Code on Social Security for Gig Workers

Context: In light of a significant rise of the gig economy globally, Code on Social Security 2020 has been passed with provisions against errant aggregators as well as various welfare policies to provide gig workers with access to social security benefits.

Who is a Gig worker?

• According to the Code on Social Security, 2020, a gig worker is a person who performs work or participates in work arrangements and earns from such activities, outside of the traditional employer-employee relationship.

Background

• The new labour codes passed by Parliament acknowledge platform and gig workers as new occupational categories. The Code on Social Security allows platform workers to claim benefits, but not labour rights.
• The main role of the laws for a ‘platform worker’ is to make available benefits and safety nets from the government or platform companies, but none of these are secure benefits.
• For example platform workers are now eligible for benefits like maternity benefits, life and disability cover, old age protection, provident fund, employment injury benefits, and so on, but eligibility does not mean that the benefits are guaranteed.
• The language in the Code is open enough to imply that platform companies can be called upon to contribute to some of these schemes, but they are not forced to contribute towards benefits or be responsible for workplace issues

Existing Legislation

• The Code on Wages, 2019, provides for universal minimum wage and floor wage across organised and unorganised sectors, including gig workers.
• The Code on Social Security, 2020, recognises gig workers as a new occupational category.
• Need for Code on Social Security, 2020
  • Lack of job security, irregular wages, and uncertain employment status
  • Rising stress due to uncertainty is associated with regularity in available work and income.
  • Limited access to the internet and digital technology.
  • The contractual relationship between the platform owner and gig worker denies the latter access to many workplace entitlements.
  • Stress due to pressure from algorithmic management practices and performance evaluation on the basis of ratings.

What is the Code on Social Security in India?

• The Code on Social Security in India aims to streamline and simplify the social security system in India. It was passed by the Indian Parliament in September 2020 along with three other labour codes:
  • Code on Wages, 2019
  • Occupational Safety, Health and Working Conditions Code, 2020
  • Industrial Relations Code, 2020
• It is based on recommendations of the Second National Commission on Labour (2002) and amalgamates 29 laws governing minimum wages, occupational safety, and social security.
• It rationalizes the provisions of eight existing central labour laws and attempts to include informal workers within the ambit of social security administration.
• It replaces nine existing social security laws. Of these, Employees Provident Fund (EPF), Employees State Insurance (ESI), maternity benefit and gratuity are entirely for organized sector workers.
• The code covers all workers, including those in the gig economy, who were previously not covered under the social security system.
• Key provisions:
  • The central government can apply the Code to any establishment (subject to size-threshold).
  • The definition of ‘employees’ will include contractual labour, gig workers, platform workers, labour from construction sites and most importantly interstate migrant labour.
  • The legal framework implies that the basic onus lies on informal workers registering as beneficiaries. Registration is a pre-requisite for universal coverage and to avail social security.
  • The code provides for the establishment of a national and various state-level boards for administering schemes for unorganised sector workers.
  • The National Social Security Board may also act as the Board for the purposes of welfare of gig workers and platform workers and can recommend and monitor schemes for gig workers and platform workers.
  • For the first time, provisions of social security will also be extended to agricultural workers also.
  • Funding: Schemes for gig workers and platform workers will be funded through contributions from the central government, state governments and aggregators.
    • Any contribution from aggregators may be at a rate between 1-2 per cent of the annual turnover of the aggregators.
    • However, such contributions cannot exceed 5 per cent of the amount paid or payable by an aggregator to gig workers and platform workers.

Key definitions in the Social Security Code

• Aggregator: An aggregator is a digital intermediary or marketplace that connects buyers or users with sellers or service providers.
• Gig Worker: A gig worker is a person who performs work outside of a traditional employer-employee relationship and earns from such activities.
• Platform Work: Platform work is a work arrangement in which individuals or organizations use an online platform to access other individuals or organizations to provide specific services in exchange for payment.
• Unorganized Sector: The unorganized sector includes enterprises owned by individuals or self-employed workers with less than ten employees engaged in the production or sale of goods or provision of services.
• Unorganized Worker: An unorganized worker is a home-based worker, self-employed worker, or wage worker in the unorganized sector.

Way Forward

• Paid Leaves, Health Access and Insurance: Measures for paid sick leave, health access and insurance may be adopted by platforms as a part of their workplace or work engagement policies for all the workers they engage, round the year. This will have positive implications for offering a social security cover to platform workers engaged by these firms.
• Occupational Disease and Work Accident Insurance: Platforms may adopt models for providing accident insurance to all delivery and driver partners, and other platform workers across India.
• Retirement/Pension Plans and Other Benefits: There is a need to adopt policies that offer old age/retirement plans and benefits and other insurance covers for contingencies such as injury arising from work that may lead to loss of employment and income.
• Support to Workers in a Situation of Irregularity of Work: Gig and platform firms may consider providing income support to workers in the wake of uncertainty or irregularity in work.
• Contingency Cover out of a Corpus Fund: Measures such as offering a social security cover out of a corpus fund can help support gig and platform workers and other self-employed individuals associated with the sector in case of contingencies.

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