Introduction:

A gig economy is a market that relies to a significant extent on temporary and part-time positions, held by freelancers and independent contractors rather than conventional full-time employees. The gig economy traditionally doesn’t come under the employee-employer format, where specialists are employed and offered specific, assigned positions in an organisation. A gig economy is defined by the hiring of employees on a flexible, temporary, and contractual basis. An individual providing food for a food delivery app or an individual who works for a company on a few projects is a demonstration of the gig economy.

One of the reasons companies like this more than the normal employee-employer relationship is that they don’t have to select someone nearby and have a greater number of individuals to select. The technology has developed so much these days that an individual can work as effectively if they work at home. The other reason why the gig economy is dominating is due to the fact that in every sector, the gig economy is functioning. In industries where it is not necessary to have high skills, such as service industries, gig employment is flourishing, and also in highly skilled industries, such as consultancy, gig employment is dominating. They exist in every kind of industry and for every sort of requirement in today’s modern world. For the employees, it is useful as well since they are able to work when they wish, what kind of work they wish, and for how long as well. They can work it as a part-time job or for some pocket money.

While the word “gig work” has its origin in the West, when used in the indian context to denote unshackled and unrestricted jobs, it entails every app-based employment (delivery, home-based jobs, etc.) that relies on this employment for their overall existence and awareness as opposed to an additional income.

Workers In The Gig Economy: Employees Or Independent Contractors?

The length of the employment relationship, legal classification by the employee, and type of work they perform are just a few of the considerations that enter into the categorization of this workforce. Platforms that enable gig work make viable financial opportunities possible, but come under criticism for exacerbating issues with job security, commercialization, and splitting employment. The triangular relationship between the producer (the worker) and the consumer (the customer), as well as between the producer and the digital company, renders it challenging to control the gig economy. The interaction between the producer and the aggregator is based on some form of contract. A web of contracts is employed in lieu of a long-term, stable employment relationship in this new model of work. Unlike an employment contract, the user contracts that Uber drivers and hosts of Airbnb have with their organizations are relatively straightforward and comprise only terms of service.[1]

Due to the nature and aim of gig work, gig workers have similar traits as both employees and independent contractors. They are akin to independent contractors since the terms of employment for them are governed by a contract. But in practice, the type of work that gig-workers do is not any different from a typical employee. The conclusion is that most who labor in the gig economy resist simplistic labeling as either contractors or employees. Even while such a labeling is technically possible, it is not recommended for several normative reasons. Aggregators might pay additional expenses, including taxes, back pay, and penalties if gig workers are strictly labeled as employees.[2] Such additional expenses might raise the likelihood of the employer’s business model becoming unprofitable. The outcome perhaps a diminished customer experience, reduced employment in total, and deceleration of their economic growth. It is very likely for gig workers, if classified as independent contractors, to still experience exploitation and be deprived of fundamental employment rights such as overtime pay and sick leave.

One who qualifies as an employee usually gets fixed wages from time to time and is hired for a substantial duration. Gig and platform workers, on the other hand, are often hired and paid temporarily. Typically discernible examples of gig workers include Ola and Uber drivers and Uber and food delivery aggregators such as Zomato, Uber Eats, Domino’s, and Swiggy. With approximately 200 million gig workers worldwide, this system of platform workers has worked well for a very long time. Though the most critical legal test for determining an employee’s management of labour relations in the gig economy, where status and control over working conditions are the top priority, the chances that the workers will be classified as employees grow with the degree of control over workers enjoyed by the enterprises. To appreciate the growth in the extent of control of gig-workers by an enterprise after achieving the status of employee by gig-workers, the case of cab-drivers is apt. The contractual form of employment of cab-drivers grants them relatively greater autonomy in the working hours, the routes taken to arrive at the destination, the overall duration of service, etc. If, however, these workers become employees, the enterprise can exert a larger extent of control with regard to the time to the destination, the routes taken, etc. In attempting to determine whether someone is an employee, an independent contractor, or both, governments have assigned a broad array of criteria. Various tests are utilized in the US, such as the ABC test, the Borello test, and the common law (right to control) test. In order to ascertain whether the employer in India exercises control over the manner in which the work is done or how much the employee is attached to the business of the company, control and integration tests are applied. Where the employer has control over the means and ways in which the contractor is looking to work, it can be said that an employer-employee relationship subsists between the employer and the employees hired by the contractor.

