Platforms and aggregators which hire gig workers should contribute towards their social security, the Labour Ministry had told the Parliamentary Committee on Labour. It had further said that although gig workers have an atypical relationship with their employer, it is “imperative” that the company with “whom he is in work arrangement for a continuous period of time, may also contribute towards his social security”.

These comments were made public in the Labour Committee’s report submitted to the Parliament on July 31. The Committee had begun examining the 2019 version of the Code on Social Security in December 2019. The expansive bill seeks to introduced reforms in guaranteeing social security of organised and unorganised workers for availing a slew of benefits such as gratuity, insurance, maternity benefits, life insurance, provident fund and so on. The code was drafted to subsume nine labour laws, and in a first, recognised gig workers and platform workers as a distinct class of workers.

It now appears that the Labour Ministry has agreed to the committee’s suggestions as the ministry’s revised bill reportedly creates a social security fund for gig and platform workers. The bill will reportedly require aggregators to mandatorily contribute 2% of their annual turnover to such funds. The government is expected to pass the bill in Parliament this session, which began on September 14. It is unclear which other provisions of the bill have been changed, or which suggestions of the Labour Commitee have been incorporated.

Here are the key takeaways around gig workers from the Labour Committee’s report:

What the 2019 code entitled gig and platform workers to

The old (2019) iteration of the Code on Social Security gave the following benefits to gig workers and platforms workers:

  • Empowered the central government to formulate schemes for gig workers and platform workers to guarantee life and disability cover, health and maternity benefits, old age protection, and any other benefits it determines. The scheme has to lay down how the benefits will be administered, the implementing agencies, the role of aggregators, sourcing of funding, and any other pertinent matters. [Section 114]
  • Allowed the central government to constitute a social security fund for gig and platform workers that could be central funded, funded in parts of employers, workers, and government, or funded by CSR funds [Section 109(4)].
  • Empowers the central government to frame a scheme for gig and platforms workers and their family members under the Employees’ State Insurance Corporation [Section 45].

Separately, the bill effectively made Aadhaar mandatory for workers which would presumably include gig and platform workers requiring them to submit their Aadhaar to avail benefits, claim cash or kind benefits, or claim insurance they are entitled to. Since the central government is empowered to notify the schemes for gig and platform workers, and the schemes may be governed by an agency, even these workers may need to submit their Aadhaar (more on this below).

Labour Committee’s recommendations

1. Clarify whether gig and plaform workers fall in organised, unorganised, or both sectors: The bill allows formation of schemes for gig and platform workers under the ESI, “which is basically meant for the organised sector”, but also entitles them to schemes under the chapter on unorganised workers. This should be clarified, and “adequate safeguards have to be built in” to ensure that it does not “impede extension of social security benefits to any type of worker”, per the Committee report. The Committee said that:

“Keeping in view the fact that specific welfare schemes are envisaged in the Code for ‘Unorganised Workers’ as distinguished from the ones available for those in the ‘Organised Sector’, the Committee feel that there is a need for more clarity in the definitions indicating unambiguously whether a particular worker belongs to the Unorganised Sector or Organised Sector or both.”

2. Narrow the definition of Gig Worker: Various stakeholders pointed out that defining gig worker as those outside traditional employer-employee relationships seemed to be “very broad” and corresponded with other non-standard employment such as temporary work or part-time work, the committee noted. Instead, the definition should be narrowed to avoid confusion, and there should be clarity on gig and platform workers belong to the organised or unorganised sector, the Committee said.

“gig worker” means a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship [Section 2(35)] Code on Social Security, 2019

3. Expand the definition of platform work: It should be expanded to include work, employment, service and other activities, and should also account for new types of work that may emerge in the future, the Committee said. An enabling provision should be added that lets the government “accommodate new emerging forms of labour market activities that may conform to the future work model”, it added.

“platform work” means a form of employment in which organisations or individuals use an online platform to access other organisations or individuals to solve specific problems or to provide specific services in exchange for payment [Section 2(55)] Code on Social Security, 2019

4. Expand the definition of Social Security per ILO convention: The bill’s definition leaves out superannuation and life, medical, accident, and occupational insurance while defining “social security”, the Committee pointed out. This should be modified to make it all-encompassing of all the nine components in the International Labour Organisation (ILO) convention on social security which are medical care, sickness benefits, unemployment benefits; old age benefit; employment injury benefit, family benefit, maternity benefit; invalidity benefit and survivors’ benefits, per the Committee.

