Home Code of Social Security, 2020 Case analysis : Indian Federation of App-Based Transport Workers (IFAT) vs. Union...

Case analysis : Indian Federation of App-Based Transport Workers (IFAT) vs. Union of India and Others

December 17, 2021

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This article is written by Sukanya Mitra, pursuing Certificate Course in Advanced Civil Litigation: Practice, Procedure and Drafting from Lawsikho.com.

This article has been published by Abanti Bose.

Table of Contents

Introduction

India is one of the largest consumers of smartphones. We have access to the world at our fingertips, through applications or more popularly, “apps”. There are apps for every single aspect of our lives, from personal life, like tracking sleep, eating healthy, etc to work like collaborating with a team to social life and much more. Some of the big names are Ola, Uber, Swiggy, and Zomato. With movement restricted due to the Covid-19 pandemic, apps have become even more crucial. In September 2021, the Indian Federation of App-Based Transport Workers (IFAT) filed public interest litigation (PIL) in the Supreme Court seeking to secure social security benefits and economic reliefs to app-based workers. The PIL has not come up for hearing yet. This article examines the grievances of the workers raised in the PIL, the applicable statutory provisions, and relevant judgments.

Background

Ola and Uber drivers in Hyderabad were on strike, back in January 2017, demanding that the companies stop registering new drivers because the existing drivers were not making enough money due to the companies’ unfair practices. They were joined by drivers from Delhi-NCR, Mumbai, Bangalore, and Kolkata. Drivers were demanding

better share in the journey fares,
better rates in light of rising fuel prices,
relaxed hours to reach targets and,
accident insurance.

Earnings were already dwindling and drivers were facing hardships in paying monthly instalments (EMIs) on car loans, fuel, and maintaining their cars.

App-based drivers on strike in Mumbai in October 2018 demanded:

companies to ensure drivers earned a minimum of Rs. 15,000 per day,
companies must share maintenance costs of cars,
companies to fairly question drivers before blacklisting them and slashing their income based on customer complaints,
increasing base fares in proportion to the type of car.

Strikes continued on and off in major cities through 2018, 2019, and 2020. Though Ola and Uber conducted talks with trade unions and associations of their drivers, there has been no concrete resolution as of yet.

A need was felt to address the demands of app-based drivers on a national level. After 2 years of work and meetings among various stakeholders, such as drivers, trade unions, etc, from across the country, the IFAT was built. The IFAT was voted into existence in Mumbai in December 2019 by app-based drivers, leaders, and activists delegates. The process of building a national federation for app-based transport workers was aided by the International Transport Workers’ Federation (ITF), Asia-Pacific, and Biju Mathew, the secretary of the New York Taxi Workers Alliance (NTWA). The main aim of the IFAT is to move forward with the demand of regulating the app-based taxi sector and to ensure that app-based drivers have social security benefits under new labour codes.

Between July and November 2019, the IFAT and ITF jointly conducted surveys into the health and safety of app-based drivers. The Covid-19 pandemic was in full force and so was the national lockdown during this period. The research took into account access to health insurance, safety nets in case of emergencies, expenditure on healthcare, and even harassment faced by drivers and mental health. A report was published in August 2020. The key findings are:

App-based drivers are termed as “independent contractors” and not employees in their contractors with the companies. This is allowing multi-national companies to circumvent their responsibilities in providing social security to the drivers who work up to 20 hours every day.
A large section of the research group had no form of social security or protection. As drivers, accidental insurance is a minimum requirement that must be provided by the companies.
Due to the long working hours, drivers get less than 6 hours of sleep. Further, backache, neck stiffness, waist pain, and liver disease are the most common ailments reported by drivers.
Apart from physical pain, drivers often face harassment, abuse, and even violence from customers, intimidation from authorities, and harassment from the companies themselves. This takes a toll on their mental health. Drivers reported feeling irritable from work, which carries into their home life and negatively impacts interactions with their families. There are no measures offered by the companies to tackle mental health issues. Drivers do not get any support from companies when dealing with unreasonable customers and authorities.
Drivers’ earnings have been adversely impacted by rising fuel prices, changes in the rate of fares, and cutbacks on bonuses and incentives. Drivers reported that there is no transparency as to how rates are fixed, how bonuses and incentives are calculated and distributed, and how the App’s algorithm decides which driver is offered to take up a ride.

The national lockdown to tackle the Covid-19 pandemic forced vehicles off the roads and permanently shut many small and medium businesses. Earnings of app-based drivers depend on the number of rides completed in a day. With the country at a standstill and no support from the companies, many drivers and their families have been pushed to poverty.

As the economy began to open up with safety measures in place, app-based workers of Ola, Uber, Swiggy, Zomato, Rapido, and Dunzo across the country protested against the lack of health safety and sanitization measures by the companies in June 2020. The workers alleged that they were not provided with adequate Personal Protective Equipment (PPE), face masks, sanitizers, etc. App-based drivers also demanded face shields and partitions between them and the passengers. App-based companies are still not providing health insurance to their workers.

