The Gig Economy and India’s Evolving Labour Law: A Legal Quagmire 

Abstract: 

This article tries to analyse the legal debate over worker classification within India’s increasing gig economy. It examines how the traditional difference between an “Employee” and an “Independent Contractor” is being challenged by the rise of platform-based companies. This article discusses the legal foundational tests used in India and tries to evaluate their applicability to the gig model’s management and flexible arrangements of work. This article also critically analyses recent legislative changes and developments regarding this, such as the Code on Social Security, 2020, and Rajasthan’s Platform-Based Gig Workers Act, 2023, arguing that these legislative changes signal a shift towards a hybrid legal category for platform workers. These acts conclude by offering recommendations for creating a more equitable and sustainable regulatory framework for the future of work and workers in India. 

Introduction 

The revolution of the digital era has fundamentally reshaped the work culture and workforce in India. With each era, our needs changes and that gives birth to new markets and businesses. In this situation, it gave rise to a new term called Gig Economy, a labour market in which a worker who is working on a contract based short-term, task-based engagement mediated by digital platforms.1 This sector of India is sizeable and is expanding rapidly. The conservative government estimates that the gig workforce was roughly at 7.7 million in 2020–21, with projections to reach over 23.5 million by 2029–30.2 These platforms, from ride-hailing apps to food delivery apps and house-related services, offer efficiency, flexibility and entrepreneurial opportunity. While these terms sound very beneficial for both parties, this promise often coexists with uncertain incomes, restricted bargaining power, and minimal social protection for a huge number of workers. (NITI AAYOG) Despite the various economic opportunities, gig workers often face significant challenges. Many gig workers earn low wages after accounting for operational costs of the job, like fuel for the vehicle and maintenance costs. There are other significant issues, like a lack of job security, limited access to social and life protection benefits like health insurance and pensions. They often face unreasonable decisions from work platform algorithms without clear recourse. This lack of an employer-employee relationship means that the gig workers bear the full burden of income instability and business expenses, which can put the workers in financial strain. 

This paper tries to examine how the Indian Law is currently addressing (or fails to address) the legal classification of gig workers, the consequences of such classification for social security and labour rights, including the recent statutory and judicial comments domestically as well as internationally. It also argues that the classic binary of “employee” versus “independent contractor” is increasingly inadequate. This platform work requires a third-way regulatory architecture that may help secure basic protections without unnecessarily suppressing productive innovations. 

Research Methodology 

The research employed here is primarily doctrinal and comparative. It examines primary sources, including constitutional provisions, statutes (notably the Code of Social Security, 2020), judicial decisions, and combines them with policy reports (NITI Aayog, BCG), international standards (ILO), and empirical assessments. The doctrinal method is supplemented by a comparative analysis of important foreign precedents, such as Uber BV v Aslam (UKSC), Pimlico Plumbers v Smith (UKSC), and the California Dynamex decisions and subsequent AB5 debates, which illuminate alternative tests and regulatory solutions applicable to platform labour. The analysis in this article recognises its limitations. While doctrinal study maps the legal terrain, qualitative and quantitative fieldwork would definitely enrich the picture of lived worker experiences in the future. (Ministry of Labour and Employment) 

Legal Framework: Traditional tests and Legal Challenge A. Traditional Indian Tests for Employment 

The Indian Labour Law has historically relied on tests which are multi-factorial to determine employment relationships. The control test, introduced authoritatively in Dharangdhara Chemical Works Ltd v State of Saurashtra, rather than focusing on the employer’s manner of performance, focuses on the degree of employer supervision. A high level of control indicates employment.3 The organisation (integration) test examines whether the employee is integrated into the employer’s enterprise, while the economic reality test considers the employee’s economic or financial dependence. The Courts generally apply a composite or multiple-test approach, which weighs various factors rather than mechanically adopting a single criterion. (Indian Kanoon) 

Why these Tests Struggle with Platform Work 

The Platform models stagger these tests. A delivery man or driver may set their own working hours (which suggests freedom), yet algorithmic systems – route assignment, dynamic pricing, performance ratings, and deactivate rules- exert powerful behavioural control that traditional tests had not envisioned. Such algorithmic management creates what scholars term “Digital Taylorism”. Automated surveillance and incentive architectures that are used to discipline workers without physical supervision or classical “control”.4 This asymmetry in the system allows these platforms to claim the state of a contractor while retaining levers of effective control. The doctrinal challenge, therefore, is to evolve tests that capture substantive control exercised through code rather than through an on-site foreman. 

