Gig Workers Achieve Nationwide Social Security in India
In a significant development for gig workers in India, the central government has announced the implementation of a social security code aimed at providing essential benefits to those engaged with online platforms. This initiative is expected to benefit approximately 15 lakh workers already registered on the labour ministry’s e-shram portal, with the number likely to increase as major companies like Swiggy, Uber, and Ola are now required to allocate a portion of their annual turnover to welfare funds for gig workers. This move marks a historic recognition of gig workers, who previously lacked legal protections.
The introduction of the social security code is a landmark moment for gig workers, as it formally defines their status for the first time. This change is expected to impact over seven million workers affiliated with digital platforms, who have historically been excluded from legal protections. The new regulations mandate that companies earmark 1-2% of their annual turnover for the welfare of gig workers, with a cap of 5% on the total amount paid to these workers. This financial commitment aims to enhance the social security framework for gig workers across the country.
Kajol Pokkhriyal, a member of the employment and HR laws practice at Nishith Desai Associates, emphasized that while some states had already begun to provide social security for gig workers, the new code ensures comprehensive coverage nationwide. This development is crucial for millions of workers who will now have access to portable benefits, health coverage, and social security, allowing them to move freely between jobs and states without losing their rights.
Expanded Benefits and Protections
The social security code introduces a range of benefits for gig workers, including mandatory appointment letters, accident insurance, and disability protection. Rishi Agrawal, co-founder and CEO of TeamLease RegTech, highlighted that these reforms address the financial invisibility of gig workers by extending portable provident fund contributions and pension eligibility, regardless of employer continuity. Additionally, workers will gain access to affordable credit through formal records, which can significantly improve their financial stability.
The code also stipulates that accidents occurring while traveling between home and workplace will be classified as employment-related accidents, ensuring that gig workers receive compensation in such cases. This provision is a critical step in recognizing the unique challenges faced by gig workers and providing them with the necessary protections.
Future Growth of the Gig Economy
The number of gig workers in India is projected to rise dramatically, with estimates suggesting an increase from 7.7 million in 2020-21 to 23.5 million by 2029-30. This growth is largely driven by the expansion of online platforms and the increasing adoption of digital services, which have created numerous job opportunities for low-skilled individuals and unemployed youth. The government’s commitment to social security for gig workers is expected to further stimulate this growth by attracting more individuals to the gig economy.
Minu Dwivedi, a partner at JSA Advocates & Solicitors, noted that aggregators who previously classified gig workers as independent contractors without providing social security benefits will now be required to comply with the new regulations. This shift is essential for ensuring that gig workers receive the protections they deserve as part of India’s evolving labor landscape.
Industry Response and Implementation
In response to the announcement, Uber India expressed its commitment to collaborating with the government to ensure the effective implementation of these reforms. Other companies, such as Rapido, are currently reviewing the notification to understand its implications. The overarching sentiment among industry leaders is that strengthening social security for gig and platform workers is vital for fostering long-term resilience and inclusion within the workforce. The government has also introduced an Aadhaar-linked Universal Account Number to facilitate easy access to welfare benefits, making them fully portable and available across states, regardless of migration. This initiative aims to simplify the process for gig workers, ensuring they can access their benefits seamlessly as they navigate their careers in the gig economy.
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