Digital Labour Platforms – An Indian Labor Law Study
Author: LawSphereX
Category: Technology, Cyber & Privacy
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DIGITAL LABOUR PLATFORMS – AN INDIAN LABOR LAW
STUDY
Aryaman Keshav, Tamil Nadu National Law University, Tiruchirappalli
ABSTRACT
The digital economy is reshaping societies and socioeconomic relationships. Unsurprisingly, all of these changes have a significant influence on work organization and, more importantly, on interactions between employers and employees. At the pinnacle of the digital era, we are seeing a stunning surge in tech firms, and most companies, including tech, are increasingly preferring, and promoting the concept of work-from-home. Digital labour is defined by their capacity to work from any location, at any time, and on any job that matches their specialised skill set. This paper aims at understanding how digital labour platforms operate in the context of Indian Labour Laws. Keywords: Labour Law, Digital Labour, Digitization, Employer-Employee Relationship.
1. Digital Labour Platforms
The gig economy refers to a labour market characterized by short-term contracts or freelance work, as opposed to permanent jobs. It is characterized by a workforce that engages in shortterm or temporary work arrangements, often for multiple clients or companies simultaneously. Workers in the gig economy are typically classified as independent contractors, rather than traditional employees, and they are usually paid on a per- project or per-task basis. Section 2(35) of the Code on Social Securities, 2020 defines a gig worker as: A person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationships. A by-product of the gig economy are digital labour Platforms.
Digital labour platforms, also referred to as “crowdwork” platforms, which operate across borders and via the internet, are becoming increasingly significant in the world of employment. However, these platforms create regulatory hurdles for labour and employment laws. The online nature of these platforms and the cross-border work performed on them make it challenging to apply appropriate labour laws and regulations. 1 The growing importance of digital platforms can be gauged from the boom the industry has achieved in 10 years as is visible from the graph given below. Source: Crunchbase Database ILO states that the number of digital labour platforms around the world has increased fivefold in the last 10 years. 2 Form figure 1, the number rose from 128 to 611 in 10 years. In 2021, 79% of the platforms that were in operation globally were accounted for by this figure.
Therefore, the remaining 21% may boast a greater number. As a result of a combination of factors, including the absence of job opportunities in certain regions and the increasing availability of digital connectivity to large portions of the global population, millions of people have turned to digitally mediated outsourced work as a means
1 International Labour Office et al., DIGITAL LABOUR PLATFORMS
A NEED FOR INTERNATIONAL REGULATION?, 16 REL 104 (2019).
2 Digital Platforms and the World of Work in G20 Countries
Status and Policy Action, 27 (International Labour Organisation, June 2021). of overcoming the limitations of their local job markets. The initial wave of outsourcing, which began thirty years ago, relocated work to regions within countries that offered lower wages. However, as digital connectivity expanded, countries like India and the Philippines were able to attract a significant amount of outsourced work. 3 According to a report on the gig and platform economy by NITI Aayog, the gig workforce is expected to expand to 2. 35 crore (23. 5million) workers by 2029-30. 4 Digital labour platforms enable businesses to access groups of workers, known as “the crowd,” who are spread across different time zones, providing the ability to complete projects at any hour. With a large pool of workers available, tasks can be completed rapidly.
Utilizing the potential of “the crowd,” a business can have access to a vast number of workers, who possess diverse skill sets and can perform a wide range of activities. 5 The act of outsourcing the work to a “crowd” is termed as “crowdsourcing” and crowdwork platforms are the digital services (websites or apps) that facilitate crowdsourcing.
2 Digital Workers
Workers or Not Under Indian Labour Laws?
According to the labour laws in India, workers can be categorized into three main groups: (i) worker, (ii) contractual workers such as contract labour and inter-state migrant workers, and workers who are employed in the unorganized labour sector. To understand the standing the digital labourers we need to understand what these 3 terms mean. Worker: A worker is someone who works for an establishment and receives wages. They are entitled to various benefits, such as minimum wages, bonuses, provident fund, gratuity, equal pay, medical benefits, and maternity benefits.6 3 In 2021, ILO declared that India was the largest supplier of workers on Digital Platforms in the world. “BQ Prime | Business News Today: Share Market News, Latest Economy & Finance News,” BQ Prime, 2021available at: https://www.bqprime.com/shell.html (last visited March 11, 2023).
4 India’s Booming Gig and Platform Economy, June 2022.
5 International Labour Office et al., “DIGITAL LABOUR PLATFORMS
A NEED FOR INTERNATIONAL REGULATION?,” 16 Revista de Economía Laboural 104–28 (2019). 6 These benefits are granted to them by laws like the Minimum Wages Act of 1948, the Employees’ Provident Fund and Miscellaneous Provisions Act of 1952 (EPFA), the Payment of Bonus Act of 1965.
