This article has been written by Shivam Srivastava, pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution course from LawSikho. 

This article has been edited and published by Shashwat Kaushik.

What Is gig economy

An economy that promotes and involves the participation of skilled and unskilled workers to earn their livelihoods as independent contractors or freelance workers on a non-permanent basis of employment for a short duration, whether on a contractual basis or on a project basis, can be considered a gig economy. The concept of a gig economy is not territorial in nature and it covers the markets globally. According to the Cambridge Dictionary, the gig economy can be defined as a way of working that is based on people having temporary jobs or doing separate pieces of work, each paid separately, rather than working for an employer. The term “gig” was first used by a jazz musician in 1915 who was getting their earnings on a performance basis. Also, during the era of the Second World War, economic and political instability forced businesses and other organisations to shift towards temporary employment for shorter periods. In the United States of America, this alternate form of employment and livelihood started developing in 1900, and initiatives taken by corporations like Amizone, Airbnb, Upworks, and Uber between 1999 and 2010 have escalated the concept and demand for gigs. However, if we talk about India, then we can remember that the old Licencing, Public Sector Control, and Government Control Policy, which is famously known as the old LPG Policy, has restricted the globalisation of the Indian economy since the introduction of the New Economy Policy in 1991. The liberalised attitude of the Indian economy towards privatisation and globalisation contributed much towards the contractual or non permanent employment as the corporations from various parts of the world started their feet falling in India for outsourcing of their information technology, business operations, and legal process-related works, but this process was very stagnant and less progressive due to the lack of information technology and digital infrastructure support. Post-2010 and especially after the General Election of 2014, the shifting of the Indian Government’s attitude and vision towards the skill development, Atma Nirbhar Bharat and the Digital India Mission, as well as the introduction of revolutionary 4G, 5G, and fibre optical services in the communication sector, has led to the rapid growth of India as the fifth-top gig economy in the world. Presently in India, more than 15 million gigs are serving in platform-as well as non-platform-based freelancing, which is forty percent of the global gig economy. Economics experts are predicting the generation of more than 350 million freelancing or independent contractor jobs by the year 2025.

What should we know about gig workers

Gig workers are the current era labour force, which is anticipated under various researches as the most trendy form of employment for the future. According to Social Security Act, 2020, “Gig worker’’ is one who performs a task or participates in work arrangements and earns from such activities independently. In simple terminology, gig workers are short-term, project-based, non-permanent workforces who generally work under some contractual relationship. They bear the obligations of a master-servant relationship but they did not own full-time employee status during their course of employment. Both the platform as well as non-platform assisted Freelance workers have been working in India since an era but it is very unfortunate to say that only in 2020, through this code on Social Security, the presence of “gig workers’ as the labourforce will be  legally acknowledged in India. Prior to this Code, the presence of freelance workers was recognised only in some of the statutes, such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005, and the Contract Labour Act, 1970, which recognised the rights of contract labourers but not so efficiently. The Gig worker form of employment covers both skilled as well as non-skilled labour force. Independent Workers like artists, content writers, coaches, contractors involved in business process outsourcing or legal process outsourcing, online teaching faculties, as well as the social media community of workers such as Youtubers and other freelance video bloggers, digital marketing experts, and SEO experts are some of the kinds of skilled workers engaged in gig working patterns. On the other hand, workers who used to work under MGNREGA, 2005, as well as workers like delivery boys working through online platforms, are examples of unskilled workers. 

Breach of contract in gig economy

Indian contract laws are based on the principles of equity, justice, and good conscience, and they provide neutral protection to all the workers, whether they are employees or gig workers who derive their employment relationship through contracts. As we know, gig working is an unorganised form of employment, so it evidences cases of breach of contract more frequently as compared to regular employment. Factors like non availability of employment benefits like appropriate bonuses, payment of gratuities, insurance benefits, and provident funds, and lack of job satisfaction are prominent reasons behind frequent job change rates or shifting of platforms. In most of the cases, these frequent job changes lead to breach of contractual obligations under the contract. On the other hand, many of the service providers who used to hire Gig workers always try to play some smart moves under the clauses of contracts framed by them so that they can retain the Gig workers at their own decided rate of wages and conditions. As we know, a single hand alone is not sufficient for clapping, but it is also not wrong to say that a gig-working economy is a situation like enjoying prosperity at the cost of those who are present at the bottom of the pyramid. Let’s discuss some prominent provisions of the Contract Act, 1872, along with the Specific Relief Act, 1963, which play a vital role in cases of breach of contract in the gig economy: 

