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This article is written by Aman Sagar pursuing Diploma in Labour, Employment and Industrial Laws (including POSH) for HR Managers from LawSikho.

Let’s understand the “gig” economy

The gig economy is a term coined primarily in the previous decade which is based on flexible, temporary, or freelance jobs, often involving linking with clients or customers through an online medium. The tasks performed by a gig economy worker can be anything from getting groceries to writing code. A gig worker can opt to work for a specified number of hours like choosing to work in a shift or work by project. Once the task or shift is complete, the worker moves on to whatever is the next gig that might be another task with the same company, or something entirely different with another company. We as a nation, while embracing this tectonic rise of the gig economy, have also been experiencing huge growth in the number of gig workers in the past few years.

India constitutes about 40% of the temporary jobs offered globally, with almost about 1.5 crore skilled workers pumping the ever-so-increasing demand of contract-based jobs or the freelance industry. Freelancers are attracted to the gig economy because they can follow their forte and, respectively, leverage the elasticity and freedom that comes along with it. A worker or independent contractor has the choice of selecting his or her work hours and at times, even the mechanism through which he or she wishes to complete the work. Such workers or independent contractors can work from home, especially when the project is related to arts and design, information technology, or creative writing. This also leads to the autonomy of choice for both, the employer as well as the worker or independent contractor, to look for other suitable options due to no restriction with respect to closeness to the workplace.

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The changing landscape of Indian labour legislations

The labour laws in India have been endorsed to ensure that the workers are entitled to all the aids they require to endure themselves.

The Parliament of India has passed the four labour codes and it has also received the President’s concurrence. The government aims to implement all the four codes in one go from the next FY 21-22 (Q2) and complete the final stretch of labour sectoral reforms. Below mentioned are the labour codes which will be coming into effect in due course of time:

  • The Code on Wages, 2019 

It is applicable to all employees in organized as well as unorganized segments, with intentions to regulate remuneration and payment of bonus in all employments and aims at providing equal wages to employees performing work of an alike nature in every industry, trade, business, or production facility.

  • The Code on Occupational Safety, Health and Working Conditions, 2020 

It pursues to regulate the health and safety conditions of workers in institutions with 10 or more workers including mines and dockyards.

  • The Code on Social Security, 2020 

The code unites 9 laws related to social security and maternity benefits.

  • The Code on Industrial Relations, 2020

It seeks to merge- Industrial Disputes Act, 1947, Trade Unions Act 1926, Industrial Employment (Standing Orders) Act, 1946. The Code aims to improve the business environment in the nation largely by reducing the labour compliance problem of industries.

However, there have been a few developments while passing the bills which have been a cause of concern because the government may not have conducted thorough due diligence towards them and maybe inclined substantially towards businesses and not towards employees. They are pending the President’s decree of approval at present. Some of the changes are given below:

  1. Presently any establishment with above 100 employees is required to seek appropriate government permission before carrying out the process of retrenchment. Now that threshold has been increased to 300.
  2. The Industrial relations code 2020 makes it close to impossible for workers to conduct any strikes. The new code would now require workers to hand in a Sixty-day notice before conducting striking within the confines of the law. And, in the case of pending proceedings before a legal court, the strike can only happen after 60 days of the completion of such proceedings.
  3. The government has the power to exempt any new institution from any provisions of the law, including ensuring worker safety which is a red flag because every new factory-based establishment has large-scale employment and they will not have safety norms and welfare provisions for their people for a good amount of time.

Challenges faced by the gig economy

Cases in India have, time and again, dealing with situations where an employer-employee association could or could not be established. Despite the fact the current focus of the central and state based governments might be to deal with the larger challenges posed by the organised sector, it is possible that authorities may start focusing on the gig economy and aim to extend the applicability of certain statutes to them, considering the growing strength of gig workers. The Order may also prove to be helpful, if it is determined that the intent of labour and employment laws is to grant a sense of protection to the workforce and identify minimum rights for gig workers, as well.

The problem persists where gig workers do not really fit into the definition of an “employee” or “worker” and therefore they remain out of India’s labour law coverage. The real challenge in regulating them is the nature of work performed by them. For instance, 22-year-old Ravi, who delivers food for a food delivery aggregator in Jaipur, works only two days; Saturday and Sunday and earns about Rs.70 per food delivery order on these days. There is no written contract and Ravi gets paid on the basis of the task. He can always decide to pull the plug by logging out of the mobile app whenever he doesn’t wish to.

The whole concern is because of the cost element that the organizations are not willing to bear because an employee is entitled to a plethora of benefits. Benefits such as provident fund, gratuity, insurance, mediclaim cover, leaves like maternity, sabbaticals, etc. which is not in the case of gig workers. 

COVID-19: Big game changer for gig economy

The year 2020-21 has had unparalleled events which primarily includes the COVID-19 global crisis that has led to the constant change of stance of governments on how things will function along with the phases of lockdown which have massively disrupted almost all the economic activity forcing all businesses to shut down and only leaving essential services to function for the greater good of people’s safety and wellbeing. However, there is one segment that is working seamlessly i.e. the gig or platform network. 

The gig economy has helped stressed employers and thousands of out-of-work employees to keep things moving via short-term work projects or contracts. The flexibility of gig work is appealing for both workers and engagement firms.

The forced digital transformation due to pandemic pushed the Work-from-Home scenario could be considered one of the prime reasons for the rapid growth of the gig economy. Workers or independent contractors get paid for each gig or job they do, and this very code is the basis of all internet applications that involve this temporary workforce. 

Many companies pay their partners, whether it is drivers or delivery execs or other such professionals, based on the number of deliveries or customers served in a day or in a week/month, or as per the arrangements that these establishments have put in place. These partners can undertake various tasks of similar or different nature with diverse companies since they are not in the permanent employment of any one establishment. It is a possibility that the amount received by these partners, in a month, maybe equal to or even be higher than the amount earned by an individual in full-time employment who might be working at an establishment.

Final thoughts

In the end, I would say that the government should create an empowering environment that gives the gig economy its due importance in the process of nation building and increasing the employment for youth who are the growth drivers of the Indian Economy. At the same time, it must be the government’s priority to create a safety net with the help of relevant legislation to support the gig economy. Pertinent measures include promoting better connectivity, focused cybersecurity which is a serious matter, ease of Internet access, reliable supply of power, lower costs associated with logistics, and many other areas which can be improved to enhance the contribution of this economy.


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