Gig Economy: A Legal Struggle for Inclusivity

Introduction

The accelerated growth of the gig-economy over the last few years that allows workers to be hired as independent contractors to use digital platforms as a means to provide intermediate labor for clear-cut, individual tasks has sparked fierce debate with regards to its social and economic ramifications for workers’ rights. The nature of gig-work and the uncertainty it poses within the employment arrangements is now the new “battleground” within the framework of global employment law. [1] The workers of the gig-economy are not tied down by long-term contracts as opposed to the traditional full-time jobs which provide an element of flexibility which is traditionally associated with self-employment. However, the classification of these workers as ‘independent contractors’ and the “intrinsically contingent and casual nature of work”[2] creates a sense of insecurity and uncertainty. By precluding the recognition of platform workers from a bona-fide employer-employee relationship, the workers are forced to face violations in terms of minimum wage, insurance coverage and other collective social benefits.

The erosion of rights as associated with a ‘shared economy’ can gravely endanger welfare in countries like the United States, Canada and India where essential worker protection schemes and social security laws are usually constricted for stable employment jobs. The gig economy is now described as ushering “the fourth industrial revolution”[3] as it no longer continues to be a niche area reserved for a few economic actors but has rather grown to provide greater “flexibilization of work”[4] specifically for workers who are looking to engage in several part-time jobs. However, despite the on-going paradigm shift, we notice that workers’ rights continue to remain endangered under various legal jurisdictions.

An International Perspective on Gig Workers

Until very recently, the Fair Works Act, 2009 and the Fair Work Commission Tribunal that seeks to reform the industrial relations system in Australia with the implementation of the “National Employment Standards” held that independent contractors are not subject to these regulations. By adopting a framework similar to the Indian law under the IDA, the Australian jurisprudence observes the “multi-factor test” in Hollis vs Vabu[5] to determine whether a worker is an employee or an independent contractor through the ‘amount of control’ exercised by the employer.[6] However, this dichotomy fails to grasp the duties of the workers employed within the gig economy. While the dependent workers exercise discretion with respect to their working hours and individual per tasks, the digital platform dictates the allotment, realization of work and the subsequent compensation entitled to. Hence, this binary classification undermines labor standards by overlooking the worker’s lack of bargaining power that is traditionally required under self-employment. Similarly, companies such as Uber, Lyft, Axiom and Task Rabbit in the United States and Canada, by referring to themselves as mere intermediaries disrupts the traditional labor markets through means such as approval rating to track the performance of workers and subsequent termination of contracts based on service algorithms provided by the apps. This arrangement leads to an ‘employer-like control’ in the workspace, hence placing the relationship of these independent contractors with their employers under a ‘legal gray area’.

Gig-Work in India

In 2021, a Zomato delivery executive was subjected to violence and assault by a customer when he was requesting compensation upon conveyance of goods. To avoid further aggravation, Zomato immediately choose to suspend the worker without investigating the alleged misconduct. Similarly, a recent tweet discussing the mistreatment of delivery executives by Swiggy has invoked great public disapproval. Currently within India, digital platforms such as Swiggy, Zomato, Ola and Uber refer to their workers as ‘delivery partners or independent contractors’ who utilize the resources of the service aggregators to perform the assigned specific tasks. Hence, by referring to themselves as ‘technology providers’ or internet service platforms, these companies exempt themselves from the liability that arises from gig work by placing themselves outside the arena of a traditional employer-employee relationship.

Gig work continues to be governed by commercial law which is based on the contractual claims between the employers and the workers instead of adhering to prescribed labor standards. The Indian position of law as discussed in the landmark case of Hussainbhai[7]states that in order to fall within the ambit of a worker under Section 2(s) of the IDA, the existence of an employer-employee relationship must be satisfied after taking into consideration the “amount of control and supervision” the employer exercises over the performance of the worker. However, this proves to be an arduous task for gig workers as the model of business employed by these companies provides only an illusory veil of flexibility, when in reality the work includes traits of ordinary employment. Additionally, another element that must be taken into consideration is the clause of “continuous service”[8] provided under Chapter 5A of the IDA that discusses the compensation a worker is entitled to, upon retrenchment. However, this chapter fails to extend its inclusivity for the workers of the gig-economy as it neglects the inherent consumer-dependent nature of the work and the associated uncertainty. In 2017, The Delhi Commercial Driver Union representing around 1.5 lakh drivers filed a writ petition before the Delhi High Court alleging exploitation of Uber and Ola employees as the service aggregators refused to treat them as employees. However, despite issuing notices to the Delhi Government, Uber and ANT technologies, the matter remains pending before the court.