Judicial Responses: India and Comparative Law 

Indian Litigation – IFAT and the Supreme Court 

At the domestic level, the writ petition by the Indian Federation of App-Based Transport Workers (IFAT) pressing for the workers’ social security and recognition is a landmark moment. The IFAT’s petition frames this question as constitutional, invoking Articles 14, 21 and 23, and asks the Supreme Court to ensure that the legal system responds to gig workers’ systemic exclusion from social security arrangements and labour protections.5 The Supreme Court’s attention to this matter of petition shows the urgent demand for legal clarity in this industry, though a final, binding pronouncement on classification is still pending. (Supreme Court Observer) 

Comparative Precedents – UK, California, EU 

Comparative jurisprudence is instructive. The Supreme Court of the UK in Uber BV v Aslam concluded that the drivers were “workers” of that company (a middle status which grants minimum rights) because, despite nominal contractual labels, Uber exercised decisive control over ride fares, access to work and platform terms, effectively limiting the drivers’ autonomy.6In Pimlico Plumber v Smith, the Supreme Court similarly emphasised substance over contract label between Employee and Employer when determining worker status for entitlements like holiday pay.7 

In the United States, the California Supreme Court’s Dynamex decision adopted an ABC test that presumes employee status to the workers unless the hiring entity proves that A) the worker is free from control, B) performs work outside of the usual course of the hiring business, and C) is independently established in a relevant trade. These stricter presumptions prompted legislative and public responses. (E.g. AB5 and later Proposition 22 dynamics), illustrating politically agitated choices when courts and legislatures change the labour classification in this industry.8 These comparative cases show that courts can and will look beyond written contracts to the realities of control and dependence, a lesson available for Indian Courts and PolicyMakers. 

Ground Realities: Precarity Worker Voices and Evidence A. Empirical Findings (Fairwork, BCG, NITI) 

Independent audits and policy studies depict a mixed picture. The Fairwork India Ratings (2022–2023) document persistent weaknesses. The platforms score low on pay, conditions and contractual clarity. Many of the workers earn below the living wage after expenses, and the grievance mechanisms are often ineffective in such matters.9 The BCG and NITI Aayog reports, while emphasising the growth potential of these platforms, also caution about earnings fluctuations and the need for social protection frameworks for the workers if the gig economy is to scale sustainably. (fair.work) 

Collective Action and Political Pressure 

The Worker mobilisations, strikes, protests, and unionisation efforts (IFAT and local associations) have repeatedly surfaced in cities across India, notably around the implementation of state legislation such as Rajasthan’s Act.10 These mobilisations have both pushed public attention and exposed the limits of voluntary corporate measures. Recent strikes in Jaipur and other cities across India forced a political response and public debate about the pace and shape of statutory protections. (The Times of India) 

Statutory Developments in India: Hybrid Moves 

The Code on Social Security, 2020 

The Code on Social Security (2020) is the central statutory instrument that formally recognises “gig workers” and mandates frameworks for social security schemes financed through a combination of state, worker, and platform contributions.11 While the Code represents a conceptual reform, its impact depends on detailed rules, notification of schemes, and enforcement. Much of the Code remains to be operationalised in practice. (Ministry of Labour & Employment) 

State Innovation — Rajasthan and Others 

Rajasthan’s Platform-Based Gig Workers (Registration and Welfare) Act, 2023 was the first state law to institutionalise registration, a welfare board, and a transaction-based welfare tax to fund benefits for gig workers.12 Other states are exploring similar instruments (e.g., Karnataka, Jharkhand). These state experiments create important governance laboratories but also raise federal coordination and portability questions. The recent political debate around implementation (including high-profile appeals from former state leaders) shows both the promise and the fragility of these reforms. (PRS Legislative Research) 

Constitutional Dimensions: Rights, Dignity and State Obligation 

The IFAT petition frames exclusion from social security as more than an economic problem; it is a constitutional one. The key provisions implicated include Article 14 (equality before law), Article 21 (right to life and livelihood with dignity), and Article 19(1)(c) (right to practise any profession/occupation) coupled with Directive Principles such as Article 39(a) (policy to secure adequate means of livelihood).13 The Courts are asked to treat the gig economy’s regulatory vacuum as a possible breach of constitutional commitments to social justice and dignity. If this demand is accepted, then this framing could trigger affirmative state obligations to design and enforce social protection and minimum standards for platform workers. (BIICL) 

Policy Tools: A Practical Toolkit 

Based on comparative lessons and Indian realities, a pragmatic toolkit for reform should include: 

