Employment Disputes in Gig Economy

With the rapid pace of automation and integration of artificial intelligence in the workplace, employers across the globe have found it both expensive and unnecessary to limit workforce engagement to the traditional employer-employee model. New-age on-demand business models are rapidly evolving, from taxi services to salon and spa services, from chefs to grocery delivery, all creating fluid and dynamic workforce structures, including the ‘gig workers’.  

Section 2(35) of the Code on Social Security, 2020 defines a ‘gig worker’ as someone who performs tasks or participates in work arrangements and earns from such activities independently. A gig economy is a market that depends largely on temporary and part-time roles, filled by freelancers and independent contractors instead of traditional full-time employees.

The gig economy conventionally doesn't fall in the employee-employer model, where professionals are hired and given specific designated roles in an organisation, and thereby challenges the very notion of the employment contract, blurring the distinction between an independent contractor and an employee. This distinction is of immense importance, as it determines which labour laws are applicable to gig workers, and it outlines the employer’s obligations towards gig workers with regard to wages, social security, working conditions, and the resolution of employer-employee disputes.

Disputes in the Gig Economy

Some of the disputes which are raised by the gig workers in a gig economy are as following:

·       Income fluctuation: As Most of the gig workers don't have a fixed job and neither are their jobs fixed, they have to face income fluctuations. This inconsistency often forces them to overwork to meet their ends.

·       Lack of Legal Protection & Social Security: Gig workers in India are not covered under labour laws, leaving them without legal protection against discrimination, unfair termination, or workplace harassment and are deprived of crucial benefits such as health insurance, retirement benefits, and paid leave, which leaves them with no safety nets for health emergencies, financial instability during retirement, or time off for illness or personal needs.

·       Work Conditions: Working conditions of gig jobs are detrimental to workers' health. Many drivers face demanding work hours, leading to physical exhaustion and a heightened risk of road traffic accidents. This risk is further intensified by stringent policies like the '10-minute delivery at the doorstep' enforced by some e-commerce platforms.

·       Social isolation: Gig workers often experience social isolation due to the nature of their work. Unlike traditional employees, they typically operate independently and lack a physical workplace, which limits opportunities for social interaction and the development of professional relationships and networking opportunities that can be beneficial for career growth and personal well-being.

Legal System in Place

4 labour codes were passed to provide benefits to the workers working in unorganized sector. The Code on Social Security Code, 2020, one of the 4 labour codes defines an “Unorganized Worker” under Section 2(86)12, “self-employed worker” under Section 2(75), and “platform worker” under Section 2(61). Under Section 6 of this code, a National Social Security Board is formed by the Central government which shall recommend the Central Government on framing suitable schemes for the for unorganised workers to exercise the conferred powers, and to perform the assigned functions etc. The board’s composition varies in different cases to make recommendations about the unorganized workers and Gig and Platform workers.

The Industrial Relations Code, 2020 a further codification that has been streamlined and unified the law, replaces three of India’s current labour regulations. The Code regulates terms of employment, dismissal, layoffs, strikes, lockouts, collective bargaining, trade union registration and recognition, and the resolution of labour disputes, the code intends to simplify and harmonize India’s industrial relations system. All employees - including platform and gig workers who are defined as individuals who carry out work or take part in a work arrangement outside of a conventional employer-employee relationship or contractual relationship - are subject to some of the provisions of the code. They do not, however, have the same rights and protections as ordinary employees because the code does not identify gig workers and platform workers as either labourers or employees.

The Code on Wages, 2019, and the Code on Social Security 2020, indicates a forward-thinking stride in the direction of acknowledging and attending to the distinct requirements of freelance workers. The purpose of these protocols is to provide safeguards to individuals working in the gig economy. These protections will include minimum wage requirements, social security benefits, and accident compensation. Despite these developments, such protections continue to be inconsistently enforced, primarily due to the ever-changing nature of the freelance economy.

Loopholes in the Law

The principal flaw in the current legal structure pertains to its insufficient delineation and classification of contract work, resulting in an absence of preciseness concerning the obligations of digital platforms in relation to their employees. Due to the lack of legislation specifically designed for the contract economy, employees lack knowledge regarding their rights and the procedures necessary to pursue resolution for complaints.

Also, the overlap in definitions and the layout of the Code makes it complex, particularly when it comes to which specific schemes apply to specific categories of workers. Furthermore, the code fails to address the issues regarding fluctuation in income. For example, provisions related to provident funds are only beneficial in the long run but how are workers expected to pay for these from the already dwindling income from these sources? There is a section of gig workers that do not want social security if the workers themselves have to pay for it from their income.

Conclusion

One of the pivotal challenges faced by gig workers in India is the ambiguity surrounding their employment status. Traditional labour laws often do not adequately cover gig workers, leading to gaps in social security protections such as health insurance, maternity benefits, and pension schemes. The legal definition of who qualifies as a 'gig worker' or a 'platform worker' remains a contentious issue, impacting their entitlement to fundamental labour rights.

The regulatory framework governing the gig economy in India is gradually evolving to address these challenges. The introduction of the Code on Social Security, aimed at extending social security benefits to gig workers, marks a significant step forward, but the Code falls short of providing all benefits accorded to traditional employees, such as gratuity and employee provident fund, it lays the groundwork for state-specific rules and welfare schemes tailored to the needs of gig workers.