Legislative Analysis

Critical Analysis of the Social Security Code in Light of the Gig and Platform Economy

SHIKHAR VERMA analyses the Social Security Code as to whether it suffers from a lack of hindsight by the legislature while forming provisions.

  • Shikhar Verma Shikhar Verma


India always had multifarious labour laws, each promulgated for the realization of a relatively small object. For example, the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, was promulgated solely for instating provident funds for employees in different organisations. Abundance of such statutes having limited applicability become contradictory to similar laws causing confusion. To remedy this, the Ministry of Labour and Employment presented four bills to replace and consolidate the erstwhile Forty-Four labour laws. One of the new bills to be promulgated is the Social Security Code, 2020 (“The Code” hereinafter) which aims to furnish social welfare to all workers/employees in both organised and unorganised sectors. The past decade has seen an exponential growth of the unorganised industry particularly taxi apps. This growth was accentuated during the Coronavirus induced lockdown as increasingly unskilled-unemployed workers started working as delivery agents for food and grocery companies, drivers etc. The unorganised sector which earlier included street vendors and small businessmen, now includes gig/platform workers who use internet applications such as Swiggy, Uber, Urban Company, etc., to provide services like food delivery, haircuts, housecleaning, etc. This recent category of workers was not mentioned in the older Unorganised Worker’s Social Security Code, 2008.

However, mere identification of such workers under the new Code does not solve the problems faced by them. Historically, Indian Courts have recognised the lack of protection afforded to them. The Supreme Court in Daily Rated Casual Labour V/s. Union of India1, held that differentiating between employees into casual and regular employees to pay less wages to the former will violate Articles 14 and 16 of the Constitution. Such classification is not based on an intelligible differentia. A similar argument has to be made to provide social benefits like provident fund, medical insurance etc., to gig/platform workers to uphold their Right to Equality.

1. Daily Rated Casual Labour V/s. Union of India,(1988) 1 SCC 122

Overlapping Definitions:

The definitions of the terms gig workers, platform workers and unorganised workers, in the Code are such that they overlap with one another2. For the sake of brevity (not to reiterate the definitions), it is sufficient to conclude that the both Gig and Platform workers are a subset of the unorganised workers3. Gig/platform workers could have received recognition by being mentioned/described within the definition of unorganised workers under Section 2(86), instead of a separate definition for each term, so that all the three kinds of workers are protected through the same provisions. For instance, Ola drivers, work outside an employer-employee relationship making them gig workers4. Furthermore, they use an online platform to access work from clients and to provide them services, making them platform workers5. Lastly, they do not need employment letters to commence work and usually do not undergo a selection process6. They are not paid a fixed salary, but their income is earned based on the number of cab rides and the distance covered by them. They receive a percentage of the total fare charged from the passenger making them self-employed (as there is very less control by the aggregator) and bringing them within the ambit of the definition of an unorganised worker. The Code is unclear as to the application of a scheme specifically enacted for the benefit of unorganised workers to those who may also fall within the gig/platform worker definition, due to this overlap7. That is, a scheme to benefit unorganised workers may not be applicable for the welfare of platform/gig workers, even though the latter is just a small percentage of the former sector. Given that the definition of the three terminologies overlap, the concerned worker would be rendered confused as to which schemes may apply to them and would be discouraged to claim benefits due to the excruciating process.

2. Kingshuk Sarkar, “Under new labour code, and Uber driver can be both gig and platform worker. It’s a problem”, (The Print, 12th October 2020), https://theprint.in/opinion/under-new-labour-code-an-uber-driver-can-be-both-gig-and-platform-worker-its-a-problem/521628/ Accessed 10th May 2021
3. ibid
4. ibid
5. ibid
6. ibid
7. ibid

Other provisions of the statute suffer from the above-mentioned uncertainties as well. Section 109(1) of the Code authorises the Central Government to formulate schemes for the welfare of unorganised workers on certain matters like life and disability, retirement/schemes for the elderly, etc. and Section 109(2) authorises the State Governments to formulate welfare schemes for unorganised workers in other areas like matters related to gratuity, employment benefits etc. This creates uncertainty among unorganised workers as to the jurisdiction of different Governments that may provide different kinds of welfare schemes due to their lack of awareness in this regard. Moreover, gig/platform workers are not professionals and are often ignorant about the schemes being introduced and the appropriate Government to claim these from.

