UPSC Editorial Analysis: Draft National Law for Gig Workers
Kartavya Desk Staff
Source: The Hindu
*General Studies-3; Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.*
Introduction of Social Security for Gig Workers
• The Union Ministry of Labour and Employment is drafting a national law to integrate gig workers into social security schemes.
• The government plans to offer health insurance and retirement savings to gig workers, a critical step towards improving their working conditions.
• Aggregators, such as platform companies employing gig workers, will be required to contribute 1%-2% of their revenue to establish a social security fund. This fund will provide for health insurance, life insurance, and other essential benefits.
Welfare Board Model and Worker Registration
• The legislation proposes a welfare board model to manage the social security fund. The board will monitor gig workers’ rights and welfare, ensuring their access to social security schemes.
• Registration of all gig workers will be mandated, ensuring they are eligible for the benefits outlined in the legislation.
• Aggregators must give a 14-day notice with valid reasons before terminating any gig worker, ensuring transparency and fairness in employment practices.
• A dispute resolution mechanism will also be introduced, a necessary step to protect gig workers from arbitrary actions by employers or platforms.
Inclusion through E-Shram Portal
• Gig workers registered on the e-Shram portal, created by the Labour Ministry, will be eligible for life and accidental insurance and other benefits.
• Aggregators will be responsible for taking the lead in registering their gig workers on the portal.
Labour Codes and Gig Workers
• The four new labour codes enacted in 2019 and 2020—covering wages, social security, industrial relations, and occupational safety—rationalized India’s labour laws, merging 29 central labour laws.
• The only code that acknowledges gig workers is the Social Security Code 2020, which considers them a subset of the informal sector. This code empowers the central government to design social security schemes for gig and platform workers.
Issues with Gig Worker Definition
• The definition of gig workers in the Social Security Code 2020 places them outside the traditional employer-employee relationship. This creates ambiguity, as many gig employers are formal entities but treat gig workers as independent contractors.
• Aggregators exploit this ambiguity, deliberately evading the application of traditional labour laws.
• This loophole leads to the misconception that gig workers are independent contractors, preventing them from receiving the same protections as formal employees.
Social Security vs. Institutional Social Security
• There is a stark difference between institutional social security and social security schemes. Formal workers enjoy comprehensive benefits, such as 26 weeks of paid maternity leave under the Maternity Benefit Act. Gig workers, under social security schemes, only receive limited cash benefits for maternity leave, highlighting the disparity in entitlements between formal and informal sectors.
• Formal workers enjoy comprehensive benefits, such as 26 weeks of paid maternity leave under the Maternity Benefit Act.
• Gig workers, under social security schemes, only receive limited cash benefits for maternity leave, highlighting the disparity in entitlements between formal and informal sectors.
• The Social Security Code 2020 aims to provide gig workers with social security schemes but does not grant them full institutional social security benefits enjoyed by formal sector workers.
Exclusion from Key Labour Protections
• Gig workers are excluded from several key labour protections: Minimum wage protection: Gig workers do not enjoy the same wage guarantees as formal workers. Occupational safety and health regulations: These do not apply to gig workers, leaving them vulnerable to unsafe working conditions. Industrial Relations Code 2020: Gig workers are not included in the dispute resolution mechanisms outlined in this code.
• Minimum wage protection: Gig workers do not enjoy the same wage guarantees as formal workers.
• Occupational safety and health regulations: These do not apply to gig workers, leaving them vulnerable to unsafe working conditions.
• Industrial Relations Code 2020: Gig workers are not included in the dispute resolution mechanisms outlined in this code.
The Core Issue: Defining Employment Relations
• The lack of an explicit employment relationship for gig workers is the central challenge. Without recognizing aggregators as employers, gig workers remain outside the scope of critical labour protections.
• The ambiguity allows platforms to categorize gig workers as independent contractors, which weakens their rights and access to benefits.
Global Precedent: UK Uber Case
• The UK Supreme Court’s ruling on Uber (2021) set an important precedent. The court recognized Uber as an employer and Uber drivers as “workers,” entitled to employment protections under UK labour laws.
• This ruling highlights the need for similar steps in India to formalize gig work and ensure gig workers receive the same protections as formal employees.
Challenges with the Welfare Board Model
• The proposed welfare board model for gig workers may face challenges similar to those seen in other sectors, such as construction.
• Despite being employed by formal employers, construction workers have been classified as informal, limiting the effectiveness of welfare boards.
• Without clear employment definitions, the welfare board model may struggle to fully protect gig workers, as seen in past attempts with other informal sectors.
Way Forward
• The key challenge in regulating gig work lies in defining the employment relationship between gig workers and aggregators. Without a clear definition, gig workers remain in a legal grey area, lacking access to full labour protections.
• Once gig workers are recognized as formal employees, they can be included in the existing four labour codes.
• Formalizing gig work will ensure that gig workers receive the same rights and protections as other formal workers, including minimum wage guarantees, safety protections, and dispute resolution mechanisms.
Conclusion
The proposed legislation is a step in the right direction but will only succeed if it addresses the core issue of employment relations. Clear definitions and robust inclusion of gig workers under existing labour codes will ensure their protection and promote the formalization of this growing sector.
Practice Question:
Examine the challenges faced by gig workers in India due to their exclusion from traditional employer-employee relationships, as highlighted in the Social Security Code 2020. How does this exclusion impact their access to social security and labour protections? (250 words)