Facts of the case

Based on their findings and looking at the worsening conditions of app-based workers, the IFAT initiated a PIL against the Union of India, Swiggy, Zomato, Ola, and Uber. The demands of the IFAT are:

Social security benefits.
Directions to app-based companies to provide economic relief to workers in the manner of cash transfers of Rs. 1,175/- per day for app-based drivers and Rs. 675/- per day for other app-based workers until the 31st December 2021 or until the pandemic subsides.
Directions to financial institutions, banks, and non-banking financial companies (NBFCs) to not seize and/or auction vehicles of app-based workers on failure to pay EMI of loans till the pandemic subsist and further, to penalize these institutions on failure to comply with RBI circulars and the Court’s judgment in Small Scale Industrial Manufacturers Association (Regd.) vs. Union of India and others (Loan Moratorium case).

Relevant provisions

The Unorganized Workers’ Social Security Act, 2008

In the PIL, the IFAT states that app-based workers or ‘gig’ workers come under the meanings of “unorganized workers” and “wage workers” under the Unorganized Workers’ Social Security Act, 2008 (Act of 2008). Accordingly, gig workers need to be registered under the Act of 2008 to claim social security benefits.

Section 2(m): “Unorganized workers” covers a home-based worker, a self-employed worker, and a wage worker, who is working in the unorganized sector. It also includes workers in the organized sector who are not covered under any of the Acts listed in Schedule II of the Act of 2008.
Section 2(n): “Wage Workers” means a worker who works for remuneration in the unorganized sector, irrespective of the place of work;
directly through an employer or through a contractor,
whether exclusively for one employer or one or more employers,
whether in cash or kind,
whether as a home-based worker, or temporary or casual worker, or migrant worker, or worker employed by households, including domestic workers,
with a monthly wage of an amount as notified by the Central or State government, as the case may be.

The social security benefits available for workers covered under the Act of 2008 are stated in Section 3:

1. By the Central Government –

Life and disability cover,
Health and maternity benefits,
Old age protection
Any other benefit.

2. By the State Government –

Provident fund,
Employment injury benefit,
Housing,
Educational schemes for children,
Skill up-gradation of workers,
Funeral assistance, and
Old age homes.

The Constitution of India

The IFAT contended, in its PIL, that if the State does not register gig workers under the Act of 2008, it would be violative of the fundamental rights of the gig workers and leave them open to exploitation.

Article 14: Every person is guaranteed equality before the law and equal protection of the law.
Article 21: Every person is guaranteed the right to life and the right to personal liberty and can be deprived of these rights only according to a procedure established by law. The Supreme Court has interpreted Article 21 in the widest possible manner and has declared the right to livelihood, right to decent and fair working conditions, and right to human dignity to come under the purview of Article 21.
Article 23: Right against exploitation is guaranteed. Human trafficking, beggar, and other forms of forced labour are prohibited.

Additionally, some of the Directive Principles of State Policy can also be applied:

Article 39(e): The State is mandated to direct its policy particularly towards ensuring that the health and strength of workers are not abused and that citizens, because of economic necessity, are not forced to take up work not suited to their age or strength.
Article 41: The State is mandated to, as far as its economic capacity and development allow, make effective provisions for securing the right to work, the right to education, and the right to public assistance in case of unemployment, old age, sickness, disablement and in other cases of undeserved want.
Article 42: The State is mandated to make just and humane working conditions and for maternity relief.
Article 43: The State is mandated to make every effort to secure work, a living wage, conditions of work ensuring a decent standard of life, and full enjoyment of leisure and cultural opportunities to all workers, industrial or otherwise, through legislation, economic organization, or any other means.

The Code of Social Security, 2020

The Code of Social Security 2020 consolidates and amends laws relating to social security and aims to extend social security benefits to all workers, irrespective of their nature of work. Provisions relevant to the discussion are:

Section 2(35) defines a “gig worker” as a person who works and earns in an arrangement outside of the traditional employer-employee relationship.
Section 2(60) specifically includes work, outside of the traditional employer-employee relationship, where organizations or individuals use online platforms to solve problems or perform services or other activities, as may be notified by the Central Government, in exchange for payment.

The definitions of “gig workers” and “platform workers” have been criticized for being overlapping. For example, a person driving for Ola is working outside the traditional employer-employee relationship and is using an online platform to provide a service in exchange for payment. He would fall under both the definitions of “gig worker” and “platform worker”. Thus, the definition of “gig worker” needs to be made more specific.

“Social security”, under Section 2(78) includes measures to ensure access to health care and to provide security of income, particularly in cases of old age, sickness, unemployment, invalidity, maternity relief, and work injury or loss of a breadwinner. These measures are to give basic protection to employees, gig workers, unorganized workers, and platform workers.

