Understanding Gig-Workers

Gig is a slang term meaning a job for a specified period of time and it refer to the workers outside of the traditional employer-employee relationship including freelancers, workers who are employed on a contractual basis with their employers, project based work and short-term work

Concept of Gig-Economy

Gig economy is a free market system in which Freelancers, independent contractors, project based workers and temporary hires are hired for temporary positions. This can be found across every industry. Gig employees could be writers, cab drivers, photographers, food delivery personnel, e-commerce delivery personnel, service provider, accountants, tutor, artists.

Simply put it is anyone who enters into formal agreements with a company to provide services without being on the company’s payroll. Digitalization of the economy allows workforce to be mobile, so people can select temporary jobs from around the world, and employees can find the best individuals for each job without much constraints.

The gig economy saves business resource such as employee benefits, office space & training while providing employees benefits such as improved work life balance & freedom to select gigs that they’re interested in.

Despite such flexibility gig workers get modest pay, no health or retirement benefits and social security in any form. There is a blurred line between those who voluntarily work as contractors & those who are being taken advantage of by an employer that might classify someone as a contractor to get out of paying fair wages & benefits.

Current legal position

Indian labour law has traditionally recognised three main categories: government employees, public-sector employees, and private-sector employees (managerial staff, workmen, or contractual workforce). These categories carry protections such as minimum wages, working hours, termination compensation, and social security.

Gig workers fell outside this — they lacked “employee” status, could not easily form unions, and often worked on one-sided contracts. That changed with the Code on Social Security, 2020.

Way ahead

The Code on Social Security, 2020, now recognises gig and platform workers as a distinct form of employment and mandates their registration for social security benefits such as insurance and maternity support.

Companies that engage gig workers will need to register them, report to the government portal, and budget for an aggregator contribution once the fund and rates are notified. The increased cost is offset by the ability to scale a flexible workforce up and down.

See Gig and Platform Workers for the full compliance framework, contribution rates, and a worked example.