Blog Symposium on Law & Political Economy after COVID

Gig Economy: Labour Force v. Self-Made Boss

Yamuna Menon


This post is part of our Symposium on Law and Political Economy in India After Covid

Internet penetration and rise of tech enthusiasts has permanently revolutionized our daily lives. The global mobile app economy exponentially growing to reach a worth of $6.3 trillion by 2021, undeniably redefined the labour market nurturing a new phenomenon called the ‘gig economy’ through the digitization of labour. Task driven service rendered through platforms like Uber, Zomato and Dunzo (to name a few) altered consumer behavior and employment relations. Even though the gig economy has been in existence for a long time, the crisis stemming from COVID-19 has reignited discussion around it. Some of the concerns that are constantly flagged are how this sector has little to no regulation, risking the exploitation of vulnerable – whether there is an employment relationship at all or is it merely a partnership, whether the increased flexibility in time and autonomy in the nature of work are disguised, whether the workers are rewarded with social security benefits and whether collective bargaining find a place in gig economy.

The disruptions driven by technology would adequately require enhanced regulatory framework. But let us take a break from our uni-dimensional approach of creating additional laws, followed by a lament about its non-implementation. Do we actually require re-classification of the gig economy workers as ‘employees’ to provide them with benefits, quality work and ability to address grievances? I will argue we do not require a re-classification. Instead, we must create a culture of responsible corporates with sustainable business practices that values human dignity and prosperity sharing.

To understand the alternatives to re-classification better, initially, we need to analyse why there was a rise in gig economy and how it functions. This might help us face certain facts and respond to the questions in a practical manner. An online platform is a medium where a matching of demand and supply takes place, with increased flexibility, no fixed workplace and autonomy to serve different consumers under rival platforms. The services have become more accessible for consumers and the demand has become more real and identifiable for workers (who are labelled as independent contractors). Therefore, gig economy workers and the corporates hosting this ‘matchmaking’ share a mutual symbiotic relationship. If this becomes hierarchical, we run the risk of devaluing the concept of ‘gig economy’. This is because gig economy is premised on this exact idea of finding a match between a customer and a gig economy worker with a hands-off approach by the corporate. Moreover, a gig economy worker can be multi-skilled performing varied tasks across platforms, at different locations and timings – deciding how, when and where to work and earn. A reclassification takes away this aspect. Having a legal recognition of the employee benefits extends a sense of security and predictability however, how many employees actually overcome the nightmare of standing up against their employer to receive such benefits risking their livelihood?  Therefore, our idea of employment must be suited to the evolving economy and society in the digital age, and be focused on creating responsible corporates.

Simultaneously, a reclassification as ‘employee’ is alarming to the corporates as they convert from a ‘matchmaker’ to ‘custodian’. When the estimates hint at increase of 20-30% in cost with reclassification of independent contractors as employees, the judiciary has stepped in to evaluate legal norms and legal realities, across jurisdictions, to ensure viable business models and uphold internationally recognized rights of workers. For instance, the past 5 years witnessed a mix of responses from the judiciary in the US, UK, Spain, Brazil, Netherlands etc on the classification of gig economy workers as employees and included developing tests like ABC  to evaluate this. It is also interesting how a single jurisdiction like UK had differing position on rights of a gig economy worker when the issue was in relation to wages/leave and on collective bargaining. Netherlands has premised its decisions on the identification of a relationship of authority between the corporate and the worker. Considering there are differing opinions and standards, my attempt here would be to suggest an alternative approach to that of reclassifying gig workers into employees or other existing categories, by addressing the structural issues ingrained in the gig economy.

