This post is authored by Aryan Dalal Student Hidayatullah National Law University, Raipur
INTRODUCTION: A LONG OVERDUE RECOGNITION
The Rajasthan Platform-Based Gig Workers (Registration and Welfare) Act, 2023
(hereinafter the “Act”) represents a ground-breaking legislative initiative aimed at
establishing welfare and social security provisions for platform-based gig workers and marks a significant milestone in recognizing and safeguarding the rights of gig and platform workers in India. It comes after years of labour exploitation, low wages, and mistreatment by companies in the gig economy, without any substantial government intervention. This historic piece of legislation owes its existence to the persistent efforts of civil society groups. At the national level, the Social Security Code acknowledges gig and platform workers, who are essentially individuals employed through online aggregator platforms, as a distinct category
of workers. The Code aims to provide them with a range of benefits. However, the
implementation of these provisions is still pending.
HISTORICAL CONTEXT
The gig economy is characterized by rideshare services like Ola and Uber, food delivery platforms like Swiggy, and multiservice providers like Urban Company, which have proliferated in India over the past decade. However, workers in these sectors faced numerous challenges, including meagre earnings and harassment, while companies refused to acknowledge them as employees, instead labelling them as “partners”.
THE GIG ECONOMY’S ECONOMIC SIGNIFICANCE
Recent research by the Boston Consulting Group underscores the economic significance of the gig economy in India, projecting the potential to create close to 100 million jobs and contribute significantly to the country’s GDP. India’s gig workforce also plays a substantial role in the global gig economy, emphasizing its importance on the global stage. The gig economy serves as a lifeline for millions including youth and the elderly, offering low-cost, low-investment employment opportunities through platforms like Ola, Uber, Swiggy, and more. However, these platforms often misclassify workers as “partners” or “mini- entrepreneurs” to avoid legal responsibilities.
CHALLENGES FACED BY GIG WORKERS
Gig workers face challenges related to their employment arrangements, payments, and working conditions. They are often subjected to rules similar to formal job markets, yet they are denied the benefits associated with formal employment, such as job security and social security benefits. Moreover, many companies fail to provide compensation or support in cases of accidents at work, exacerbating gig workers’ vulnerability.
A NATIONAL TREND: K’TAKA GIG WORKERS WELFARE BOARD
The trend of recognizing gig workers’ rights extends beyond Rajasthan, with the government in Karnataka pledging a significant seed fund of Rs 3,000 crore for “comprehensive insurance coverage”. This move aligns with promises made by the government and reflects the growing recognition of the gig economy's importance in India’s political and economic landscape.
A HISTORIC MILESTONE
The Act addresses these challenges by introducing key provisions such as worker
registration, the creation of a social security fund, and providing social security benefits, including insurance, maternity support, gratuity, and more. The Act also establishes a grievance redressal mechanism and imposes penalties on non-compliant platforms and employers. The act outlines the creation of a “welfare board” tasked with designing welfare policies and grievances on a piece-rate basis. The board aims to establish a “social welfare fund” financed by the digital transactions made by consumers on platforms that utilize gig workers. This approach bears resemblance to similar schemes in countries like Thailand and
Malaysia.
This Act stands out for several reasons:
1. Transaction-Level Fee: The Act ensures that a fee is levied on every transaction,
providing a source of revenue for a welfare fund. This fee calculation exposes the
commission rates imposed on workers, which were previously hidden under the
“upfront pricing” model.
2. Tripartite Welfare Board: The Act establishes a welfare board consisting of
government representatives, companies, and workers. This tripartite structure, based on an ILO framework, promotes sectoral bargaining and prevents companies from
manipulating compliant unions.
3. Data Transparency: The Act mandates that transaction-level data be stored in a
government-controlled database, with an accessible information system/app for
workers. This move towards transparency enables workers, the public, and
policymakers to gain insights into the industry's functioning.
