THE LEGAL STATUS OF GIG WORKERS IN INDIA

Abstract

The gig economy has emerged as a significant driver of economic growth in India, offering flexible work arrangements via digital platforms such as Uber, Ola, Swiggy, Zomato, and Amazon Flex. While these platforms provide opportunities for income generation, they raise critical concerns about job security, social protection, and workers’ rights. This article examines the legal status of gig workers in India, analyzing the emerging legislative framework—particularly the Code on Social Security, 2020, and Rajasthan’s pioneering state-level legislation—while identifying gaps in labor protections. It explores judicial developments, the challenges of employment classification, and the urgent need for comprehensive reforms to ensure fair wages, social security, and collective bargaining rights for India’s growing gig workforce, projected to reach 23.5 million workers by 2030.

I. Introduction

In this article, we examine the legal protections available to workers in India’s platform economy. A gig worker refers to an individual who engages in income-earning activities outside traditional long-term employment contracts, often mediated by digital platforms. The Code on Social Security, 2020 defines a “gig worker” as a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationships.[1]

The features of gig work include flexibility in work hours, absence of formal contracts, payment per task or assignment basis, and lack of traditional employment benefits like health insurance, paid leave, or pensions. It is clearly seen that this model has both benefits and detriments.

Gig workers, comprising delivery agents, drivers, freelancers, and similar workers, operate outside traditional employer-employee relationships. While the gig economy offers opportunities for income generation, it raises critical concerns about job security, social protection, and workers’ rights.

Globally, the legal status of gig workers has sparked debates on the misclassification of employment, leading to legal reforms in several countries. In India, the legal framework surrounding gig workers is still evolving. Although some recent legislation recognizes their existence, many issues—such as the absence of collective bargaining rights, lack of social security, and ambiguity regarding their employment status—remain unaddressed.

According to a 2022 NITI Aayog report titled India’s Booming Gig and Platform Economy, the gig workforce is expected to expand to 23.5 million workers by 2030.[2] India hosts some of the largest platform companies globally, making it one of the largest gig economies. Sectors such as logistics, ride-hailing, food delivery, freelance IT services, and e-commerce have become heavily reliant on gig workers.

II. Categories of Gig Workers

Gig workers in India typically fall into two categories:

(1) Platform Workers: Those who access work through online platforms, such as food delivery executives and ride-hailing drivers.

(2) Non-Platform Gig Workers: Those engaged in freelancing or project-based work outside digital platforms.

What unites them is the precariousness of their work. Unlike traditional employees, they often have no guarantee of minimum wages, social security, job stability, or collective bargaining rights.

III. The Question of Legal Identity: Employee or Independent Contractor?

At the center of the debate around gig workers lies the question of their legal identity: Are they employees entitled to statutory protections, or independent contractors merely offering services? The Indian courts apply the control and supervision test to determine whether an employment relationship exists.

Key Judicial Precedents:

In Dhrangadhra Chemical Works Ltd. v. State of Saurashtra,[3] the Supreme Court held that the key factors in determining employment are the degree of control and supervision exercised over workers.

In Secretary, Haryana State Electricity Board v. Suresh,[4] the Court held that mere terminology in a contract cannot negate an employer-employee relationship if the substance of the relationship reflects such a connection.

Applying These Tests to Gig Workers:

Though platform companies claim that gig workers are independent contractors, several aspects challenge this classification:

Algorithmic Control: Platforms regulate gig workers’ access to jobs, pricing, and even their ability to remain on the platform through ratings and deactivations.

Economic Dependence: Many gig workers are financially dependent on these platforms for their primary income.

Lack of Bargaining Power: Contract terms are usually non-negotiable, dictated unilaterally by platforms.

Despite these factors, the Indian legal system has been slow to recognize gig workers as employees, leaving them in a grey legal zone.

IV. Emerging Legal Framework for Gig Workers

1. Recognition Under the Code on Social Security, 2020

The Code on Social Security, 2020 (SSC) is the first Indian legislation to formally recognize gig and platform workers.[5] This is significant because it acknowledges gig workers as a distinct category within the Indian legal system.

Key Definitions (Section 2):

Gig Worker: A person who performs work outside the traditional employer-employee relationship and earns from such activities.

Platform Worker: A gig worker who performs work using an online platform to offer goods or services.

Key Protections:

Social Security Schemes: The government can frame welfare schemes for gig and platform workers covering life and disability cover, accident insurance, health and maternity benefits, old-age protection (pension), education for children, and skill upgradation.

Funding Mechanism: Aggregators (e.g., Uber, Swiggy) are required to contribute 1% to 2% of their annual turnover toward these welfare schemes (subject to a cap). Additional funding may come from central or state governments or other sources.

Mandatory Registration: Gig and platform workers must be registered to avail the benefits under the Code.