A positive step towards the inclusion of gig-workers by positioning them within the legal arena is the Social Security Code, 2020. This updated act is a culmination of nine acts such as Employees Provident Fund Act, Pension scheme, The Maternity Benefit Act, etc. This act seeks to introduce uniformity of social security provisions for workers across all sectors and provide greater access to members of the unorganized sector. This is the first time an act focuses on the employment arrangements of gig-workers, platforms workers, fixed term employee etc., who were earlier precluded from the labor legislations present in the country. The code opines the mandatory registration of platform workers on an online platform to enable them to avail the benefits of the code. For example, platforms such as Zomato and Swiggy are required to allocate 1-2% of their revenue for social protection and welfare schemes.[9]

Although, the act bestows benefits such as life and disability cover, accidental insurance, creche etc., it continues to partake in the vicious loop of dubiety by refusing to recognize the workers as employees. While the code advocates the need for social security, it fails to provide a roadmap for actualization of matters such as minimum pay, job security and workplace safety. It also remains insufficient in terms of capturing the gnawing realities of the worker’s environment such as income insecurity, deplorable working and pay conditions, increased effects against physical and mental health. Moreover, the code struggles to reshape the social landscape for the unorganized sector by omitting the conceptual distinction between gig workers/platform workers from self-employed individuals despite separating under the Act. A document by non-profit PRS Legislative Research dated September 2020 provides a fitting example: In the absence of appointment letters and regulation of work timings by the employer, a driver working for one app-based cab aggregator might work for its competitor as well, thus falling under the gig worker definition. However, he would also qualify as a platform worker since he pursues his job through an online platform. This driver might also be categorized as an unorganized worker because he is self-employed.”[10]

Such overlaps between the definitions can prove to be detrimental for workers in terms of accessibility to protection schemes and expose the definition to misinterpretation due to its ambiguous nature. Upon reading of the act, the modus operandi of the act inclines largely towards a pro-industry approach instead of a pro-worker approach. It remains essential for the parliament to alter the code to create a framework equipping gig-workers a universal minimum wage, job security and the ability to form legalized unions to ensure real-time results.

Conclusion: Gig Work in Future

Jurisdictions around the world are slowly moving towards the creation of comprehensive labor laws that recognize the misguided pretense of these digital platforms that resort to utilizing loopholes within the law for mistreating their workers. States such as California, have recently passed a landmark bill, i.e., the Assembly bill 5 to incorporate the ABC test as means to broaden potential liability and extend employee classification status to gig workers as well. This test’s initial presumption states that all workers are employees, and places the burden on the employers, to prove that the workers are performing work “outside of the hiring entity’s business.” Senator Maria E Durazo opines that “there’s nothing innovative about underpaying someone for their labor and basing an entire business model on misclassifying workers.”[11] However, subsequently a ballot initiative led by app-based companies such as Uber and Lyft sought to exclude the workers from the above labor laws based on “pressure tactics and deceptive advertising”[12].

A faint hope comes in with the PRO Act that seeks to broaden the definition of “employee” to include a large number of workers by utilizing the AB test advocated in the California labor law. In Australia, the Fair Work Commission recently passed a landmark judgment that mandates the treatment of Delivery workers as employees under the law and not as independent contractors. In particular, the commission held that the Deliveroo booking system exercised significant control over the deliveries establishing an employer-employee relationship.

The Covid-19 pandemic has witnessed a greater inclination of the workforce towards the gig-economy for sustenance and livelihood. While the primary objective is the recognition of these platform workers as employees for instance, as illustrated in the UK supreme Court Judgement on Uber drivers. The argument of the plaintiffs to be classified as workers sheds a great amount of light on the power imbalance that emerges due to the service agreement imposed on the drivers. The algorithm continuously shadows the driver in terms of acceptance and cancellation of rides, the regulation of fares and finally, the rating system to compute the driver’s performance. Considering these observations, the court recognized the presence of Uber in “almost every aspect of the operation”[13] to deem the drivers as workers, Hence, moving closer to the ‘formalization’ of gig workers within the UK employment legislation.

