The Gig Economy and Labour Law: Redefining Worker Rights in India

The Rise of the Gig Economy in India

The gig economy refers to a labour market where individuals undertake short-term, task-based or freelance work often facilitated by digital platforms. In India platforms like Uber, Ola, Swiggy, Zomato, Urban Company, and freelance marketplaces such as Upwork and Freelancer have driven exponential growth in this sector. According to a 2023 report by NITI Aayog India’s gig economy is projected to employ over 23 million workers by 2030 fueled by rapid urbanisation, widespread internet access and a young tech-savvy population.

Gig workers in India span a wide spectrum: from low-skilled workers like drivers and delivery personnel to highly skilled professionals such as graphic designers, content writers, and IT consultants. The appeal of gig work lies in its flexibility workers can set their own schedules work across multiple platforms, and avoid the rigidity of traditional employment. For many especially in a country with high youth unemployment (over 20% in urban areas as per 2024 CMIE data) gig work provides an accessible entry point into the workforce without requiring formal qualifications or extensive experience.

However, this flexibility comes with trade-offs. Gig workers often lack job security social security benefits, and legal protections that traditional employees take for granted. The classification of gig workers as independent contractors or partners by platforms exempts companies from providing benefits like provident fund health insurance, paid leave or minimum wages. This has sparked debates about the need for a new legal framework to address the unique challenges faced by gig workers.

The Legal Framework: Navigating the Grey Area

India’s labour laws, rooted in the industrial era are ill-equipped to address the complexities of the gig economy. Key legislations such as the Industrial Disputes Act, 1947, Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 and Employees’ State Insurance Act, 1948 were designed for traditional employer-employee relationships with fixed hours, workplaces, and contracts. Gig workers however, operate in a fluid, technology-driven environment where these laws are difficult to apply.

The Code on Social Security, 2020: A Step Forward

The Code on Social Security, 2020, one of four labour codes introduced to consolidate and modernise India’s labour laws, marks a significant step towards recognising gig workers. It defines gig workers as individuals engaged in livelihoods outside traditional employer-employee relationships and platform workers as those operating through online platforms. The code mandates the creation of social security schemes for gig workers including:

• Life and disability cover.

• Health and maternity benefits.

• Old-age protection.

• Education support for workers’ children.

It also proposes a social security fund, to be financed partly by platform companies, the central and state governments and potentially workers themselves. Additionally the code requires platforms to register gig workers and contribute 1-2% of their annual turnover to the fund ensuring financial sustainability.

Despite these progressive provisions implementation has been slow. As of July 2025 many states have yet to notify rules for the code leaving gig workers without access to promised benefits. The lack of clarity on contribution ratios how much platforms, workers and governments will pay has further delayed progress. Moreover the code does not address critical issues like minimum wage guarantees collective bargaining rights or protection against arbitrary deactivation from platforms.

Challenges in Applying Traditional Labour Laws

The classification of gig workers as independent contractors lies at the heart of the legal challenge. Platforms argue that gig workers are not employees because they have the autonomy to choose their working hours, reject tasks, and work for multiple platforms. However this autonomy is often overstated. A 2022 study by Fairwork India revealed that gig workers particularly delivery executives and drivers, are subject to algorithmic control, including dynamic pricing, performance-based incentives, and deactivation risks based on customer ratings or task acceptance rates. This level of control resembles traditional employment, raising questions about misclassification.

Furthermore gig workers lack access to grievance redressal mechanisms. Traditional employees can approach labour courts or trade unions to resolve disputes but gig workers have no such recourse. Issues like unfair deactivation, low earnings or unsafe working conditions often go unaddressed leaving workers vulnerable. The absence of collective bargaining rights further weakens their ability to negotiate better terms with platforms.

The Realities of Gig Work: Challenges on the Ground

While the gig economy promises flexibility, the ground realities for many workers are far less rosy. Low-skilled gig workers, who form the majority in India face significant challenges that undermine the benefits of gig work.

Low Earnings and Financial Instability

A 2024 Fairwork India report found that many gig workers particularly delivery executives earn below the minimum wage in major cities like Delhi and Bengaluru after accounting for expenses such as fuel, vehicle maintenance and platform commissions (often 20-30% per order). For example, a Swiggy or Zomato delivery executive working 12 hours a day might earn ₹15,000-₹20,000 per month but after expenses, their take-home income could be as low as ₹8,000-₹10,000. This financial precarity is compounded by the lack of savings, as gig workers rarely have access to provident funds or retirement benefits.

