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Just Another ‘Gig’? – The Concept of Gig Economy and its Legal Implications

The author, Soumyashree Ray Chowdhury, is a fifth year BA.LLB student at ILS Law College, Pune.

John Mcafee, an English-American computer programmer and businessman had said, “The gig economy is empowerment. This new business paradigm empowers individuals to better shape their own destiny and leverage their existing assets to their benefit.” In the past decade there has been a steady growth in the number of gig workers around the world. This article examines what exactly is a ‘gig economy’ and how the workers in the sector are exploited. It also aims to understand the existing and the proposed law in not only India but the USA as well. Finally, it highlights the importance and the need for major policy reforms to promote the well-being of the workers.

A lot has been written about the gig economy and the gig workers. News articles, legal blogs, highlighting the plight of these workers and the ways to combat the existing issues have been widely discussed. But what exactly do these terms mean? ‘Gig Economy’ includes alternative and nonstandard working arrangements.[1] This can be further explained by the definition of the term provided by Merriam-webster which says “economic activity that involves the use of temporary or freelance workers to perform jobs typically in the service sector” constitutes as gig economy.[2] These workers generally fall outside the purview of the traditional employee-employer relationships but remains to be one of the most popular sectors in the labour market. A 2017 report by The Bureau of Labor Statistics showed that almost 55 million people in the US are gig workers.[3] In India, the number has been recorded to be close to 15 million, as per a report by TeamLease Services.[4] The evolution of the digital age can be said to be one of the major contributors to the growth of this sector.

‘Are Gig Economy workers being exploited?’[5], ‘The joys and perils of the gig economy’[6], ‘The Gig Economy: A platform for exploitation’[7] – these are the few headlines of articles which analyse and call attention to the rising exploitation of the workers in this particular sector. Whether it is in terms of salaries, working hours, contracts – there has been very little security provided to these workers under the Indian law. The existing labour and employment laws do not set out rules which govern these workers and hence they are made to rely purely on contractual relationships between them and their employer. Although there is scope for them to be considered as ‘contractors’ under The Contract Labour (Regulation and Abolition) Act, 1970, [The Act] in the practical sense it would make the nature of work done by gig workers very different as they would lose their autonomy to work in a freelance manner according to the provisions of the Act.

In 2019, new draft labour codes were introduced in the parliament which garnered both widespread praise and criticism. One of the codes, i.e. the Code on Social Security drew attention due to the introduction of the concept of ‘gig workers’ and it’s intention to provide social security measures to them. It defines the term ‘gig workers’[8] and as earlier mentioned, defines them as workers who fall outside the purview of traditional employer-employee relationship and hence differentiates it from the definition of ‘employee’[9] under the code. In spite of this being a well-intentioned move, a pertinent point to note is that there is no further clarity to ensure what are the factors that would help one identify who exactly a gig worker is. The terms ‘Employee’ as well as ‘Workman’ have been lucidly defined under most of the Indian labour labor laws and interpreted widely by the courts to decide on inclusions and exclusions from the definition. In the case of Jodhpur Vidyut Vitran Nigam Ltd. v. Karamchari Rajya Beema Nigam and another[10], while discussing the Employees State Insurance Act, the High Court held that the term 'employee' in section 2 (9) of the Act was not confined to those employed in a factory but extended as well to those engaged in work incidental or preliminary to work of establishment. In the same vein, the Supreme Court in the case of Officer in Charge, Sub Regional Provident Fund Office and Another v. M/s Godavari Garments Limited[11] recently revisited the definition of the same term under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. Additionally, the Delhi High Court in the decision of Divyash Pandit vs. The National Council for Cement and Building Materials[12] ruled that research work would not be skilled, unskilled, manual or technical work and such an employee would not be a workman under the Industrial Disputes Act, 1947. These cases merely serve as few examples as to how evolved these terms are in contrast to that of the term ‘gig worker’. In addition to the vague definition, there is also very little clarity on the difference between these workers and ‘unorganized workers’[13].

On a global level, there have been key developments addressing the plight of these independent workers in the USA where the California legislature passed the Assembly Bill 5 (AB5). This bill was codified on the basis of the decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles[14]. Under this law, there is a clear three-tiered test laid down to effectively differentiate between an independent contractor and an employee for the purposes of laws that are related to employee wages, working conditions and social security benefits and the same would be extended to Independent contractors if they meet the conditions to be an employee as laid down by the test. Although this law has been welcomed and is viewed as an opportunity by many existing independent contractors as a way to earn at least the minimum wage and also other employee perks & benefits[15], it has met with strong opposition from other independent contractors, journalists and truck owners. Further, it has also been alleged that the legislation does not reflect the realities of the gig economy[16]. Comparing the legislations of both India and the USA, it can be seen that though there is a significant effort taken by the legislators as well as the courts to achieve a goal which benefits the gig workers and to classify a person as an independent contractor or as an employee, there is uncertainty in its implementation process due to unclear wordings of legislations - thus posing a problem.

With the COVID-19 pandemic currently looming over us, gig workers are facing a future of unreliability both in India and worldwide. It is at this time that the value of accessible health care, flexible options to stay back home when unwell, and income support is realised. At the outset, understanding the impact that a growing gig economy might have on various countries would go a long way. While there might not be easy solutions, governments must focus on reviewing the existing laws/codes and, proposing legislative tools as well as inclusive policy frameworks which would go a long way in protecting the rights of the gig workers and ensuring the effective growth of the gig economy.

[1] What is a Gig Worker?


[3] Helping the gig economy better for the gig workers.

[4] Employment Outlook Report (2018-19)

[5] Are Gig Economy workers being exploited’ (Nov 20, 2019)

[6] The Joys and Perils of the Gig Economy (Friday, 17 January 2020)

[7] The Gig Economy: A platform for exploitation (July 4, 2018)

[8] Section 2 (35) of the Social Security Code

[9] Section 2 (26) of the Social Security Code

[10] (2003) 1 LLJ 104 (Raj.)

[11] [Civil Appeal 5821/2019]

[12] 2012 LLR 463

[13] Section 2(78) of the Social Security Code

[14] (2018) 4 Cal. 5th 903.

[15] Top 5 things you need to know about the Assembly Bill 5 [AB5], (Sep 24, 2019 4:21:10 PM)

[16] California’s new law is all bark, no bite. (Sep 20, 2019,08:46am)

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