The Gig Economy Calls for Identification Within the Indian Labour Laws


Sonam Srivastava
Kushagra Srivastava


Time to read

5 Minutes

The Indian employment laws mandate a person to fall under the definition of ‘employee’ in order to avail the underlying benefits. In this scenario, a gig worker (who is rather a freelancer working on short-term contracts) is often devoid of such benefits on account of no resulting employer-employee relationship.

While the Employment Exchanges (Compulsory Notification of Vacancies) Act 1959 mandates a person to be employed in any establishment for remuneration to qualify as an employee, the Minimum Wages Act 1948 (MWA 1948) requires him to be employed for hire or reward in a scheduled employment in respect of which minimum rates of wages have been fixed. Other definitions under respective enactments also make it amply clear that the person must be an employed one and specify wages as the mandatory criteria.

Thus, judicial intervention in the interpretation of these definitions is indeed the need of the hour keeping in mind that gig workers are projected to constitute half of the workforce by 2020 and almost 80 percent by 2030. Further, it has been reported that 70 percent corporates in India have used gig workers at least once for major organizational issues in 2018.

Uber case and the stand taken in the UK

A positive intervention recently came up in the UK where, in the Uber BV v Aslam [2018] EWCA Civ 2748 case, the Court of Appeal upheld that Uber drivers are workers and shall be considered as working while the app is in operation with them being ready and willing for the trips. The Court observed that although according to the contract the workers are self-employed yet the nature of their work clearly indicates that they are employees and shall be governed by the Working Time Regulations 1998 and the National Minimum Wage Regulations 2015.

The decision comes from a common law jurisdiction which has been cited extremely often by the Indian courts. Thus, a reference to the same in forthcoming cases can certainly facilitate the Supreme Court in what could prove to be a revolutionary step.

Roots in the Indian judiciary

The issue has largely gone unaddressed in the Indian courts, though some traces may be found dating back to 1960s, when the labour department of the state of West Bengal issued a notification (dated 16 May 1960) which provided that the minimum rates of wages for the employees commonly known as freelancers employed by the producers shall not in any case be less than that of the permanent workers of the respective categories.

This was challenged before the High Court of Calcutta in 1961 when a single judge held that a freelancer does not qualify to be an employee. In addition, the judge went on to hold that, in the notification, such persons form a class by themselves but such classification is not permitted or contemplated by the provisions of the MWA 1948. But when the matter went to a division bench it was observed that what the notification does is that it places freelancers in a category separate from that of permanent employees. Thus, when the minimum wages of this category are being fixed, the same cannot be challenged on the ground that it is in contravention of the MWA 1948, the provisions of which allow for minimum wages to employees only.

High Courts with the intervention

It is startling how the High Courts across the country have stepped up to resort to natural justice with the Supreme Court still unable to recognize it.

In JS Walia’s case, a 2014 ruling of the Delhi High Court, a contractor had availed the services of a welder from time to time. It was contended that there existed no employer-employee relationship. Moreover, since the welder did not work continuously for a period of 240 days, there was a justification to terminate his services as well. But the holding of the Court stated that one should be conscious of the fact that in most cases workmen do not have adequate documentary evidence to show their employment and the same has to be discerned from the circumstances, oral evidence and other material that may be placed on record.

Similarly, the Bombay High Court, with a revolutionary dictum in Krantikari Suraksha’s case (1995), went on to observe that unfair labour practice is one subject for the purpose of which it is necessary to identify the employer. With such subject not having been adequately taken care of by the Maharashtra Security Guards Act 1981 and the relevant Security Guards Scheme in question under that legislation, the registered employer must be held to be the employer at least for the purpose of unfair labour practices complaints and therefore it would be wrong to hold that there could never be a legal relationship of employer-employee between the registered employer and the security guards for any purpose whatsoever.

But the issue still looms large

The Supreme Court, as observed in Sarva Shramik Sangh’s case (2003), has been stern on its view that the sine qua non for application of the concept of unfair labour practice is the existence of a direct relationship of employer and employee.

Notwithstanding the above, it would be wrong to state that efforts were never made by the Supreme Court. In Hussainbhai’s case (1978) it was held that the true test to determine the employer-employee relationship is that of ‘economic control’ and thus where a worker or group of workers labours to produce goods or services and these goods or services are for the business of another, that other is, in fact, the employer. He has economic control over the workers’ subsistence, skill and continued employment.

However, this test was ruled to be insufficient in Nilgiri’s case (2004) wherein the Supreme Court was of the view that along with the test following factors shall also be taken into account to determine the nature of relationship: (a) who is the appointing authority; (b) who is the pay master; (c) who can dismiss; (d) how long alternative service lasts; (e) the extent of control and supervision; (f) the nature of the job, ie, whether it is professional or skilled work; (g) nature of establishment; (h) the right to reject.

Thus with the insertion of several factors as a necessary precondition, it is hard to state that the Supreme Court is taking steps to recognize the short-term contract workers as employees.


It is indeed a harsh reality that there is in an absence of relevant legislation which clearly lays down the law for the rapidly developing gig economy, but the reluctance on the part of the judiciary has certainly made it exasperating for justice to be rendered by adhering to the prevailing laws.

At the same time it cannot be held in entirety that the current laws do not offer the inclusion of gig workers within the ambit of employee. The definition provided under the MWA 1948 states that employee also includes one declared to be an employee by the appropriate Government. Thus, a mere notification declaring gig workers to be classified as an employee would suffice. Moreover, the definition under the Payment of Gratuity Act 1972 states that a person employed on wages, whether the terms of his employment are express or implied, qualifies to be an employee. This indeed opens the scope for judicial activism by interpreting the term ‘implied’ so as to include the short-term contract workers within the ambit.

What stands required at this stage is an approach of implementation. The Supreme Court should consider doing away with its half-hearted approach and resort to enhanced protection for the relevant workers. Failure to carry out the same would render triggering of strong discontent among the gig workers as inevitable and may lead to flooding of the courts with petitions in the near future.

Sonam Srivastava is a registered Indian Patent Agent and a freelancing patent consultant.

Kushagra Srivastava is a student at the National Law Institute University, Bhopal.


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