1. A Statutory “Third Way”: a legislated intermediate status (e.g., “dependent contractor” or “platform worker”) guaranteeing baseline protections (minimum earnings floors, accident insurance, access to grievance redress) while allowing contractual flexibility for scheduling.14
2. Portable Benefits: contributory portable accounts (pension credits, health insurance vouchers) that travel with the worker across platforms. This addresses the fragmentation common to gig work. 
3. Transaction-based Welfare Tax: a low, per-transaction levy on platform operations (as in Rajasthan), pooled into social funds to be administered via welfare boards with worker representation. (PRS Legislative Research)
4. Algorithmic Accountability: this enables mandatory transparency for the platforms, which includes periodic independent audits of allocation/rating algorithms, and a right for workers to obtain meaningful explanations and appeal automated deactivations. 
5. Tripartite Governance and Worker Representation: the welfare boards and regulatory bodies should include worker representatives (e.g., IFAT), platform representatives, and government nominees to avoid capture and ensure legitimacy. 
6. Tax and Fiscal Measures: Align fiscal incentives so platforms contribute to social protection (partial payroll-equivalent contributions, cess credits), preventing revenue leakage while keeping compliance administrable. (BCG)

Implementation Challenges and a Roadmap 

Key Implementation Challenges 

1. Ambiguity in definitions and obligations: Who is responsible, platforms, workers, or the government, for contributions, insurance, benefits, etc., remains unclear. For example, the Code on Social Security (2020) does not provide concrete mechanisms for liability sharing among aggregators, workers, or states. Such ambiguity creates confusion to hold someone responsible.15
2. Inconsistent and fragmented registration & portability: Gig workers are required to register on different state or national portals as a requirement for their work, which complicates and makes it difficult to benefit from portability, especially for migrants.16
3. Sustainable financial planning and burden on platforms: Contributions from aggregators may vary disproportionately relative to their revenues or number of workers. Platforms may resist cost increases, which could get passed to workers.17
4. Roadmap for Effective Implementation 
5. Clarify Legal Definitions: Clarifying legal definitions of all terminologies used for such workers, like “gig workers/ platform workers/ dependent contractor” which will make it easier to resolve the challenges. 
6. Establish governance mechanisms: welfare boards with worker representation, state-central coordination to ensure portability. 
7. Build Institutional and administrative capacity: set timelines for rules, audits, grievance mechanisms, and algorithmic transparency. 

Conclusion: 

The evolution of India’s gig economy, which has risen in the digital era, has exposed the deep inadequacy of traditional employment classifications and labour protections. Although it is one of the fastest-growing industries in India, it also faces significant challenges. The people who work for such platforms have yet to have a proper definition of their status as workers. On paper, they are called “Independent Contractors” but in reality, they don’t really have control over the fares or service charges and maintenance. These workers lack social security. They often don’t have access to perks like health insurance and pensions, The lack of clarity in the legal definition of gig workers prevents them from accessing social security frameworks. Judicial pronouncements in Indian Courts and foreign Courts like the Supreme Court of the UK, California, etc, along with legislative innovations like the Code on Social Security, 2020, and Rajasthan’s Platform-Based Gig Workers Act, 2023, demonstrate a slow but undeniable shift towards a hybrid regulatory model that acknowledges gig workers as a distinct category requiring tailored protections. 

This issue of the gig economy cannot be ignored or put in a red tape over it because many of the indian citizens are dependent on such platform-based work for their livelihood. The legal and policy architecture surrounding their rights will not only shape the future of the workforce of India, but also give millions of Indian Citizens social justice and economic inclusion. The constitutional guarantees of equality, dignity, and livelihood demand nothing less than a coherent framework that balances innovation with protection. 

As India stands at this legal and economic crossroads, the challenge is not whether to regulate this platform-based work industry or not, but how to design a legal framework that secures the rights and minimum standards of work without damaging entrepreneurial growth. 