An additional recommendation could be the creation of new legal arrangement that caters to the needs of this ‘shared economy’ rather than classifying the workers under the two traditional groupings of an employee and an independent contractor. Several theorists recommend a potential “dependent contractor” category that is “a middle ground between the traditional employees and independent contractors”[14] Other immediate policy changes that could provide an additional layer of protection is the introduction of dispute settlement clauses in employment agreements that would furnish equal bargaining power for the workers in situations of arbitrary termination of employment.

One could advocate for the creation of an independent commission specializing in worker rights such as in Australia, i.e., equipped for maintaining an equitable platform for redressal. Owing to vast numbers associated with this economic sector, while the Social Security code is critical, it remains an inadequate measure to strengthen gig-worker rights. It is essential to implement stronger modifications and national reforms that would cover the lacunae within the Indian law to extend protection to gig-workers.

(This post has been authored by Vrinda Gundam, a fifth year student in the B.A L.L.B (Hons.) program at Jindal Global University.)

References

  1. The Gig Economy: A New Global Battleground?’ (Ibanet.org, 2021) <https://www.ibanet.org/article/CBA4C174-2A35-4E5F-A278-9255C1C2577E>.
  2. Aloisi, Antonio, Commoditized Workers. Case Study Research on Labour Law Issues Arising from a Set of ‘On-Demand/Gig Economy’ Platforms (May 1, 2016). Comparative LaborLaw&Policy Journal, Vol. 37, No. 3, 2016, Available at SSRN: https://ssrn.com/abstract=2637485 or http://dx.doi.org/10.2139/ssrn.2637485
  3. Lucy Trevelyan, ‘The Gig Economy: A New Global Battleground?’ (Ibanet.org, 2021) <https://www.ibanet.org/article/CBA4C174-2A35-4E5F-A278-9255C1C2577E>.
  4. Supra note 2.
  5. [2001] HCA 44 207 CLR 21
  6. Ibid
  7. 1978 AIR 1410
  8. Balaji M, ‘India’s Gig Economy In The Pandemic’ (Medium, 2021) <https://medium.com/the-ópinion/indias-gig-economy-in-the-pandemic-895d93235ca3>
  9. Sanvi Bhatia, ‘CAN THE NEW SOCIAL SECURITY CODE OF 2020 HELP SOLVE THE SWIGGY-ZOMATO LABOUR LAW CRISIS?’ (Centre For Labour Laws, 2021) <https://cll.nliu.ac.in/can-the-new-social-security-code-of-2020-help-solve-the-swiggy-zomato-labour-law-crisis/>.
  10. Divya J Shekhar, ‘Forbes India – Why The Code On Social Security, 2020, Misses The Real Issues Gig Workers Face’ (Forbes India, 2021) <https://www.forbesindia.com/article/take-one-big-story-of-the-day/why-the-code-on-social-security-2020-misses-the-real-issues-gig-workers-face/63457/1>.
  11. Carolyn Said and Dustin Gardiner, ‘California Legislature Passes AB5 Gig-Work Bill, Which Could Turn Contractors Into Employees’ (San Francisco Chronicle, 2021) <https://www.sfchronicle.com/business/article/Senate-passes-AB5-gig-work-bill-turning-14430204.php>.

  12. Brian Chen and Laura Padin, ‘Prop 22 Was A Failure For California’S App-Based Workers. Now, It’S Also Unconstitutional.’ (National Employment Law Project, 2021) <https://www.nelp.org/blog/prop-22-unconstitutional/>.
  13. Uber BV & Ors. v. Aslam & Ors. [2021] ICR 657
  14. Protecting Workers’ Rights In The Gig Economy: AI And Digital Labour Platforms’ (Global.lehigh.edu, 2021) <https://global.lehigh.edu/sites/global.lehigh.edu/files/2_ILO_UN_Ex_Machina_Final_Draft.pdf>.

Cite as: Vrinda Gundam, ‘Gig Economy: A Legal Struggle for Inclusivity ‘ (The Contemporary Law Forum, 26 November 2021) <https://tclf.in/2021/11/26/gig-economy-a-legal-struggle-for-inclusivity/> date of access.

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