In a first, the Indian government’s new draft social security code will recognise gig economy workers, and will mandate gig economy companies to contribute to a social security fund for gig and platform workers, reported Business Standard. Approved by the Union Cabinet on Tuesday, the code will come up in the Parliament’s monsoon session starting next week.
Gig workers will also be eligible to insurance benefits provided by state-run Employees’ State Insurance Corporation. According to the draft Bill, they will also be entitled to life & disability cover, health & maternity benefits, old-age protection, and “other benefits” laid out by the central government, which will frame social security schemes for them, according to another Business Standard report.
Platforms such as Swiggy, Uber, Ola, and Zomato, fall under gig economy, and do not have a typical employer-employee relationship with the delivery “partners” (as they are referred to by the companies). In India, gig workers are a subset of the unorganised workforce, who are plagued with unsafe working conditions, limited insurance and other benefits, and perennially changing rates for deliveries and rides. Uber and Ola drivers have been driven to suicide as a result of low earnings when incentives were tweaked in 2017.
Gig companies globally insist that workers carrying out deliveries and ferrying passengers on their platforms are not their employees, but “partners” or independent contractors, and hence are not entitled to usual social security benefits.
Currently, gig workers are not covered under any labour code
In India, such workers are not presently covered by any labour code, and hence companies are not legally required to give them social protections or covers. For instance, in India, any company with over 20 employees has to contribute to an employees’ provident fund. This does not apply to delivery partners that Swiggy or Zomato hire, since they are not employees.
The new social security code will subsume nine existing central labour laws, including those on unorganised workers, maternity benefits, gratuity payments, among others. The Cabinet on Tuesday also approved codes on industrial relations, social security, and occupational safety, health, and working conditions.
The new code is an iteration of the Code on Social Security, 2019, which was referred to the Parliamentary Standing Committee on Labour in December 2019 for examination. The committee’s report was adapted on July 29, 2020. The committee asked that protections be put in place for social security schemes to gig and platforms workers, who do not have “any traditional employer-employee relationship”.
Last month, the Ministry of Labour had reportedly accepted the recommendations of the labour committee, that proposed setting up a social security fund in the draft social security code. The report said the ministry’s cabinet proposal reportedly said the aggregators will have to mandatorily contribute up to 2% of their annual turnover to such funds.
In a recent New York Times opinion piece, Uber CEO Dara Khosrowshahi framed the contractor-employee argument as a trade-off between flexibility and benefits. He suggested a “third way”, proposing that gig economy companies be required to establish benefits funds which give workers cash for whatever benefits they may want to access, such as health insurance of paid time-off. “All gig companies would be required to participate, so that workers can build up benefits even if they switch between apps,” he wrote. This would come in via a ballot initiative (Proposition 22) which Californians would vote in November, during the US presidential elections (more on this below).
Uber, Lyft pushing back on California law forcing drivers to be classified as employees
In California, USA, ride-sharing companies Uber and Lyft have been in a tussle with the state government’s insistence on implementing labour protections. A landmark employment law, AB5 (Assembly Bill 5), came into effect in January 2020, and requires gig-workers to be classified as employees, instead of independent contractors. It was designed to grant employment benefits to modern gig economy workers.
In August, the companies were an inch away from temporarily suspending operations in California, but eventually managed to block a court directive that would have forced them to do so. A judge in the San Francisco Supreme Court had ordered the companies to classify their drivers as employees, rather than independent contractors — in compliance with AB5 — within 10 days. The directive was a result of a lawsuit brought forth by California’s attorney general, in an attempt to force the companies to comply with AB5.
The companies are currently backing another proposal — Proposition 22: App-Based Drivers as Contractors and Labor Policies Initiative (2020) — that California residents will vote on as part of November’s presidential elections. It will be an “on ballot” option for Californian voters to have their say on the matter. The proposition allows gig companies to define platform-based drivers for food delivery and cab services as independent contractors.
If approved by people, the proposition would allow Uber, Lyft, DoorDash and the like to adopt their own labor and wage policies specific to app-based drivers.
- Report of the Parliamentary Standing Committee on Labour on the Code on Social Security, 2019
- Uber, Lyft aren’t shutting down in California, at least for now
- California Senate passes a bill to restructure gig economy; Uber, Lyft oppose it