Furthermore, Section 114 separately allows the State Government to provide schemes for gig/platform workers. The protection afforded to gig workers is substantially less than the provisions for unorganised workers. Section109(2) allows the State Governments to provide schemes related to retirement, provident fund etc., for unorganised workers, whereas, there is no such provision for gig/platform workers, leading to discrimination against the latter and breaching their Right to be treated Equally. A solution to this problem is that the State Government should be given complete authority to formulate welfare schemes for all workers belonging to the unorganised sector and without diverging both kinds of sectors. The Central Government should be mandated to contribute a small percentage (of GDP) monetarily to the welfare funds to facilitate these schemes. Had gig/platform workers been included within the definition of unorganised workers, this wasted effort could have better served the Standing Committee by focusing on other areas while drafting the Code.

Problems with the Registration Process:

Section 113 of the Code requires all unorganised/gig/platform workers to register themselves to avail social security schemes. Section 113(2) further mandates this application to be accompanied with Aadhar numbers along with other documents. This requirement blatantly disregards the fact that a small population of rural India is still not in possession of this document. Further, it leads to the addition of an unnecessary piece of paperwork to the registration process8. Flexibility of accepting other ID cards in Aadhaar’s stead must be provided. Not doing so discriminates against those who either do not possess an Aadhar card or have not gotten it linked to their mobile numbers. Thus, mandating the provision of this document during registration for claiming welfare schemes is violative of their right to be treated equally under Article 14 of the Constitution of India, as they aren’t treated on par with other gig/platform workers.

8. Swati Rao, “How the Social Security Code 2020 fails gig workers”, (Spontaneous Order, 23rd November, 2020), https://spontaneousorder.in/how-the-social-security-code-2020-fails-gig-workers/, Accessed on 15th May 2021

Furthermore, applying to receive the Aadhaar card, amending it or getting it linked to the mobile number is a tedious and elongated process which stretches over several days. Gig/Platform worker’s ability to earn money is dependent on the amount of time they actually work. Wasting their time to complete such documentation processes not only reduces their earning capacity but also makes them ineligible to claim any benefits during this time. Such loss of income will discourage them to claim the benefits under welfare schemes and goes against the object to enable more gig/platform workers to claim these benefits9. There are still a number of instances in which furnishing an Aadhaar is not mandated10. According to the Hon’ble Supreme Court in Justice KS Puttswamy V/s. Union of India11, furnishing an Aadhaar card is not required during school admissions, for sitting in CBSE Board exams, NEET medical entrance test or UGC entrance tests. Similarly, registration process must allow workers the flexibility to use other ID’s.

9. Ibid; Footnote 2
10. Ibid; Footnote 2
11. Justice KS Puttaswamy V/s. Union of India, (2019) 1 SCC 1

Indian bureaucracy is marred by red tapism and corruption. Under the Unorganised Workers’ Social Security Act of 2008, there were instances of fictitious people’s names being added to the list of recipients or even abstention of the names of eligible beneficiaries. Similar problems can be expected with the registration process for gig/platform workers under the Code as well12. Government authorities are infested with lazy and disinterested government workers, who demand bribes to complete menial tasks and antagonize citizens by delaying the delivery of the same. It cannot be expected for such a corrupt system to let the economically weaker and disadvantageous groups off the hook. The registration process is bound to victimize many of these honest workers irrespective of them making a physical effort or a virtual one. They will inadvertently be required to make reminder calls and visits to Government offices to ensure the facilitation of their registration while being harassed by Government Babus. Their time could be better spent completing fresh assignments and maximizing their already limited earnings, further discouraging them to partake in this process.

12. Ibid; Footnote 8

Disinterested Aggregators:

Section 114(3)(c) of the Code provides the Central Government with an unfair discretion to opttopile the burden of wholly funding welfare schemes on the aggregators through whom gig/platform workers avail work. The Government would not want to fund these schemes itself if this responsibility can be forced on profit-making organisations. In a similar sentiment, Section 114(4) directs aggregators to pay 1-2% of their annual turnover to the Government for funding social security schemes for such workers. Aggregators are averse to entertaining such schemes and seek to avoid the increased costs which they incur by mandatorily contributing to such Government funds. Compulsory grant of a percentage of their turnover invariably leads to profit reduction, which would inevitably instigate corporations to push this burden over to the workers themselves by deducting such amounts from their income, indirectly penalizing them for choosing a flexible employment13. It is imperative to recall that gig/platform economy suffers from fluctuation of work and that their income is dependent upon the amount of work (gigs) that they receive. They earn a small percentage, out of the actual amount charged from the customers and deducting even Rs. 200-1000 per month would greatly affect their income and ability to survive. Furthermore, many workers are affiliated with multiple platforms and enjoy the flexibility to work for more than one platform. Contribution by aggregators towards a social security fund would provide an excess of funding as a lesser number of workers would contribute to the annual turnover of multiple companies. One may perceive this being a good thing, but more amount in the fund also increases the chances of deception by the Government servants managing it.

