Gig workers law deepens industrial democracy
Rajasthan's gig workers law mandates transparency in gig companies' transactions and creates a welfare board for gig workers
Recently, the state of Rajasthan enacted the Rajasthan Platform Based Gig Workers (Registration and Welfare) Act, 2023. The long title of the Act sets out three functions that the law is meant to perform: Constituting a welfare board and a welfare fund for platform-based gig workers; registering gig workers, aggregators, and primary employers; and providing social security to gig workers.
Rajasthan’s law is the latest in a series of global efforts to regulate platform/gig work and to protect the rights of gig workers. The “atypical” character of gig work — where workers and consumers of services interact with each other through an online “app” — has allowed gig work companies to evade the obligations of labour law by classifying their workers as “partners” and whose terms and conditions of work are defined only by a contract. Over the past few years, many legal battles have taken place over gig companies’ efforts to “misclassify” workers in this way; while workers have often been successful (though not always), and gained important labour law rights through litigation, there is also an understanding that the specific nature of gig work is best addressed through legislation.
While the new Labour Codes — enacted at the central level — have a provision for social security for gig workers (the details of this are meant to be worked out through executive rules), the Rajasthan law is the first comprehensive law, passed in India, that seeks to address the issue of gig work and protect the rights of gig workers. Among other things, the law sets up a multi-stakeholder welfare board, with representation both from gig workers and employers; it provides for a welfare fund that will be made up of contributions (in the form of cess) from gig companies, contributions from workers, state grants, and other sources; and sets out the rights of gig workers and the obligations of the companies, along with a grievance redressal mechanism for resolving disputes.
These are progressive — but familiar — provisions. There is, however, one way in which the Rajasthan law is markedly innovative even by global standards and seeks to accomplish what no other laws have so far done. In a section of the legislation called “tracking and monitoring”, the Act sets up what is called a “Central Transaction and Information Management System” (CTIMS). It is mandated that every payment including “the break-up of the commission charged,” GST, and welfare cess for each transaction, will be recorded and open to inspection.
The significance of this provision cannot be overstated. As everyone who has used the services of a gig company — whether it is Uber, Ola, Zomato or Swiggy — knows, transactions are mediated through an “app”. The “app”, in turn, runs upon an algorithm that determines charges and rates, commissions, and a “rating system”. The most direct source of exploitation in the gig economy is the platform companies’ control over the app and the opaqueness of the algorithms: Workers are subject to unilateral take-it-or-leave-it changes in their terms and conditions of service through the app and are frequently kept in the dark about the details of transactions. Platform companies have, across the world, resisted opening up the apps to scrutiny, on the basis that it is proprietary software and making it transparent would raise competition law concerns.
The CTIMS provisions of the Rajasthan law tackle this problem head-on. In effect, they mandate transparency with respect to the relationship between the company, the app, and the worker, and create a permanent and transparent record. The purpose of this is to make all dealings open and subject to scrutiny, rather than at the mercy of an opaque app and algorithm.
Indeed, if we consider this provision, as well as the requirement of workers’ presence on the welfare board (which hearkens to the “works council” models that are seen in Germany and certain Scandinavian countries), we see that an underlying theme of the law is industrial democracy. Rather than simply vesting rights in workers and leaving them to take their chances in labour tribunals or courts, the law seeks to empower them by enabling participation, both in the operation of the welfare board as well as through making the terms of service transparent through the CTIMS.
Of course, this is just the beginning. It is possible to deepen industrial democracy in the context of the gig economy. For example, not just by making information transparent through CTIMS, but by mandating that issues around the functioning of the app and the algorithm will be subjected to collective bargaining provisions under existing law; and to subject the app and the algorithms themselves to audits, on grounds of issues like discrimination. Some of these issues may well be dealt with at the time rules are framed under the Act.
For now, however, the Rajasthan law marks a crucial advance for the protection of the rights of gig workers. This is an industry that has long been marginalised and exploited because of the manner in which gig companies exploit loopholes in labour law and simply avoid its application. This is now changing around the world, and the model set out under the Rajasthan law might provide valuable guidance on how to bring about that change.
Gautam Bhatia is a Delhi-based advocate. The views expressed are personal