The first step towards having a better relationship between the stakeholders of a gig economy is a fair and transparent written contract. Here is where corporates have to become game-changers by providing detailed contracts in local language to facilitate informed decision making by those working in the gig economy. This has to be supported by the collectives of gig economy workers who can create awareness about the rewards and harms of this system. For example, this would include non-recognition of forced arbitration, formally allowing unionization of the workers and also introducing service related insurance coverage. A 2016 ILO report provides insight into this aspect. Many contracts have explicit clauses on independent contractor and enhanced independent contractor. Simultaneously it also places restraint on trade and monitors workers sharing their ‘rating’ for third party employment opportunities. This double standard cannot be allowed further. Such contradictory approaches are alarming and thus require revision from corporates. This is not giving an ‘employee’ status, but entitling those working in the gig economy to the rewards of being an independent contractor as the contract itself envisaged.

Secondly, what we must refrain from doing is assuming what the requirements of the gig economy workers are. We must be cautious while relying on foreign examples to voice the needs of the gig economy workers in India. For instance, California recently took a step to recognize gig economy workers as employees, however replicating it in India poses challenges. The realities of economy, the alternative job opportunities and financial planning differ starkly – because being employed is prioritized over quality of employment in India. We must engage with the workers and their associations directly to understand whether they were lured into the system through false hopes, impossible targets and abusive conditions, before suggesting policy changes and more laws. This will help in better appreciation of the decision to become a gig economy worker, before importing any foreign models.

Further, we must also educate the end consumers about the inequities that their service providers (i.e. gig economy workers) are subjected to, in order to ensure that the corporates are inclined to provide better working environment and benefits as part of their brand building exercise. For instance, the garment industry witnessed a movement against the sweatshop practices by including details of such work in the label of the garment itself, to influence the choice of garment by a consumer. Consumers can either prioritise the cheaper price or the ethical practices of a brand that they want to associate with.

The next step is to ensure building a strong corporate governance structure to enable a facilitative work environment for the gig economy workers to be self-employed. This might sound ideal but has a lot of significance when corporates are remodeling their business strategies to build reputation during the remarkable rise of responsible investing. There are corporates who voluntarily extend benefits like insurance, pension contributions, holiday pay and sickness benefits to gig economy workers which will influence other corporates to initiate similar steps (for instance, Uber’s proposals in first half of August 2020). Considering many benefits are modeled around collaborations between corporate and a worker, what me must also explore is the readiness of a gig economy worker to give up part of present income for a future expectation. Interestingly, the concept of dependent self-employment was also invoked in many occasions to explain the functioning of gig economy, however recent trends makes a departure from such efforts. What requires attention is the diverse nature of work that a gig economy worker can involve in, the amount of control by a platform on the worker and the possibility of easy portability between platforms along with the credentials earned. Assessing these factors can lead us to understand the kind of relationship between parties in gig economy. 

Finally, an accessible grievance redressal mechanism is pertinent. This can take two forms – one, that is internal support structure within the online platform and two, unrestricted access to the legal structures of the land for remedies. Many a times we have noticed how the redressal processes consume time, resources and livelihood of a person. Irrespective, having these structures is crucial to building trust between corporates and workers. As an example, let us consider an issue that often gets highlighted – gender discrimination and pay gap among the gig economy workers. This is where the State can step in to scrutinize such actions of the corporates, analyse the remedial measures and impose policies against victimisation of a worker after the worker files a grievance.

Therefore, while it is appealing to suggest reclassification of gig-workers into existing structures, we must also appreciate that such a proposition challenges the very premise of gig economy. Instead, a better approach would be to strengthen equitable relationships and power structures between various stakeholders in the gig-economy. This will help create responsible and sustainable business models, having transparent contracts with fairer terms and fostering an environment for mutual development among stakeholders. This also means that corporates have to refrain from double standards to squeeze biased benefits for profitability, avoid unilateral alteration of terms and develop an understanding around treating workers with dignity. Such an approach would be plausible only with the support of end consumers – how they balance/compromise/make choices based on cost efficiency in terms of cheaper service versus valuing ethical practices of a corporate towards the gig economy workers.

Yamuna Menon is a 2020 graduate of the National Law School of India University, Bangalore, who is deeply interested in antitrust law.

Picture Credits: Almasty

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