On this point, the Uber case has caused the most controversy. Uber drivers brought their action to court but were ruled against by the California Supreme Court, stating that drivers enjoyed significant control over their work schedules, vehicles, locations, and even the right to drive for competitors. Because of this, they are not eligible for employee rights since they are independent contractors. Alternatively, Uber drivers need to be recognized as employees, as per a recent ruling by the Supreme Court of the United Kingdom (UK). Unlike in the California ruling, this ruling underlines that platform owners take responsibility for ensuring workers’ safety and welfare because of the authority they wield over them.[3] Although the California Supreme Court put greater emphasis on the independence of workers guaranteed due to the contractual nature of the work, the Supreme Court of the United Kingdom took into account the impact of such contract employment and equated it with traditional employment. Lawmakers are under huge pressure to label independent contractors as employees because of the pandemic’s horrible treatment of gig workers.

There is an Indian public interest lawsuit requesting the Supreme Court to give job status to gig workers. Whether or not a gig worker is classified under either of these two categories has historically been the topic of this discourse, as well as the difference between independent contractors and employees. The topic of whether an individual is an employee, an independent contractor, or both has come up before courts all over the globe. The criteria employed to determine whether a worker is an employee or an independent contractor differ across jurisdictions, such as India, and tend to emphasize items such as the degree of control exercised by the employer over the worker and the intent of the parties. These determinations, which are still evolving globally, can consider such things as how people are hired and discharged, who the equipment belongs to, who possesses the contract title, and who dictate the norms and standards. These factors are important in the factual matrix of gig work, considered later in this discussion. Experts concur, however, that since employer control interpretations are by definition subjective, such determinations often yield different results.35 It is therefore not surprising to find that different courts like the U.K. and U.S. Courts have arrived at very dissimilar conclusions regarding the same issue.36 In some nations, courts have classified gig workers as employees. Nonetheless, in nations such as Australia and Brazil, the legal framework has categorized gig workers as independent contractors.

Therefore, it is speculated that gig workers don’t fit so conveniently in either the independent contractor or employee labels. Even if such a classification is technically possible, it should be avoided for a number of ethical reasons. 38 Business models of aggregators may be dismantled if they are compelled to undertake the entire financial the burden of remaking gig workers as employees, such as repaying salaries and fines. Subsequently, this could degrade the customer experience, create fewer jobs in general, and hinder their economic growth. Gig workers would still be taken advantage of and deprived of basic job benefits such as overtime and sick leave if they were labeled independent contractors.

Current Situation Of India’s Gig Workers

India, with a workforce of 15 million skilled workers, has become a prominent player, dominating 40% of all available freelance labor globally, leaving the US, China, Brazil, and Japan behind to claim the world’s fifth-largest gig economy. As per the International Labour Organization (ILO), India hosts the world’s second-largest gig economy, with more than 56% of all gig workers across the Asia-Pacific region, which results in an explosion in jobs in India, both in the white-collar and the blue-collar domains. Ernst & Young further states that roughly 40% of all gig workers worldwide are from India. Currently, approximately 47% of the gig employment is in medium-skilled occupations, approximately 22% in high-skilled occupations, and approximately 31% in low-skilled occupations, mainly in the non-agricultural sectors and predominantly in urban locations. The trend suggests that the share of laborers with medium capabilities is increasingly diminishing while the share of laborers with low and high capacities is increasing.[4] Freelancing work has existed historically in India for a long time, for example, in industrial sectors where temporary employees are hired on a need-based basis. On-demand workers are also commonly utilized in Indian households for domestic services. Even though India’s gig economy is thriving, workers at the base of the pyramid exist under very harsh conditions. India has always had the equivalent of gig work, given its big informal economy and workers, and the present situation provides a chance to organize and formalize it.

Reasons For The Growth Of The Gig Economy In India

Due to the benefits that the gig economy offers, both developed and developing countries around the globe are seeing a rise in the adoption and utilization of gig employment[5].

• Technological advancements and rapid digitization
• Increased gender inclusivity and student participation
• Employees focus on well-being

• Economic incentives

Legal System In Place

The government of India has brought 4 new labour codes in 2019 to bring 29 central laws under one roof. They are:

• Code on Wages
• Industrial Relations Code
• Social Security Code
• Occupational Safety, Health and Working Conditions Code[6]

1.Code on Wages, 2019

The 2019 Code on Wages Bill combines four earlier laws on payment of wages and bonuses to include all employees. The Central Government regulates wages for industries such as mines and railways; states regulate others. It sets a floor wage and requires reviews every five years. The Bill imposes regulations on working hours, and overtime, and provides for wage deductions up to 50%. Gender wage discrimination is prohibited, with the penalty of up to three months’ imprisonment and a Rs. 1 lakh fine in case of contravention

2. Industrial Relations Code,2020

The new Code increases the threshold for automatic standing orders from 100 to 300 employees, making it easier to hire and fire. Closures, lay-offs, or retrenchments in units employing more than 300 workers need approval from the government. It prescribes a 60-day notice for strikes and prohibits strikes during and 60 days from the institution of tribunal proceedings. The Code also establishes a re-skilling fund for retrenched employees, with the employers’ contribution being an equivalent amount of 15 days of the employee’s last drawn pay.

