Amidst the ongoing expansion of the gig economy lately[1], there are questions regarding the inclusion of workers within the ambit of the social security frameworks. In response to these concerns, the Government of India introduced the Code on Social Security, 2020 (SS Code)[2]. With the implementation of the labour codes being delayed and in the absence of any other legislation on gig workers, Rajasthan has emerged as the first state in advocating social security schemes among gig workers. The Rajasthan Platform-based Gig Workers (Registration and Welfare) Bill, 2023[3](Bill) was brought before the Rajasthan Legislative Assembly on July 21, 2023, and was passed on July 24, 2023[4].
Stakeholders impacted by the Bill
Before we begin the analysis ,it is important to understand a few crucial terms that the aforementioned bill includes.
Aggregator: An Aggregator[5] is defined under the Bill as a digital intermediary for a buyer of goods or user of a service to connect with the seller or the service provider and includes any entity that coordinates with one or more aggregators for providing the services.
On a bare reading of the definition, it is understood that an aggregator is any entity providing a digital platform that is utilized by gig workers to get access to clients/customers to whom they can provide services. The definition also includes entities which do not directly engage gig workers but merely coordinate with other aggregators.
Gig worker[6]: A Gig worker is defined under the Bill as a person who performs work or participates in a work arrangement and earns from such activities outside of the traditional employer-employee relationship and who works on a contract that results in a given rate of payment, based on terms and conditions laid down in such a contract and includes all piece-rate work.
Salient features of the Bill
- Rajasthan Platform-Based Gig Workers Welfare Board[7]: The state government will establish this board, comprising two representatives each from aggregators and gig workers, along with members selected from various departments such as Labour, Information and Technology, Social Justice and Empowerment, Transport, and Finance. The Board will serve as the central authority for registering gig workers and aggregators, overseeing cess deductions, establishing monitoring mechanisms, safeguarding gig workers (including designing and announcing social security schemes), ensuring timely resolution of grievances linked to platform-based gig workers’ rights, collaborating with registered unions associated with platform-based gig workers, and conducting regular open consultations.
- Registration of Aggregators and Platform-Based Gig Workers[8]: Aggregators are required to register within 60 days of the legislation’s enactment and submit a database of all their platform-based gig workers to the board. This information will facilitate the automatic registration of gig workers with the Board, each receiving a unique ID.
- Platform-Based Gig Workers Social Security Fund and Welfare Fee: A fund will be established to benefit registered platform-based gig workers. Funding will come from welfare fees contributed by aggregators, state government grants, and other sources. The precise utilization of this fund remains unspecified, and it’s unclear whether the welfare fee is separate from existing social security obligations towards gig workers.
- Rights of Registered Platform-Based Gig Workers[9]: These workers will have the right to access both general and specific social security schemes, voice grievances, and partake in decisions related to their well-being.
- Central Transaction Information and Management System (CTIMS)[10]: The bill proposes the establishment of CTIMS to monitor and trace platform-related payments, including welfare fee collection. Administered by the Board, this system aims to enhance transparency.
- Interest and Penalty: Failure by aggregators to remit the welfare fee on time will result in a prescribed penalty-simple interest at a rate of 12% per annum from the due date. For other breaches of the Bill, the state government is empowered by the Bill to impose significant fines, ranging from INR 5 lakhs for initial contraventions to INR 50 lakhs for subsequent violations.
Observations:
- Dialogue between stakeholders: The stipulated responsibilities of the Board to engage with registered unions and representatives of aggregators and gig workers indicate the Bill’s intention to foster dialogue among all stakeholders. This forward-looking approach aims to promote the interests of both gig workers and aggregator businesses.
- Challenges in registration of gig workers: Issues could arise if gig workers are associated with multiple aggregators, potentially leading to dual registration and compliance confusion among aggregators.
- Computation of Welfare fee: The welfare fee will be derived from a percentage of the value of each transaction involving platform-based gig workers. However, the definition of “value of each transaction” for calculating this fee is not defined in the legislation, potentially introducing extra costs for aggregators.
- Interplay between the Bill and the SS Code: Considering that SS Code confers upon the state government the duty of developing social security schemes for gig workers, the interplay between the SS Code and the Bill remains to be seen. It is possible that forthcoming rules under the Bill will address this aspect, resolving any potential overlaps and conflicts with the SS Code.
The way forward:
The platform-based gig worker model of engagement has traditionally served as an income source along with minimal restrictions on the part of the gig workers and as an appropriate business model with low liability from a legal compliance standpoint on the part of the aggregators. The passing of the Bill by the Government of Rajasthan is a welcome step towards the inclusion of gig workers in social security schemes, however certain issues which have been observed above are yet to be clarified.
The Bill is yet to receive the assent of the Governor and is not yet in force. The rules are to be notified by the Rajasthan Government later andare expected to resolve the finer intricacies and uncertainties currently under the Bill. While the Bill should undoubtedly provide advantages to gig workers, and at the same time, it must be careful to avoid unintentionally burdening aggregators, which could hurt their ability to conduct business. The focus should be on fostering an environment that is conducive not only to gig workers but also promotes the expansion of the gig economy by supporting the growth of aggregator’s businesses. Taking inspiration from the Rajasthan government, administrations in Madhya Pradesh and Karnataka, among others, are also contemplating enacting legislation aimed at extending social security coverage to gig workers.
[1]https://www.niti.gov.in/sites/default/files/2022-06/Policy_Brief_India%27s_Booming_Gig_and_Platform_Economy_27062022.pdf
[2] https://labour.gov.in/sites/default/files/ss_code_gazette.pdf
[3] Rajasthan Platform-based Gig Workers (Registration and Welfare) Bill, 2023
[4] https://assembly.rajasthan.gov.in/LegislationGovernmentBills.aspx
[5] Section 2(a) of the Rajasthan Platform-based Gig Workers (Registration and Welfare) Bill, 2023
[6] Section 2(e) of the Rajasthan Platform-based Gig Workers (Registration and Welfare) Bill, 2023
[7] Section 3 of the Rajasthan Platform-based Gig Workers (Registration and Welfare) Bill, 2023
[8] Section 8 & 9 of the Rajasthan Platform-based Gig Workers (Registration and Welfare) Bill, 2023
[9] Chapter VI of the Rajasthan Platform-based Gig Workers (Registration and Welfare) Bill, 2023
[10] Chapter VII of the Rajasthan Platform-based Gig Workers (Registration and Welfare) Bill, 2023
-Mohamed Faheem,
Advocate & Associate