“social security” means the measures of protection afforded to employees 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 enshrined and schemes framed under the Code; [Section 2(70)] Code on Social Security, 2019

5. Include gig and platforms workers within Unorganised Workers: The Committee said the ministry should include gig workers, platform workers, freelance workers, and agriculture workers, self-employed workers so that social security and welfare benefits are ensured to all kinds of unorganised workers. A proper definition would also facilitate creation of a national database of such workers as envisaged under the code and prevent litigation, the Committee noted.

6. Specify who will contribute to a social security fund: The code should specify who would contribute to social security funds of gig and platform workers, for example in the form of a cess, per the Committee, stating that “this cess may be based on three way contributions in predetermined differential ratios shared by the gig/ platform owner or aggregator, the service consumer, and the employee”. The ministry told the Committee that even though a “gig worker” is a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship, “it is imperative that the company/establishment with whom he is in work arrangement for a continuous and long period of time, may also contribute towards his social security”.

7. Frame a scheme in the law itself, instead of delegating it to the central government: The code allows the central government to form a scheme to provide social security to gig and platform workers, but remains silent on the mechanism by which the social security benefits will be extended to the gig and platform workers, the Committee pointed out. It is vital that the ministry clearly spell out and frame a scheme in the code itself under which benefits of Employees Compensation Act, medical facilities, and other social protections can be credibly and convincingly extended to them, the Committee said.

8. Merge different provisions to gig & platform workers in one place: The bill provides benefits for gig and platform workers in at least two places, under Section 109{4) and under Section 114. There is overlap, so both sections should be merged so that provisions of such workers exist in the same place, the Committee recommended.

Aadhaar mandatory to avail benefits; will ensure ‘portability’, says Labour Ministry

Even with the Supreme Court judgment on Aadhaar, the 2019 bill effectively made Aadhaar mandatory for availing benefits, under the following provisions:

  • Mandatory Aadhaar seeding: The bill made Aadhaar seeding mandatory for workers to register as beneficiaries of social security schemes. Workers will have to submit Aadhaar for registration, seeking cash, to draw money, or other kind benefits, or avail insurance payments for themselves or their family members [Section 143].
  • Unique number: Unorganised workers have to register with the concerned authority to get a unique number, which will be based on Aadhaar [Section 113(2)].
    • It appears that an unorganised worker will have to both seed their Aadhaar, and also register for another unique number that will be linked to Aadhaar. When questioned about this logic (by the Committee), the Ministry said Aadhaar can be useful for portability, but having a unique number for each scheme will ensure that it runs smoothly. “For example, in EPF also we have a Universal Account Number”, the Ministry said.
  • Electronic records based on Aadhaar: Separately, the bill requires that electronic records be maintained by the concerned authority for different schemes. The record “as far as possible” should bear continuous number to manage the scheme and avoid any duplication or overlapping in records, the bill said [Section 111]. While the bill does not mention Aadhaar here, the Ministry later told the Committee that records would be maintained via Aadhaar numbers. “Through the seeding of Aadhaar in the registration database, portability can be achieved,” the Ministry told the Committee.

The Committee pointed out that the Puttaswamy judgment only allows Aadhaar linkage for benefits funded by the Consolidated Fund of India (CFI). However, the Ministry’s response was that while the code does not currently involve any CFI fund, it may arise in the future, and current expenses under the bill cannot be estimated. The Ministry assured the Committee that any application of Aadhaar will be made per the law of the land, within the scope of the Supreme Court judgment, and in consultation with the UIDAI. The Ministry told the Committee that:

“The linkage of national database for unorganised worker with Aadhaar will enable the Government of India to have a single unified sanitized and robust database. This will act as a robust platform to deliver various social security schemes of the Central and the State Government for the welfare of the unorganised workers. It will also address the de-duplication of the unorganised worker.” Labour Committee Report