India’s labour law reforms a threat to gig workers: Extending social security benefits need of hour

There is a pressing need to address the provision of social security benefits to gig workers in a sustainable manner, with roles and responsibilities of all stakeholders clearly and equitably defined.

Children of migrant workers wearing protective face masks wait to cross the border to their home state of Uttar Pradesh, during an extended nationwide lockdown to slow the spread of the coronavirus disease (COVID-19), in New Delhi. (Courtesy: Reuters photo)
  • Soumya Jha and Ulka Bhattacharyya

India is currently witnessing the COVID-19 pandemic spreading rapidly. Gig workers, who contribute
significantly to India’s workforce, have in this scenario, either been operating at the forefront, serving
essential needs of the locked-down population, or have travelled back to their native places having no source of income. In either case, gig workers face a future of uncertainty.

While some companies have been providing gig-work partners financial and medical reliefs, in the scenario of an imminent economic recession, immediate measures on part of the government may be needed to stem the immense human costs of this pandemic. A relief package announced by the Union Government in March addressed concerns of organized sector workers and building and construction work, but there is no mention of measures directed at gig workers yet.

This stands in contrast to the approach of other nations. The United States Senate recently passed a stimulus bill creating a ‘Unemployment Assistance Program’ and providing jobless benefits to individuals including gig workers. Canada proposed legislation to establish the ‘Canada Emergency Response Benefit’ to support workers, including the self-employed, and otherwise ineligible for employment insurance.

India last year introduced the draft Social Security Code, 2019, which takes the first step in recognizing the need to provide social security to the unconventional ‘gig’ workforce, operating outside the confines of the traditional employment relationships. The Draft Code is currently under consideration by a Parliamentary Standing Committee on Labour and will likely be enacted soon. With the COVID-19 pandemic bringing into focus the plight of gig workers, the Draft Code requires critical examination by the Standing Committee, to identify and highlight gaps, which need to be addressed, so that the interests of all stakeholders are met.

At a time when labour laws are in the limelight with States creating multiple relaxations in India’s labour law regime, the Draft Code’s potential passage will be a significant development.

Definitional challenges

The Draft Code demonstrates lack of clarity in defining critical terms including ‘aggregator’, ‘gig worker’,
‘platform work’, and ‘platform worker’. A ‘gig worker’, for instance, is defined as someone who ‘earns from such activities outside of traditional employer-employee relationship’, without indicating how exactly a gig worker is identifiable.

Globally, a more nuanced understanding of ‘gig work’ prevails. While the ILO explains it as ‘crowd-work’ or ‘work on-demand via apps’, the State of California has laid down the ‘ABC test’ to identify beneficiaries of work-related rights and protections. The European Parliament, too, passed a Directive on ‘Transparent and predictable working conditions in the European Union’, under which beneficiaries of social security are identified by the duration and nature of their work in a week. Unlike the ABC test and EU Directive, the Draft Code does not lay down any clear test or threshold to identify a ‘gig worker’, the absence of which may be problematic, especially at the time of implementation.

Apart from definitional challenges, the exact status of a ‘gig worker’ remains unclear, since provisions
relating to them mostly fall within the Chapter on ‘Social Security for Unorganized Workers’ under the
Draft Code, while ‘gig worker’ and ‘unorganized worker’ are defined separately, curiously. Resultantly,
provisions on gig workers are spread across the Draft Code, in a fragmented fashion, without much thought for coherence.

Multiple social security mechanisms

The Draft Code seems to contemplate three separate social security mechanisms for gig workers. This is by empowering the Central Government to: frame schemes for gig workers and their families via the ESIC framework, constitute a Social Security Fund for unorganized workers, gig workers and platform workers, and frame social security schemes for gig workers.

While the Draft Code’s likely intent may have been for the proposed Social Security Fund to act as a funding source for the social security schemes, this inter-relationship is unclear presently, and creates avoidable confusion.

The interaction of these frameworks under the Draft Code necessitates clarification now, and not through subsequent subordinate legislation. This is desirable not only for gig workers, but also for aggregators who would require clarity on their exact roles and responsibilities in the operation of the contemplated social security mechanisms.

The ongoing Covid-19 pandemic has offered an urgent impetus to the enactment of the Draft Code to
address the immediate concerns of extending social security to gig workers, who are tirelessly operating at the forefront by serving the needs of India’s locked-down population.

Though it still remains to be seen how the Standing Committee examining the Draft Code, addresses
persisting concerns, there is no doubt that there is a pressing need to address the provision of social security benefits to gig workers in a sustainable manner, with roles and responsibilities of all stakeholders clearly and equitably defined. There is no time to waste.

  • Soumya Jha and Ulka Bhattacharyya are Research Fellows at Shardul Amarchand Mangaldas & Co, New Delhi. Views expressed are the authors’ own.

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

Most Read In Economy