The Union Ministry of Labour and Employment is in the process of drafting a national law aimed at integrating gig workers into social security systems, providing them with benefits like health insurance and retirement savings. The government is likely to require aggregators to contribute 1%-2% of their revenue to create a social security fund that would offer these benefits. Additionally, there are plans to revise the definitions of gig and migrant workers to ensure they are more inclusive and reflective of the current employment landscape.

The proposed legislation intends to establish a welfare board model, which would create a fund specifically for the social security of gig workers. It would mandate the registration of all gig workers and require aggregators to provide a 14-day notice period with valid reasons prior to termination, while promoting transparency in automated systems. New dispute resolution mechanisms will also be implemented to safeguard the rights of gig workers.

The Labour Minister indicated that aggregator companies employing gig and platform workers would be encouraged to take the lead in registering their workers on the designated portal. Workers registered on the Labour Ministry’s e-Shram portal will have access to life and accidental insurance, along with additional benefits.

Labour Codes

• In this context, it's worth noting that India established four new labour codes in 2019 and 2020. These codes aim to simplify and rationalize existing labour laws by merging 29 central labour laws into four broad categories: wage, social security, industrial relations, and occupational safety and health. Among these, the Social Security Code of 2020 is the only one that specifically mentions gig and platform workers.
• Under this code, gig and platform workers are classified as a subset of informal sector workers. Consequently, the code provides for the creation of social security schemes for gig and platform workers by the central government. Furthermore, similar to informal workers, gig workers are required to self-register on the e-Shram portal.

Definition of Workers

• The issue arises from how gig workers are defined in the Social Security Code 2020, which places them outside the conventional employer-employee relationship. This is problematic because many gig employers, including some well-known companies, function as formal entities within the formal sector. The exclusion of gig workers from traditional employment frameworks is at the heart of the problem.
• This intentional strategy by "aggregators" seeks to obscure employment relationships in gig and platform economies, thereby circumventing the application of existing labour laws. In a gig economy, employment relationships remain ambiguous, with workers often categorized as independent contractors.
• This confusion about employment relationships leads to the erroneous belief that gig workers are independent workers. The Social Security Code 2020 perpetuates this misconception by categorizing gig workers as part of the informal sector without clarifying the actual employment relationship within the gig economy.
• Additionally, there is a significant disparity in entitlements between institutional social security and social security schemes. For instance, formal workers are entitled to 26 weeks of paid maternity leave under the Maternity Benefit Act, 1961, as part of institutional social security coverage.
• In contrast, registered informal workers receive only cash benefits ranging from ₹5,000 to ₹10,000 for maternity support under social security schemes. This stark difference in entitlements highlights the limitations of the Social Security Code 2020, which aims to provide gig workers with access to certain social security schemes but does not extend to institutional social security.
• Furthermore, other institutional protections, such as minimum wage safeguards, are absent for gig workers. Occupational safety and health regulations do not apply to them, and they are excluded from the Industrial Relations Code 2020, which means they lack access to the dispute resolution mechanisms it provides.
• A clear employment relationship is fundamental for protection under labour laws, but this relationship remains undefined in the context of gig work in India. Recent legislation introduced in states like Rajasthan and Karnataka also suffers from this same deficiency.

The Core Issue

• If the Union Ministry of Labour and Employment is genuinely committed to safeguarding the interests of the growing number of gig workers in the country, it must explicitly define the employment relationship within gig and platform work and eliminate the ambiguity created by so-called "aggregators." Recognizing "aggregators" as employers and clarifying the employment relationship in gig work is essential.
• A significant precedent is the 2021 ruling by the U.K. Supreme Court in the Uber case, where Uber was recognized as an employer, and its drivers as "workers," leading to the requirement that Uber comply with existing labour laws.
• Once the employment relationship is clearly defined, gig workers can be integrated into the proposed four labour codes, which would eliminate the need for separate legislation.
• The welfare board model suggested by the Union Ministry of Labour and Employment has had limited success in the past, especially with construction workers who were also categorized as informal despite being employed by formal companies. Clarifying employment relationships in gig work would further facilitate the formalization of workers in this sector.
• Moreover, the overall labour code was designed for simplification and rationalization. Introducing separate laws for specific workforce segments undermines this goal. Recognizing the employment relationship in gig work is crucial; once this issue is resolved, the rest will follow