Social security benefits for gig workers: Rajasthan promises action

Rajasthan has become the first state to propose a law to provide platform-based gig workers with basic social security and welfare rights and schemes, following a promise made by the state’s chief minister Ashok Gehlot in his budget speech in February.

Formally announced in June 2023, the Rajasthan Platform-based Gig Workers (Registration and Welfare) Bill includes a plan to add a financial levy to consumer purchases on app-based platforms – such as taxi rides and fast food deliveries – to fund social security benefits for platform-based gig workers.

Photograph iStock credit amlanmathur

According to media reports, the benefits will include health insurance cover under government schemes, financial payments in the event of accidents and medical emergencies, scholarships and pensions. A new welfare board will also be established to hear the grievances of platform-based gig workers, monitor all payments generated on platforms, and penalise “errant aggregators” (app-based platforms).

Because gig workers – including taxi drivers, food delivery agents and couriers working for digital and mobile app-based platforms – are not formally employed by any company, their legal status and rights under employment and social security laws are not clear.

However, trade unions argue this allows aggregators to avoid providing employment and social security rights and protections to gig workers – such as sick pay, medical expenses in the event of accidents at work and pension schemes and contributions.

Unions also allege that platform workers do not always earn the local living wage after paying their work-related operating costs, and have little power to raise grievances and disputes with the aggregators – for example, over cancellation of payments for their services in the event of complaints from customers.

Gig worker numbers ‘set to triple’
According to a report published in July 2022 by NITI Aayog, the government’s official think tank, around 7.7 million people were employed as gig workers (meaning platform-based workers and non-platform temporary workers in sectors like construction) in June 2022. NITI Aayog says the number of gig workers is set to more than triple by 2029-30, jumping to an estimated 23.5 million.

Currently, there are around 8.8 million people in India registered in the category of ‘gig workers’ on the central government’s e-Shram portal (the online registration system designed to allow informal sector workers to access social security benefits such as accident insurance). 

The Rajasthan government also estimates that there are between 225,000 to 275,000 gig workers in the state itself, with about 50,000 working for Ola and 35,000 for Uber. Some drivers are registered with both taxi platforms as there is no restriction preventing them from working for different taxi apps.

The Ashok Gehlot-led Congress government in Rajasthan is proposing to levy a ‘welfare cess’ on consumers using app-based services to fund schemes that will provide better employment and social security rights and benefits for gig workers.

According to government officials, the levy is likely to be one per cent of the total value of the service or delivery, such as a taxi ride or a food home delivery order.

The draft bill also states that the Gehlot government proposes to form a welfare board under which all platform-based gig workers and the aggregators will be registered.

The board will be chaired by Rajsathhan’s state labour minister and will feature representatives from gig workers’ unions, aggregators and members of civil society.

The board will have the power to hear the grievances of platform-based gig workers, monitor all payments generated on platforms and penalise “errant aggregators”.

According to the draft bill, if the aggregators fail to comply with any of the provisions made by the board, they will have to pay a fine of Rs 10 lakh or can be suspended or prevented from functioning in Rajasthan. 

Schemes for gig workers
The draft bill says the board will formulate schemes for the benefit of the gig workers, provide them with immediate financial assistance in case of accidents and medical emergencies, and offer them health insurance cover under state government schemes. It will also have the power to formulate and provide specific benefit schemes, such as gratuities, scholarships and pensions.

“All platform-based gig workers registered with any platform shall be automatically registered with the board irrespective of the duration of their engagement with the platform,” states the bill.

“The board shall generate a unique ID for every platform-based gig worker registered with one or more aggregators in the state.”

According to the draft bill, the unique IDs will be valid for three years.

The draft also states that information about all registered gig workers and aggregators will be maintained in a database, available in the public domain. 

To kick off the new ‘Rajasthan Platform-Based Gig Workers Social Security and Welfare Fund’, the Gehlot government has provided ‘seed funding’ of Rs 200 crore. The fund will then receive funding from the gig worker ‘welfare cess’ levied on the customers of app platforms.

Explaining the rationale behind the proposed bill, Rajasthan’s state labour secretary Vikas Sitaramji Bhale said that as well as establishing a fund and other mechanisms to ensure gig workers receive appropriate welfare and social security benefits,

Rajasthan’s government also aims to end the situation that allows aggregators to claim there is no employee/employer relation between themselves and the gig workers, who they class as ‘partners’ or self-employed workers. He argues that this allows the aggregators to exempt themselves from providing certain employment and social security rights and benefits to gig workers registered on their platforms.

“They clearly have an employer-employer relationship,” he said.
Bill announced before Rajasthan Assembly elections

The announcement has been made just a few months before the Rajasthan Assembly elections. However, because there is very little time left before the model code of conduct kicks in for the State Assembly polls scheduled later this year – and aggregators are expected to resist the plans – the State administration faces a very tight schedule to implement the bill. However, the Gehlot Government hopes to win the support at the election of the state’s 300,000 gig workers, who are estimated on average to be aged between 20–35.

Labour experts say the proposed law for gig worker rights in Rajasthan is viewed by many commentators as an effective template, and have urged the central government to draft a single, national law along the same lines.

“In a historic move, the state of Rajasthan has introduced the Rajasthan Platform-based Gig Workers (Registration and Welfare) Bill, 2023,” said Rajat Malhotra, a legal risk, ethics and compliance professional.

“This trailblazing legislation is the first state-level initiative of its kind in India, aimed at transforming the gig economy by ensuring minimum social security for gig workers. Rajasthan houses an estimated 300,000 gig workers, and the new law is set to directly affect their livelihoods.”

Bill is a ‘model for wider adoption across India’
Welcoming the move by the Ashok Gehlot government in Rajasthan, Shaik Salauddin, national general secretary of the Indian Federation of App-based Transport Workers (IFAT), said the IPAT had been asked to join a high-level meeting of the Rajasthan government’s secretaries of labour, transport, finance, IT and other departments to discuss the bill and its aims.

“The suggestions given by us were accepted by the state government in a positive manner,” he said. “Now the Karnataka government is also considering a similar law. The Rajasthan law will become a model for the entire world.”

Ashish Singh, from the Rajasthan Gig & App-Based Workers Union, said: “This entire system will be fully digital – from registration of personnel to management of the welfare schemes. The number of gig workers is expected to increase in this sector in the near future. It is a farsighted programme, which should be implemented soon.”

However, Nipasha Mahanta, Sayantani Saha and Vikram Shroff from law firm Nishith Desai Associates, sounded a note of caution about whether the bill will provide sufficient rights and protections for gig workers.

“Though the Rajasthan Platform-based Gig Workers (Registration and Welfare) Bill, 2023 Bill is a step in the right direction, it remains to be seen whether it will truly protect and promote gig working arrangements,” the three lawyers said.

“The proposed law will need to be fleshed with details of actual benefits that will flow to gig workers from the welfare fund. Such regulation may also deter aggregators and platform-companies from relying on gig working arrangements as they may be required to incur additional liability and share details of their financial transactions with the government.”

The lawyers also raised concerns about the welfare cess and how aggregators will be made accountable.

Meanwhile, in a statement, the App Workers’ Union said: “The bill fails to deliver on ensuring the rights of the workers, and only makes some token gestures towards the interest of the increasing number of gig workers.

“Thus, the app workers do not have anything to look forward to apart from the vague, tokenistic gesture of the Rajasthan government attempting to gain electoral points.”