Update: The Code on Social Security has been passed in both houses of Parliament. The Lok Sabha first passed it on September 23, followed by passage in the Rajya Sabha on September 24.
In a first, the central government has recognised the gig economy — gig workers, platform workers, and aggregators — under a wide-ranging proposed labour law that it introduced in Lok Sabha on Saturday. The Code on Social Security, 2020, empowers the central government to formulate social security schemes for gig workers and platform workers around life and disability cover, accident insurance, health and maternity benefits, old age protection, creche, and other benefits the government may determine as necessary.
So far, gig workers have not fallen under any legislation and are not entitled to social security schemes. Companies that rely on gig workers, such as Zomato, Swiggy, Ola, and others, consider such workers as independent contractors, and not employees, and hence leave them out of any social security benefits.
The new code said that social security schemes can be can be fully or partially funded by the government, by aggregators, in part by the state government, or funded by CSR, or “any other source”. Aggregators will have to contribute between 1-2% of their annual turnover, excluding taxes or cess payable to the central government, as contribution to social security funds for gig and platform workers. The aggregator’s contribution will not exceed 5% of the amount payable to gig workers and platform workers.
The bill was introduced in Lok Sabha amidst opposition from Congress MPs Manish Tewari and Shashi Tharoor.
How the code defines gig workers, platform workers, and aggregators
A gig worker is a person who works or participates in a work arrangement and earns from such activity “outside of traditional employer-employee relationship”. Separately, the bill also recognises “platform work”, also a work arrangement outside traditional employer-employee relationship “organisations or individuals use an online platform to access other organisations or individuals to solve specific problems or to provide specific services or any such other activities which may be notified by the Central Government, in exchange for payment”. A “platform worker” is a person engaged in or undertaking platform work.
An aggregator is a digital intermediary or market place for a buyer/user of a service to connect with the seller/service provider. The bill classifies aggregators into the following kinds:
- Ride-sharing services
- Food and grocery delivery services
- Logistic services
- e-Market place (both market place and inventory model) for wholesale/retail sale of goods and/or services (B2B/B2C)
- Professional services provider
- Travel and hospitality
- Content and media services
- Any other goods and service provider platform
Central govt will lay down scheme specifics
The government will also provide for how the scheme would be administered, what the role of aggregators would be, and the agencies for implementing the scheme, and so on. The government will notify when aggregators have to start contributing.
- Power to exempt aggregators: The central government can exempt an aggregator or a class of aggregators from contributing funds to social security subject to certain conditions. An aggregator having more than one business shall be treated as a separate business entity or aggregator. [Section 114].
Additionally, the central government will provide for the interest rate payable by aggregators in case of delayed payments or failure to contribute to the social security fund. [Section 114]
Toll free centre: The “appropriate Government” “may” set up a toll free call centre or helpline to give information about social security schemes for unorganised workers, gig workers, and platform workers. The centre will also help with processing registrations for gig workers and platform workers, and help enroll them in the social security schemes. [Section 112]
Government also to establish social security fund
Apart from letting the government form schemes [under Section 114], the bill also provides that the central government establish a social security fund for unorganised workers, gig workers, and platform workers [under Section 141]. For gig and platform workers, the funding can come fully or partially funded from the central the government, from aggregators, in part from state government, or from CSR, or “any other source” (as was mentioned above). It can also be made up of the composition of the offences under the bill.
Social security means “the measures of protection afforded to employees, unorganised workers, gig workers and platform workers to ensure access to health care and to provide income security, particularly in cases of old age, unemployment, sickness,invalidity, work injury, maternity or loss of a breadwinner by means of rights conferred on them and schemes framed, under this Code”.
Scheme under ESIC: The central government can also frame a scheme for gig workers and platform workers, and their family members for benefits admissible under the Employees State Insurance Corporation (ESIC). The government will have to specify the contribution, user charges, scale of benefits, and eligibility criteria in the scheme.
National Social Security Board to be formed, will administer, monitor schemes
A National Social Security Board will be formed by the central government, that will give recommendations on formulating schemes for gig workers and platform workers (and for unorganised workers). It will also monitor the schemes, and advise the centre on issues that arise out of the code’s administration. It will review the state-level record keeping and review the expenditure of the fund and account. The labour minister and labour secretary will serve as chairperson and vice-chairperson.
- Out of the 40 nominated members (by the centre), 19 will be government officers, including from central government ministries and departments, and from state governments. There will be 21 members — 7 representatives each — from unorganised sector employers, unorganised sector workers, and eminent persons from civil society [Section 6].
This will also be the board for welfare of gig workers and platform workers. Provided while “such Board serves the purposes of welfare of, or matters relating to, gig workers and platform workers”, some of the members will be replaced by [under Section 114] :
- 5 representatives each of aggregators, and gig workers and platform workers, nominated by the central government
- Experts nominated by the central government
- Five representatives of state governments in rotation
- Joint secretary in the Labour ministry to serve as member secretary
It’s unclear whether there will be two separate National Social Security Boards, one for unorganised workers [Section 6], and another for gig workers and platform workers [Section 114]. It is more also possible that the same board will have different members, when addressing gig and platform workers.
Mandatory registration with Aadhaar
To avail benefits, every gig worker and platform worker has to register for a unique number, “in such form along with such documents including Aadhaar number as may be prescribed by the Central Government”. This comes with the pre-condition that gig and platforms workers seeking registration are above 16 years of age and has submitted a self-declaration “containing such information as may be prescribed by the Central Government” [Section 113].