Historically, labour has been the first one to suffer, being low on the Government’s priority list, which allows the latter to cut additional costs on welfare schemes and use that money to fulfil tangible electoral promises instead. The Uttar Pradesh (Temporary Exemptions from Certain Labour Laws) Ordinance, 2020, which suspended labour laws to aid the growth of the economy post the first Coronavirus lockdown is a testament of this labour sacrificing attitude. Similar attitude was reflected by Uber in Uber BV v Aslam14, where the company fought tooth and nail to prove that cab drivers were not their employees, but were self-employed workers to escape the liability of providing paid leaves and other meagre benefits.

13. Ibid; Footnote 8
14. Uber BV V/s. Aslam, [2021] UKSC 5

Keeping this behaviour (and its consequences) in mind, the Central Government should strive to largely fund welfare schemes themselves for provision of benefits to the gig workers instead of pushing this burden over to the aggregators. The Government should also advertise these schemes and worker’s social rights. This will increase awareness within the workforce and will deter aggregators to deduct amounts from their income without contributing to welfare schemes. Moreover, pushing the burden of contributing to the welfare fund on the gig/platform workers, would be contrary to the tenets of the Income Tax laws. Those earning below Rs. 2,50,000 a month don’t have to pay any income tax. If the Government does not expect payment of tax on their income, then being forced to contribute for their own social security by aggregators is unjust.

Lack of welfare measures:

The Code acts as a smokescreen to providing any concrete solutions to the problems faced by gig/platform workers. Chapter IX barely consists of six provisions, which largely deal with the procedural and jurisdictional aspects of rolling out welfare schemes. As aforementioned, the amount of discretion provided to the Governments is huge. The word ‘may’ is routinely used in the language of the relevant provisions. The Government ‘may’ introduce schemes under Section 114 of the Code. Section 112 specifies that the Governments ‘may’ set up grievance/helpline cells if they consider them to be necessary. The statute does not direct the Government to implement welfare measures, but merely provides suggestions to do so. The provisions do not introduce any concrete measures themselves and their promulgation is left to the imagination and convenience of the Government. Governments are less inclined to introduce labour welfare measures particularly for gig/platform workers, as such initiatives go unnoticed by the general public i.e., their voters. Such schemes cannot garner many votes during elections and cannot offer much publicity, whereas untenable promises for provision of free electricity, water, or advertising unimplemented schemes are preferred by them. In consonance with this sentiment, there has been a lack of effort on any Government’s side to formulate any welfare schemes for gig/platform workers since the formulation of the Code, even though some schemes may have been rolled out for unorganised workers.

Gig/platform workers are in dire need of maternity benefits. These should have been included within the Code itself. Many female cab drivers or delivery persons, who perform physically strenuous duties may find it difficult to work during pregnancy. In such cases provision of benefits during the time of absence should not have been left upon lethargic Governments. The spirit of the Constitution of India is embedded with provisions that reflect women empowerment. Article 15(3) of the Indian Constitution enables the State to create special provisions to protect and empower women and children. The legislature must keep this constitutional essence in mind while creating provisions to confer maternity/parental benefits within the code itself to safeguard the interests of expecting gig/platform workers, rather than leaving this task upon the Governments. Doing so would also ensure compliance with Article 42 of the Constitution, which provides for maternity relief. Indian Courts have gone into monologues explaining the virtues of motherhood15. It was held in MCDV/s. Female Workers (Muster Rolls)16, that employees working on muster rolls in an industrial establishment are entitled to receive maternity benefits. Moreover, Section 60 of the Code provides for daily wage workers to receive maternity benefits from their employer as well. But platform aggregators usually refuse to consider themselves as employers17 and instead refer to the workers as their partners. Uber is known to have attempted to avert the notion of creating an employment relationship with its drivers18. Relinquishment by aggregator of its responsibilities as employers, exposes gig/platform workers to risks of being unprotected and uninsured in times of life altering events, so far as job security or maternity benefit is concerned. Enablement for aggregators to escape the payment of maternity benefits must be reduced. Thus, schemes for maternity benefits etc., must be included within the language of Chapter IX of the code itself.