SHORTCOMINGS, CONCERNS AND RECOMMENDATIONS
The Act represents a noteworthy effort to secure social security for gig workers. However, it faces critical issues that might limit its effectiveness. I have identified some shortcomings in the act:
1. Ambiguities in the act: While the act is well-intentioned, it grapples with significant ambiguities and uncertainties in its key definitions and provisions. Firstly, the definitions of a gig worker and aggregator within the Act lack the necessary clarity to categorically treat aggregators as employers, a distinction that has global implications. This ambiguity departs from established global best practices in distinguishing between employees and independent contractors. Secondly, there are lingering ambiguities in the Act, particularly concerning grievance resolution and data sharing. The Act’s effectiveness hinges on the establishment of precise rules and systems for its implementation. Lastly, the Act falls short in providing clear definitions of social security and welfare measures, leaving these crucial aspects open to interpretation. It places significant discretion in the hands of the welfare board, raising questions about the extent of influence that gig workers may wield in the presence of powerful platform representatives. Addressing these ambiguities is essential to ensure the Act’s
effectiveness in safeguarding the rights and well-being of gig workers.
2. Employee Misclassification: The Act continues to categorize gig companies as
“aggregators” rather than addressing the issue of employee misclassification. This
sidestep could leave workers without certain protections afforded to employees.
3. Limitation on Labour Laws Integration: The failure to define gig workers as
employees restricts the ability to integrate existing labour laws. Consequently,
aggregators may evade compliance with labour laws and avoid providing workplace entitlements. While some Indian platforms do address this, it risks turning essential entitlements like occupational safety into acts of aggregator benevolence. Australia and New Zealand have adopted a more proactive approach by focusing on the health and safety of workers regardless of their employment status.
4. Database Concerns and Perpetual Registration: It aims to establish a gig worker
database, but it doesn’t specify the duration of engagement with app-based platforms. This registration system’s perpetuity might inadvertently affect gig workers who engage with multiple aggregators in a single day, potentially leading to limitations on their job choices. Further, it lacks preventive mechanisms to address this issue. Some worker unions raise concerns about deductions from workers’ earnings for the social security fund, emphasizing that workers are already financially strained. They also advocate for the timely formation of the welfare board to avoid delays due to elections. Additional
recommendations include setting provisions for basic minimum earnings, capping commission rates, ensuring data transparency, and addressing inflation-adjusted fares and allowances.
TOWARDS A FAIRER GIG ECONOMY
In an era of platform capitalism characterized by skewed algorithms, this Act represents a progressive step toward taming digital bosses and envisioning worker-owned platforms with fair labour practices. Most importantly, it grants dignified recognition to gig workers, allowing them to assert their rights, hold platforms accountable, and participate in decision- making processes, transcending their roles as mere “Ola drivers” or “Swiggy delivery
persons”.
CONCLUSION: EMPOWERING GIG WORKERS
The gig economy has become a crucial employment source in India, especially for youth and migrant workers seeking financial stability and flexibility. However, rapid growth, competition among platforms, and abundant low-cost labour have reduced incentives for gig workers. They face increased workloads, job insecurity, and inadequate pay. Most aggregating platforms don’t consider them as “workers”, depriving them of social security benefits. This highlights the challenges in an industry that provides employment opportunities but also requires attention to workers; rights and well-being. The introduction of the Act by the Rajasthan government is a laudable step to address the challenges faced in India by gig workers. It holds the potential to substantially improve their working conditions and overall well-being. However, the success of this initiative largely depends on its effective implementation. This act’s primary focus on the welfare of gig workers is an encouraging development, and if executed successfully, it could serve as a model for other states in the country. Such a uniform approach would ensure that gig workers across India enjoy similar protections and rights. Nevertheless, we must acknowledge the
hurdles ahead. While the Act represents a significant leap forward, it is just the beginning of a journey toward securing the rights and dignity of gig workers in India. In conclusion, Rajasthan’s initiative is a commendable move, but the road ahead requires vigilance and persistent efforts to truly uplift the gig workers’ lives in our country.
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