The Gig Economy Uncovered: Addressing Vulnerabilities and Securing Rights for Indian Workers

Written By Sanika Hebalkar

India’s gig economy, driven by startups like Zomato and Swiggy, is reshaping the labour market by offering flexibility and convenience, enabling services and goods to be delivered with ease. However, while consumers benefit, gig workers, particularly delivery partners, face harsh realities such as low wages, lack of job security, and minimal protections. The rapid growth of this sector in urban areas highlights significant regulatory gaps, raising concerns about the long-term sustainability of the gig model from both economic and social perspectives.

What is the Gig Economy?

The gig economy is a labour market defined by short-term, freelance, or contract-based work, shifting away from traditional permanent jobs toward a flexible, task-based system. Gig workers, often operating as independent contractors, find jobs through digital platforms that serve as intermediaries between workers and businesses. These workers complete specific tasks for a fixed fee or hourly wage, while businesses hire them for particular jobs without committing to full-time employment. Platforms like Uber, Swiggy, and Upwork facilitate connections, handling task distribution, payment processing, and communication between workers and clients.

Who is a Gig Worker?

According to the Code on Social Security, 2020 (Section 2[35]), a gig worker is defined as someone engaged in temporary work arrangements and earning income independently. This broad definition encompasses a wide range of roles, including food delivery couriers, rideshare drivers, freelance writers, graphic designers, and other service providers who work on a project-by-project basis.

The Gig Economy in India: Present Scenario

India has become a global hub for gig workers, ranking fifth worldwide behind the USA, China, and Brazil. With nearly 15 million skilled freelancers, India represents 40% of the global freelance workforce. Experts predict the gig economy will grow by 17% annually, reaching an estimated value of $455 billion by 2024. By 2025, it’s expected that India could have 350 million gig jobs.

Despite this rapid growth, the majority of gig workers, particularly at the lower end of the pyramid, face difficult working conditions. A NITI Aayog report projects that India’s gig workforce will reach 23.5 million by 2029-30, but the model’s success has largely come at the expense of labour protections. Workers are typically classified as “partners” rather than employees, reducing labour costs for companies while denying workers access to basic rights, such as health benefits, paid leave, and fair wages.

India’s booming gig economy presents significant challenges for workers, including income fluctuations, lack of legal protection, and poor work conditions. Gig workers, especially those on Ecommerce platforms, face inconsistent earnings, no social security, and limited benefits like health insurance or retirement plans. Long hours, rapid delivery demands, and social isolation further add to their vulnerability. Current labour laws, such as the CLRA and UWSSA, fail to address the needs of platform workers, leaving them without protections. However, some companies like Big Basket, Flipkart, and Urban Company are beginning to ensure minimum wage standards for their gig workers.

Existing Framework for Gig Workers in India

India’s legal framework for gig workers is evolving as the gig economy expands rapidly. Under traditional labour laws, workers are classified into three broad categories: employees, contractual and migrant workers, and those in the unorganized economy. Employees are entitled to benefits like minimum wages, provident funds, and health insurance under laws such as the Minimum Wages Act, 1948, and the Employees’ Provident Fund Act, 1952. Contract labour is governed by the Contract Labour (Regulation and Abolition) Act, 1970, while migrant workers are protected under the Inter-State Migrant Workmen Act, 1979. Unorganized workers, including gig and platform workers, fall under the Unorganized Workers’ Social Security Act, 2008 (UWSSA), granting access to welfare schemes like life insurance and health benefits through Ayushman Bharat.

In response to the growing gig economy, the Indian government introduced the e-SHRAM portal to create a national database for unorganized workers, including gig and platform workers, to extend social security benefits. Additionally, the Social Security Code, 2020, consolidates several labour laws and defines categories like “platform workers,” establishing a National Social Security Board to recommend welfare schemes.

A significant development occurred on July 24, 2023, when Rajasthan became the first state to pass the Rajasthan Platform-Based Gig Workers (Registration and Welfare) Act. This law defines gig workers as those working outside traditional employment structures and establishes the Rajasthan Platform-Based Gig Workers Welfare Board, which registers workers, platforms, and employers. It oversees social security schemes, manages a welfare fund, and ensures legal protections for gig workers, including penalties for employers violating the law.

At the national level, laws like the Code on Wages, 2019, and the Code on Social Security, 2020, offer some protections such as minimum wages and social security. However, enforcement remains inconsistent, particularly for gig workers, who lack the same legal safeguards as traditional employees. Meanwhile, older laws like the Contract Labour Act, 1970, and Employment Compensation Act, 1923, may apply to certain contract workers but do not comprehensively address the unique needs of gig workers. The Supreme Court has also pushed for better conditions, directing governments to ensure gig workers benefit from existing welfare schemes. Rajasthan’s legislation sets a precedent for other states, potentially shaping broader protections for gig and platform workers across India.

