Understanding Gig-Workers

Gig is a slang term meaning a job for a specified period of time and it refer to the workers outside of the traditional employer-employee relationship including freelancers, workers who are employed on a contractual basis with their employers, project based work and short-term work

Concept of Gig-Economy

Gig economy is a free market system in which Freelancers, independent contractors, project based workers and temporary hires are hired for temporary positions. This can be found across every industry. Gig employees could be writers, cab drivers, photographers, food delivery personnel, e-commerce delivery personnel, service provider, accountants, tutor, artists.

Simply put it is anyone who enters into formal agreements with a company to provide services without being on the company’s payroll. Digitalization of the economy allows workforce to be mobile, so people can select temporary jobs from around the world, and employees can find the best individuals for each job without much constraints.

The gig economy saves business resource such as employee benefits, office space & training while providing employees benefits such as improved work life balance & freedom to select gigs that they’re interested in.

Despite such flexibility gig workers get modest pay, no health or retirement benefits and social security in any form. There is a blurred line between those who voluntarily work as contractors & those who are being taken advantage of by an employer that might classify someone as a contractor to get out of paying fair wages & benefits.

Current Legal Position

Currently, Indian labor & employment laws recognized three main categories of employees:

• Government employees
• Employees in public sector undertakings (PSUs)
• Private sector employees who may be managerial staff or workmen or Contractual workforce

All these employees are ensured certain working conditions, such as minimum wages under the Minimum Wages Act of 1948, a set of number of hours of work, compensation for termination, social security and other benefits.

Currently the gig workers lack the ‘employee’ status under Indian Law, thereby resulting in several restrictions, such as an inability to form unions to represent their interests, exploitative contacts.

The only thread holding them in place currently is high earning potential that most of the informal workers get against a employment contract role. However, with changing economics it is expected that the pay will undergo restructuring that will cause changes in the entire ecosystem.

Way Ahead

In 2019, The Parliament of India introduced a new code of social security fund where gig and platform workers have been officially recognized as a form of employment. The code now specifies that these employees will also enjoy the Employment benefits.

The gig workers are now expected to get protection under the new code such as minimum wages, maternity benefits, EPF funds, insurance benefits provided by state run employee’s states insurance corporation etc.

It mandates the registration of both gig workers and platform workers on the government specified online portal. The conditions for registration are:

• Worker should complete sixteen years of age but has not attained the age of sixty years

• The worker has worked for not less than ninety days during the preceding twelve years

• The worker must submit a self-declaration electronically or otherwise in a specific format and manner containing all the relevant information as prescribed by the Central Government

• Every eligible unorganized worker, gig worker or platform worker shall make an application for registration in the specified form along with relevant documents including Aadhaar number

The changes are expected to increase the total cost for Companies when engaging Gig workers while also reducing some of the flexibility benefits such as ability to scale up or down as needed. However, one key thing to keep in mind is that Social Security is one key benefit that is expected to be rolled out for all Gig-Workers in India.

Companies will need to evaluate clearly the benefits and costs of engaging Gig-workers and Contract Employees before deciding on employment model for future projects.