In the leading case of Associated Cinemas of America, Inc. vs. World Amusement Company (1937) 201 Minn 94 (Minnesota SC), it was clearly reiterated that “a breach of contract occurs when a party there to renounces his liability under it, or by his own act, makes it impossible that he should perform his obligation under it or totally or partially fails to perform such obligations.” This breach may be anticipatory or actual; in case of anticipatory breach, the option is with the aggrieved party to sue at once or wait for performance. It is also important to note that the party repudiating the contract may nevertheless choose to perform when the time comes and promisee will be bound to accept the same. In the context of Gig workers, the main issue or concern is their frequent shifting of jobs. When we look into the provision of Section 39 of the Indian Contract Act, 1872. It clearly states that when a party to a contract has refused to perform or disabled himself from performing his promise in its entirety, the promisee may put an end to the contract unless he has signified, by words or conduct, his acquiescence in its continuance. However, Indian Contract Law also provides certain specific rights to the service providers or the platform owners, such as Section 63, which clearly states that every promisee may dispense with or remit, wholly or in part, the performance of the promise made to him, or may extend the time for such performance or may accept instead of it any satisfaction which he thinks fit. This provision is based on Doctrine of waiver, and it clearly indicates that a platform owner or service provider may dispense with or remit the requirement of performance of contract by Gig Worker and it will not amount to breach on the part of Gig Worker. Also, Section 10 of the Specific Relief Act, 1963, provides rights of claiming specific performance in the favour of the service provider or platform owner where no other suitable remedy is sufficient to cover the losses that may arise due to nonperformance. However, Section 16 clause b provides a protection to the gig workers that if a service provider himself becomes incapable of performing or violates any essential term of the contract that on his part remains to be performed, or acts in fraud of the contract, or wilfully acts at variance with, or in a subversion of, the relation intended to be established by the contract, then such service providers are not entitled to any specific performance in such a contract.

Legal remedies to gig workers and service providers

Indian Contract Law itself suggests various remedies that may be some good protective measures for gig workers as well as for service providers. Sections 73 and 74 of the Indian Contract Act, 1872, provide remedies to the service providers in the form of liquidated and unliquidated damages against any kind of breach. Also, as we discussed earlier, the Specific Relief Act, 1963, facilitates rights of specific performance in the favour of service providers and platform owners but it does not mean that gig workers did not have any rights in their favour. Gig workers can defend themselves on any of the grounds available under Indian Contract Law, as clearly specified by Section 9 of the Specific Relief Act, 1963. These grounds may include incapacity of parties, lack of free consent, lack of consideration, or any kind of restraint in marriage or trade. Further, Section 62 of the Indian Contract Act provides an important right in the favour of gig workers: if there is any novelty in the contract unilaterally without the consent and knowledge of the gig workers, then it should not be treated as novelty under the provisions of Section 62. In 1984, Delhi High Court clearly stated that where the parties had foxed by mutual agreement the rates of hiring cinema halls, one of them was not allowed subsequently to alter them unilaterally.

Suggestions and conclusion

On the basis of the facts and provisions discussed above, it may be suggested and concluded that the provisions of commercial laws in India are efficiently dealing with the prospects of gig-working employments but in order to render more effective and efficient protective justice in regards to gig workers, there must be some specific laws that need to be enacted by the parliament as well as state legislatures. Further, if we talk about some specific areas that are in immediate need of statutory sanctions, then they must include labour-related legislation for gig workers to regulate their working hours, minimum wages, and other employment benefits like payment of gratuities and bonuses, as well as workmen’s compensation. Also, in order to tackle the most prominent problem of frequent shifting of engagement, there is a need for some neutral regulations and guidelines issued by the Ministry of Labour and Employment that must serve the interests of gig workers as well as service providers and reduce the chances of breach of contract by introducing a separate dispute resolution mechanism alternatively to the court proceedings. However, it is also equally important to resolve the problem of non-employee status of gig workers by amending or introducing the new legal provisions because it is the main grass-roots problem that must be immediately taken into consideration by legislative bodies to resolve various disputes. Therefore, on the basis of the facts and circumstances discussed in this article, I may conclude that some serious and effective measures from legislative bodies as well as service providers are immediately required for trust building amongst the gig workers and solving there commercial as well as non-commercial concerns.

References

• Avtar Singh,The Indian Contract Act, Section 62
• Avtar Singh, Contract And Specific Relief (12th Edn 2017)
• Shepherd and Wellington, Contracts And Contract Remedies (4th Edn) 805
• https://supremoamicus.org/wp-content/uploads/2022/01/Haini-Tayal-.pdf
• https://www.barandbench.com/law-firms/view-point/regulatory-framework-and-the-protection-of-basic-rights-of-gig-workers