Issues with the Present Legal Framework

The Code on Social Security, 2020 defines gig workers as individuals engaged in non-traditional, short-term, or project-based work arrangements. While the definition covers a range of roles like cab drivers and freelancers, the legal framework falls short in providing adequate protection to gig workers, particularly platform-based workers.

Two major issues persist. First, there is no specific legislation tailored to the needs of gig workers. The absence of a dedicated law leaves these workers vulnerable to exploitation and unaware of their rights and benefits. Second, there is a lack of coordination and clarity in the existing laws. The Code on Social Security dedicates only a few sections (112, 113, and 114) to gig and platform workers, with vague provisions on social security schemes and helplines, and no mandatory protections.

The code also fails to address issues like income instability. Many workers opt out of social security schemes because their irregular income prevents them from contributing. Additionally, while some schemes require employer contributions, this often leads to fewer gig workers being hired, as seen with the maternity leave provision that resulted in fewer female workers being employed.

Sexual harassment and safety concerns are also inadequately addressed. While the POSH Act covers workplace harassment, it remains unclear if it applies to digital platforms used by gig workers. This legal ambiguity perpetuates gender inequalities in the gig economy.

The Rajasthan Platform-Based Gig Workers Act, 2023 is a positive step, providing comprehensive protection for gig workers, but a national framework is still lacking. Until such legislation is enacted at the national level, gig workers will continue to face inconsistent protections and unclear legal rights across India.

1. Legal Reforms and Recognition: Amend labour codes or introduce new legislation to legally recognize gig workers, ensuring minimum wages, social security, and basic labour rights. States can adopt models like Rajasthan’s 2023 Act, which establishes a welfare board for gig workers.

2. Tripartite Governance: Create a governance structure involving the government, platforms, and worker representatives to promote dialogue, collective bargaining, and fair working standards.

3. Skill Development: Offer national programs for upskilling gig workers, helping them transition to better-paying roles of entrepreneurship through collaborations with vocational institutes.

4. Social Security: Implement the Social Security Code, 2020 to ensure gig workers receive benefits like health insurance, accident coverage, and pensions, funded by platforms, government subsidies, and worker contributions.

5. Fair Pay and Algorithmic Transparency: Ensure platforms maintain fair pay structures and transparency in task allocation algorithms, allowing workers to challenge unfair decisions.

6. Data Portability: Introduce standards allowing gig workers to transfer work history and ratings across platforms to improve mobility and reduce dependence on a single platform.

7. Heat Protection Policies: Mandate safety measures like cooling accessories, breaks, and compensatory pay during extreme weather to protect workers’ health.

8. National Gig Worker Registry: Develop a unified registry to streamline access to benefits, track workers, and ensure they receive social security and welfare programs.

9. Legal Aid and Advocacy: Establish dedicated legal services and helplines to assist gig workers in resolving disputes, understanding their rights, and navigating legal challenges.

10. Minimum Wage Guarantees: Implement a national minimum wage for gig workers, tailored to regional economic conditions, and enforced through audits.

11. Access to Financial Services: Facilitate affordable credit, savings accounts, and insurance products for gig workers through partnerships with financial institutions.

12. Gig Worker Unions: Support the formation of unions or associations to represent gig workers, enabling collective negotiations with platforms and policymakers.

13. Incentives for Fair Practices: Provide incentives like tax breaks to platforms that adopt fair labour practices and adhere to high standards of worker treatment.

14. Grievance Redressal Mechanisms: Develop accessible grievance platforms for gig workers to report issues and track resolutions efficiently.

15. Public Awareness Campaigns: Launch initiatives to educate gig workers about their rights, available benefits, and how to access support services.

16. Income Stabilization Programs: Introduce programs offering financial support or income guarantees during periods of low earnings to help gig workers manage financial instability.

In India’s evolving gig economy, balancing technological advances with worker protections is crucial. Gig work, defined by temporary, platform-based roles, often lacks adequate coverage under traditional labour laws, leaving workers vulnerable in terms of social security, health insurance, and other benefits. Key legal battles, such as All India Gig Workers Union v. Uber India, underscore the push for better recognition and benefits. The introduction of the Code on Social Security is a positive step, but it does not fully address all needs of gig workers. Internationally, frameworks like those in the EU and certain US states offer models for India. Moving forward, India’s regulatory approach should ensure fairness and inclusivity, learning from global practices to support gig workers effectively and equitably.