How labour law changes will impact gig workers

Updated : December 01, 2020 03:49 PM IST

In the long run, the new labour laws could encourage more workers in shifting to the gig economy.

Though meant to promote workers’ welfare, particularly in manufacturing, unforeseen consequences may do the opposite.

Such laws may nudge more workers from full-time jobs to the gig economy.

The year 2020 has had unprecedented events, including the coronavirus crisis. Meanwhile, periodic lockdowns have disrupted almost all economic activity.

But one segment is working seamlessly – the gig or platform ecosystem. Gig platforms have helped harried employers and millions of out-of-work employees to keep things moving via short-term work assignments or project-based contracts. The flexibility of gig work is appealing for both workers and hiring firms.

Implications of New Laws

Now, however, India’s latest labour laws are poised to change the gig economy. In September, Parliament passed three crucial Labour Bills. Running into 300-plus pages with 411 clauses, they impact every employed person. Though meant to promote workers’ welfare, particularly in manufacturing, unforeseen consequences may do the opposite.

Yet, proponents feel the new laws will empower states to attract more business, benefitting enterprises. The new laws permit employers to hire and relieve workers. Presently, companies with 100-plus workers need government approval for retrenchment. This number stands raised to 300. Almost 90 percent of India’s workforce is informal, with employee counts under 300. Consequently, such employees can be relieved without prior approval.

Furthermore, the revised Industrial Relations Code requires workers from all services and sectors to provide a 60-day notice before going on strike. Earlier, a six-week notice was mandatory only for public utilities – water, electricity, gas, telecom, etc. If a pending case exists before any legal tribunal, a strike can only begin 60 days after the proceedings culminate.

Also, via the new laws, the government can exempt new establishments from any regulations, including those ensuring workers’ safety. The new Bills allow authorities to permit new entities to side-line these rules if it promotes employment generation and economic prosperity.

Benefits for Gig

Such laws may nudge more workers from full-time jobs to the gig economy. The new labour laws have provisions covering gig workers. There is a proposal for establishing a National Social Security Board, which will consult the Centre in formulating schemes covering interstate migrants and contract labour. These migrants are those relocating from hometowns and earning up to Rs 18,000 per month.

For unorganised workers, the Centre will create a social security fund, requiring contributions from aggregators or employer companies, comprising a minimum of 1-2 percent of their yearly turnover. Gig workers will also pay 1-2 percent of their monthly income to the platforms towards social security benefits. By including gig/platform workers, the new laws cover millions of self-employed persons, including those on contract with service sector entities. But unorganised establishments with less than 10 workers have the discretion of not opting for this. Significantly, for withdrawing gratuity, the minimum service tenure stands reduced from five years to one only.

Currently, India has only around three million gig workers versus 500 million other workers. Nonetheless, with millions of jobs lost due to the pandemic, any additional employment is most welcome. As per estimates, the gig economy now generates around 56 percent of new employment.

If the new laws give a fillip to the gig ecosystem, it will drive greater jobs creation. The gig economy comprises a wide section of workers, including consultants, contract workers, cleaners, drivers, delivery personnel, bloggers, freelance writers, et al. Ola, Uber, Swiggy, Zomato, Amazon and a host of other platforms are part of this ecosystem. The flexibility of work hours and the leeway to work with more than one company or contractor has also been encouraging women to enter the gig workforce.

Since the gig ecosystem eliminates overhead costs, India’s economy benefits from the services. Therefore, the government should create an enabling environment ensuring adequate talent in the gig economy. Relevant measures include promoting better connectivity, cybersecurity, ease of Internet access, reliable power supply, lower logistics costs and a framework for adherence to project contracts.

Backed by the new labour laws, the requisite measures could help the gig economy provide growing job opportunities to people struggling to find gainful employment.

(The author Sahil Sharma is Co-founder and CEO – GigIndia. Views expressed are personal)

How labour law changes will impact gig workers

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