INTRODUCTION
This article seeks to establish why the regulation of the Gig economy through legislation is premature and a typical case of putting the cart before the horse. It examines practices in various jurisdictions to further buttress the argument that regulation through litigation is not the answer.
The world of employment is undergoing a hastened metamorphosis. Traditional modes of engagement have made way for more flexible, dynamic and value-based engagement models that have benefits for both the engager and the engaged (there is a deliberate restraint from using traditional descriptors like employee and employer) are becoming the order of the day.
WHAT IS THE GIG ECONOMY?
The gig economy as defined by the Merriam Webster’s Dictionary is economic activity that involves the use of temporary or freelance workers to perform jobs typically in the service sector. Several other terminologies like on-demand economy, sharing economy, crowd-based economy, platform economy, concierge economy, have all been used to describe this phenomenon but the one that has stuck has been “gig economy”, signifying an economy dominated by gig work.
Interestingly, the proposed Social Security Code, 2020 defines Gig work. It is one of the few legislations worldwide that has ventured to do so. Section 2 (35) defines a GIG WORKER as a person who performs work or participates in a work arrangement and earns from such activities outside of the traditional employer-employee relationship.
Countries like England, USA, France, Denmark, and others have gone the route of classifying gig work under the head of employment, which may not be the right approach. The reason we say that is that the essential elements of employment are not met, and the Australian Labour Minister Tony Burke has correctly referred to these engagements as “employment-like”.
The right approach is therefore to acknowledge that gig work and employment are distinct and should not be painted with the same brush.
WHY THE GIG ECONOMY?
A one-word answer to why the gig economy would be flexibility – flexibility for both the gig engaged and the gig engagers. The primary reasons for people to undertake platform (and therefore gig) work according to the National Council Appraisal Economic (NCAE) Report published on 1st August 2023 are:
• Higher/Supplemental Income | • Regular receipt of money |
• Independence | • Preferable work environment |
• Flexible work hours | • Money in bank account |
• Easy Entry |
The benefits that the platform has by engaging gig workers are also many. It gives them easy access to a large pool of unskilled and semi-skilled workforce who are engaged and disengaged at will. It also allows them to disengage with ease with no need to pay gratuity or retrenchment compensation. Administration is also easy as the entire activity is technology led and managed, and everything is done on the platform.
The below table compares the benefits of both:
PLATFORM | GIGGER |
Easily accessible – unskilled and skilled workforce | Ease of entry – unlike employment- simplified with no focus on past record |
Earning commensurate with business/transactions | Flexible with no commitment to hours, quantum, or duration of work |
Technology governed with low administrative burden | No pressure to perform, report to a boss or justify earnings |
No retrenchment, gratuity, compliance, collective bargaining or other burdens | No tie-in in respect of exclusive employment, non-compete, etc. |
At will engagement with the ability to disengage at any point | At-will engagement with the ability to disengage at any point |
WHEN DID GIG WORK BEGIN?
Unlike the popular notion, gig work is not new in India or anywhere in the world- we have always had plumbers, electricians, drivers, agricultural workers, bidi rollers, cigar rollers, agarbatti rollers, badli workers, journalists, and coders who have been gig workers for decades
What is new is platform work – where gig work is facilitated through a technology platform. This new era has been referred to by Prof. Klaus Schwab from the World Economic Forum as the fourth Industrial Revolution which is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.
Approximately 80 Lakh Workers are registered on platforms like Zomato, Swiggy, Dunzo, Ola, Uber, Ride, EKart, Amazon Delivery, Urban Company, Delhivery and other gig platforms combined. That is approximately twice the population of Singapore. This shows how Gig work in India has seen phenomenal growth over the last 5 years in India.
WHAT ARE THE KINDS OF GIG WORK?
Broadly, gig workers fall into the following categories:
Direct Gig Workers: These individuals engage directly with consumers without utilizing a platform. For example, electrician, plumbers, etc.
Direct Platform Workers: This category involves workers who use platforms to offer services directly to consumers. They engage in transactions through the platform, with the majority of the amount going to the worker. For example, cab drivers using a platform.
Platform Workers for Third-Party Services: This group utilizes platforms to provide services, primarily executing support functions on behalf of a third party. For example, delivery partners collaborating with online delivery platforms.
WHAT IS THE LEGAL LENS OF GIG WORK?
Employment is a Master- servant relationship with a contract of service
While discussing the employer and employee relationship Justice Dharmadhikari of the Supreme Court in Ram Singh And Others Versus Union Territory, Chandigarh And Others, (2004 (1) SCC 126 said “It is necessary to take a multiple pragmatic approach weighing up all the factors for and against an employment instead of going by the sole ‘test of control’.
Gig works is a contract for service with no master-servant relationship- limited supervision and only technical control – it does not fit the definition of employment. Gig work is a contractual engagement between principal and principal, a person who needs something done and a person willing to do it. No labour rights are enforceable in the case of gig workers and only contractual rights can be enforced.
The terms of engagement are the contract entered into between the platform and the worker. Platforms provide unilateral contracts and also result in an unequal bargaining position for the worker. As platform workers are not consumers but service providers, they can’t access consumer protection laws to sort out any grievances they may have.
SHOULD GIG WORK BE REGULATED?
Undoubtedly there must be regulation of an economy that impacts the lives of over 8 million people in India. However, this is a slippery slope as the industry itself has not evolved. There must be a deliberate restraint in legislating in this area and the State must limit itself to providing social security benefits and possibly ensuring on job health and accident protection but no more. Over-legislating this area may result in a premature death or even worse, metamorphosis of the industry into something else. This is why it is a slippery slope that warrants a wait-and-watch approach.
Worse yet, it would be to consider gig work as employment. This would blur lines that have been created with the specific intent of keeping gig work flexible and easy to engage in. What is the harm in treating gig work as employment? These are two-fold. From the perspective of the engaged, it means added onus and accountability on the otherwise footloose and carefree. From the perspective of the engager, it means a large disincentive to engage persons in gig work as there are unseemly burdens, economic, administrative, and regulatory.
Rajasthan has already passed social security legislation for gig workers, Read our Article on this. Karnataka has provided insurance of 4 lakhs for gig workers. Jharkhand and Telangana have set up a committee to decide minimum wages for gig workers. Is this a good trend? Only time will tell.
CONCLUSION
In conclusion, it can be said that gig work is the future. In this post-Covid era, flexibility has replaced stability as an essential element of the quintessential “work-life”. This flexibility is not limited to work-from-home, work from anywhere but also extends to work when I want, work with whom I want and work as what I want. Gig work provides this flexibility. Employment may not. Equating both may be a disaster. Regulation must be guarded and limited.
-Aditya Kamath,
Advocate & Partner
