Good news for Rajasthan’s gig workers as the state has established a dedicated welfare board for their benefit. The recently passed legislation by the Rajasthan State Assembly intends to establish a welfare board and a registry of all gig workers, aggregators, and primary employers in the state who work with gig workers. However, the outcomes will be determined by how well the Board functions.
The Law from the Perspective of a Gig Worker
A gig worker registered with the Act’s Welfare Board will have access to general and specific social security schemes, the opportunity to be heard for any grievances, and the opportunity to participate in all decisions made for their welfare through representation on the Board. The gig worker will be assigned an ID number that will be valid across all platforms for the duration of the work. A Platform-based Gig Workers Welfare Cess will be collected on each transaction to fund social security schemes for gig workers. It cannot be less than one percent of the transaction value and cannot be greater than two percent. However, the kinds of social security schemes and benefits to be given to gig workers will be determined by the board. Studies show that previous welfare boards constituted for other classes of workers have shown dismal performance. So it remains to be seen whether or not another welfare board will repeat the episode.
Another issue is how benefits are distributed among gig workers. The nature of the gig economy is its flexibility to change the terms and conditions of work. By registering with various aggregators, such as Uber and Ola, full-time gig workers rely on these platforms as their sole source of income. A second category of gig workers consists of those who rely on these platforms to supplement their income. They put in a few days or hours of labour. Consequently, the nature of the work performed by gig workers differs, and it is unclear how these differences will be reflected in the registry.
The registration of a gig worker is valid for life. Some questions arise in this context.
Consider the scenario where a Swiggy gig worker decides to discontinue their engagement after a brief period, say a month. Would they still be eligible for any benefits that the Act stipulates?
Do specific benchmarks, such as a minimum threshold for the value of transactions or a minimum duration of work, dictate the eligibility for social security benefits? These are some concerns that necessitate careful consideration and have to be addressed by the Board within its guidelines.
How do aggregators fare under the law?
The definition of aggregators includes the travel and hospitality services that are listed in the schedule to the Act, professional services, healthcare, content and media services, ride-sharing services, logistics, online marketplaces, and food delivery apps. The aggregators are supposed to register with the Welfare Board and share their database of all platform-based gig workers onboarded or registered with them. They have to update the registry based on the increase or decrease in gig workers registered under them. Any aggregator who fails to undertake the responsibilities under the Act shall be liable to a fine of Rs 5 lakh for the first conviction and up to Rs 50 lakh for subsequent convictions.
The Act establishes a Central Transaction Information and Management System to track every transaction generated on platforms. Every payment, including its breakdown of commission charged, payment made to platform-based gig workers, Goods and Services Tax (GST) deducted, and welfare cess deducted, will be recorded on the Central Transaction Information and Management System (CTIMS) for each transaction related to platform-based gig workers.
The process of submitting returns to the Board regarding the collected cess amount, along with the continuous sharing and updating of gig worker details, comes with associated costs. Additionally, the integration of all the platform-based data into a central management system will be gruelling due to potential variations in algorithms and technologies employed by different platforms. Further, there is a cess that has to be collected automatically in each transaction as a gig worker welfare cess. In general, the cost of the aggregators will go up, which will inevitably reflect in the final amount payable by the consumer. The emergence of similar welfare boards in various states further complicates the scenario. With each state introducing its own set of cess regulations, the resultant multiplicity of compliance requirements only serves to intensify the intricacy of the system. Thus, the challenges encompass not only the financial aspects tied to reporting and integrating data but also the potential complications arising from the proliferation of state-specific welfare boards and their associated levies.
Another uncertain aspect pertains to the willingness of the aggregators to share their data with the central system. Keeping in mind the central database system proposed in the law, the breakdown of each transaction required might make the aggregators sceptical about the intention of the law. Rather than asking for a total transaction value involved, the database looks out for commissions charged in each transaction.
As long as these questions remain unresolved, the well-intentioned law might result in unintended consequences owing to poor policy design. In light of this, it’s crucial for other states, notably Kerala, which is currently formulating its own policy for gig workers, to meticulously contemplate the intricacies of the process before reaching a definitive conclusion.
(This article was first published on Hindustan Times)
Views expressed by the author are personal and need not reflect or represent the views of the Centre for Public Policy Research.
Anu Maria Francis is an Associate, Research at Centre for Public Policy Research (CPPR). She completed her graduation in Law from National University of Advanced Legal Studies, Kochi. She has worked as UPSC exam trainer and mentor with many coaching institutions in Kerala. She has also interned with a couple of organisations like Kerala State Information Commission, ACTIONAID India, Ceat Tyres Ltd, Biocon Pharma Ltd, Khaitan and Co Law Firm etc. Her academic interests pertain to legal and governance issues and education. She also has experience in handling business ventures.