Reference(S) / Bibliography: 

Primary sources (cases, statutes, petitions) 

1. Dharangadhara Chemical Works Ltd v State of Saurashtra AIR 1957 SC 264. (Case text available via Indian Kanoon). (Indian Kanoon)
2. Uber BV v Aslam [2021] UKSC 5 (UK Supreme Court) (judgment) (Supreme Court) 3. Pimlico Plumbers Ltd v Smith [2018] UKSC 29 (judgment) (Supreme Court) 4. Dynamex Operations West, Inc. v Superior Court of Los Angeles County 4 Cal.5th 903 (Cal. 2018) (ABC test) (Justia)
3. Indian Federation of App-Based Transport Workers v Union of India (Writ Petition) (petition filed 9 September 2021) (Supreme Court Observer)
4. The Code on Social Security, 2020 (No. 36 of 2020) (India) (Ministry of Labour & Employment)
5. Rajasthan Platform-Based Gig Workers (Registration and Welfare) Act 2023 (Act No. 29 of 2023) (Rajasthan) (PRS Legislative Research)
6. The British Institute of International and Comparative Law, Indian Federation of App-Based Transport Workers v Union of India (2021) (BIICL)
7. Federation of Indian Chambers of Commerce & Industry, AIOE Submits Recommendations on Labour Codes for Gig Workers to Ministry of Labour and Employment. (FICCI)

Reports and policy documents 

1. NITI Aayog, India’s Booming Gig and Platform Economy (Policy Brief, 25 June 2022) (NITI AAYOG)
2. Boston Consulting Group, Unlocking the Potential of the Gig Economy in India (Report, 29 March 2021) (BCG Media Publications)
3. International Labour Organization, World Employment and Social Outlook 2021: The Role of Digital Labour Platforms in Transforming the World of Work (Report, 2021) (International Labour Organization)
4. Fairwork Project, Fairwork India Ratings 2023: Labour Standards in the Platform Economy (Report, 31 Oct 2023) (fair.work)

Selected press/commentary 

1. Times of India, ‘App-based cab drivers go on strike in city, leave hapless citizens in lurch’ (Jaipur report, 3 June 2025) (The Times of India)
2. Business & Human Rights Resource Centre, ‘India: Supreme Court reviews plea for social security rights of gig and platform workers’ (20 Nov 2024) (Business & Human Rights Resource Centre)
3. Gig Workers in India: The Road to Rights and Social Security by Manpreet Arora (LegalServiceIndia)
4. Quest for consistent social security across Indian states by Prakash Gupta and Apoorv Kulkarni (Hindustan Times)

1 NITI Aayog, India’s Booming Gig and Platform Economy (Policy Brief, 25 June 2022) (NITI AAYOG)

2 Boston Consulting Group, Unlocking the Potential of the Gig Economy in India (Report, 29 March 2021) (BCG Media Publications) 

3 Dharangadhara Chemical Works Ltd v State of Saurashtra AIR 1957 SC 264. (Case text available via Indian Kanoon). (Indian Kanoon)

4International Labour Organization, World Employment and Social Outlook 2021: The Role of Digital Labour Platforms in Transforming the World of Work (Report, 2021) (International Labour Organization) 

5Indian Federation of App-Based Transport Workers v Union of India (Writ Petition) (petition filed 9 September 2021) (Supreme Court Observer)

6 Uber BV v Aslam [2021] UKSC 5 (UK Supreme Court) (judgment) (Supreme Court) 7 Pimlico Plumbers Ltd v Smith [2018] UKSC 29 (judgment) (Supreme Court) 

8 Dynamex Operations West, Inc. v Superior Court of Los Angeles County 4 Cal.5th 903 (Cal. 2018) (ABC test) (Justia) 

9 Fairwork Project, Fairwork India Ratings 2023: Labour Standards in the Platform Economy (Report, 31 Oct 2023) (fair.work)

10 Times of India, ‘App-based cab drivers go on strike in city, leave hapless citizens in lurch’ (Jaipur report, 3 June 2025) (The Times of India) 

11 The Code on Social Security, 2020 (No. 36 of 2020) (India) (Ministry of Labour & Employment)

12 Rajasthan Platform-Based Gig Workers (Registration and Welfare) Act 2023 (Act No. 29 of 2023) (Rajasthan) (PRS Legislative Research) 

13 The British Institute of International and Comparative Law, Indian Federation of App-Based Transport Workers v Union of India (2021) (BIICL) 

14 Business & Human Rights Resource Centre, ‘India: Supreme Court reviews plea for social security rights of gig and platform workers’ (20 Nov 2024) (Business & Human Rights Resource Centre)

15 Gig Workers in India: The Road to Rights and Social Security by Manpreet Arora (LegalServiceIndia)

16 Quest for consistent social security across Indian states by Prakash Gupta and Apoorv Kulkarni (Hindustan Times) 

17 Federation of Indian Chambers of Commerce & Industry, AIOE Submits Recommendations on Labour Codes for Gig Workers to Ministry of Labour and Employment. (FICCI)