The rapid expansion of platform workforce is ushering in a new global economic revolution, with India positioned at the forefront of this transformation. With the world's youngest population, rapid urbanization, and widespread adoption of smartphones and related technology, India is uniquely poised to lead this change. According to the 2022 report by India's public policy think tank, NITI Aayog, titled ‘India's Booming Gig and Platform Economy' (‘NITI Aayog Report'), the Indian gig workforce is projected to rise to 2.35 crore workers by 2029-30, a 200% increase from the current 77 lakhs. By 2029-30, gig workers will form 4.1% of India's total workforce, rising from 1.5% in 2020-21.
The NITI Aayog Report defines gig workers as those who operate outside the traditional employer-employee arrangement, further classifying them into platform and non-platform-based workers. Platform workers are individuals whose jobs depend on online software applications or digital platforms. In contrast, non-platform gig workers are typically casual wage labourers or self-employed individuals in traditional sectors, working either part-time or full-time outside these applications and platforms.
Problems Faced by Platform Workers
Platform workers are arguably the most visible segment of the gig economy in todays' day and age. Jobs such as delivery drivers or cab drivers offer “easy entry” for many semi-skilled youth, needing only an Aadhaar card and a driver's license. However, due to slow pace of the lawmakers to formulate and enforce regulations in this sector, these roles also have their own disadvantages, some of which are detailed below:
- No job security: Most platform workers operate on a day-to-day basis and can be dismissed without any notice. This lack of job security can cause financial instability and make it challenging for platform workers to plan their future.
- Unequal bargaining power: Platform workers in India often lack the bargaining power to secure fair compensation and working conditions, especially when competing against a vast pool of other workers on digital platforms.
- Income instability: Platform workers frequently grapple with income fluctuations due to the irregular and unpredictable nature of their work. Their earnings are contingent upon the completion of individual “gigs”, with payment directly influenced by demand fluctuations within the sector.
- Dynamic rating system: Reports indicate that one of India's leading food delivery apps operates on a dynamic rating system that changes weekly based on the quality and quantity of work. Workers with higher ratings receive perks such as the ability to book shifts for the following week in advance and attractive interest rates on personal loans. The program also offers health insurance as a benefit, which can change weekly.
While platforms have often employed similar gamification tactics to motivate workers to work more or earn more, including health insurance such a program could be detrimental not only to the workers but also to their families.
Evaluating the Classification of Platform Workers: Independent Contractors or Employees?
In various jurisdictions, including India, the tests to determine misclassification of independent contractors as employees often focus on factors like the degree of control the employer exerts, integration, duration of engagement and exclusivity etc. Indian courts, apart from analysing the terms of the agreement, may use a series of “tests” to gauge the nature of the relationship. The authorities/courts look at all aspects of the working relationship and no single test should be considered conclusive for classifying a worker.
Given the unique nature of platform work, if these tests applied to similar scenarios yield varied interpretations. Platform workers exhibit traits of both employees and independent contractors. For instance, Uber drivers experience significant company control over fare collection, complaint management, conduct standards, and pricing, indicating an employer-employee relationship. Yet, they choose their assignments, refuse clients or locations, set their schedules, provide their own equipment, and often lack exclusive employment arrangements, all characteristics of independent contractors.
Due to the dual nature of platform work, categorizing platform workers strictly as employees or independent contractors is challenging. A rigid classification as employees may impose prohibitive costs on companies, such as taxes, back wages, and penalties, potentially undermining their business model and reducing job opportunities and economic growth. Conversely, classifying platform workers as independent contractors may result in denial of essential employment rights like minimum wages, bonus, overtime pay, health, maternity benefits, etc.
The difficulties of categorizing platform workers underscores the need for a third, “hybrid” category. This new category would serve as an intermediate classification, entitling platform workers to limited employment rights and benefits while maintaining the flexibility that supports the platform economy's business model.
Conceptually, the hybrid category would balance limited employment rights and benefits with shared liability between the hiring company and the platform worker while requiring compliance with company guidelines and procedures. This would enhance platform worker's welfare by including them in the labour law framework without disrupting the platform economy's flexibility. By adopting this hybrid approach, a balance between the interest of the platform workers may and that of the platform economy may be achieved.
Gig and Platform Workers under the Code on Social Security, 2020
The Indian legislature through the Code on Social Security, 2020 (‘Code'), for the first time, recognised this previously unregulated sector of platform and gig workers, by defining them and making provisions to regulate their rights and terms of engagement.
The Code, defines a gig worker as ‘a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship'. Therefore, going forward, gig workers would be recognised as a separate class of workers, functioning outside the traditional employer-employee relationship in India.
Chapter IX of the Code provides welfare schemes for unorganized, platform and gig workers. Section 114 empowers the central government to create and implement social security schemes for these workers, covering life and disability insurance, accident insurance, health and maternity benefits, old age protection, crèche facilities, and other necessary benefits. The Code mandates the Central Government to create a social security fund (‘Fund') for gig and platform workers. It requires aggregators, such as ride-sharing services, food and grocery delivery services, logistic services or other platforms, to contribute 1-2% of their annual turnover to the Fund, which will be used to implement various schemes. However, this contribution is capped at 5% of the total amount paid or payable by the aggregator to their gig and platform workers. The Code further provides for registration of unorganised workers, gig workers and platform workers to avail of the benefits of the welfare schemes.
State Initiatives
After the passage of the Code, various states have taken measures to regulate the working conditions and benefits of the gig and platform workers.
Rajasthan was the first state to pass a legislation called the Rajasthan Platform Based Gig Workers (Registration and Welfare) Act, 2023 (‘Platform Workers Act'), however, the same has not been enforced yet. The definition of ‘gig workers' in the Platform Workers Act aligns broadly with the Code. It also includes any person working on a contract that results in a specified rate of payment based on the terms and conditions of that contract, encompassing all piece-rate work.
Similar to the Code, the Platform Workers Act also provides for setting up of a welfare fund called ‘The Rajasthan Platform Based Gig Workers Social Security and Welfare Fund' (‘Welfare Fund') for the benefit of registered gig workers. The Welfare Fund will include a welfare fee, which will be a percentage of the value of each transaction, worker contributions, government grants, and donations.
Following in the footsteps of Rajasthan, Karnataka has released a draft of the Karnataka Platform-based Gig Workers (Social Security and Welfare) Bill, 2024 (“Draft Karnataka Bill”). The Draft Karnataka Bill seeks to protect the rights of platform-based gig workers, places obligations on aggregators in relation to social security, occupational health and safety, provide transparency in decision making, provide a dispute resolution mechanism etc. It also proposes establishment of ‘Karnataka Platform Based Gig Workers Welfare Board', similar to the Welfare Fund under the Platform Workers Act and the Code. As per the Draft Karnataka Bill, aggregators are obligated to enter into a contractual agreement with the gig worker and provide a 14-day notice before terminating the contract. It further stipulates that all grounds for termination or deactivation from the platform, should be clearly specified in the agreement between aggregators and gig workers and obligations to establish reasonable working conditions.
The Karnataka government has also introduced an insurance scheme to provide social security to gig workers in the unorganized sector, such as full-time and part-time delivery personnel in e-commerce companies like Swiggy, Zomato, and Amazon. The scheme offers a total insurance coverage of Rs. 400,000, which includes Rs. 200,000 for life insurance and Rs. 200,000 for accidental insurance. The entire insurance premium will be borne by the government, and the benefit covers both on-duty and off-duty accidents.
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