How to ensure fair rights for gig economy workers: New labour laws, transparent contracts are the way forward

The COVID-19-induced lockdown brought tragically into the limelight two facts: one, gig workers have no social security whatsoever, and two, the terms of conditions of their relationship with the platforms were far from transparent

TR Gopalakrishnan / June 22, 2020 18:39:22 IST
How to ensure fair rights for gig economy workers: New labour laws, transparent contracts are the way forward

“Hire and fire is a loaded word, the American system is ‘employ at will’,” says Hari TN, head of HR, BigBasket, one of India’s largest online supermarkets. The distinction sort of escapes me. “Here, we have an employment contract.”

That was just the point, as we see the continuing and substantial shift in the job market to a contract-based system. “Firms prefer to employ at will and they are trying to circumvent hiring and firing laws by having more workers on contract,” says Vidhya Soundararajan, assistant professor, IIM Bangalore.

The context was a query “on paper we are not a hire and fire economy but we seem to be heading there” at a recent webinar entitled Formalising the Gig Economy. A segment that is only a few years old in India but is growing bigger by the day, as more and more services move to a platform-based model, and more and more workers sign up to them to gain market access and customers.

The nearly two-month COVID lockdown has brought tragically into the limelight two facts:

One, gig workers have no form of social security and hence were among the hardest hit as they overnight lost all income.

And two, that the terms of conditions of their relationship with the platform are far from transparent.

The platforms argued that they had no responsibility to help as they were not workers in the traditional legal sense but were “partners” or “independent contractors.”

How to ensure fair rights for gig economy workers New labour laws transparent contracts are the way forward

Representational image. Courtesy: Mahesh V

What exactly do we mean by formalisation?

Here, the discussion threw up a whole host of questions which neither the existing laws nor the new draft laws in the making address. Questions such as what these gig workers are letting themselves in for, how their status should be defined, ensuring fair and transparent terms of engagement with the employer or platform.

That formalisation will involve a combination of legislation, regulation and responsible corporate governance is accepted. Also, there is little argument that these platforms are a huge convenience for both customers and the workers they engage.

“These gig workers are micro entrepreneurs and these platforms are providing them an easy way of procuring business and there is a push automatically for them to upskill,” says Hari.

All well and good in an earlier time. But going forward, the issue of who is a gig worker, how to ensure contracts are fair and transparent and creating a social security system for them assume greater significance.

Gig economy: New term, old problems

“The gig economy is a new avatar of contract labour which has been there for the last 30 years,” says professor Soundararajan. “And there are a number of things we can pick from the contract laws.”

Soundararajan points out, “But before we go into social security, the fundamental question in formality is to know who the worker is. To create such a database is the first step to formalising. And it is easy to do since many of these workers are platform-based. The State should organise this.”

One important issue that many gig workers face, especially taxi drivers who have signed up with aggregators such as Ola and Uber, is the lack of transparency in the terms and conditions of their engagement. There is plenty of anecdotal evidence that there are significant variations in the kind of contracts workers sign.

There are indications that a sizable number of workers in Micro, Small and Medium Enterprises may not get back their old jobs and the chances are high that they will enter the gig workforce. And as the trend towards new kinds of apps is likely to grow, ensuring fair contracts which workers clearly understand, which do not violate basic rights and which offer some protection against a unilateral change in working conditions and wages is an urgent need.

“The ability to raise complaints about work is absolutely necessary and is a part of the formalisation process,” adds Sarayu Natarajan, founder, Aapti Institute, a Bengaluru-based institute on research and technology.

Tanveer Pasha, president of Ola-Uber Drivers’ and Owners’ Association, best describes just how unfair and one-sided these contracts are.

“They don’t call us drivers as they don’t want to come under the labour law. They say partners or use some other term. The pandemic has hit drivers hard and they are not getting any kind of help,” says Pasha.

What do Ola and Uber drivers sign? 

Are the contracts fair? “With companies such as Ola and Uber, whose drivers I represent, we have not signed any contract. They have applied through the app, saying ‘we agree to all terms and conditions’. When we try to log in, a pop-up message appears saying click on ‘agree to Terms and Conditions’,” explains Pasha.

