Employment LawNavigating Worker’s Rights in the Gig Economy: Legal Framework and Emerging Challenges

INTRODUCTION

Employment laws in India have historically been rooted in a framework that seeks to protect workers’ rights while balancing industrial and economic growth. They are deeply influenced by colonial-era legislation, post-independence labor rights movements, and evolving economic structures. The regulatory landscape has traditionally focused on aspects such as wage protection, social security, industrial relations, occupational safety, and working conditions. India has a vast and complex labor law regime, comprising nearly 200 state and central laws governing different aspects of employment. These laws were fragmented and often seen as overly rigid for modern labor dynamics. Recognizing the need for simplification and efficiency, the Indian government introduced Labor Law reforms through four key labor codes: The Code on Wages, 2019, The Industrial Relations Code, 2020, The Occupational Safety, Health, and Working Conditions Code, 2020, and The Social Security Code, 2020.

Despite these significant reforms, employment laws in India have been traditionally designed for formal sector employees. The rise of the gig economy has created a pressing need for new legal frameworks that recognize non-traditional workers and address the challenges they face.

While these reforms aim to bring clarity and inclusivity, they remain largely focused on the formal sector, leaving gig and informal workers with limited legal protections. The rapid expansion of digital platforms and app-based employment has challenged traditional labor laws, necessitating further amendments and policies to integrate gig workers into the legal framework. As employment structures evolve due to technological advancements, globalization, and shifting work models, employment laws in India must be dynamic and inclusive to ensure that the rights of all workers, both formal and informal are adequately protected. This is particularly important in the context of the gig economy, which has introduced new forms of employment relationships that do not fit within traditional employer-employee frameworks, thereby raising concerns about worker rights, benefits, and social security.

THE RISE OF GIG ECONOMY IN INDIA

A gig economy is a labor market that primarily relies on temporary, flexible, and part-time work arrangements, where freelancers and independent contractors take on roles instead of traditional full-time employees. Unlike the conventional employee-employer model, where individuals are hired for designated positions within an organization, the gig economy operates on short-term, contract-based employment. The gig economy in India has witnessed significant growth, driven by technological advancements and the rise of digital platforms like Uber, Ola, Swiggy, Zomato, and Urban Company. They include: Ride-sharing drivers, Food delivery personnel, Freelancers in IT, marketing, and design Household service providers, etc.

One of the key reasons companies favor the gig economy over traditional employment models is the ability to access a broader talent pool without being restricted by geographical proximity. With advancements in technology, remote work has become highly efficient, allowing individuals to perform tasks just as effectively from home. Additionally, the gig economy is expanding across various sectors, from low-skill service industries to high-skill fields such as consulting, making it a prevalent model for diverse professional needs in modern society. For workers, this system offers flexibility, enabling them to choose when, how, and for how long they work. It provides opportunities for supplementary income, whether as a primary job, a side hustle, or a means of earning extra money.

The flexibility of gig work is attractive, but it also comes with challenges such as income instability, lack of job security, and absence of social security benefits.

KEY CHALLENGES IN GIG ECONOMY

In India, the gig economy has seen rapid expansion, encompassing various services such as food delivery, ride-sharing, and freelance work. However, this growth has outpaced the establishment of regulatory frameworks designed to ensure fair and safe working conditions for gig workers. Some of the key challenges they encounter include:

• Income Instability: Since gig workers do not have permanent jobs or guaranteed assignments, they often face fluctuations in their earnings. This financial uncertainty frequently compels them to work excessively to sustain their livelihoods.
• Lack of Legal Protection and Social Security: Gig workers in India remain outside the purview of labor laws, leaving them unprotected against issues such as discrimination, unjust termination, or workplace harassment. Additionally, they are deprived of essential benefits like health insurance, retirement plans, and paid leave. The absence of these safeguards makes them highly vulnerable, with no financial security for medical emergencies, old age, or unforeseen personal circumstances.
• Challenging Work Conditions: Many gig workers, particularly drivers, endure long and strenuous working hours, which can lead to physical exhaustion and an increased risk of road accidents. The pressure is exacerbated by stringent policies such as the “10-minute doorstep delivery” mandate by some e-commerce platforms, which forces delivery personnel to rush, endangering their safety. The continuous stress of meeting tight deadlines contributes to chronic fatigue and burnout, making gig work physically and mentally demanding in the long run.
• Social Isolation: Due to the independent nature of gig work, many workers experience a lack of social interaction. Unlike traditional employees, they do not have a shared workplace, reducing opportunities for networking and professional relationships. The absence of a communal work environment deprives them of workplace camaraderie and support, which could otherwise enhance their career prospects and overall well-being.

EVOLVING LEGAL FRAMEWORK FOR GIG WORKERS IN INDIA

In 2019, the Indian government introduced four new labor codes to consolidate 29 existing central laws. These include:

1. Code on Wages, 2019 – This legislation unifies four previous wage-related laws and applies to all employees. The central government sets wages for sectors like mining and railways, while state governments determine wages for other industries. It establishes a minimum wage, subject to review every five years, and includes provisions on working hours, overtime, and permissible wage deductions up to 50%. The law prohibits gender-based wage discrimination, with violations punishable by up to three months of imprisonment and a fine of ₹1 lakh.
2. Industrial Relations Code, 2020 – This Code raises the employee threshold for mandatory standing orders from 100 to 300 workers, simplifying the hiring and termination process. Establishments with more than 300 workers require government approval for closures, layoffs, or retrenchments. It mandates a 60-day strike notice and prohibits strikes during and 60 days after tribunal proceedings. Additionally, it introduces a re-skilling fund, requiring employers to contribute an amount equal to 15 days’ wages for retrenched workers.
3. Code on Social Security, 2020 – This Code consolidates laws on employee benefits such as provident funds, pensions, and insurance. It broadens the definition of employees to include gig and platform workers, ensuring their access to welfare schemes. However, implementation remains inconsistent across states.
4. Code on Occupational Safety, Health, and Working Conditions, 2020 – This legislation revises the definition of a factory to include establishments with at least 20 workers using power and 40 without. It removes workforce limits for hazardous industries and applies to contractors employing 50 or more workers. The law mandates an eight-hour workday and allows women to work in all industries, including night shifts, with necessary safety provisions. Employers must issue appointment letters, while interstate migrant workers earning up to ₹18,000 per month gain access to ration portability but lose temporary housing benefits. The Code also introduces a journey allowance for travel from their home state to their workplace.

