The Rajasthan Platform-based Gig Workers (Registration and Welfare) Act, 2023: Something for Gig Workers to cheer for

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The gig economy includes platform-based companies (interchangeably used as platform aggregators) like Ola, Uber, Swiggy, Zomato and Amazon, etc. It has the potential to support up to 90 million employment in India’s non-farm sector alone, transact over USD 250 billion in the volume of labour, and contribute an additional 1.25% (approximately) to India’s GDP over the long run, according to a recent analysis by Boston Consulting Group[i]. Thus, the gig economy has been a useful outlet for employment in a country like India where informal labour and unemployment have characterized the structure of the job market in the last decade[ii]. In a bid a become India’s first state to guarantee social security to gig workers[iii], Rajasthan on 21st July 2023, tabled the Rajasthan Platform Based Gig Workers (Registration and Welfare) Bill, 2023. The Bill was passed in the Rajasthan Assembly and enacted as a law on 24th July.

Major Provisions in the Act

The Act talks about taxing internet platform aggregators operating in the state with up to 2% of their earnings from each transaction through the platform. The tax shall not be more than 2% or less than 1%, as per the Act, and will be applied to a company’s earnings on that transaction and not to the customers[iv]. This fee, thus, will serve as the welfare fee (take care of their social security) for gig workers. Associations that represent gig workers have applauded the action, which was schemed by the Indian National Congress party, which is currently in power in the state. Over the past few years, gig workers have routinely organized protests seeking better pay and social security benefits.

The Act extends rights to Platform-based Gig Workers: being registered with the state, having access to general and specific social security schemes, having an opportunity to be heard for any grievances, etc. Under the Act, as already mentioned, the gig workers and the platforms active in the state will be registered and a Welfare Board and Welfare Fund for gig workers will be set up to essentially guarantee social security to the workers. The Platform-based Gig Workers Welfare Board will convene at least once every six months, with the Labor Minister of the Government of Rajasthan serving as its chair. Gig workers and “aggregators, owners, and manufacturers of goods and services being delivered through platforms” [v]in each state will have two representatives on the Board, in addition to the bureaucrats, and all four will be chosen by the government[vi]. Next, the state government will nominate two more delegates, one of whom will come from civil society. Another requirement is that women will make up one-third of the Board – indeed a welcome move[vii]. The state government will maintain a database of the gig workers and generate a unique ID for every one of them. They will have a unique ID which will be applicable across all the platforms[viii]. The ID will enable such workers to access general and specific social security schemes, be heard in case of a complaint, and participate in all decisions taken for their welfare through representation in the Board. Platform aggregators, too, will have to get registered with the state government within sixty days of enforcement of the Act. The state will maintain a register of platform aggregators operating in the state along with the name and designation of an officer authorized by the state government responsible for carrying out obligations under the Act, once it is enforced. This information will also be published on a web portal. Additionally, the government has included a penalty clause[ix]. Any platform which misses the deadline to pay the welfare fee will be fined with interest compounded annually from the date that payment is due at the rate of 12%. The Act gives the state government the authority to fine platform aggregators up to Rs. 5 lakh for the first violation and up to Rs. 50 lakh for future violations if any other provision of the act is broken.

The Breakthroughs and the Concerns: What Works and What Doesn’t

There are many important breakthroughs in this law, including the imposition of a cess fee (read tax) on individual transactions to finance the social security schemes for workers. This ensures that workers benefit from social security that they have earned from their work, instead of having to rely on charity from platform-based companies or allocations by the government. To enhance transparency and accountability, as already discussed, the Act also mandates the establishment of a centralized transaction tracking and management system[x]. This will make every record available. Arbitrary deductions in the name of the delivery fee and a lack of transparency when it comes to payments has been a major issue with gig work. This system will serve as a common portal, offering detailed breakdowns of individual bills, including fare charges, service costs for customers, payment to platform workers, cess fee deductions, and the GST deducted at the transaction level.

A section on the gig economy was introduced to the statute Code on Social Security in 2020, a federal statute that codifies all labour rules in India. This clause requires platform-based businesses to establish a social security fund with contributions between 1% and 2% of their annual revenue. This has not yet begun to work, though. In line with the 2020 Code on Social Security, this Act sets the ball rolling and the Government of India should think of fine-tuning this and implement the same across all the states in India[xi].

Regarding grievance redressal, the Act designates the Department of Labor and the Tripartite Board as responsible entities[xii]. These bodies will oversee the registration, acknowledgement, and timely resolution of grievances faced by platform-based gig workers, bolstering their rights and protections. There is a provision that indicates that the Board should engage with registered unions who work with gig and platform workers and hold ‘regular’ consultations, without specifying how frequent these consultations should be. Furthermore, it is not stated which problems call for such a consultation. This indicates that there is no mandatory requirement to involve unions in matters that might materially affect employees’ rights. The Act has to be strengthened through further amendments to gig workers’ collective action.

According to the Act, platform-based gig workers will have access to general and specific social security plans developed by the Board in exchange for a contribution from them. However, the Act makes no mention of the amount of this contribution, its upper or lower bound, or how it will be collected. The payments made by workers should be maintained to a minimum given the low wage rate and the uncertainty in their income. The plan should make sure that the worker’s method of contribution collection prevents the platform aggregator from shifting any costs to the gig worker or further reducing their wages.

Platform aggregators may be discouraged from using gig working arrangements as they will forced to assume additional liability and divulge information about their financial activities to the government[xiii]. Even, the tax on each transaction could put a burden on consumers eventually if the platform aggregators shift the burden to the consumers. This can lead to a fall in demand consequently leading to the profit of platforms falling which can make it counterproductive for the gig workers. Some of these concerns remain.

Summing Up

The Act is a step in the right direction with the same being discussed in Karnataka[xiv] and Delhi[xv]. Also, following Rajasthan, associations for gig workers across the country have urged the central government to take action to assure social security benefits, minimum salaries, and fixed hours of work for gig workers. It was also announced that when gig workers register with the state government, they will receive a one-time payment of Rs 5,000 to help them in acquiring critical things such as helmets, uniforms, and other everyday essentials. If properly implemented, such legislation will be the first step in providing gig workers with a respectable identity and recognition, allowing them to actively assert their legal entitlements, hold the platform accountable, and most importantly, participate in decision-making.

gig economy

Author: Sovik Mukherjee

The author is an Assistant Professor in Economics at the Faculty of Commerce & Management, St. Xavier’s University, Kolkata, West Bengal, INDIA.

















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