Chapter IX of the Code provides the scheme for social security for unorganized workers, gig workers, and platform workers. To avail benefits under the Code, it is mandatory for gig workers, unorganized workers, and platform workers to be registered under section 113. Schemes for gig workers and platform workers are to be framed by the Central Government, under section 114, regarding:

Life and disability cover,
Accident insurance,
Health and maternity benefits,
Old age protection,
Crèche,
Any other benefit determined by the Central Government.

The schemes may be funded through a combination of contributions from the Central government, the State Governments, and aggregators. “Aggregators”, as per section 2(2), are digital intermediaries or market places where buyers or service-users connect with sellers or service providers. Schedule 7 of the Code provides a list of aggregators.

Table

Description automatically generated

The National Security Board constituted for unorganized workers under section 6(1), will act as the Board for gig workers and platform workers for suggesting and monitoring welfare schemes for them. For this purpose, the Board shall consist of:

5 representatives of aggregators – nominated by the Central Government,
5 representatives of gig workers and platform workers – nominated by the Central Government,
Director-General of the Employees’ State Insurance Corporation,
5 representatives of state governments.

The Code received the assent of the President on September 28, 2020. However, it has not been brought into force. Section 142 was notified on May 03, 2021, whereby an Aadhaar card is mandatory to avail benefits under the Code. On August 26, 2021, the Union Ministry of Labour and Employment developed a national database of unorganized workers, the ‘e-shram portal’, with the National Informatics Centre. The responsibility of registering workers eligible for benefits under the Code is with the states and union territories. The database is linked with Aadhaar.

Judgments relied on

The IFAT relied on the decision of the U.K. Supreme Court in Uber BV vs. Aslam on 19.02.2021. In 2016, two drivers working with Uber, James Farrar and Yaseen Aslam, sued Uber on the ground that they were “workers” under the law and the company had denied them their rights and wages. The employment tribunal ruled in favour of the drivers and held that the 40,000 drivers engaged by Uber were “workers” as per law. The tribunal further ruled that when calculating drivers’ hourly wages, the time spent waiting for rides should also be included. Uber appealed twice and lost both times. The case finally reached the Supreme Court in 2020.

The primary question was whether the tribunal was entitled to find that drivers who work for Uber through the Uber App under workers’ contracts qualify for workers’ rights such as national minimum wage, paid leaves, etc. Uber contended that drivers work as independent contractors under contracts made directly with the passenger as Uber is simply the drivers’ booking agent and hence, they do not qualify for workers’ rights.

If the drivers work under workers’ contractors, a secondary question arose that whether the tribunal was also entitled to find that the petitioners were working under such contracts whenever they logged into the Uber App and were ready to accept trips. Uber argued against this and stated that drivers were working only when they were driving their passengers to their destinations.

The Supreme Court examined the extent of power Uber exercises over the drivers in terms of rates charged, terms of the contract between Uber and the drivers, monitoring the drivers’ performance, mandating routes which drivers need to follow, and restricting personal communication between the drivers and the passengers. The Supreme Court concluded that Uber maintained strict control over its drivers so much so that to improve their economic conditions, drivers must work long hours on Uber’s terms. The Supreme Court upheld the decision of the tribunal that Uber drivers are “workers” as per law and are entitled to rights such as minimum wage, paid annual leaves, etc.

The IFAT contended that Uber, being a multinational entity, must treat all its drivers across the world the same.

The IFAT also relied on the Loan Moratorium case for reliefs in repayments of loans and EMI’s on vehicles. In this case, the Supreme Court was hearing a batch of writ petitions challenging the Central Government’s Covid-19 Regulatory Package notified by the Reserve Bank of India, vide circular dated March 27, 2021. The petitioners prayed for the moratorium period to be extended and a complete waiver of the interest accruing on the outstanding portion of term loans during the moratorium period. The Central Government further notified a Scheme dated October 23, 2021, deciding to not charge interests on loans up to Rs. 2 crores. But this relief was restricted to 8 categories of borrowers specified in the Scheme.

The Central Government stated that they had not contemplated a total waiver and only a deferred payment of interest because the amount of interest sought to be waived was over Rs. 6 lakh crores, and a substantial portion of the net worth of banks would be wiped out. The very survival of banks would be in serious jeopardy.

The Court held that it could not order an extension of the moratorium period because it was a policy decision. It could also not order a complete waiver of interest because it would have a far-reaching negative impact on the economy. The Court did, however, direct the government to waive the compound interest during the moratorium period. It further held that restricting reliefs to specific categories of borrowers was irrational.

Conclusion

A vast majority of India’s workforce is engaged in the unorganized sector. Workers are dependent on day-to-day earnings. If they do not secure any work for a day, they do not earn that day. Workers struggle to make ends meet daily and are unable to plan for the future. Adequate legislation to help workers is lacking. The grievances of gig workers resonate with all workers in the unorganized sector and hence, the decision of the Supreme Court will have a rippling effect on the unorganized sector.

References

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