Contract labour and migrant workers: a workman7 shall be deemed to be employed as “contract labour” in or in connection with the work-of an establishment when he is hired in or in connection with such work by or through a contractor, with or without the knowledge of the principal employer. 8 It basically means an individual who has been hired by a contractor through a contract to work. A person who works for a contractor in a different region of the country where they are not normally based is considered a migrant worker. 9 Workers from the Unorganised Sector: These workers carry out tasks similar to those performed by home-based workers, self-employed workers, or wage workers. The Unorganised Workers’ Social Security Act, 2008 is responsible for overseeing the wellbeing of these workers.
The act provides for several welfare programs, including life and disability insurance through Pradhan Mantri Jeevan Jyoti Yojana, as well as health and maternity benefits through Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana. Platform workers are not eligible for any perks under the Indian Labour Statutes, including contract labour. Although the definition of ‘contract labour’ may allow for expansion to include platform workers, they are currently not covered by any such laws. However, there is a shining light at the end of this tunnel i. e. , the Code on Social Security, 2020.
2.1. The Code on Social Security, 2020
The Social Security Code is a statute designed to simplify and replace central labour laws 7 Workman is defined under S. 2(s) of the Industrial Disputes Act, 1947 as any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied, and for the purposes of any proceeding under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person: related to employee social security.
It aims to merge nine existing labour laws, which include the Employees’ Compensation Act of 1923, the Employees’ State Insurance Act of 1948, the Employees’ Provident Funds and Miscellaneous Provisions Act of 1952, the Maternity Benefit Act of 1961, the Payment of Gratuity Act of 1972, the Cine Workers Welfare Fund Act of 1981, the Employment Exchange Act of 1959, the Building and Other Construction Workers Cess Act of 1996, and the Unorganized Workers' Social Security Act of 2008. While the code has many salient features, like expanding the scope of the term ‘wages’, the recognition of gig and platforms workers is of prime importance.
10 Section 114 (1) of the code, states that, ‘The Central Government may frame and notify, from time to time, suitable social security schemes for gig workers and platform workers on matters relating to— (a) life and disability cover; (b) accident insurance; (c) health and maternity benefits; (d) old age protection; (e) crèche; and (f) any other benefit as may be determined by the Central Government. ’ While this code might provide the benefits normal workers enjoy to platform workers, the question still remains about their status as workers. Although the Social Security Code recognizes gig workers, it makes a distinction between them and traditional employees. The Code mandates that employees receive gratuity, employee compensation, insurance, provident fund, and maternity benefits.
However, for gig workers, it allows for the development of suitable social security schemes by the Central and State Governments, which would cover aspects like life and disability cover, accident insurance, health and maternity benefits, and old age protection. Additionally, the Code requires the Central Government to establish a social security fund for gig workers. Gig employers, such as ride sharing or food and grocery delivery services, will have to contribute 1-2% of their annual turnover to the fund. However, this contribution will be limited to 5% of the amount paid or payable by the employer to the gig worker. To access the benefits of the Schemes, all gig and platform workers must register themselves. 10 S. 2(35) defines and S. 2(61) of Code on Social Security, 2020 defines gig worker & platform worker respectively.
3. Relationship between Platforms & Workers
Digital labour platforms serve as intermediaries between service providers and customers, facilitating work or services delivered between them. This creates a three-party relationship consisting of the requester or client seeking services, the platform acting as an intermediary, and the workers. 11 In a world where work can be bought and sold like any other item and there are no rules or protections for workers, much of the work can be done remotely. This means that more people can compete for the same job, which can drive wages down. As a result, low-cost and low-skilled workers, such as digital workers, may struggle to negotiate better pay or better working conditions, as they have less bargaining power. 12 Digital labour platforms create a more decentralized and flexible labour market, which can increase the bargaining power of employers.
In many countries workers are often classified as independent contractors rather than employees, which results in them not getting protected by labour laws and not having anyaccess to collective bargaining. In India for example, section 2(h) of the Trade Unions Act, 1926 defines trade unions as,any combination which is formed for the purpose of regulating the relations between: workmen and employers workmen and workmen employers and employers or for imposing restrictive conditions on the conduct of any business or trade.
3.1 Result of the Relationship
Since, Digital Platform Labourers are not identified as workmen, they cannot form a registeredtrade union under the act and hence can’t avail the benefits of collective bargaining and other advantages a trade union provides to its members. This makes it easier for employers to set wages and working conditions, as they are not bound by any contractual.
