Contemplating a Hybrid Model for Gig Work: Perspectives from India and the Code on Social Security, 2020

While gig work comes with challenging work conditions, the pandemic's impact has perpetuated this, leading to calls for unionisation and protests for better working conditions, in India and globally. Importantly, the pandemic has highlighted pre-existing conceptual challenges with gig work. Gig work’s inherent flexibility is being juxtaposed with traditional ‘employment’ although gig work was perhaps never envisioned as such. Technology has further disrupted ‘employment’ by transforming organizations, thereby rendering ‘employees’ less necessary.

Interestingly, recent protests and litigation, in India and globally, are demanding ‘employee’ status for gig workers, given that access to social security and other benefits generally hinges on ‘employee’ status. Therefore, whether gig workers are ‘employees’, ‘independent contractors’ or ‘self-employed’ is an increasingly critical question.

Courts across jurisdictions are emphatically recognising the ‘employee’ status of gig workers, often after protracted litigation. For instance, the Spanish Supreme Court in 2020 ruled that riders of a delivery company were employees and not self-employed workers; legislation on this was recently enacted. The French Supreme Court of Appeal, in 2020, observed the ‘link of subordination’ test to rule in favour of drivers claiming employee status on a ride-hailing platform. Additionally, a Dutch court favoured drivers on the same platform, confirming their ‘employee’ status. Most recently, the European Commission has proposed that platform workers be legally presumed as ‘employees’, subject to certain conditions; these conditions follow important jurisprudence in the European Union, where the self-employment status of platform workers was challenged. These developments are also inspired by ‘employee’ status protests in California, followed by the AB5 law, effectively presuming ‘employee’ status for certain ‘independent contractors’. Other American states may also follow suit.

The Hybrid Model: A solution to the classification problem?

An important question is whether solving gig work’s ‘classification problem’ lies in assigning ‘employee’ status to gig workers. The genesis of this lies in gig work’s uniqueness. A gig worker chooses the time and duration of work, often working across platforms. This flexible model of gig work makes it difficult for traditional benefits, intended for industrial nine-to-five workers, to apply to gig workers (for instance, fixed salary, minimum wages, and collective bargaining policies). It is also inaccurate to classify gig workers as ‘self-employed’ solely because they select work assignments. The ‘self-employed’ have  opportunities to acquire clients to develop business and, hence, profits; this remains inaccessible for gig workers. Further, companies retain some control over gig workers, reminiscent of traditional employment. Gig workers, therefore, may be treated uniquely, as a novel category between an ‘employee’ and ‘independent contractor’/‘self-employed’ worker.

This view is endorsed by academics. Some recommend legislating for a third, ‘hybrid’ category of ‘independent worker’, such as in Germany where the concept of ‘employee-like person’ is endorsed. Similarly, in the UK, the Supreme Court held drivers on ride-hailing platform to be ‘workers’, again an  intermediate category, who are entitled to unique benefits. Italy too termed couriers with delivery platforms as ‘pseudo-subordinate’ workers with limited employment rights. Another route endorsed is providing all gig workers with basic rights including minimum and fair pay, health and family leave, and protections from discrimination, but not additional benefits including retirement, health and welfare benefit plans, and unionization, which remain restricted to ‘employees’.

The hybrid model and Indian law

In India, the passage of the Code on Social Security, 2020 (Code), amidst the pandemic, is significant, as it is the first Indian law recognizing gig work.

Interestingly, the Code defines gig workers as individuals ‘earning outside a traditional employer-employee relationship’, indicating their non-employee status under the Code. Consequently, the Code provides a distinct model of benefits, including life and disability cover and accident insurance. The Code’s proposal, for creating a ‘Social Security Fund’ for gig workers further endorses this, by requiring contributions by governments, fund beneficiaries/employers, or corporate social responsibility (CSR) contributions. This compares to portable benefits, where certain universal benefits, not tied to a particular job or employer, but associated solely with individuals, are available to gig workers. 

These provisions indicate a hybrid model. However, while the Code envisages a distinct model of benefits, providing such benefits is discretionary, in contrast to the mandate on providing social security to ‘employees’ (such as gratuity).  Arguably this discretion in the Code’s text may subsequently convert to a de facto mandate, with implementation in line with the Code’s larger intent. Regardless, there remains the possibility of more being done to statutorily provide gig workers with assured benefits, despite a hybrid model being contemplated.

However, the Code’s recognition of a hybrid model is preliminary. Developments are underway, which will interact with this model in ways that are unclear presently. A public interest litigation (PIL)  filed before the Supreme Court of India (September 2021) has claimed social security benefits for gig workers; it reportedly seeks benefits under existing social security laws for gig workers, and classifying gig workers as ‘employees’  vis-à-vis platforms. This also comes when, globally, litigation surrounding employee statushas gained momentum.

Other developments will also impact the Code’s hybrid model. The Code’s implementation, the contents of the proposed social security schemes for gig workers under the Code, and a reported National Employment Policy addressing the status of gig workers, are all underway. These will impact not only how the Code’s attempt to carve out a hybrid model fares, but also what happens to the future of the nascent hybrid model, should there be a reclassification of employment status of gig workers on account of the PIL.

Summing up

While gig work’s initial attraction was as a new way to earn, its growing prominence and increasing indispensability raises important questions. The most contested of these concerns employment status.

Jurisdictions have adopted different approaches: some have, in fact, granted ‘employee’ status and guaranteed employee benefits, which has been uniquely challenging. In Spain, it is reported that the rider law has adversely affected both companies and workers. In California, AB5 has encountered backlash in the form of Proposition 22, exempting gig companies from providing employee benefits to gig workers. Though Proposition 22 has been rendered unconstitutional recently, efforts similar to it are being contemplated across the United States of America. The other approach has recognised them as an independent category altogether. This is particularly interesting because it contemplates a hybrid model with unique benefits, perhaps best suited to address gig work’s unique nature.

In India, the Code’s enactment and attempt to carve out a hybrid model of benefits to gig workers is important. However, commenting conclusively on this model’s merits is premature, given that the Code’s implementation and the PIL, are pending. Regardless, while the Code has seemingly taken steps towards a hybrid model, its future, though some way off, will be keenly followed.

Soumya Jha is a Research Fellow at Shardul Amarchand Mangaldas & Co, New Delhi, India.

Ulka Bhattacharyya is a Research Fellow at Shardul Amarchand Mangaldas & Co, New Delhi, India.

The authors would like to thank Ms Pooja Ramchandani for valuable comments and discussions on earlier drafts. All views expressed are personal.