Safety and Health Risks

Gig work especially in ride-hailing and delivery involves significant safety risks. Drivers and delivery personnel face road accidents, exposure to extreme weather and in some cases, violence from customers. A 2023 survey by the Indian Federation of App-based Transport Workers (IFAT) reported that over 60% of ride-hailing drivers had experienced accidents or injuries without adequate insurance coverage. Women gig workers, though a smaller segment, face additional risks like harassment and lack of gender-specific safety protocols. The absence of health insurance or paid sick leave exacerbates these vulnerabilities.

Algorithmic Control and Deactivation

Platforms rely heavily on algorithms to manage gig workers determining pay rates, task allocations and performance evaluations. This black box approach leaves workers with little control or transparency. For instance a low customer rating or failure to meet algorithmic targets (e.g accepting 80% of assigned tasks) can lead to deactivation without notice or appeal. Such practices create a constant sense of insecurity as workers depend entirely on the platform for their livelihood.

Lack of Social Protections

Unlike traditional employees gig workers do not receive benefits like paid leave maternity benefits, or pensions. This lack of social security is particularly concerning for low-skilled workers who often have no fallback options. For example a delivery executive who falls ill or is injured may lose income entirely during recovery pushing them into financial distress.

Case Studies: Voices from the Field

To illustrate the challenges consider the story of Rajesh a 28-year-old Uber driver in Mumbai. Rajesh works 14 hours a day to earn ₹25,000 per month but after fuel costs vehicle maintenance and platform commissions he takes home less than ₹12,000. Without health insurance or accident coverage a single mishap could wipe out his savings. Similarly Priya a freelance graphic designer on Upwork enjoys the flexibility of gig work but struggles with unpredictable income and the lack of retirement benefits. These stories highlight the need for systemic changes to protect gig workers.

Global Perspectives: Lessons for India

Countries worldwide are grappling with similar challenges in regulating the gig economy. In the United States California’s Proposition 22 (2020) allows companies like Uber and Lyft to classify workers as independent contractors while providing limited benefits like healthcare subsidies and accident insurance. However critics argue it falls short of full employee protections. In the European Union a 2023 directive mandates better working conditions for platform workers including a presumption of employment status if platforms exert significant control (e.g through algorithms). The EU also requires platforms to ensure algorithmic transparency and provide appeal mechanisms for deactivation.

India can learn from these models. The EU’s approach to classifying workers based on platform control could help address misclassification in India. California’s hybrid model offering partial benefits without full employee status, could serve as a starting point for balancing flexibility and security. Additionally, the UK’s model of granting worker status to gig workers (a category between employee and contractor) provides access to minimum wages and holiday pay, which could be explored in India.

Redefining Worker Rights: A Path Forward

To create a fair and sustainable gig economy India must redefine worker rights to reflect the realities of platform-based work. Here are key areas for reform:

1. Clear Classification Criteria

Establishing clear criteria for classifying gig workers is essential. If platforms exert significant control through algorithms, pricing, or performance metrics workers should be entitled to employee-like benefits. A hybrid model where gig workers receive partial benefits (e.g. health insurance, accident coverage) without losing flexibility, could strike a balance.

2. Minimum Wage and Income Security

Gig workers should be guaranteed a minimum income per task or hour, adjusted for expenses like fuel, maintenance and platform commissions. Transparent pay structures, where workers understand how earnings are calculated, would enhance trust and fairness.

3. Social Security and Benefits

The full implementation of the Code on Social Security 2020 is critical. Platforms should contribute to a social security fund to provide health insurance accident coverage, maternity benefits, and retirement plans. The government must expedite rule notifications and clarify contribution ratios to ensure timely access to these benefits.

4. Safety and Working Conditions

Platforms must prioritise worker safety by providing accident insurance limiting working hours to prevent fatigue, and implementing gender-specific safety measures for women workers. Regular audits of working conditions and robust grievance redressal mechanisms can address safety concerns.

5. Collective Bargaining and Representation

Gig workers should have the right to form associations or unions to negotiate better terms with platforms. The government could facilitate worker cooperatives or platform-specific unions to give gig workers a collective voice, as seen in the efforts of organisations like IFAT.

