Introduction
The Gig economy, also known as the sharing economy, refers to short-term contracts or freelance employment as opposed to permanent positions. It includes individuals working as independent contractors, freelancers, or temporary workers who offer their services or goods to others through digital platforms like Uber, Zomato, Swiggy, Airbnb, and TaskRabbit. The gig economy has recently become popular due to its flexibility and ease of use, but it has also sparked debates around the rights and protections afforded to workers. In this blog, we will explore the gig economy’s popularity, disadvantages, and legal frameworks in both foreign and Indian contexts.
Why is the gig economy popular?
The gig economy is popular for several reasons. For starters, it gives people more freedom and control over their professional life. They can choose when, where, and how much they want to work, which can be beneficial for people with family responsibilities, students, or those seeking a second income. Additionally, the gig economy enables people to monetize their skills and resources without the need for significant capital investment, which can be appealing to those with limited resources.
Furthermore, the gig economy has led to the emergence of new business models and industries, creating opportunities for innovation, entrepreneurship, and economic growth. It has also made it easier for consumers to access goods and services at lower costs and greater convenience. Finally, advances in technology have facilitated the growth of the gig economy, allowing people to connect with potential clients or customers through digital platforms.
What are the disadvantages of the gig economy?
Despite its many advantages, the gig economy has its fair share of disadvantages. One of the most significant concerns is the lack of job security and protections for workers. Gig workers are frequently classed as independent contractors, which means they do not have the same perks and protections as employees, such as a minimum salary, overtime compensation, or healthcare coverage. They are also not covered by many labour laws, which can leave them vulnerable to exploitation or unfair treatment. Additionally, gig work can be unpredictable and inconsistent, leading to financial instability and stress for workers. They may struggle to find enough work to make ends meet or may experience sudden changes in demand, leaving them struggling to find alternative sources of income. Finally, the gig economy can also have broader social and economic impacts, such as exacerbating income inequality, reducing tax revenues, and creating challenges for regulatory agencies trying to oversee and enforce labour laws.
Foreign laws and case laws on the topic
The legal frameworks governing the gig economy vary widely across countries, and many nations are grappling with how to regulate this rapidly evolving sector. In the United States, for example, gig workers are typically classified as independent contractors, and their employment rights and benefits are limited. However, some states have enacted laws that recognize gig workers as employees, granting them more extensive protections and benefits. In California, AB5, a law that came into effect in 2020, established the ABC test, to determine whether a worker is an independent contractor or an employee and granted a minimum wage of $15 per hour for employees under the California minimum wage law. The NYC Department of Consumer and Worker Protection (DCWP) has suggested that app-based restaurant delivery workers in New York City receive a minimum pay rate of no less than $23.82 per hour on average by 2025. In Europe, the legal landscape is more complex. Some countries, such as the Netherlands and Denmark, have created hybrid models that offer a middle ground between traditional employment and gig work. Other nations, such as France and Spain, have enacted legislation that classifies gig workers as employees and grants them corresponding rights and benefits. One notable case in this area of law is the recent decision by the UK Supreme Court in the case of Uber BV v Aslam. In this case, it was decided Instead of being independent contractors, Uber drivers were considered “workers,” and as such were entitled to benefits like holiday pay and the minimum wage. This decision has significant implications for gig companies operating in the UK and may lead to similar rulings in other jurisdictions.
Indian laws and case laws that regulate the topic
In India, the gig economy is governed by a patchwork of laws, and the legal status of gig workers remains a subject of debate. Generally, instead of being considered employees, gig workers are categorized as independent contractors, thus they are not entitled to the same protections and benefits as regular workers. However, there have been some recent developments in Indian law that may provide greater protections for gig workers.
- Social Security Benefits
The most significant legal development in recent years is the Code on Social Security, 2020, which was enacted in September 2020. The law seeks to provide social security benefits to gig workers, including those working in the platform economy. The law defines gig workers as “platform workers” and requires platform companies to contribute to a social security fund on behalf of their workers.
The law provides for gig workers to receive benefits such as health insurance, disability insurance, and maternity benefits. Additionally, it creates a framework for the registration of gig workers and platform companies, which will enable gig workers to access social security benefits.
In addition, some gig companies in India have taken steps to provide benefits to their workers. For example, Ola has launched a program called “Chalo Befikar” that provides free insurance to its drivers, covering accidents, disability, and hospitalization. Zomato has also launched a program called “Zomato Gold Support Fund” that provides financial assistance to its delivery partners who are impacted by COVID-19
- Minimum Wages
In India, there is no national minimum wage for gig workers. Under the Minimum Wages Act, 1948, all workers in India are entitled to receive a minimum wage. However, the act has traditionally not applied to gig workers, who have been classified as independent contractors. In 2018, the government issued a notification stating that all “gig workers, platform workers, and workers in the unorganized sector” should be paid minimum wages.
The minimum wage is determined by the state government, and many states do not have a minimum wage for gig workers. Some states, such as Delhi and Maharashtra, have established a minimum wage for gig workers, but the rates vary depending on the work performed.
- Employment Status
The status of gig workers as independent contractors or employees has been a matter of debate in India. In some cases, gig workers have been classified as employees and entitled to the benefits and protections provided to traditional employees while other times they are classified as independent contractor devoid of the benefits received by traditional employees. The Supreme Court is dealing with a PIL involving gig workers seeking employee status.
- Working Conditions
The gig economy has raised concerns about the working conditions of gig workers. In India, the government has issued guidelines for gig platforms on issues such as minimum wages, working hours, and safety standards. In 2020, the Ministry of Labour and Employment issued a draft code on the Occupational Safety, Health, and Working Conditions Code, which seeks to provide greater protections for workers in the gig economy.
Conclusion
The gig economy has transformed the way we work, creating new opportunities for flexibility, entrepreneurship, and innovation. Furthermore, it has also raised concerns about worker protections and labour rights, particularly for gig workers who are classified as independent contractors. The legal frameworks governing the gig economy vary widely across countries, with some nations granting gig workers more extensive protections than others.
In India, recent developments in the law suggest that gig workers may be entitled to greater protections and benefits in the future. The Code on Social Security, 2020, represents a significant step towards providing social security benefits to platform workers, including gig workers. Overall, it is clear that the gig economy is here to stay, and legal frameworks must evolve to provide adequate protections and benefits for gig workers. While the gig economy has many advantages, we must address its disadvantages and ensure that all workers are afforded fair treatment and protection under the law. It is not enough to simply have laws in place to protect gig workers; they must also be effectively enforced. The government should strengthen the legal enforcement mechanisms to ensure that gig workers are able to access the protections afforded to them by law. It is also important for gig platforms to take responsibility for the welfare of their workers. The industry should adopt self-regulation practices, such as establishing codes of conduct or creating internal dispute resolution mechanisms, to provide gig workers with greater protection and support.
Author(s) Name: Eshita Dhawan (Rajiv Gandhi National University of Law, Punjab)
