Law Firm in India|Celebrating 20 Years of Excellence

Laws in India for GIG or Temporary Workers

The Code of social security, 2020 provide benefits to the Gig or Platform workers. It also defines the new terms in the code including ‘Gig Economy’.

“Even though the gig economy is just beginning in India, the rapid growth of this sector is evident.  A report says, there is a possibility of 350 million gig jobs in India by 2025. The government should take special care of the interests of gig workers in the labor laws.”
Gig economy and gig workers are the changing face of employment in India. This class was the most financially affected due to the covid pandemic and consequently became more aware of their legal rights and rules. According to a survey in India 90% of gig workers have lost their income due to the impact of the covid pandemic. However, some economic experts say that after the pandemic period, this economy will pick up and provide a huge number of jobs in India. A 2017 Ernst & Young study on the “future of jobs in India” found that 24% of the world’s gig workers came from India.

Due to this influence, the gig economy and its legal status in India has become a matter of discussion. No provision had been given in the earlier labor laws regarding the gig economy and workers but though the new Code on Social Security in year 2020,  nine legislations were replaced which stated that gig workers will also be eligible to have benefits under the code.
Concept of GIG Workers & Economy

The word GIG usually conjures visions of a one off musical performance. It happens once and then the band is off to find their next performance or gig. Gig is a slang term meaning a job for a specified period of time and it refer to the workers outside of the traditional employer-employee relationship including freelancers, workers who are employed on a contractual basis with their employers, project based work and short-term work. But it finds its way into mainstream business vocabularies as more & more communities trend toward a gig economy.

Gig economy is a free market system in which temporary positions are common. Freelancers, independent contractors, project based workers and temporary hires all fall under the title gig workers and are found across every industry. Gig employees could be writers, rideshare drivers, photographers, food delivery agent, e-commerce site’s delivery agents, service provider, accountants, tutor, artists, anyone who enters into formal agreements with a company to provide services without being on the company’s payroll. With digitalization, the workforce is increasingly mobile, so workers can select temporary jobs from around the world, and employees can find the best individuals for each job without as much geographic constraints.

The gig economy also saves business resources, like benefits, office space & training while providing employees benefits like an improved work life balance & freedom to select profiles or gigs that they’re interested in. While this flexibility is appealing, gig workers in turn, usually trade that in for modest pay little or no health or retirement benefits, tax complications and out of pocket equipment expenses. There is a blurred line between those who voluntarily work as contractors & those who are being taken advantage of by an employer that might classify someone as a contractor to get out of paying fair wages & benefits.

Legal Provisions

Currently, Indian labor & employment laws recognized three main categories of employees: government employees, employees in government controlled corporate bodies known as public sector undertakings (PSUs) & private sector employees who may be managerial staff or workmen. All these employees are ensured certain working conditions, such as  minimum wages under the Minimum Wages Act of 1948, a set of number of hours of work, compensation for termination etc. The gig workers lack the ‘employee’ status under Indian Law, thereby resulting in several restrictions, such as an inability to form unions to represent their interests, exploitative contacts.

The evolution of labor laws:

In 2019, The Parliament of India introduced a new code of social security fund with the concept of gig and platform workers and decided on the beneficial schemes for such workers. The social security code in 2020 amalgamated the nine enactments which includes, the Employees' Provident Fund Act, 1952, the Maternity Benefit Act, 1961, and the Unorganized Workers' Social Security Act, 2008 to include informal or gig workers into this scheme. The gig workers will get protection under the new code such as minimum wages, maternity benefits, EPF funds, insurance benefits provided by state run employee’s states insurance corporation etc.

It also passed the four labor codes to provide benefits to the workers working in unorganized sector. The new codes are stated below:
  1. The Code On Wages, 2019
This code applies to all employees of organized and unorganized sector to regulate remuneration and payment of bonus during the course of employment. It also provides equal wages to employees performing work of an alike nature in every industry, trade, business, or production facility.
  1. The Code On Social Security, 2020
This code combines the all 9 laws related to social security, maternity benefits, employee’s compensation act, pension act etc.
  1. The Code On Occupational Safety, Health & Working Conditions, 2020
This code states provisions to regulate the health and safety conditions of workers with 10 or more workers including mines and dockyards.
  1. The Code On Industrial Relations, 2020
This code merges Industrial Disputes Act, 1947, Trade Unions Act 1926, and Industrial Employment (Standing Orders) Act, 1946. The purpose of the code is to improve the business environment in the country by reducing the labor adherence problem of industries.

Mandatory Registration Process

To avail the benefits under the Code it mandates the registration of both gig workers and platform workers on the government specified online portal. The conditions for registration are:
  • Worker should complete sixteen years of age but has not attained the age of sixty years.
  • The worker has worked for not less than ninety days during the preceding twelve years.
  • The worker must submit a self-declaration electronically or otherwise in a specific format and manner containing all the relevant information as prescribed by the Central Government.
  • Every eligible unorganized worker, gig worker or platform worker shall make an application for registration in the specified form along with relevant documents including Aadhaar number.
Deficiency of the code

The labor & employment ministry add new terms “gig workers, platform workers, and gig economy” in the Social Security Bill, 2019 which is fine but even though India have had over 100 state plus 40 central labor laws explaining provisions for employees of the labor sector, still the gig workers remain out of India’s labor law coverage. Hence, this isn’t the code on wages which define employees.

Even though gig workers will get protection in matters related to minimum wages, crucial protection related to occupational health & safety still remains to be addressed.

The gig economy allows different people across cities, age groups & skills sets to pick up work without being tied down to one single project. Since the concept of gig economy and gig workers is quite new to India but it is very fast growing in employment space in the past few years. According to a report, the gig economy has the potential to serve up to 90 million jobs (roughly 30% of India’s non-farm workforce), add up to 1.25% to India’s GDP in the long run, and create millions of new jobs across all sectors of India’s economy. Therefore, legal remedies for such workers are very limited here in India even after the introduction of the new code of security. Government needs to include platform/gig workers in the definition of employee, so that they can get the benefit of the provisions of various labor laws of the country and the states. The Gig workers segment play a very important role in nation’s economy and include the huge group of unemployed individuals of the country hence, the government should create an empowering environment leading with specific legal provisions for the gig workers security during their employment which may give the gig economy its due importance in the process of nation building.

How Can we Help You?

Write to us with your enquiries, questions or request a meeting with a lawyer to discuss your potential case. One of our experts would review the form and revert back shortly.

Thank you for getting in touch!

We appreciate you contacting us at India Law Offices. We will review the details that you have submitted and one of our experts will connect with you shortly.

Invalid Captcha