Introducing the Topic:

The platform-based gig economy has been steadily expanding, with more companies entering the digital space. According to a NITI Aayog projection, the gig workforce is expected to grow to 23.5 million workers by 2030. While the gig economy has revolutionized the world of work, it has also introduced new challenges. A primary concern is the ambiguity surrounding the employment status of gig workers. The Social Security Code (SSC) 2020 defines a gig worker as “a person who performs work or participates in a work arrangement and earns from such activities outside of a traditional employer-employee relationship.” This definition raises questions about whether gig workers are partners of companies like Swiggy, Ola, and Uber or should be considered their employees. This debate is crucial given that many platform-based gig workers face a lack of social protection, long working hours, and employment instability. On July 24, 2023, Rajasthan became the first Indian state to address these issues legislatively with the Rajasthan Platform Based Gig Workers (Registration and Welfare) Act, 2023.

Following this, Karnataka has also drafted a bill aimed at protecting gig workers, marking significant steps toward recognizing and securing this workforce.

Karnataka’s Draft Bill (Discuss the Legal Framework)

The draft Karnataka Platform Based Gig Workers (Social Security and Welfare) Bill, 2024, aiming to regulate social security and welfare for gig workers. Gig workers have raised concerns about being dismissed unfairly by aggregator companies due to poor client ratings or not meeting response rates. The bill proposes significant reforms, including protection against arbitrary dismissals by requiring a 14-day notice with reasons for dismissal, the creation of a welfare board funded by the aggregator company, state, and central government, and access to social security schemes as announced by the state government.

Key Features:

1. Welfare Board and Grievance Cell: Proposes establishing a welfare board and grievance cell to oversee gig worker welfare.
2. Registration and Unique IDs: Gig workers receive a unique ID usable across platforms upon registration with the welfare board.
3. Welfare Fund: Calls for creating a welfare fund with contributions from aggregators, the state government, and workers.
4. Contract Review and Safety: Requires government review of worker contracts and mandates a safe working environment.
5. Penalties: Proposes fines for aggregators violating provisions, ranging from INR 5,000 to INR 100,000.

The bill does not clearly define the employment status of gig workers. It describes a gig worker as “a person who performs work or participates in a work arrangement that results in a given rate of payment, based on terms and conditions laid down in such contract.” The term ‘work arrangement’ is vague and does not specify the exact relationship between the aggregator and the gig worker, leaving it open to interpretation. The bill also does not clarify who sets the ‘terms and conditions of the contract,’ which are typically decided by the aggregator companies. While the bill requires aggregators to inform gig workers of any changes in the contract terms at least 14 days in advance, it does not ensure that the original contract terms are fair. It remains unclear how the government will enforce ‘fair contracts,’ as claimed.

In Continuation – Discuss the Current State Analysis

India’s gig economy, projected to surpass $455 billion by 2024, is growing, with the workforce expected to reach 23.5 million by 2029-30. Despite this growth, challenges include a lack of data on gig workers and inadequate social security measures.

Lack of Data and its Implications: The absence of official data on gig workers complicates efforts to secure their rights. Companies like Uber and Zomato do not publicly disclose workforce data, hindering effective policy formulation.

Social Security Initiatives: The Code on Social Security, 2020, aims to provide benefits to gig workers but is not yet operationalized. The e-Shram portal, launched in August 2021, aims to create a national database for unorganized workers, including gig workers.

Talk in Support of the Topic 

Supporters argue that the legislative efforts in Rajasthan and Karnataka are necessary to provide gig workers with the protection and security they currently lack. These measures will ensure fair treatment, social security benefits, and a safer working environment, addressing the exploitation often faced by gig workers.

Critically Analyze the Concerns of Startups Regarding the Karnataka Bill to Give a Sense of Completion

A group of top tech startups and unicorns, including Swiggy, Ola, Zomato, Uber, Urban Company, and Amazon, have expressed “serious concerns” over the Karnataka Platform Based Gig Workers (Social Security and Welfare) Bill, 2024. They argue the Bill, in its current form, would hinder the ease of doing business, increase regulatory burdens, and impact the startup economy. This feedback was submitted through trade bodies like the Confederation of Indian Industry (CII), the National Association of Software and Service Companies (Nasscom), and the Internet and Mobile Association of India (IAMAI).

Broad Inspection Powers:

The Bill grants the state government extensive powers to inspect algorithms, contracts, and daily operations of platforms.

These powers are seen as reminiscent of the “Inspector Raj” era, potentially stifling business operations and going against the spirit of ease of doing business.

Worker Classification:

Unlike Rajasthan’s approach, the Karnataka Bill does not clearly distinguish gig workers from traditional employees.

Allowing gig workers to seek redress under the Industrial Disputes Act of 1947 effectively treats them as full-time employees, which could lead to increased regulatory burdens.

Confidentiality and Proprietary Information:

The Bill mandates the sharing and auditing of proprietary information, including algorithms, which poses risks to the competitive edge of platforms.

Such confidential information may not be disclosed to gig workers without adequate safeguards.

Central Transaction Information and Management System (CTIMS):

The requirement to map every transaction onto the CTIMS is seen as excessively onerous.

Startups suggest relying on self-reporting and audited financial statements instead, as integrating a holistic system via APIs with all platforms is challenging.

Cess or Welfare Fees:

The proposed welfare fee should be capped at 1-2% of the payout to gig workers or state-specific net revenue, with a maximum of Rs 1-2 per transaction.

Higher fees would be burdensome and could lead to increased costs for customers or gig workers, which would be counterproductive.

Operational Mandates:

Provisions in the Bill directly mandate how companies should operate, including notice periods for gig workers, grounds for termination, and the number of cancellations allowed per week.

Standard template contracts might not consider sector-specific nuances, impacting the flexibility needed by different startups.

Personal Liability for Directors and Employees:

The Bill’s provisions on personal liability for directors and employees in case of offences are seen as overly harsh.

This could deter businesses from operating in Karnataka and breed mistrust within the industry, especially given the push towards decriminalization in other labor codes and laws.

Startups argue that these provisions could significantly hamper their operations, increase regulatory and compliance burdens, and ultimately harm Karnataka’s reputation as a progressive state and startup hub.

Summarize the Discussion:

The Bill is likely to have far-reaching implications as it introduces some first-of-its-kind welfare measures for Gig Workers and onerous compliance requirements for Aggregators. Provisions such as dispute resolution through the mechanism prescribed under the ID Act may be challenging to implement given that the ID Act is a law which is fundamentally based on (and which provides a dispute resolution framework in the context of) an employer-employee relationship.