. The Social Security Act of 2020 identifies "gig workers" and "flat workers" and envisions social security benefits. The effectiveness of such provisions is still to be debated as states constitutively frame their laws. Already in discussions are hybrid employment model proposals that separate the gig workers as a category and balance rights to independent contractors and employees to reap most benefits from flexibility. Others, such as BigBasket and Flipkart, have pledged to pay gig workers at least the local minimum wage after deducting expenses-that is definitely a good sign on improving wage practices.The Government of India has launched the e-SHRAM portal to create a national database for unorganized workers, including gig workers, to facilitate access to social security schemes. Many states have proposed or implemented measures to protect the rights of migrant workers, such as the Karnataka Bill which seeks to regulate employment conditions for migrant workers. 

Overall, the changes are very far from perfect toward an Indian legal structure on custodial employment and much more needs to be done in order to ensure that there are adequate protections and benefits for custodial workers.

In this connection, hybrid employment models have been suggested by experts as a new bimodality between independent contractors and traditional employees, and it is considered to be a proper response to the challenge of the migrant worker. They provide them with some rights and concessions but accept flexible work demands. There is a growing cry for a whole legislation that basically focuses its emphasis on the rights protection of the rights of migrant workers. These should, therefore, encompass minimum wages, health insurance, retirement benefits, and procedures on complaint resolution.

It is important to implement social protection measures for migrant workers. This may include establishing a welfare fund supported by contributions from the government and foundation companies to provide health insurance, maternity benefits and pension funds.

India needs to sort out how it regulates the gig economy by putting a clear framework in place for worker classification that accounts for the reality of platform-based work. The growth of the gig economy in India has the opportunity and challenges -though great opportunities in flexibility and the rise of new forms of employment, highly pointed to show huge gaps in labor protections. Fair treatment and security for the so-called gig economy workers call upon urgent reforms to the Indian legal framework regarding labor relations. This would ensure that India produces an even more even playing field for all stakeholders in the labor market.

One idea is portable benefits systems, systems that can provide social security to workers across multiple gigs or platforms, ensuring that workers can receive minimum earnings as well as fair working conditions without suffocating that very flexibility which leads so many to gig work.

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