Why gig economy needs a new labour gig

Updated: September 26, 2019 7:15:56 AM

A good starting point of legislative measures will be an acceptance of the changed nature of the employee-employer relationship within the gig economy paradigm

Countries around the world are waking up to the need for re-orienting their labour laws to address these iniquities. (Representational image)Countries around the world are waking up to the need for re-orienting their labour laws to address these iniquities. (Representational image)

By Sarayu Natarajan & Alok Prasanna Kumar

California recently passed an important legislation classifying gig economy workers (such as Uber drivers) as “employees” of the platforms on which they seek work, that is, only if such companies have control over the hours and nature of work. Workers can, now, claim benefits under existing labour laws. While labour groups hail this as a victory, platforms claim that this will reduce flexibility.

The legislative intervention comes at an important juncture in history. The future of work, and workers, is poised to change forever. Thus, it becomes important to explore the nature of change and the ensuing considerations for policymakers. The changes expected will require a very different kind of labour law that will need to balance the interests of employers and workers.

Labour laws have their origins in the industrial and manufacturing context, where there was a designated workplace, and an identifiable workforce. The laws were primarily focused on addressing power imbalances by mandating recognition of unions, ensuring workplace safety, and creating legal structures for peaceful resolution of disputes. They also allowed for collectivisation of labour to bargain with management for improvement in working conditions.

The next stage entrenched the rights of workers, which were won through collective bargaining. Payment of bonus, gratuity, provident fund, pensions, and health and maternity benefits were enshrined as a matter of right, with a belief that the legal relationship of employee and employer was stable, and capable of determination. However, this notion has been upturned by the rise of gig economy platforms.

The gig economy consists of platforms which connect service providers with consumers. They raise concerns that defy classification in the pre-existing legal frameworks. Companies which own these platforms claim that the service providers are not really workers or employees, but, in fact, “independent contractors”, who enjoy flexibility of work hours and freedom to choose nature of work. These “gigs” allow people to step in and out of paid work at their convenience, while also doing away with the requirement of a fixed workplace.

However, workers are always under surveillance with ratings systems, and face threats of deactivation via non-transparent means. Their earnings are also volatile, as far as monthly incomes are concerned. This is specifically disadvantageous to women, who cannot avail of benefits, like maternity leaves available under traditional laws. These concerns co-exist with workplace safety issues. In India, apps such as Urban Clap pose new challenges in terms of safe workplaces.

Countries around the world are waking up to the need for re-orienting their labour laws to address these iniquities. Initial intervention, with drivers and organisations approaching courts, have had mixed results. In the United States, for instance, different state courts took diametrically opposed views on consideration of gig economy workers as employees.

Even courts are limited by the laws and the specific legal frameworks within which they operate.

Besides, court intervention cannot change the fundamental assumptions on which the law has been drafted, namely, a fixed workplace, and an identifiable workforce. While this may matter less in claims concerning minimum wages or social security, such assumptions do matter for occupational safety. Part of the problem lies in defining workplaces since work is carried out at customers’ location.

Thus, addressing these concerns requires legislative intervention. A good starting point of such legislative measures will be an acceptance of the changed nature of the employee-employer relationship within the gig economy paradigm. This has to be done with a view to address the serious power imbalances between workers and platforms. Knee-jerk over-regulation might result in a sudden loss of livelihoods, weakening the case for regulations. On the other hand, loose and laissez-faire approaches may have little impact on the ground.

At the moment, there are few, if any, coherent legislative proposals at the Union or state level to address these concerns. The government needs to examine existing laws, including the proposed labour codes, and introduce a legislative framework, which will be conducive for gig economy platforms, and the millions engaged in providing their services.

A good starting point can be to address the gaps in the four Codes mooted by the Union government, and proposing legislative tools and policy frameworks that will be necessary to prepare for the coming future.

Natarajan is Founder, Aapti Institute, & Kumar is a Senior resident fellow, Vidhi Centre for Legal Policy. Views are personal

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