6. Algorithmic Transparency and Accountability

Platforms must disclose how algorithms determine pay task allocation, and deactivation. Workers should have the right to appeal deactivation decisions and access data on their performance metrics. This transparency would reduce arbitrary actions and empower workers.

7. Skill Development and Career Progression

To address the lack of long-term career prospects platforms and the government could collaborate on skill development programmes. For example training delivery executives in customer service or logistics management could open new career paths reducing dependence on low-paying gig work.

The Role of Stakeholders

Addressing the challenges of the gig economy requires collaboration among multiple stakeholders:

• Government: Expedite the implementation of the Code on Social Security, 2020 and create a regulatory framework that balances innovation with worker rights. State governments must notify rules and establish oversight mechanisms.

• Platforms: Adopt ethical practices such as fair pay, transparent algorithms and safety measures. Contributing to social security funds and engaging with worker associations can build trust.

• Gig Workers: Advocate for their rights through collective action such as forming unions or joining organisations like IFAT. Raising awareness about their challenges can drive policy change.

• Civil Society: NGOs and research organisations can provide legal support conduct studies and amplify gig workers’ voices to influence policy.

The Future of India’s Gig Economy

The gig economy holds immense potential for job creation, economic inclusion, and innovation in India. With a projected 23 million gig workers by 2030 it could play a pivotal role in addressing unemployment and empowering marginalised groups including women and rural youth. However without robust legal protections gig workers will continue to face exploitation financial insecurity and unsafe working conditions.

By redefining worker rights India can create a model for the gig economy that other countries can emulate. This requires balancing the flexibility that attracts workers and platforms with the security and dignity that workers deserve. Policymakers platforms and workers must collaborate to build a framework that harnesses the benefits of the gig economy while ensuring fairness and equity for all.

FAQs

1. What is the gig economy and how is it different from traditional employment?

The gig economy involves short-term flexible, or task-based work often facilitated by digital platforms like Uber, Zomato or Freelancer. Unlike traditional employment gig workers are typically independent contractors not employees, and lack benefits like provident fund, paid leave or job security.

2. How does the Code on Social Security, 2020 address gig workers’ rights?

The Code on Social Security, 2020 recognises gig and platform workers and mandates social security schemes, including life and disability cover, health and maternity benefits and old-age protection. It also proposes a social security fund financed by platforms, workers and governments.

3. Why is the classification of gig workers controversial?

The classification of gig workers as independent contractors rather than employees exempts platforms from providing benefits like minimum wages or social security. However algorithmic control and performance metrics suggest workers have less autonomy than claimed leading to debates about misclassification.

4. What are the main challenges faced by gig workers in India?

Gig workers face low earnings, financial instability safety risks (e.g., accidents, harassment) lack of social security, and algorithmic control. Arbitrary deactivation and limited grievance redressal mechanisms further exacerbate their vulnerabilities.

5. How can gig workers improve their working conditions?

Gig workers can form associations or unions like the Indian Federation of App-based Transport Workers, to negotiate better terms. Engaging with policymakers, raising awareness, and leveraging legal support from NGOs can also drive change.

6. What role do platforms play in ensuring gig worker welfare?

Platforms can ensure fair pay, transparent algorithms and safety measures like accident insurance. Contributing to social security funds offering skill development programmes and providing grievance redressal mechanisms are also critical.

7. How does India’s gig economy compare to global models?

India can learn from global models like the EU’s 2023 directive, which presumes employment status for workers under significant platform control and California’s Proposition 22, which offers limited benefits to independent contractors. These models balance flexibility and security.

8. What steps can the government take to protect gig workers?

The government should expedite the implementation of the Code on Social Security, 2020 clarify contribution ratios for social security funds and establish clear classification criteria. Creating oversight mechanisms and supporting worker unions can also help.

9. Are women gig workers treated differently in India?

Women gig workers, though fewer in number face unique challenges like harassment and lack of gender-specific safety measures. Platforms must implement protocols like panic buttons, sensitivity training and flexible hours to support women workers.

10. What is the future of the gig economy in India?

With a projected 23 million gig workers by 2030 the gig economy can drive economic inclusion if supported by robust legal protections. A balanced framework ensuring flexibility, fair pay and social security is essential for sustainable growth.

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