Pasha says the companies are unethical. He claims they gave false assurances to capture the market. “In the beginning they said invest in a vehicle and you can earn 1 lakh or 2 lakh a month. But after we bought the vehicle they said the plan has changed and now you can earn only Rs 50,000.” He says they take 25 percent of the revenue as commission. “If we complain, they say 'if you are happy, work, otherwise you can leave'.”

The situation is quite bad for drivers, “There is no guarantee on earnings. Even after working 20 hours we are unable to earn even Rs 200,” Pasha says.

Are regulations the solution?

Calling workers partners or using another term to circumvent labour laws may “not be unfair,” says Hari, who, however, admits it is wrong of companies to raise false hopes with unsustainable offers.

Hari, however, cautions against rushing into any new legislation and regulation. “Ultimately, it has to be a good compromise between protecting labour and allowing these platforms to survive. The requirement today is definitely  not more regulation but to ensure what there is actually works on the ground.”

That the gig worker needs protection for the present and the future, however, is amply obvious. Yet, to expect this to be done entirely by the State may be unrealistic, especially given some of the specific characteristics of gig work such as choosing different platforms, different kinds of work, volatility of wages and how contracts are renewed.

“The thought that formalisation has to come only from the State needs a rethink,” Natarajan points out. “There are many aspects that can be brought out by corporations and platforms themselves. Evidence shows that complaints are mainly against the platform and not the State.”

Natarajan cautions against viewing everything in terms of COVID-19 but agrees “it does mark a shift in terms of the way we work and how we engage with society and of course the State and a lot of that is going to be mediated by technology.”

The necessity to give businesses a level playing field, allowing more of them to enter the field and grow is accepted. But workers need a level playing field too and here laws and regulations are needed to deter unfair practices. Towards which a lot can and has to come from corporate governance. “Transparency is the first step,” states professor Soundararajan.

“It is necessary to hold firms responsible to some extent, as part of corporate governance, for the welfare of their workforce,” adds Natarajan. Specifically with regard to online contracts mentioned by Pasha, she says “it resembles what is called a web trap contract. This resonates with our own empirical findings which show there is difficulty in accessing the terms. Also, the power differential while making these contracts cannot be ignored.”

The holy grail of social security

And then there is social security, the most important aspect of formalisation as the economy recovers. Basically, enabling workers to protect themselves when there is loss of income. In the absence of any kind of unemployment allowance from the State, the only option is for companies to introduce some kind of contributory savings scheme outside of the government legislated schemes like provident fund.

Hari says let the worker decide how to save. “Every business has a certain capacity to pay while remaining viable and sustainable. How you break it up between cash on hand and earnings for the future can be mutually determined."

Unfortunately, that is the ideal. But given the predominant view that corporate governance is lacking in these areas, there is unlikely to be any consensus on how to structure any contributory savings scheme that leaves out the State.

As we witness the ravages the pandemic has wreaked not only among gig workers but also the entire range of daily wage and contract workers, it is clear that such measures need to be considered by the State and by the corporations more urgently than ever.

Laws cannot prevent a new entrant from offering unsustainable wages and incentives which are then snatched away without notice, as Ola and Uber did. Workers rarely tend to think too far into the future and go for the immediate gain.

“If some new company says they can earn Rs 5,000 a day, workers will take it,” says Pasha. “Workers need to ask companies to specify minimum earnings for a certain number of years.”

And that is something the law can ensure companies build into their business plan with the right kind of regulation and enforcement.

Gender issues get short shrift

The last important aspect is gender issues in the work place, especially the pay gap which is very real and protection from sexual harassment and abuse. The problem: with an office or factory, the workplace is well defined. With gig work, there is no fixed workplace and the task component is very different.

“These women experience threats and insecurity as their work is done in personal and intimate spaces,” says Natarajan. “We have heard some horror stories. Formalisation will have to address how women experience platform work.”

And we come full circle. For as with the drivers and other categories of gig workers, when it comes to addressing their issues, employees, men and women, have no recourse from the platform. So, maybe the real question is how to make platform management into responsible corporate citizens.

This article was first published in Citizen Matters, a civic media website and is republished here with permission. (c) Oorvani Foundation/Open Media Initiative.


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