COVID-19: A catalyst for the gig economy
Six months into the COVID-19 pandemic has reshaped and accelerated the future of work. Businesses worldwide have changed the way they operate.
Limitations in operating from brick-and-mortar workplaces have encouraged businesses to embrace technology to enable their workforce to connect virtually and deliver remotely. By prioritizing safety and supporting flexibility, businesses in the service sector, in particular, have enabled and equipped their employees to be more productive at a time when mankind is witnessing one of its worst catastrophes. This has been the key differentiator for such businesses continuing to serve their clients and customers amidst the crisis.
While industries such as tourism and hospitality almost came to a standstill, and gig workers of companies such as Ola and Uber were amongst the worst hit, having lost their source of livelihood, e-commerce (such as Amazon) and digital payment businesses (such as Mobikwik) saw a sudden surge in demand during the lockdown and have significantly scaled up their operations.
Professional services firms (such as IT services, consulting, and law) are considering continuing the work-from-home (WFH) arrangement as a long-term option, and some of them have even surrendered part of their real estate. Interestingly, WFH has also led to a paradigm shift in the perception on productivity. Since employees are not working fixed hours from their regular office locations, the focus has shifted to the quality of work and output. Employers are now increasingly adopting digital analytics-based algorithms to assign work and maximize productivity.
Having the regular workforce WFH has substantially reduced the difference between full-time employees versus gig workers for corporations. In fact, in the prevailing dynamic environment, gig-worker arrangement adds to their agility and reduces their risks. This is making it possible for gig workers to make the best choices and maximize their income while benefiting from flexibility in working hours and lifestyle and the freedom to work for more than a single employer.
While the pandemic ushers in new opportunities for gig workers and informally acknowledges their notable presence in the economy, it also exposes the darker side of the spectrum. As employers get more flexibility in hiring and firing, issues such as health and safety and lack of job security, occupational identity and collective bargaining rights continue to haunt the gig economy. The current legal framework protects only those who fall under the statutory definition of “employee”. Being freelancers who work on short-term contracts, gig workers are not covered under such definition and hence remain outside the pale of consequential benefits such as minimum wages, hours of work, compensation for overtime, leave, and severance, and retirement benefits, which are the privileges available only to employees. While addressing this disparity in several cases, the courts in India have opined that gig workers are independent contractors and, as such, are not entitled to the rights and safeguards envisaged for employees.
Another major issue faced by gig workers is the lack of fair and transparent contracts, which are often worded to their disadvantage as they are in no position to bargain.
Although the gig economy has been steadily gaining traction in the mainstream economy, the pandemic accelerated its path towards widespread social acceptance. At this stage, the legal protection of gig workers is imperative and the Code on Social Security, 2020 (Code) enacted on September 28, 2020 is a welcome step towards formalization of the gig economy. It is the first legislation to recognize the concept of gig workers and make social security accessible to them.
Some key highlights of the Code in relation to gig workers include:
- An enabling provision for coverage of gig workers and their families under the Employee State Insurance Corporation (ESIC) framework.
- Social security schemes related to life and disability cover, health and maternity benefits, old age protection, education, housing, provident fund, etc. tailored to the needs of gig workers.
- Creation of a social security fund specifically for gig workers.
- Regulation of the role of aggregators who engage gig workers.
The Code will come into force and effect from a date to be notified by the Central Government. The rules under the Code are currently in the drafting stage. The Government intends to implement the Code along with the other three labour codes by the year end or early next year. The Code addresses the need of the hour and is undoubtedly a positive step in the direction of identifying, giving statutory recognition and providing basic protection to gig workers.