Views: Does Rajasthan’s gig worker law protect the workers?

By Sarayu Natarajan and Soujanya Sridharan

This is part two of a series. Read part one here.

The year 2023 has been noteworthy for the millions of gig and platform workers in the country. Their demonstrations have drawn regulatory attention to demands for fair working conditions.  This combination of political will and workers’ demands has manifested in the passage of Rajasthan’s Platform Based Gig Workers (Registration and Welfare) Act that promises to deliver social security for the state’s 4 lakh-strong platform gig workers. Ever since, there have been significant developments emerging from the state governments of Karnataka and Tamil Nadu to afford social security for platform workers.

However, upon closer inspection, the Rajasthan law reveals myriad details that only serve to disempower workers and could potentially set upsetting precedents. For starters, the platform gig economy has many types of workers and work arrangements. Work such as data annotation and personal services may not fit the mould of the definitions in the Act and are not currently included in the schedule. Moreover, the introduction of cess levied on every transaction undertaken on platforms opens doors for wide misinterpretation, failing to distinguish between 2-sided platforms (e.g. Uber, Ola, Urban Company) and multi-sided platforms (e.g. Amazon, Flipkart). Lastly, the law relies on a troubled model of welfare boards to determine and disburse social security schemes to registered workers, with little regard for the implementation of such schemes.

Platform work and workers are not cut from the same cloth 

Think about buying a recent bestseller, something you wish to get your hands on sooner than ever. The immediate impulse is to reach out to your smartphone’s Amazon app, look it up, place an order and have it delivered in a day, at worst two. Working behind the scenes to fulfil one’s order is an enormous chain of suppliers, distributors, warehouse and delivery workers, often engaged as temporary contractors on terms not unlike the ones between a driver and a mobility platform. But, within its current ambit, the law may not protect the rights of warehouse workers because they fail to meet the criteria of workers engaged with ‘platforms’ as defined by Section 2(g) of the Act.

The same example is useful to understand the difference between two-sided and multi-sided platforms – an understanding of which is necessary to design a cess/surcharge mechanism that is proposed by the law to finance welfare initiatives. Two-sided platforms are those that act as an intermediary between providers of a certain service (e.g. cab workers, beauty personnel) and customers for that service. Consequently, the cess to be levied on intermediary platforms amounts to the entire length of the transaction that uses the services of the gig worker – essentially, calculated as 1-2% of the value of the whole ride or beauty service. Suppose the transaction cost of the ride or beauty service is INR 500, the cess so charged would vary between INR 5-10.

Multi-sided platforms, on the other hand, coordinate a variety of services, like storage, discovery, order delivery and fulfilment, using services of many different vendors and contractual workers, as shown in the book delivery example. However, the cess to be levied on such platforms would amount to 1-2% of the delivery fee paid to the gig worker. Suppose the value of the book is 500 and the delivery fee is INR 50 for the same, the cess so charged would amount to INR 0.5-1.

In its current form, the cess mechanism does not distinguish between the two types of platforms. Over time, the cess could have potentially disruptive implications for certain sections of the platform economy by disincentivizing high-value mobility, and personal or home-based services. Ultimately, the cess poses a unilateral burden on certain types of workers and platforms to contribute a higher sum towards the yet-to-be-constituted welfare fund.

The Rajasthan law calls for the creation of a Platform Based Gig Workers Welfare Board. The Board, in turn, is empowered to register workers, aggregators and platform companies as well as formulate and implement schemes for the welfare of workers. But, such an institution comes with many pitfalls, chief among which are the failures of a board model that has been used in the context of the construction sector work where conditions remain abysmal to date. Further, the application of the board model, inspired by the Maharashtra Mathadi, Hamal and Manual Workers Board which has yielded limited success, betrays a deeper lack of understanding of newer patterns of labour engagement in the platform economy.

In a similar vein, the extraordinary powers afforded to the Board to build a centralised registry of workers who are assigned unique IDs opens doors for many policy and privacy complications. Rudimentary orientation with principles of privacy and data protection will dictate that such centralisation of information, coupled with the creation of additional ID systems, could prove to be disastrous. It also remains to be seen how this new ID system will interact with other existing schemes, such as eShram, that guarantee similar social protections to informal workers, including platform gig workers.

Designing fairer instruments for workers’ welfare

At the policy level, the lack of clarity around the schemes to be notified by the Board begs a deeper introspection of the needs and aspirations of gig workers themselves. While furnishing social security protections is unequivocally the need of the hour, there is yet much to be understood about the equitable design and distribution of welfare schemes.

An alternative to the current funding mechanism for the cess could be to consider the imposition of a flat transaction fee between INR 2-5 rupees, as opposed to the 1-2% stipulated by the Act. To the extent that some of the burden is passed on to workers, a transaction fee approach can go a long way to ensure that workers are not unduly affected by the increase in service fees, while avoiding the functional differences between two- and multi-sided platforms. To this end, co-pay mechanisms that involve matching contributions from platforms and consumers can be explored to ensure long-term sustainability of the welfare fund.

Bolstering workers’ voices in regulatory action

The run-up to the national elections in 2024, juxtaposed with a burgeoning class of platform gig workers, has sharply brought into focus the need for urgent regulatory action. Indeed, gig workers represent an essential backbone powering urban landscapes, providing a variety of services that are both simultaneously discreet and significant. While the Rajasthan Act is a starting point both in terms of the content and the intent to protect workers, a meaningful law that speaks to workers’ aspirations and accounts for operationalising as well is important. Thus, as more states consider bringing similar legislation, it becomes crucial to contemplate a unified approach to platform regulation, one that centres workers’ voices.

Sarayu Natarajan and Soujanya Sridharan are at the Aapti Institute, and are engaged in research on the platform economy, amongst other things.