Authored By: Subhadra S Nair
NALSAR University of Law
1.0 Introduction
India ranks as the 5th largest hub for gig workers globally, with over 15 million skilled individuals engaged in freelance work, making up nearly 40% of the world’s freelancers. By the end of 2024, the Indian gig economy will reach an approximately $455 billion valuation. However, despite its rapid growth, gig workers in India face harsh working conditions, minimal earnings, and a near-complete absence of legal protections and social benefits.
A gig economy is a labour market that relies on temporary, flexible, and part-time roles, typically facilitated through digital platforms. In this economy model, a gig worker is characterised by a non-traditional employer-employee relationship. Workers, such as food delivery drivers or freelancers, perform short-term tasks or projects rather than holding traditional full-time jobs. This model allows individuals to work around other commitments, generating supplementary or primary income.[1]
However, the very quality that made this model so appealing is what has led to several complications. The question arises as to where to draw the line between promoting flexibility and protecting the rights of working individuals. [2] In the Indian context, this model has several problems, such as the lack of fixed wages, which forces workers to work overtime to make ends meet. Another issue is the lack of legal frameworks to guarantee them fundamental rights.
2.0 Legal Framework in India
Article 21 of the Indian constitution guarantees the fundamental right to the protection of life and personal liberty. It ensures certain safeguards against arbitrary deprivation of life and freedom.[3] The lack of social security, occupational safety and fixed wages can be seen as a violation of a person’s ability to lead a dignified life. The Supreme Court in Olga Tellis v. Bombay Municipal Corporation (1985) and Francis Coralie Mullin v. Administrator, Union Territory of Delhi (1981) expanded the scope of Article 21 to include the right to livelihood and humane working conditions. These interpretations provide a constitutional mandate to extend legal protections to gig workers.
The Code on Social Security, 2020, identifies gig workers and provides certain social security benefits, such as life and disability cover, health insurance, maternity benefits, and old-age protections. However, other crucial protections like minimum wage guarantees, occupational safety, and rights to collective bargaining have been omitted. The exclusion of these essential protections stems from several factors. First, the current legal framework fails to address the unique challenges of gig work, which operates outside the traditional employer-employee relationship. As a result, existing laws such as the Minimum Wages Act and the Occupational Safety, Health, and Working Conditions Code do not directly apply to gig workers. This leaves them vulnerable to exploitation.
Moreover, gig platforms often classify workers as “partners” or independent contractors. This categorisation exempts them from employers’ obligations, such as ensuring fair wages and safe working conditions.[4]. The absence of legal obligations allows platforms to avoid additional costs and liability, contributing to their resistance to broader regulation.
The absence of dedicated laws for gig workers highlights a significant disparity between the rapid evolution of the gig economy and the sluggish pace of legislative development. The gig market’s exponential growth has outpaced the ability of legal frameworks to. This gap underscores the urgent need for laws tailored to the unique structure and demands of the gig.
Recent public interest litigations (PILs) in Indian courts have highlighted the precarious situation of gig workers, focusing on their lack of social security and basic labour protections. For instance, the Indian Federation of App-Based Transport Workers (IFAT) filed a petition in the Supreme Court to recognise gig workers as “unorganised workers” under the Unorganized Workers’ Social Security Act, 2008. The plea also demanded that gig platforms such as Zomato, Swiggy, Ola, and Uber provide workers with social security benefits like health insurance and pension. The petition argues that the current employment contracts disguise the employer-employee relationship, denying workers their constitutional rights under Articles 14, 21, and 23, guaranteeing equality, the right to life, and protection against forced labour.[5]
The Indian judiciary could interpret these cases by examining international precedents, such as the UK Supreme Court’s ruling that classified Uber drivers as workers and recognised their right to minimum wage and other benefits.[6] Such a stance may influence Indian courts to view aggregator-worker relationships not as partnerships but as de facto employment contracts warranting labour protections.
A landmark judicial decision in the United States, specifically the California Supreme Court’s judgment in Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018), could be an essential reference. In this case, the Court held that the hiring entities’ duty was to determine whether a worker was an independent contractor or an employee. Suppose the worker does not meet the criteria for being an independent contractor. In that case, the company must treat them as employees, subjecting them to wage orders and employment protections. This decision, which utilises a three-pronged “ABC test” to determine employment status, paved the way for more substantial recognition of gig workers in the U.S. and could serve as a persuasive precedent in Indian courts.[7] The Indian judiciary could draw upon this case law to interpret the relationship between aggregators (like Swiggy and Uber) and gig workers. The focus could be examining the control these platforms exert over workers, how they engage in regular business operations, and the degree of independence workers possess. If the court concludes that the platforms exert too much control, it could recognise gig workers as entitled to labour protections under Indian law.
3.0 Comparative International Perspectives
India could look to models other countries use to address this pressing issue. Of course, these models cannot be emulated in India as they will have to be heavily tailored and customised to succeed in India.