11 International Labour Office et al., “DIGITAL LABOUR PLATFORMS
A NEED FOR INTERNATIONAL REGULATION?,” 16 Revista de Economía Laboural 104–28 (2019). 12 Otto Kässi, Vili Lehdonvirta and Fabian Stephany, “How Many Online Workers are there in the World? A Data- Driven Assessment.”
The biggest issue however, remains of the low renumeration that the workers working on the platforms get. According to a report by the ILO in 2017, indicates that half of the workers earn less than US$2. 16 per hour for the time they spend working. 13 Another reason as to why the workers on the platforms earn so less could be attributed to the fact that jobs aren’t available on a long-term basis. 14 Another reason for the low wage is due to the ability of the consumers to reject the work performed. Many platforms offer their clients the opportunity to reject payment for the work performed without offering any justification. Furthermore, several platforms use algorithmic management, which may result in the rejection of a worker's response to a task even if it is correct.
This is because if three workers perform a task and one response is different from the other two, the algorithm may be programmed to reject the response that is different. Such a rejection not only impacts the worker's earnings but also their ratings and reputation on the platform. This can be detrimental to their chances of obtaining better-paying tasks, and they may even face deactivation from the platform if their rejection rate exceeds a certain threshold. Digital labour platforms are often criticized for their lack of transparency and accountability. Workers may not have access to information about their clients or the terms of their employment and may not be able to negotiate their wages or working conditions. This can make it difficult for workers to assert their rights or to hold employers accountable for any violations.
In addition, digital labour platforms can lead to the erosion of traditional employment relationships. Since workers are often classified as independent contractors, they do not have access to benefits such as health insurance or retirement savings. This places a greater burden on workers to provide for their own financial security and can make it difficult for them to plan for the future. Digital labour platforms can have a significant impact on the types of jobs that are available in the labour market. Some argue that digital labour platforms create new job opportunities, particularly for workers in developing countries who may not have access to traditional employment opportunities. Others argue that digital labour platforms lead to the displacement of traditional jobs, particularly in industries such as 13 “How much do crowdworkers earn? ,” 2019 available at: http://www. ilo.
org/global/about-theilo/multimedia/maps-and-charts/enhanced/WCMS_660548/lang--en/index. htm (last visited March 14, 2023). 14 The workers typically spent 24. 5 hours per week on crowdwork, and out of this, 18. 6 hours were paid work while 6. 2 hours were unpaid. Unpaid work includes tasks like searching for tasks, taking screening tests to qualify, researching requesters through online forums, communicating with requesters, and performing tasks that were ultimately rejected or not submitted. transportation orhospitality. On the flip side of the coin, digital labour platforms provide the workers empowerment by giving them the ability to choose from a wide range of job opportunities and greater control over their working hours. Workers are able to choose when and where they work and can often work multiple jobs simultaneously.
This increased flexibility can be particularly attractive to workers who need to balance work with other commitments, such as caring for children or elderly relatives. However, the benefits of digital labour platforms are not distributed equally among all workers. Those with highly sought-after skills, such as programming or data analysis, are often able to command higher wages and better working conditions. On the other hand, workers with less specialized skills, such as data entry or transcription, may struggle to find work and may be forced to accept lower wages. Specialized skills, such as data entry or transcription, may struggle to find work and may be forced to accept lower wages.
4. The Case of Multinational Platform Workers
Digital labour platforms that can be broadly divided into two categories: location-based platforms, which facilitate tasks that are performed in person at specific locations (such as taxi, delivery, home services, domestic work, and care services), and web-based platforms that facilitate tasks that are performed online by either a group or selected individuals. In the past, most services required workers to be present on site, but technological advancements have opened up new opportunities for producing and delivering services remotely. These services can then be sold through platforms, which connect buyers and sellers who are geographically dispersed. Freelancers create profiles to display their skills, bid on tasks, and find digital work opportunities in their local and global markets.
Companies that want to outsource services - that is, buy services that were previously produced in-house from external providers - can posttheir projects on the platform and hire skilled professionals from a larger talent pool from various parts of the world. The surge in online freelancing is being propelled by both technological and economic factors, and the trends have been intensified by the Covid-19 pandemic over the past two years. The internet is playing an increasingly significant role in connecting the global economy. About 50% of traded services around the world have already been digitized. Additionally, roughly 12% of global goods trade occurs through international e-commerce. Cross-border Skype calls make up 46% of the volume of conventional international calls.
In a study conducted by eBay across 18 countries, it was found that between 88% to 100% of small and medium-sized enterprises (SMEs) using their platform are exporters. 15 One significant aspect of digital work platforms is that they aim to reduce external regulation of the employer-employee relationship. Which becomes even more difficult when you considerthat not all platform work happens inside the boundaries of a nation, and when cross national border transactions happen as it becomes unclear which jurisdictions’ regulations apply to the work being transacted.
