Labour Laws in the Age of the Gig Economy

Gig economy is a system where most of the people work on contractual basis or what is called as gigs. These are short term employments. The issue with these sorts of employment is that there is a compromise with labour laws since these employees doesn’t necessarily fall under the definition of labourers or workmen. Read along to know more about the case studies of Ola and Uber workers and their concerns.

Introduction

The gig economy is basically a labor market where exists pre-dominance of short term contracts or freelance work instead of permanent jobs.[1] It is termed as a ‘gig’ economy because each piece of work done is seen as an individual gig and the workers are paid after the completion of each gig.[2] The Taylor Report in its definition of gig economy states that “it tends to refer to people using apps to sell their labor.”[3] The gig economy can also be based around non-technological platforms but it has app-based platforms to its core. Since under this type of working model the work is divided into individual ‘gigs’ it offers flexibility to the worker as he exercises control over the working hours and it allows him to be ‘fluid’ while juggling with his other priorities. In India, the major manifestations of this gig economy come in the form of Uber and Ola which provides customers with app-based taxi services.

The Issues: Question of Flexibility

Though this kind of setup offers the workers autonomy and flexibility, since it classifies them as independent contractors it denies them protection against unfair dismissal, sickness pay, paid leave or minimum wage. Being an independent contractor they are denied all the benefits which are attached with being a ‘worker’ or an ‘employee.’ The problem arises when the workers are not given as much flexibility as they are promised. A lot of workers in this gig sector are often pressurized to work regularly or to be available when the company requires. Under the guise of an independent contractor a lot of these workers are effectively the employees of the company with little control over their work situation.

This concern was also voiced by the drivers of Ola and Uber recently in a case filed against these companies in the Delhi High Court. These companies classify the drivers working under them as ‘driver-partner’ which puts them in a legally grey area. The drivers have contended that the selection of the customer[4] is done solely by the company and the fares are changed regularly based on the discretion of the companies without any consultation and hence there is no element of flexibility present.[5] An analysis of the employment contract of the cab drivers of Ola shows that the contract requires the driver to be exclusively available to Ola and to no other competitor, and also lists out various terms and conditions which are to be followed during the service period, the violation of which may lead to the imposition of hefty fines on the drivers.[6]

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To Regulate, or Not to Regulate

In a similar case filed by the cab drivers an employment tribunal in UK ruled that the drivers appointed by Uber are ‘workers’ and not independent contractors and are entitled to all rights attached to the workers as such.[7] Also, in a USA judgement delivered by the New York Department of Labour Administrative Law it was held that the ‘driver-partners’ of Uber were essentially employees as the company exercised a considerable amount of control over them and were thus, entitled to all the related benefits. [8]

In light of the orders passed by these courts it is important to realize that the primary reason for which a substantial number of people choose to work in gig economies is to enjoy the flexibility and the autonomy which these jobs offer. In a survey conducted by the Chartered Institute of Personnel and Development (‘CIPD’) in UK, 55% of the people doing gigs agreed that they were satisfied with the independence they enjoyed.[9] While it is important to protect the basic rights of the workers it is also pertinent to understand that by choosing to work jobs in this gig setup the worker chooses to forego some of his rights in lieu of the benefits that it offers. They make a conscious decision to do the work despite knowing about the lack of social security benefits that it provides. In the survey by CIPD it was also observed that about 58% of the workers in this sector had other permanent jobs and were doing this only as a means to complement their income.[10] Thus, the classification of all the workers here as employees is problematic as it takes away the element of autonomy which for a lot of people is the primary reason to work here in the first place.

In my opinion, there is a need to evolve a sort of demarcation mechanism using which the workers who work regularly/permanently in such jobs can be segregated from the ones who do it occasionally and have some other sort of permanent/traditional job in place. In the case of cab drivers for example it can be established by determining the number of rides a driver completes per day over a month. By analyzing the above data it can be established which of them have driving these cabs only as their primary profession and should thus be classified as employees and be given related benefits. Whereas the people who choose to take this up as a part time activity shouldn’t be given the employee status and should be allowed to retain their autonomy and flexibility which comes with being an independent contractor. It is essential to strike a balance between protecting the rights of the workers on one hand while allowing them their autonomy on the other.

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Conclusion

The growth of information technology has brought about numerous changes in our lives including the creation of new avenues of employment one such being the rise of the gig economy. While it has offered numerous advantages to both the employers and the people working such gigs in the form of increased flexibility and autonomy, it has been subject to misuse by the companies and in several instances, has resulted in exploiting the workers by denying them protection under the labour laws. Hence, it is required that the government works to strike a careful balance between the two so as to ensure the growth of the business as well as the protection of workers.

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[1] Bill Wilson, What is the ‘gig’ economy,? British Broadcasting Corporation (February 10, 2017), http://www.bbc.com/news/business-38930048

[2] Nicole Kobie, What is the gig economy and why is it so controversial,? Wired UK (July 11, 2017), http://www.wired.co.uk/article/what-is-the-gig-economy-meaning-definition-why-is-it-called-gig-economy

[3] Matthew Taylor Report, Good Work: The Taylor Review of Modern Working Practices, Pg. 25 (July 11, 2017).

[4] Which also implies the destination at which they are supposed to go.

[5] Delhi HC to Decide Whether Ola and Uber Drivers are Employees, Huffington Post (May 5, 2017), http://www.huffingtonpost.in/2017/05/08/delhi-hc-to-decide-whether-ola-and-uber-drivers-are-employees_a_22076788/

[6] Alok Prasanna Kumar, Analysis: Ola’s contract with drivers show they’ve got a raw deal, Factor Daily (March 21, 2017), https://factordaily.com/ola-contract-driver-analysis/

[7] Matt Burgess, Tribunal rules Uber drivers should get minimum wage and holiday pay, Wired UK (October 28, 2016), http://www.wired.co.uk/article/uber-staff-employment-tribunal

[8] Dan Rivoli, N. Y. judge grants Uber drivers employee status, Daily News (June 13, 2017), http://www.nydailynews.com/new-york/n-y-judge-grants-uber-drivers-employee-status-article-1.3245310

[9] Chartered Institute of Personnel and Development, To gig or not to gig? Stories from the modern economy, Pg. 23 (March, 2017).

[10] Id. at 7.