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An Overview of the Legal Implications of the Gig Economy, and the Status of Gig Workers in India

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Charu Kohli
Gig Economy

The twenty-first century and the fast-paced world saw various new globalized forms of communication coming upfront, however, ‘the new way of work’ is by far the most pivotal in speeding the force of digitalization globally.  The CEO of Uber stated that the gig economy will be bigger and greater than the traditional method of work. Further, Vice Chairperson of Niti Aayog India, Shri Suman Bery stated that the gig-platform economy is at the core of this unfolding paradigm shift.

This shift is gifted due to the accelerated digitalization of novel methods of technology which has today reshaped the world. The Economic Survey of India 2020-21 has significantly noted that India has already emerged as one of the world’s largest countries for flexi-staffing which means the gig and platform work and pointed out that this form of work will likely continue to grow with the increase in e-commerce platforms and be the face of tomorrow’s India.

Gig Workers – Who are they?

The Oxford English Dictionary defines a gig to be a short-term contract or task that someone performs for monetary benefits. The gig economy is often referred to as the platform economy since the whole setup is remotely based on the web and is the process of online work. In the digitalized world gig work has shifted to the tap of buttons and the touch of a screen. That means the gig economy is a temporary or freelance job done via various platforms. The gig worker in general is when a person works for someone else without a codified long-term formal relationship.

This is the self-employed way of life where the employee works for the contractor through the medium of the Internet rather than having a physical work relationship. The work-from-home is an online work platform different from a gig because there the employee receives benefits like sick leave and insurance however the element of freedom, flexibility, and independence are missing which one is able to receive in the new way economy. The presence of gig workers led to companies hiring individuals to do certain jobs occasionally on a need basis rather than employing full-time workers.

The New Gig Economy

Gig Workers

Since the rapid growth and dynamic nature of India’s economy, its interconnectedness with the global economy has been proven to add a beneficial curve. The emergence of the gig economy in the Indian context is a product of increased demand for services that the traditional employment ways were unable to cover. The speed of the process of digitalization has grown rapidly around the world and led to the transformation of societies at large and ushered the slow-paced world into a new economic revolution with significant implications for the future of work and employment. India has twin advantages, firstly having a favorable demographic structure along with amplified and skilled human resources, and secondly the rapid proliferation of digital technologies positions it to be at the forefront of this economic revolution. 

Although the concept of gig workers is relatively new in India the gig economy was estimated in 2019 to be worth $2 trillion annually and is even expected to expand at a 7% rate annually over the next decade. The gig economy which was earlier perceived to be just an occasional job has now taken over the Indian grounds by storm. It is now an entire way of work system that allows the companies to hire people on a need basis and pay them less than a full-time worker’s pay cheque.

The Challenge of Gig Economy

Gig Economy

The new economic revolution has transformed the landscape of work since now approximately 15 million people work as freelancers or contractors in India and this number is growing day by day. The exponential growth rate has led to millions of individuals now earning a living and navigating through the gig work setup. The tremendous growth has led to various challenges as well like how to frame a legal setup for the workers further the question of their incentives and safeguard procedure for the workers put them into a tight situation.

The navigation of the work setup is difficult since these challenges range from the status of employment to intellectual property rights. The new form of the economy gives freedom from restrictive employment contracts and flexibility in scheduling. independence from supervisors, no form of workplace politics but still they get fished out for work without pay, last-moment cancellation, sometimes middleman pay is too high, etc which needs proper legislation to sort out. This is why the gig economy legislature is a topic of conversation among various Indian legal experts and even policymakers.  

The status of employees is a crucial challenge and one the most important problem faced by gig workers is their role/ position in the job since they are legally employed as independent contractors and not traditional employees therefore, they are unable to avail the benefits of the company. Further, the legal structure for independent clauses varies from place to place making it far more difficult to find aid easily in times of distress. The right over their work as a duty of most gig workers is to create original content and provide services to the company which involves intellectual property like writing, software designing, graphics, editing, and making niche products.

Therefore copyright, contract negotiation as well as trademark registration are all important but lack a proper legal gateway. Further, the complexity of taxation policy poses an important challenge for the workers since they have fluctuating incomes. Every individual that earns is bound to pay tax in that regard and so a gig economy worker is also supposed to pay tax for the betterment of society. But there is no automatic tax withholding rather estimation game is played which complexes the situation.

The Solutions Available

Every legal entity foresees a need for proper legislation for the gig economy and the need to protect the company as well as the employees but there is no guidance given on this matter rather it is local bodies who formulate their own prerogative methods to find solutions to such issues. The Indian legal implication on this matter is unclear as the specific legislation for such workers is missing. Even though gig workers are not recognized under the law as distinct players in the market, e-commercial companies and sites like Urban Company, Flipkart, and BigBasket took it upon themselves to ensure that every worker at least earns the minimum hourly wage during their tenures with the company. Also, the International Bar Association has subjected the registration of gig workers as a mandate globally.

Local Gig Solution

Since there is no federal solution primarily based on gig workers the state laws are coming into action. For example, the Karnataka Act on Service Providers Act of 2013 regulates all employment services including the ones offered via online platforms. It mandates the registration of service providers with the government and further to pay taxes. Its guidelines state that health insurance coverage as well as benefits like maternity leave and pension schemes are to be handed out to all. However, this is seen as a juxtaposition law since the businesses are burdened with paying for online short termed workers. Also, small businesses face the rear end of the straw since they unlike Amazon India and Flipkart India are unable to operate without local restrictions.

Union Gig Solution

The NITI Aayog’s Final Report of 25th July 2022 on India’s Booming Gig and Platform Economy- Perspectives and Recommendations on the Future of Work looks out for the need to create a Gig Economy specific policy in order to benefit the workers. However, no such step has yet been taken by the legislative body. According to the report India’s platformed economy is in dire need of a framework that balances the flexibility offered by online portals while also ensuring the social security of the employees. This need comes out from the will to provide better employment to all in order for a developing nation like India to grow stronger and more economically powerful.

However, after the in-depth analysis of various acts related to workers, the union laws on the gig economy can be classified into employees and freelancers. The first category who are employees irrespective of short-term or long-term contracts gets protection under Industrial Dispute Act which deals with issues related to unfair dismissal, compensation, and without notice termination. Further, the piece rates workers are also covered under the act. Further, the regulation of work relationship between an employer and an employee/ worker is regulated via some sections of the Industrial Employment (Standing Orders) Act, of 1946. The Minimum Wages Act, of 1948 along with the Employees Provident Fund and Miscellaneous Provisions Act, of 1952 as well as the Payment of Bonus Act, of 1965 helps in providing benefits which are entitled to employees like minimum wages, bonus, provident fund, and maternity benefit as other monetary benefits.

Conclusion

In a nutshell, a gig worker is a person who works outside the sphere of traditional employer-employee relationships in the economy and has their work delivered via the platforms. This new age economy has opened various new gateways for individuals to venture through and create a name for themselves. This economy helps them make a living on their own terms and standards in their own time. However, the legal landscape is difficult to drive through for any gig worker due to the complexities of the economy. The need is to familiarize the workers with all the key legal considerations and for the legislation to create a more structured formal setup.

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