3. Code on Social Security, 2020

The revised Code hikes the number of workers required for compulsory standing orders from 100 to 300, simplifying hiring and firing. Closures, retrenchments, or lay-offs in units employing more than 300 workers need the government’s sanction. There is a requirement of a 60-day notice for strikes and a prohibition of strikes at and within 60 days of tribunal proceedings. The Code also provides for a re-skilling fund for retrenched workers, with contributions by the employers of 15 days’ wages.

4. Code on Occupational Safety, Health and Working Conditions, 2020

The Code defines a factory to cover establishments with 20 employees utilizing power and 40 without power. It eliminates manpower restrictions for dangerous conditions, covers contractors with 50+ staff, and stipulates a limit of eight hours per day of work. Women are allowed to work in all establishments, including night shifts, with the will and safety precautions. Employers are required to provide appointment letters. Inter-state migrant workers, who earn Rs. 18,000 per month, have the portability advantage of rations, but the temporary accommodation advantage is lost. The Code also adds a journey allowance for travel from their own state to the place of work.

Conclusion

As the contours of India’s gig economy are shifting, the intersection of technological advance, flexible working and regulatory challenges identifies a pressing need for a balanced approach that maintains the rights and addresses the vulnerabilities of the gig workers. The gig economy, characterized by its reliance on temporary or project-based work undertaken through digital platforms, has revolutionized how companies operate and how people work. This paradigm, while promising to upend conventional industry frameworks, brings to the forefront complicated legal and ethical questions about the status and protections of gig workers. One of the key issues of concern for gig workers in India is the ambiguity about their employment status. Traditional labour law tends to leave out gig workers from its ambit, thereby resulting in lacunae in social security protection in the form of health insurance, maternity benefits, and pension schemes. There is no definitive legal definition of who is a ‘gig worker’ or a ‘platform worker’, which is impacting their access to fundamental labour rights.

Litigation and legal precedents ensure the fight of gig workers in achieving protection and recognition under the law. One such case is that of All India Gig Workers Union v. Uber India Systems Pvt. Ltd., in which gig workers have challenged the classification practice by Uber and demanded fair wages along with social security benefits. Similarly, the Public Interest Litigation (PIL) filed in the Supreme Court by the IFAT brings to the fore the larger issue of social security rights for all the workers, including the gig economy workers, as bringing them under the ambit of ‘unorganized workers’ and therefore rightfully eligible for statutory benefits.

The legal framework governing the gig economy revolves in India is gradually evolving to address these challenges. The Code on Social Security, with its attempt to cover social security benefits for gig workers, is a step in the right direction. Although the Code is not entirely comprehensive, covering all the benefits that are being enjoyed by regular employees, such as gratuity and employee provident fund, it prepares the ground for state-level legislation and welfare schemes in accordance with the needs of gig workers. Across the world, others like the European Union have defined minimum rights for gig workers and India and other nations grappling with the same regulatory issues have followed the precedent. The approach varies; an example being that some of the US states treat gig workers as independent contractors unless there are specific criteria indicative of an employer-employee relationship

[1] Anand Pawar & Ankit Srivastava, Gig Workers and Employment Laws: An Indian Perspective (2022) V Shimla Law Review 88, https://www.hpnlu.ac.in/PDF/9825f8d3-fd55-4d44-9ab9-053ababcbf71.pdf

[2] Frontline, Gig Economy India: Workers’ Rights, Labour Exploitation, Surveillance & Data Privacy Laws (2024) https://frontline.thehindu.com/the-nation/human-rights/gig-economy-india-workers-rights-labour-exploitation-surveillance-data-privacy-laws/article69341247.ece

[3] Emma Charlton, What is the Gig Economy and What’s the Deal for Gig Workers? (22 November 2024) https://www.weforum.org/stories/2024/11/what-gig-economy-workers/

[4] Record of Law, An Exploration of Rights and Protections in India’s Gig Economy (January 2025) https://recordoflaw.in/an-exploration-of-rights-and-protections-in-indias-gig-economy/

[5] Juris Centre, Rules and Regulations Governing Gig Workers in India (10 September 2024) https://juriscentre.com/2024/09/10/rules-and-regulations-governing-gig-workers-in-india/

[6] “WORKERS’ RIGHTS IN GIG ECONOMY: LEGAL FRAMEWORK AND CHALLENGES.” Manupatra Articles, https://articles.manupatra.com/article-details/WORKERS-RIGHTS-IN-GIG-ECONOMY-LEGAL-FRAMEWORK-AND-CHALLENGES.

By:

Devangi Jaiswal

Christ University