Acknowledging the challenges posed by differing jurisdictions and regulations, the Global Commission on the Future of Work of the ILO recommended the establishment of an international framework for the governance of digital labour platforms, which mandates the platforms and their clients to observe certain minimum rights and protections. 16 Here the example of Maritime Labour Convention, 2006 is of importance. It is a global labour code that applies to seafarers around the world. Under the Convention, all workers who work at sea are entitled to a workspace that meets global safety standards, just and reasonable employment terms, access to medical treatment, and living conditions that are acceptable. 17 The MLC has been widely regarded as a success. Over 90 percent of the tonnage shipped is covered by the convention, as 82 Member States have ratified it as of February 2019.
Since ships can be reviewed and checked when entering or exiting a signatory jurisdiction, the regulatory coverage of the MLC is expanded. Maritime employment law and digital platform crowdwork share some similarities, including the short-term, task-based nature of the work. Seafarers were employed for individual voyagesand paid only after completing the voyage, and in the same way, many online crowdworkers are paid based on the number of tasks completed or the entire project. In the past, maritime jobs were prone to wage theft with sailors being left unpaid and stranded in foreign countries. However, the current configuration of various types of digital labour platforms has led to similar issues of wage theft for crowdworkers who work online. But the most important similarity is the fact that both the maritime workers and the digital
15 Mckinsey Global Institute, Digital Globalization
The New Era of Global Flows, (2016).
16 (ILO, 2019, p. 44).
17 Article IV, Maritime Labour Convention, 2006.
workers work transnationally and hence should be bound by a transnational law. The ILO's Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (MNE Declaration), 2017 could be a valuable resource to contemplate when contemplating the global regulation of digital labour platforms. The MNE Declaration offers a framework for multinational enterprises to follow toensure ethical and sustainable workplace practices. This definition of multinationals includes companies that operate services outside their home country. Digital labour platforms could utilize the principles outlined in the MNE Declaration to create transparent codes of conduct for their members, which could include procedures for workers to report any issues or concerns they may have.
Another option for a transnational digital labour code could be “Ombuds office for the Crowdsourcing Code of Conduct” established in 2017 by Eight digital labour platforms in Germany collaborated with the German trade union IG Metal and the German Crowdsourcing Association. Their code of conduct encourages fair cooperation and trust among crowd workers,service providers, and clients. Findings and suggestions
1) Digital Labour Platforms have grown significantly more important after the Covid-19
pandemic and need for a statute to regulate the platform workers is being felt all around the nation. The Code on Social Security, 2020 does offer some relief to the platform workers and hence is a step in the right direction.
2) The Indian Labour law does not identify platform workers as workmen which results in
them losing out on various perks other workmen get which further results in the exploitation of the digital labourers.
3) The digital platforms form a tripartite relationship between themselves the clients and the
workers and further do affect the relationship between the workers and the employers who are the clients on these platforms. The bargaining power is heavily skewed in the favour of the consumers here as at least in India the platform workers cannot form a recognised trade union as they aren’t considered to be workmen. This takes away the bargaining power from the digital workers and gives an unfair advantage to the clients and the platforms who can exploit these workers.
4) There is a strong necessity for a global code to regulate the digital platforms around the
world and protect the digital workers. The example of MLC could provide a way forward in establishing a global labour code. Conclusion The digital labour platforms are emerging as a really big alternative to traditional forms of employment because they provide you the ability to work remotely without many qualifications (when it comes to microwork). Digital labour platforms have rapidly transformed the way we work and connect with each other in the digital era. These platforms have created a new kind of work that is flexible, location-independent and provides opportunities for people to earn money from anywhere in the world. However, while these platforms have benefits for workers, they also raise concerns about workers' rights and protections, including fair wages, job security, and benefits.
The gig economy has created a new breed of entrepreneurs who are adept at leveraging these platforms to create their own businesses, but it has also led to a proliferation of low-paying jobs that lack security and stability. Digital labour platforms have also led to the displacementof traditional jobs and a shift towards a more flexible workforce. To address these challenges, policymakers, platform owners, and workers themselves must work together to ensure that the benefits of digital labour platforms are shared fairly and that the rights and protections of workers are respected. This includes providing fair wages, access to benefits such as health care and retirement plans, and protections against discrimination andharassment. Additionally, regulations and laws must be updated to reflect the realities of the gig economy and to protect workers’ rights in this new world of work.
India has taken the first step into this larger world by bringing in the Social Security Code,
2020 and now all that remains is that it is implemented properly.