Safeguarding Gig Workers: Current Status and Background

The Union Ministry of Labour and Employment is in the process of drafting a national law aimed at incorporating gig workers into social security schemes. This initiative is designed to provide essential benefits such as health insurance and retirement savings to a growing segment of the workforce.

Key Features of the Proposed Legislation for Gig Workers

• Social Security Fund: The government plans to require aggregators (companies that facilitate gig work) to contribute 1%-2% of their revenue to create a social security fund.
  • This fund will be utilised for providing health insurance and other welfare benefits to gig workers.
• Inclusive Definitions: The definitions of gig and migrant workers are being revised to reflect current employment realities more accurately.
• Welfare Board Model: The proposed legislation will establish a welfare board that mandates:
  • Registration of all gig workers (under the e-Shram portal through self-declaration).
  • Aggregators must provide a 14-day notice before terminating a worker, along with valid reasons.
  • Transparency in automated systems used by aggregators.
  • Introduction of dispute resolution mechanisms to protect the rights of gig workers.

Current Status and Background

• Gig Worker Population: According to a NITI Aayog report, India’s gig worker population was estimated at 7.7 million in 2020-21, projected to increase to 23.5 million by 2029-30.
• Existing Labour Codes: In 2019 and 2020, India enacted four new labour codes that merged 29 existing laws into four broad categories: wages, social security, industrial relations, and occupational safety.
  • The only code addressing gig workers specifically is the Social Security Code 2020, which categorises them as informal sector workers.

Challenges in Current Framework

• Definition Issues: The Social Security Code 2020 places gig workers outside the traditional employer-employee relationship, complicating their access to benefits.
  • This categorisation allows aggregators to avoid obligations typically associated with formal employment.
• Entitlement Discrepancies: There is a significant difference between institutional social security (e.g., paid leave under the Maternity Benefit Act) and the limited benefits offered under social security schemes for gig workers.
  • For instance, while formal workers receive comprehensive maternity benefits, gig workers may only receive a cash benefit of ₹5,000-₹10,000.
• Lack of Protections: Gig workers are not covered under minimum wage protections or occupational safety regulations. They also lack access to dispute resolution mechanisms provided under the Industrial Relations Code 2020.

Core Issues and Recommendations

• Clarify Employment Relationships: Clearly defining the employment relationship in the gig economy is crucial.
  • Recognizing aggregators as employers would facilitate the inclusion of gig workers under existing labour codes.
• Learn from Global Precedents: The UK Supreme Court’s ruling on Uber classified drivers as “workers,” mandating compliance with labour laws.
  • Similar recognition in India could enhance protections for gig workers.
• Avoid Separate Legislation: Introducing separate laws for specific workforce segments undermines the goal of simplifying and rationalising labour laws.
  • Instead, integrating gig workers into existing frameworks would promote their formalisation.
• State-Level Initiatives: States like Rajasthan and Karnataka are already implementing policies for gig workers, including welfare funds and grievance redressal mechanisms.
  • These models can serve as blueprints for broader national policies.

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