Social security serves as a crucial safeguard for individuals, ensuring access to healthcare and income security,particularly during circumstances such as old age, unemployment, illness, disability, maternity, or the loss of a primary breadwinner. However, gig workers—often referred to as “independent contractors,” “freelancers,” and “on-demand workers”—across the globe frequently find themselves unable to access social security benefits. These gig workers are connected with clients, customers, or service opportunities through platform aggregators who provide them with a certain fee on a case-to-case basis.
As businesses increasingly rely on gig workers to meet their operational needs, there is a growing recognition of the need to protect the rights of these workers. In response, the government has been taking steps to formulate laws and frameworks aimed at safeguarding gig workers’ rights and ensuring their social security. The Code on Social Security 2020 (“Code”) introduced the definition of “Aggregator” as a digital intermediary or a marketplace for a buyer or user of a service to connect with the seller. The Government of Rajasthan, on July 24, 2023, passed the Rajasthan Platform based Gig Workers (Registration and Welfare) Act, 2023 (“Rajasthan Act”), which broadened the definition of Aggregators so as to include any entities that coordinate with one or more aggregators for providing the services. The Karnataka government followed suit, using a similar definition of Aggregators in drafting the Karnataka Platform based Gig Workers (Social Security and Welfare) Bill, 2024 (“Karnataka Bill”). This bill was made available to the public through a public notice dated June 29, 2024; however, it is yet to come into effect.
Under all the foregoing legislations, the primary responsibility is of the Aggregators to register themselves as well as the gig workers by providing the information of the gig workers onboarded or registered with them. The state government has the authority, as per state laws, to set up a gig workers’ welfare board to exercise the powers granted and fulfil the duties assigned to it. The aggregator then has to proactively update the gig workers welfare board of any change, including any increase or decrease in the number of gig workers. The registration has to be done on the e-Shram portal launched by the Ministry of Labour & Employment, Government of India, on August 26, 2021, with an aim to create a comprehensive National Database of Unorganised Workers verified and seeded with Aadhaar. Pursuant to this, the gig workers will be provided with a Universal Account Number (UAN). UAN can open the door to a plethora of opportunities for gig workers by enabling them to register themselves under various governmental schemes/portals including the National Career Service (NCS) Portal and Pradhan Mantri Shram-yogi Maandhan (PM-SYM) and also to provide them with skill enhancement and apprenticeship opportunities.
Apart from the above, the Rajasthan Act introduced several key changes aimed at improving the welfare of gig workers. Some of the key changes/benefits are highlighted herein below:
- Welfare Board Establishment: The Rajasthan Act establishes a dedicated Gig Workers Welfare Board, tasked with overseeing the implementation of welfare measures for gig workers.
- Contribution to Welfare Fund: All platform-based gig workers shall have access to general and specific social security schemes based on contributions made as may be notified by the State Government from time to time.
- Welfare Fee: Aggregators are required to contribute a percentage of their transaction value to a welfare fund for gig workers. This fund is intended to finance various social security measures.
- Dispute Resolution Mechanism: A dedicated mechanism is established for resolving disputes of gig workers in relation to any grievance arising out of entitlements, payments, and other benefits.
The Karnataka Bill goes a step further by offering additional benefits to platform-based gig workers. Some of these benefits are outlined below:
- It includes a provision ensuring that the contract to be entered between the aggregators and platform-based gig workers shall have simple language that is easily comprehensible. It shall contain an option in favour of the worker to allow them to terminate the contract if the change/amendment adversely affects their interests.
- State government shall lay down the guidelines, which will be specific to the sector in which the goods/services are being provided.
- Establishment of an Automated Monitoring and Decision Making System which is to be employed by the aggregators and gig workers will have a right to seek any information in relation to their engagement.
- Each gig worker will be provided with a human point of contact for all clarifications under the provision of the Karnataka Bill and will be provided on the respective account of the gig workers on the platform application.
The Ministry of Labour and Employment, Government of India, recently published an advisory dated September 16, 2024, wherein the authorities emphasize the need for more aggregators to extend their support by ensuring registrations to take provide this agenda a big push and help it reach a fruitful stage. The advisory focuses primarily on the aggregators providing the following list of goods/services:
- Ride Sharing services
- Food and grocery delivery services
- Logistic services
- E-Marketplace (both marketplace and inventory model) for wholesale/retail sale of goods and/or services (B2C and B2B)
- Professional service provider
- Healthcare
- Travel and Hospitality
- Content and media services
- Any other goods and service provider platform
The government further laid down a standard operating procedure for the online onboarding of platform aggregators on the e-Shram portal through proper verification and authentication using Aadhar eKYC.
The inclusion of gig workers under social security frameworks is a vital step towards ensuring equitable protection and welfare for all workers in the evolving digital economy. The recent legislative efforts by the Rajasthan and Karnataka governments, along with the proactive measures by the central government, underscore the growing recognition of gig workers’ rights. As the gig economy continues to expand, the success of these initiatives will depend heavily on effective implementation, cooperation from aggregators, and continuous policy refinement. By addressing the gaps in social security for gig workers, India sets a promising precedent for other regions grappling with the complexities of protecting this dynamic workforce.
Authors: Neeraj Vyas (Partner) & Abhishek Malhotra (Associate)