Gig economy has transformed business models across organizations. Gig workers have become an essential part of industries such as deliveries, edtech, software, digital marketing, transport, online shopping and logistics. However, as gig workforce has not been regulated thus far, the rapid boom of gig economy has resulted in various issues. These issues are, amongst others, working conditions, lack of benefits and social security. Gig workers resorting to protests and strikes in order to make themselves heard is indicative of their dissatisfaction.

To address the issue of social security for gig workers, the Government of India enacted the Code on Social Security, 2020 (SS Code). With the labour codes' implementation postponed until 2024 and in the absence of a safety net for gig workers currently, Rajasthan becomes the first State to espouse the cause of gig workers. The Rajasthan Platform-based Gig Workers (Registration and Welfare) Bill, 2023 (Bill) was tabled before Rajasthan Legislative Assembly on Friday, July 21 and was passed on Monday, July 24.

The Bill aims to promote the welfare of gig workers. The primary focus of the Bill is on social security. It is applicable to aggregators operating in the State of Rajasthan.

Aggregator

An 'Aggregator' is defined 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".

By virtue of this definition, entities which do not directly engage gig workers but merely coordinate with other aggregators also qualify as 'aggregators'. This is likely to lead to ambiguity on responsibility in terms of compliance where both actual aggregators and coordinating aggregators are involved.

Gig worker

The term 'gig workers' has been defined under the Bill as "a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship and who works on contract that results in a given rate of payment, based on terms and conditions laid down in such contract and includes all piece-rate work".

The salient features of the Bill are as under:

  • Platform Based Gig Workers Welfare Board: The Bill prescribes the establishment of a welfare board to be the nodal authority for the purpose of registration of gig workers and aggregators, ensuring cess deduction, setting up a monitoring mechanism, protection of gig workers including formulating and notifying social security schemes, ensuring time bound redressal of grievances related to the rights of platform-based gig workers and engaging with registered unions working with platform based gig workers and holding regular open consultations with them. The constitution of the board will comprise of two representatives each from amongst gig workers and from aggregators amongst other members selected from the Departments of Labour, Information and Technology, Social Justice and Empowerment, Transport and Finance. The powers and functions of the welfare board relating to consultation with unions and the representation of gig workers and aggregators, indicate that the Bill aims to promote dialogue between the stakeholders by prescribing such measures. This is a positive move towards protection of the gig workers. However, the challenge for the Board would be to strike a balance when making decisions in a manner that it promotes industrial peace and harmony and does not disrupt business.
  • Registration of gig workers and aggregators: Aggregators are required to submit the database of all their platform-based gig workers to the Board basis which the gig workers will be automatically registered with the Board and provided a unique ID. Given that the gig workers could be working with multiple aggregators, this is likely to cause confusion as to the division of responsibility for complying with the obligations pertaining to a gig worker.
  • Platform Based Gig Workers Social Security Fund and Welfare Fee: A fund will be established for the benefit of registered platform-based gig workers. It will be funded by the welfare fees to be contributed from aggregators, grant-in-aid from the State Government an other sources. The manner of utilization of the Fund is yet to be notified and it is not clear whether the welfare fee is in addition to the social security obligations towards gig workers. This is unlike the SS Code which provides that the social security schemes to be formulated thereunder may be funded in any of the following manners: (i) wholly funded by the Central Government; or (ii) partly funded by the Central Government and partly funded by the State Government; or (iii) partly funded by the Central Government, partly funded by the State Government and partly funded through contributions collected from the beneficiaries of the scheme or the employers; or (iv) grants or any other source.

The welfare fee will be at a prescribed rate of the value of each transaction related to platform-based gig workers. There is no interpretation provided for the value of a transaction for calculating welfare fee.

Therefore, there could be a possibility of added cost for aggregators with the additional obligation of the welfare fee.

It possible that the aggregator companies may revisit their business model which could involve offloading the cess amount to end-users by way of a mark-up and/or adjusting the remuneration of gig workers to include the added cost. Companies may also re-consider their strategies of giving promotional offers, discounts, and coupons to customers.

Given that the SS Code has conferred the State Government with the duty to formulate social security schemes for gig workers the inter-play between the SS Code and the Bill remains to be seen. It is possible that the rules to be formulated under the Bill address this aspect and any potential overlaps and conflicts with the SS Code are reconciled.

  • Rights of registered platform-based gig workers: Platform based gig workers will have the right of access to general and specific social security schemes, opportunity to raise grievances, and participation in all decisions taken for their welfare.
  • Central Transaction Information and Management System (CTIMS): The Bill envisages establishing a CTIMS for monitoring and tracking payments made on the platform include details of welfare fee collection. CTIMS will be administered and monitored by the Board. This system will ensure transparency.
  • Interest and Penalty: There is a penalty prescribed if any aggregator fails to pay the welfare fee within time which is a simple interest of 12 per cent per annum from the date on which such payment is due. If any other provisions of the Act are violated by the aggregators, the Bill empowers the State Government to impose steep penalties in terms of fine up to INR 5 lakh for the first contravention and up to INR 50 lakh for subsequent contraventions.

The Bill is yet to receive the assent of the Governor and is not yet in force. The rules to be notified by the Rajasthan Government at a later stage can be expected to address the finer points and ambiguities currently under the Bill. For instance, matters such as responsibility of payment of social security contributions and welfare fee where a gig worker is registered with multiple aggregators or in case of an entity coordinating with other aggregators.

Issues raised by industry bodies on the technical feasibility of CTIMS vis-à-vis the existing business/transaction systems of platforms and potential conflict with SS Code are yet to be addressed.

Passing of the Bill by the Government of Rajasthan is a progressive move by the Rajasthan Government. The Bill could inspire similar initiatives in other States to introduce a regulatory framework for gig workers as the gig economy continues to evolve.

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