State-Specific Developments

On July 24, 2023, Rajasthan became the first Indian state to enact the Rajasthan Platform-Based Gig Workers (Registration and Welfare) Act, aimed at regulating gig and platform-based workers. It defines gig workers as individuals earning outside traditional employment through contract-based work. The law establishes the Rajasthan Platform-Based Gig Workers Welfare Board, responsible for registering workers, aggregators, and primary employers, overseeing social security schemes, and managing a welfare fund. Workers can seek legal recourse in case of statutory rights violations, while non-compliance by businesses can result in penalties. This Act is a significant step in recognizing and securing rights for gig workers, preceding the National Social Security Code of 2022, which is yet to be fully implemented across states.

Judicial Intervention:

On June 14, 2021, the National Human Rights Commission (hereinafter referred to as “NHRC”) filed a writ petition before the Hon’ble Supreme Court, seeking improved working conditions for gig, platform, and migrant workers. In response, the Supreme Court directed the central and state governments to expedite the registration process to ensure these workers benefit from government welfare schemes. Additionally, all state governments were instructed to submit affidavits detailing their plans for distributing dry rations under the “Atma Nirbhar Bharat Scheme”, aiming to provide relief to unorganized workers facing economic hardships.

ISSUES WITH THE PRESENT LEGAL OUTLAY

Section 2(35) of the Code on Social Security, 2020 defines a gig worker as an individual engaged in work arrangements that do not follow the conventional employer-employee structure, earning independently from such engagements. Simply put, gig workers take on short-term or temporary contractual jobs, including roles such as cab drivers, freelancers, and designers who offer specialized services on a project basis.

There are two significant challenges within the existing legal framework concerning gig workers. The first issue is the absence of dedicated legislation that directly addresses their needs and protects them from exploitation. Without specific laws in place, gig workers are not only vulnerable to unfair treatment by employers but also lack awareness of their rights and available benefits.

The second challenge lies in the fragmented and uncoordinated labor laws governing gig workers. While Chapter IX of the Code on Social Security, 2020 pertains to the unorganized workforce, only Sections 112, 113, and 114 explicitly address gig and platform workers.

• Section 112 allows government bodies to establish facilitation centers and helplines for gig workers, outlining their roles and responsibilities.
• Section 113 mandates the registration of unorganized workers with the central government, which is a prerequisite for availing benefits under any government scheme.
• Section 114 empowers the Central Government to introduce social security schemes for gig and platform workers covering areas such as life and disability insurance, accident coverage, health and maternity benefits, old age protection, and crèche facilities. However, these schemes are discretionary rather than mandatory, with funding sourced from the central or state governments, corporations, workers, or a combination of these entities.

The law also fails to address income instability, which is a major concern for gig workers. Many social security schemes require employees to contribute a fixed amount from their income each month, which then accumulates into a social security fund. However, given the already irregular and low earnings of gig workers, many opt out of these schemes, leaving them without protection in the long run. Furthermore, the obligation on employers to contribute to such schemes has had unintended consequences—instead of improving worker benefits, companies are reducing the number of hires to avoid additional financial liabilities. A similar trend was observed when the government mandated maternity leave for female gig workers, which instead of improving their working conditions, led to fewer employment opportunities for women in gig jobs.

Another critical concern that remains unaddressed is workplace safety and protection against sexual harassment. While the Prevention of Sexual Harassment (hereinafter referred to as “POSH”) Act provides a comprehensive legal framework for workplace harassment, it is still unclear whether its provisions extend to digital workplaces used by platform workers. The lack of clarity in defining gig workspaces within existing legal protections leaves workers, especially women, vulnerable to exploitation and unsafe working conditions.

WAY FORWARD

While recent legislative initiatives in India have aimed to tackle some of the challenges faced by gig workers, significant gaps persist in safeguarding their rights and ensuring fair treatment. The gig economy, which thrives on temporary, flexible, and often unstable work arrangements, poses distinct challenges that conventional labor laws have struggled to accommodate. The introduction of four new labor codes in 2019 and 2020 marked a step toward streamlining and modernizing India’s labor regulations.

The primary need of the hour is to ensure that platforms contribute to workers’ provident funds, insurance, and pension schemes, implement minimum wage protections or guaranteed earnings for gig workers, define gig and platform workers in labor laws, distinguishing them from traditional employees, recognize gig workers’ right to unionize and negotiate with platforms and Establish a legal framework to address grievances, unfair terminations, and wage disputes.

AMLEGAL REMARKS

The gig economy has revolutionized employment patterns in India, offering flexibility and new income opportunities. However, the lack of legal protections poses serious risks to workers’ rights and social security. While the Social Security Code, 2020 is a step in the right direction, more comprehensive reforms are needed to ensure fair wages, job security, and legal protection for gig workers. By learning from global best practices, India can create a balanced framework that benefits both gig workers and digital platforms, ensuring a fair and sustainable future for the workforce.

Team AMLEGALS