Regulating the Gig Economy: The Need for Legal Frameworks to Protect Workers

Karnataka’s proposed legislation aims to establish fair contracts and income security for gig workers, addressing a crucial gap in labor rights. These measures are designed to bolster the rights of workers who, while not classified as traditional employees, also lack the true independence of self-employed contractors. This initiative represents a significant step toward creating a more equitable framework for the gig economy, ensuring that workers are protected while navigating the unique challenges of platform-based employment.

The Karnataka government’s plan to introduce legislation aimed at supporting gig workers is both a positive and essential initiative.

This proposal effectively tackles three major misconceptions propagated by the gig and platform industry. The first misconception is that aggregators promote platform work by offering the allure of being “boss-free” and positioning workers as “partners” or “captains.” This narrative attracted many, especially the youth, to engage in gig work. However, the reality is starkly different; there exists a dominant entity—the algorithm—alongside a network of local managers enforcing its directives. Algorithms determine work hours, delivery assignments, cancellation protocols, and performance ratings essential for task allocation, dictating when workers may be deactivated or terminated. Shaikh Salauddin from the Indian Federation of App-based Transport Workers aptly described this experience, stating that “Gig workers spend hours trying to guess what the algorithm is doing and it feels like they are a rat in a maze.” This experience starkly contrasts the idea of being one’s own boss, as the workers must consent to stringent digitally generated terms that govern every aspect of their job. Noncompliance can result in serious repercussions.

The Karnataka Bill acknowledges the dominant influence of these algorithms, holding aggregators accountable for disclosing the criteria that guide their decision-making processes. This includes work allocation, denial grounds, worker categorization, and the use of personal data in determining work opportunities and earnings. The legislation aims to dismantle the algorithmic control exerted by companies, enabling workers to regain some authority over their professional lives.

The flexibility myth is the second misconception. The industry claims that platform workers enjoy flexible working conditions, allowing platforms to exclude them from labor protections. However, research reveals that this notion of flexibility is often misrepresented. In reality, the flexibility resides solely with the employer, leaving workers with little to no autonomy. Workers are often bound by mandatory login times to qualify for incentives, and those who experience inactivity face unfavorable rate cards and reduced incentive opportunities.

Karnataka’s draft Bill introduces essential provisions for fair contracts, income security, and the right for platform workers to decline work without facing penalties. These measures enhance the position of workers, who find themselves neither classified as employees nor genuinely enjoying the independence of self-employed contractors.

The third myth posits that gig workers are “part-time” individuals seeking supplementary income. A study conducted by PAIGHAM and the University of Pennsylvania highlights that 96% of surveyed cab drivers rely entirely on gig work for their daily income, with a similar figure of 90.7% for delivery workers. The average work hours for taxi drivers exceed 11 hours per day, and for delivery personnel, around 10 hours. By mandating social security, the Karnataka legislation acknowledges this reality and paves the way for comprehensive support schemes addressing issues such as old age, bereavement, and health crises.

Despite the Indian government’s endorsement of progressive principles for platform workers at the G-20 summit last year, its Code on Social Security has fallen short, failing to provide adequate protections by separating workers from essential labor rights. Notably, state governments are leading the charge in this regard, with Rajasthan being the first to pass relevant legislation, soon followed by Karnataka, with Jharkhand, Tamil Nadu, Haryana, and Telangana also taking steps in this direction.

In the political landscape, where guarantees rely entirely on state funding, this law marks a significant shift. It underscores that social security for workers should also be supported by market contributions, emphasizing that private entities must uphold their economic responsibilities to workers. While there are areas for improvement in the Bill—such as the lack of provisions on minimum wage, occupational safety, working hours, and collective bargaining rights—the legislation nonetheless empowers workers to organize and advocate for enhanced rights.

Rakshita Swamy is the Director of the Social Accountability Forum for Action and Research, while Biju Mathew serves as President of the International Alliance of App Based Transport Workers.

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