15. Mini KT V/s. Divisional Manager, LIC, 2018 (1) KLJ 245
16. MCD V/s. Female Workers (Muster Rolls), 2000 SCC (L&S) 331
17. Uber BV V/s. Aslam, [2021] UKSC 5
18. ibid

Analysis and Conclusion:

Gig/Platform economy is a relatively new concept throughout the world. However, it is worth noting that Countries like USA and the UK have made great strides in simplifying and modifying their law through judicial precedents to make it more friendly for these groups of workers. Instead of writing down six simple guidelines disguised as provisions of a statute, India should take a note from their books to improvise our law for such workers. The Code already contains provisions based on statutes and precedents developed over the years to protect and provide welfare to workers belonging to the organised sector. Instead of including a separate chapter for unorganised/gig/platform sector, they should strive to bring gig/platform workers within the ambit of same provisions or should furnish Chapter IX of the Code with similar provisions. A similar attempt was made by the Employment Tribunal (UK) as well as the Supreme Court of the U.K. in Uber V/s. Aslam19. Uber drivers were brought within the definition of ‘workers’ under Section 230(3)(b) of the (UK)Employment Rights Act, 1996.The Court broadened the definition of ‘workers’ to being them within the ambit of existing legislations/law. This would enable them to gain minimum wages and paid holidays calculated from the time they log onto the app20.

19. ibid
20. ibid

Bringing gig/platform workers within the ambit of the same/similar provisions governing the organised workers is full of challenges as most gig/platform workers work for more than one aggregator. As an example, an Ola driver may also work for Uber at different times to ensure that he gets the best pay, flexibility of working hours and more work. In case there are no rides on Uber, they can log in to Ola and get work. To avoid over charging the aggregators (by making them contribute to a fund) in such circumstances, the Government should set up a welfare fund fuelled by the its own taxed income (as has been suggested before in this paper), which is otherwise wasted on unfinished infrastructure projects or ends up in the pockets of corrupt politicians. Given that Indian Government sets aside a large portion (7.3% in 2018-19) of the country’s GDP for funding the varying social welfare schemes21, a slight portion of this massive amount can be used to make a distinct fund for gig/platform workers as well. Such a fund must be brought to the realm of the Right to Information Act,2005, to ensure transparency and regular audits of the same.

However, this is a half-baked measure as the workers will still be subject to the mercy of the Government to formulate any actual welfare schemes. A better alternative would be to be inspired by the Dynamex Operations W. V/s. Superior Court and Charles Lee22, which instigated the California State Legislature to enact Assembly Bill 5. The Bill codified the judgement and the tests (to analyse that when can independent contractors be termed as workers/employees) established in the case. Similarly, a slew of Indian judgements has already established tests to analyse the ambit of the definition of ‘workmen’. Typically, these tests establish an employer-employee relationship based on a higher degree of control and supervision exercised by the employer over their employee’s activities, especially when they are working outside a factory setting23. If the definition and the scope of the tests are broadened by the Hon’ble Supreme Court, then an employer-employee relationship between the aggregators and gig/platform workers can be established. This would obligate aggregators to provide social security to workers under the other provisions of the Code (i.e. the ones applicable to the organized sector), without depending upon the Government to formulate schemes to do the same.

21. (Press Information Bureau, 4th July 2019), https://pib.gov.in/Pressreleaseshare.aspx?PRID=1577032>, Accessed on 2nd June 2021
22. Dynamex Operations West, Inc. V/s. Superior Court, No. S222732 (Cal. Sup. Ct. Apr. 30, 2018)
23. Group 4 Securitas Guarding Ltd. V/s. Employees Provident Fund Appellate Tribunal and Ors, 184(2011) DLT591, Dhrangadhara Chemical Works V/s. State of Saurashtra, 1957 LLJ 478

Even though the Code is being projected as a progressive and improved version of the older labour laws, the legislature will have to work very hard to take away the wide discretion provided to the Government and aggregators. This rings true for both the Unorganised and Organised Sectors and particularly the Gig/platform workers. Unless hardcore changes to mandate provision of medical benefits, standardised life cover, compensation etc. are not introduced, gig workers will continue to bear the punishment for opting to work flexibly, which also allows them to work diligently since they chose their own tasks.

SHIKHAR VERMA is an Advocate at the Delhi High Court and can be reached at adv.shikharverma@gmail.com.