Labour and Employment in India’s Gig Economy

Introduction

India’s gig economy—comprising app-based delivery riders, ride-hail drivers, freelance digital professionals, and informal service providers—has surged in the past decade, offering flexible income opportunities to millions. Yet this workforce often lacks the protections enjoyed by formal employees. To address their precarity, India’s legislature and judiciary have taken novel steps: recognizing gig and platform workers under the Code on Social Security, 2020, integrating them into welfare schemes, and encouraging registration through the e-Shram portal. This explainer unpacks the legal framework, judicial pronouncements, statutory duties, and practical implications for gig workers in India.

Defining Gig Workers under Indian Law

Chapter I, Section 2(35) of the Code on Social Security, 2020 defines a gig worker as “a person who performs work or participates in a work arrangement and earns from such activities outside of a traditional employer–employee relationship”. This broad formulation deliberately separates gig workers from contract labourers and unorganised workers, yet leaves ambiguity regarding the precise nature of the “work arrangement.” Nevertheless, it marks the first statutory recognition of gig workers, compelling both central and state governments to devise tailored social security schemes.

Legislative Framework: Code on Social Security, 2020

The Code on Social Security consolidated nine labour statutes and, for the first time, extended welfare benefits to gig and platform workers. Key features include:

• Social Security Schemes
  The central government and state governments may frame schemes for gig workers covering life and disability insurance, accident insurance, health and maternity benefits, and old-age protection. Funding sources may include contributions from aggregators (platforms), governments, and corporate social responsibility funds, as well as nominal worker contributions.
• National Social Security Board
  A National Social Security Board advises and monitors these schemes, ensuring they meet gig workers’ specific needs—ranging from health care access to income security during work interruptions.
• e-Shram Portal Registration
  The Ministry of Labour and Employment has issued advisories urging platforms to register gig and platform workers on the e-Shram portal. As of 2024, approximately 7.7 million gig workers registered, enabling them to claim social security benefits under schemes like Ayushman Bharat and PM-SYM (Pradhan Mantri Shram Yogi Maandhan).
• State Initiatives
  Demonstrating policy innovation, Rajasthan enacted the Rajasthan Gig Workers’ Welfare Act, 2023, establishing a state-level welfare board, mandating 1–2 percent platform transaction fees to fund social security, and requiring transparent disclosure of earnings and commissions. Karnataka followed with draft legislation in 2024, reflecting growing subnational engagement.

Social Protection Measures and Implementation Challenges

While the Code provides a framework, implementation reveals gaps:

1. Low Registration Rates
   Despite relaxed norms, e-Shram registrations reflect only a fraction of the estimated gig workforce. NITI Aayog’s 2022 report projected growth from 7.7 million gig workers in 2020–21 to 23.5 million by 2029–30; yet, many lack awareness of e-Shram benefits.
2. Ambiguity in Definition
   The broad statutory definition complicates the distinction between gig workers, independent contractors, and unorganised workers. Without clear guidelines, platforms and state agencies struggle to identify eligible beneficiaries, delaying scheme rollout.
3. Funding and Coverage
   Aggregators have been reluctant to contribute, citing cost burdens. Consequently, state governments often shoulder scheme financing, stretching fiscally constrained budgets. Moreover, interim measures like PM-JAY health coverage apply only to registered workers, leaving gaps for those unregistered.
4. Fragmented Governance
   Social security schemes operate under multiple departments: Labour, Electronics & IT (e-Shram), Health, and State Welfare. This fragmentation impedes coherent policy coordination and consistent nationwide implementation.
5. Absence of Employment Rights
   While social security benefits address welfare deficits, gig workers remain classified as independent contractors, excluding them from minimum wage laws, working hours regulations, and collective bargaining rights under the Industrial Disputes Act, 1947.

Judicial Interventions and Emerging Doctrines

Indian courts and tribunals have begun addressing gig workers’ concerns:

• Contractual Reality over Form
  Drawing on multi-factor “control and integration” tests, tribunals have examined whether gig workers operate under de facto employer control—such as algorithmic management, performance metrics, and designated work hours—thereby warranting reclassification for statutory protections.
• Health and Safety Obligations
  Courts have held that platforms bear non-delegable duties of care where risks are inherent, such as food delivery during monsoons or late-night ride-hailing, mandating insurance coverage and protective measures under public liability norms.
• Gendered Dimensions
  The lack of explicit inclusion under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 leaves women gig workers vulnerable. Advocates urge judicial interpretation to extend workplace sexual harassment protections to gig and platform contexts.

International Standards and the ILO’s Role

Globally, the International Labour Organization (ILO) champions decent work for gig workers. The ILO’s project “Extension of Social Protection to Gig and Platform Workers in India,” supported by Japan’s Ministry of Health, Labour and Welfare, advances:

• Tripartite Social Dialogue
  Facilitating discussions among government, platforms, and worker representatives to design inclusive social security schemes and grievance mechanisms.
• Evidence-Based Policy
  Generating data on gig worker demographics, income volatility, and social security gaps to inform responsive legislation.
• Global Best Practices
  Advising Indian authorities on models from the EU’s work-related accident insurance for platform workers and Latin America’s digital labour rights frameworks.

Practical Recommendations for Policy and Practice

To operationalize protections and empower gig workers, stakeholders should:

Enhance Registration and Awareness
Targeted campaigns via platforms, trade unions, and local authorities can boost e-Shram enrollment. Incentives—such as premium-free initial coverage—may encourage registration.

Clarify Definitions and Boundaries
The central government should issue authoritative guidelines distinguishing gig workers from other categories, reducing ambiguities and facilitating scheme delivery.

Mandate Platform Contributions
Legislation should require aggregators to contribute a fixed percentage of transaction values to social security funds, ensuring sustainable financing and reducing fiscal strain on governments.

Extend Employment Protections
Amend labour codes to grant gig workers core employment rights—minimum wages, maximum working hours, and access to dispute resolution forums—where algorithmic control or lasting work arrangements exist.

Strengthen Grievance Redressal
Establish one-stop digital portals for gig workers to file social security and occupational safety complaints, track resolution status, and escalate to labour courts if necessary.

Empower Collective Bargaining
Recognize gig worker collectives and federations, enabling them to negotiate with platforms under statutory frameworks, as envisaged by ILO Convention No. 144 on tripartite consultations.

Conclusion

India’s gig economy presents both promise and peril. While its flexibility absorbs millions into income-earning activities, the absence of formal protections leaves gig workers vulnerable to income shocks, health risks, and algorithmic exploitation. The Code on Social Security, 2020 and state-level innovations mark critical first steps, but effective implementation demands clearer definitions, mandatory platform contributions, broader employment rights, and robust social dialogue. By aligning national policies with ILO standards and global best practices, India can transform gig work from precarious hustling into dignified, secure livelihoods—fulfilling the constitutional mandate of social justice and the aspirational goals of inclusive economic growth.