India's Gig Workers Gain Legal Status - Social Security Challenges Remain

India’s Gig and Platform Workers Gain Legal Recognition

Millions of individuals engaged in gig and platform work across India have been granted legal status through recently enacted labor legislation. This represents a significant development for the nation’s workforce in the delivery, ride-hailing, and e-commerce sectors. However, the practical benefits remain uncertain, and access to crucial social security provisions is not yet guaranteed as platforms evaluate their new responsibilities.

New Labor Codes and Gig Worker Status

This recognition is a direct result of the Code on Social Security – one of four labor laws brought into effect by the Indian government on Friday, following initial parliamentary approval in 2020. Notably, this code is the sole component of the new framework specifically addressing gig and platform workers. The remaining codes, concerning wages, industrial relations, and workplace safety, do not currently extend minimum earnings, job security, or improved working conditions to this expanding segment of the workforce.

The Expanding Gig Economy in India

India possesses one of the largest and fastest-growing gig economies globally. Industry estimates indicate that over 12 million people currently participate in on-demand services, including food delivery, ride-hailing, and e-commerce package handling. This sector has become a vital employment source, particularly for young and migrant workers facing barriers to traditional job markets, and is anticipated to continue its expansion alongside the growth of logistics, retail, and hyperlocal delivery services.

Reliance on Gig Workers by Major Companies

Major companies, including Amazon, Flipkart, Swiggy, Blinkit, Zepto, Uber, Ola, and Rapido, depend heavily on gig workers to operate within India – the world’s second-largest internet and smartphone market, following China. Despite their crucial role in supporting some of India’s most successful tech businesses, the majority of gig workers historically lack traditional labor protections and access to fundamental social security benefits.

Social Security Fund Contributions

The newly implemented labor laws aim to address this disparity by formally defining gig and platform workers within the legal framework. Aggregators, such as food delivery and ride-hailing platforms, are now required to contribute 1-2% of their annual revenue – capped at 5% of payments to workers – to a government-managed social security fund.

Uncertainties Regarding Benefit Implementation

However, significant details remain unclear. The precise nature of the benefits offered, the process for workers to access them, the tracking of contributions across multiple platforms, and the timeline for benefit payouts are all yet to be defined. This raises concerns that substantial improvements in worker protections may take considerable time to materialize.

Coverage Under Existing Schemes

The Code on Social Security establishes a legal basis for gig workers to be included in schemes like the Employees’ State Insurance, provident fund, and government-backed insurance programs. The scope of these benefits – including eligibility criteria, contribution levels, and delivery methods – remains undefined and will be determined by future regulations and scheme notifications.

Social Security Boards and Worker Representation

Central and state-level Social Security Boards are being created to design and oversee welfare programs for gig and platform workers. The central board will include five representatives from gig and platform workers and five representatives from aggregators, all appointed by the government, alongside senior officials, experts, and state representatives. However, the decision-making process, the influence of worker representatives, and control over funding and benefit delivery remain unclear.

Expert Perspectives on Implementation

“We must await further clarification regarding the government’s implementation strategy for the four Codes and its objectives for gig workers,” stated Balaji Parthasarathy, a professor at IIIT Bangalore and principal investigator of the Fairwork India project. “Furthermore, we need to observe how these changes are translated at the state level.”

State-Level Variations in Implementation

Parthasarathy emphasized that labor policy in India is jointly managed by the federal and state governments. Consequently, state governments are responsible for designing, notifying, and administering the schemes necessary to operationalize the Code on Social Security for gig workers. This could lead to inconsistent access, with some states acting swiftly while others delay or prioritize other concerns.

Platform Company Responses

Platform companies have generally expressed support for the reform, while still assessing the implications. Amazon India affirmed its support for the government’s labor overhaul and is evaluating the necessary adjustments. Zepto welcomed the new codes as a positive step towards clearer regulations that protect workers while facilitating business operations.

Financial Impact and Compliance Challenges

Eternal, formerly Zomato, indicated in a stock exchange filing that the Social Security Code represents a move towards more standardized rules and does not anticipate a significant financial impact on its long-term business. However, Aprajita Rana, a partner at AZB & Partners, noted that the changes “will naturally have a financial impact” on India’s e-commerce sector due to the formalization of worker contributions.

New compliance obligations will also arise, requiring companies to register all workers with the government fund, address potential overlap with multiple aggregators, and establish internal grievance mechanisms.

Registration Hurdles and Lost Wages

A significant challenge for gig workers seeking benefits will be registering on the Indian government’s E-Shram portal, launched in 2021. As of late August, the portal had registered over 300,000 platform workers, despite government estimates of a 10 million-strong gig workforce. Trade unions are assisting workers with enrollment, but registration may result in lost wages due to the time required to complete the process.

Ongoing Concerns and Demands from Unions

“These workers often work 16-hour days,” explained Ambika Tandon, a PhD candidate at the University of Cambridge. “They simply do not have the time to register themselves on the government portal.”

CITU, along with nine other major Indian trade unions, is calling for the withdrawal of the new labor laws and has planned nationwide protests. Workers emphasize that more immediate concerns – such as fluctuating earnings, account suspensions, and abrupt account terminations – are more pressing than access to insurance or provident fund benefits.

The Debate Over Employee Status

There is an ongoing discussion regarding whether gig workers should be classified as employees. The new labor laws do not address this question, instead defining gig and platform workers as a distinct category. In contrast, other countries, such as the U.K., Spain, and New Zealand, have moved towards recognizing platform workers as employees, granting them minimum wages and other benefits.

“With this law, the Indian government has settled the debate by stating that these gig workers do not fall within the scope of employment or other protections,” Tandon concluded.

The Indian labor ministry did not respond to a request for comment.