Limitations of the Code:

These benefits are not automatic and depend on government schemes being designed and implemented. The Code does not provide gig workers with rights to minimum wages, job security, overtime pay, or protection against unfair dismissal. Workers are not classified as “employees” or “workers” under other Indian labor laws, thus excluding them from core labor protections under the Minimum Wages Act, 1948, Industrial Disputes Act, 1947, Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, Payment of Gratuity Act, 1972, and Trade Unions Act, 1926.

2. State-Level Initiatives: Rajasthan’s Pioneering Step

In 2023, Rajasthan became the first Indian state to enact the Rajasthan Platform-Based Gig Workers (Registration and Welfare) Act.[6]

Salient Features:

The Act mandates the registration of gig workers, creates a welfare board to administer social security schemes, and imposes a welfare cess on platform aggregators. This development may inspire similar legislative moves by other states such as Karnataka and Tamil Nadu.

3. Judicial Developments

In 2021, the Indian Federation of App-based Transport Workers (IFAT) filed a petition before the Supreme Court of India seeking recognition of gig workers as employees and extension of social security benefits under the SSC 2020.[7] Though the case is pending, it marks a significant move toward asserting gig workers’ rights through judicial channels and could potentially reshape gig worker rights in India.

V. Key Issues Still Unaddressed

Despite these legislative and judicial developments, several critical gaps remain:

1. Minimum Wages: There is no legal guarantee of minimum wages for gig workers. Many earn less than statutory minimum wages when accounting for time spent waiting for assignments, fuel costs, and platform commissions.

2. Job Security: Gig workers have no protection against sudden termination or deactivation from platforms.

3. Working Conditions: There is no regulation of working hours or rest periods.

4. Collective Bargaining Rights: There is no formal recognition for unions of gig workers. Although informal unions like IFAT and Swiggy Delivery Boys’ Unions have emerged, there is no formal recognition of their right to collectively bargain.

5. Algorithmic Transparency: Platform workers are subjected to algorithmic supervision. Apps dictate when and where to work, how much to charge, and who gets priority access to gigs. Opaque algorithms often control workers’ economic fate with minimal accountability, yet there is no regulation of these systems controlling work allocation and pay.

VI. Implementation Challenges

Even where laws exist, several practical obstacles remain:

Lack of Data: There is insufficient data on the number and working conditions of gig workers.

Poor Awareness: Many workers are unaware of their rights under existing legislation.

Platform Reluctance: Platform companies show reluctance to comply with their obligations under new laws.

VII. The Way Forward: Reimagining Labor Law for the Digital Age

To adequately protect gig workers, India must embrace a bold, reform-oriented approach:

1. Broaden Legal Definitions of Employment: Introduce an intermediate legal category (such as “dependent contractor”) for gig workers, ensuring partial protections like minimum wages and social security.

2. Enforce Algorithmic Accountability: Mandate transparency in algorithmic decision-making related to pay, work allocation, and deactivation.

3. Guarantee Minimum Wages for Gig Workers: Adopt regulatory frameworks that ensure gig workers earn at least minimum wages, factoring in working hours, fuel, and other incidental costs.

4. Recognize Collective Bargaining Rights: Reform trade union laws to allow gig workers to organize, bargain, and negotiate with platforms.

5. Robust Social Security Infrastructure: Fully implement the SSC 2020’s social security schemes, with transparent funding and dedicated grievance redress mechanisms.

6. Encourage State-Level Legislative Experiments: Rajasthan’s Act should serve as a blueprint for other states, adapted to local labor market dynamics.

VIII. Conclusion

While gig workers in India have gained formal legal recognition under the Code on Social Security, 2020, and Rajasthan’s pioneering law, most fundamental labor protections—such as fair wages, job security, and bargaining rights—remain absent. Gig workers are legally invisible when it comes to basic labor protections like fair wages, job security, or safe working conditions.

India is at a crucial turning point. Whether gig workers will remain digital day laborers or gain full-fledged labor protections depends on future court rulings, proactive policymaking, and the political will to ensure a fair and dignified platform economy. The expansion of the gig workforce to an estimated 23.5 million workers by 2030 makes urgent reform not merely desirable but essential for social justice and economic stability.

References

[1] Code on Social Security, 2020, No. 36 of 2020, § 2(35), INDIA CODE (2020).
[2] NITI Aayog, India’s Booming Gig and Platform Economy (2022), available at https://www.niti.gov.in.
[3] Dhrangadhra Chemical Works Ltd. v. State of Saurashtra, AIR 1957 SC 264 (India).
[4] Secretary, Haryana State Electricity Board v. Suresh, AIR 1999 SC 1160 (India).
[5] Code on Social Security, 2020, No. 36 of 2020, INDIA CODE (2020).
[6] Rajasthan Platform-Based Gig Workers (Registration and Welfare) Act, 2023, Raj. Act No. 3 of 2023 (India).
[7] Indian Federation of App-based Transport Workers v. Union of India, W.P. (C) No. 1114/2020 (Supreme Court of India) (pending).