One such model is successful in Spain. Spain’s “Rider Law” passed in 2021 requires food delivery platforms to treat delivery riders as employees, thus offering them fundamental rights such as minimum wage, paid leave, and social security benefits. This move marks a significant shift from previous practices where riders were treated as independent contractors. [8]India can replicate this law’s success by revising the labour laws to accommodate the realities of the gig economy and ensure that workers are recognised as employees with corresponding rights to minimum wage, health insurance, and social security.
4.0 Economic and Social Implications
In India, gig workers’ economic and social inclusion remains a critical issue, with many gig workers lacking access to essential benefits such as healthcare, pensions, and social security. While the Indian government has taken steps to address these gaps, including through schemes like PM-SYM (Pradhan Mantri Shram Yogi Maan-dhan), more efforts are needed to ensure that gig workers are adequately covered under social security frameworks.
PM-SYM, launched in 2019, is a pension scheme for unorganised workers. After the age of 60, it offers a monthly pension of Rs 3,000.[9] However, this scheme primarily targets low-income, non-formal workers. It does not fully encompass gig workers, particularly those self-employed or working on flexible terms through digital platforms. This is where the challenge lies: gig workers often fall outside the traditional employment relationship, making it harder to categorise them for such schemes.
Corporate giants like Swiggy, Zomato, and Uber have been at the centre of discussions about the treatment of gig workers. While these companies benefit from gig labour’s flexibility and cost-saving potential, their responsibility toward worker welfare often comes into question. Expanding CSR obligations could ensure these workers receive fair wages, including minimum wage guarantees and payment transparency. Companies could be required to disclose the criteria for setting pay rates, as is the case in some European countries. In line with CSR obligations, companies can offer health insurance, accident insurance, and other benefits to protect gig workers in cases of injury or illness, mainly since gig work can involve hazardous tasks, such as food delivery or ride-sharing. Companies can offer more than just monetary compensation by making gig workers a part of their CSR strategies. They could provide skill development programs, pension plans, and avenues for career growth. Additionally, gig platforms could introduce grievance mechanisms and transparent, fair policies for dispute resolution, which would go a long way in improving the work environment for gig workers.
5.0 Conclusion
The gig economy in India represents a significant and rapidly expanding segment of the labour market, offering millions of flexibility and income opportunities. However, this growth has exposed workers to a lack of social security, fair wages, and occupational safety. While some legislative steps, like the Code on Social Security, 2020, have acknowledged gig workers, these measures fall short of providing comprehensive protections.
The Indian legal system has the potential to draw from constitutional mandates and international precedents to redefine the aggregator-worker relationship, ensuring better rights for gig workers. Comparative insights, such as Spain’s “Rider Law” and the U.S. “ABC test,” highlight the possibility of crafting laws that balance the gig economy’s unique needs with workers’ rights.
Ultimately, addressing gig workers’ challenges requires a collaborative effort from policymakers, the judiciary, and industry stakeholders. By implementing robust legal frameworks, extending CSR obligations, and promoting corporate accountability, India can lead the way in establishing a fair and equitable gig economy that safeguards the dignity and livelihood of its workers while fostering sustainable economic growth.
Reference(s):
[1] Articles – Manupatra, https://articles.manupatra.com/article-details/WORKERS-RIGHTS-IN-GIG-ECONOMY-LEGAL-FRAMEWORK-AND-CHALLENGES.
[2] Gig-economy working: where are we up to now?, https://www.shoosmiths.com/insights/articles/gig-economy-working-where-are-we-up-to-now.
[3] Const. of India art. 21.
[4] Nilabhra Bhattacharya, Post-pandemic exploitation of food delivery workers, and the legal reforms needed, (Oct. 14, 2021), https://theleaflet.in/analysis/post-pandemic-exploitation-of-food-delivery-workers-and-the-legal-reforms-needed.
[5] Just a moment…, https://www.newsclick.in/SC-agrees-hear-PIL-social-security-benefits-gig-workers.
[6] Kingshuk Sarkar, Why UK Supreme Court’s Uber Driver Verdict Can Impact Indian Gig Workers, (Mar. 10, 2021), https://theleaflet.in/analysis/why-uk-supreme-courts-uber-driver-verdict-can-impact-indian-gig-workers.
[7] Nilabhra Bhattacharya, Post-pandemic exploitation of food delivery workers, and the legal reforms needed, (Oct. 14, 2021), https://theleaflet.in/analysis/post-pandemic-exploitation-of-food-delivery-workers-and-the-legal-reforms-needed.
[8] Spain approves a “Riders Law”, (May 31, 2021), https://industrialrelationsnews.ioe-emp.org/industrial-relations-and-labour-law-may-2021/news/article/spain-approves-a-riders-law.
[9] Pm-Sym, Ministry of Labour & Employment|Government of Ind (Nov. 14, 2022), https://labour.gov.in/pm-sym.
