Union Labour Minister Santosh Kumar Gangwar today introduced Code on Social Security, 2020 — which will provide social security benefits to gig workers — in Lok Sabha, along with two other labour codes amidst opposition from Congress MPs, including Shashi Tharoor and Manish Tewari. According to a Business Standard report, aggregators or gig economy companies will have to contribute 1-2% of their annual turnover for social security of gig workers. The contribution “should not be more than 5% of the amount paid to gig workers”, per the report.

So far, gig workers have not fallen under any legislation and are not entitled to social security schemes. Gig companies, such as Zomato, Swiggy, Ola, and others, consider such workers as independent contractors, and not employees, and hence are left out of any social security benefits. The code was first introduced in 2019 in the lower house, and was referred to the Standing Committee on Labour, which presented its report in end July.

Among the committee’s recommendations was that the code should specify who will fund social security benefits for gig workers. The Labour ministry’s thinking was that gig economy companies should contribute to this even though they have an atypical relation with gig workers, as compared to common employee-employer relations. The other two bills introduced are the Occupational Safety, Health, and Working Conditions Code, 2020, and Industrial Relations Code, 2020. The three bills were introduced after their previous (2019) versions were withdrawn.

Substantive changes were made to the 2019 social security code, and a section of the preamble was also changed, Gangwar said. Of the 233 recommendations made by the Standing Committee on Labour, 174 recommendations were incorporated into the new bill, he added. It’s worth noting that committee’s deliberations happened during the nationwide lockdown and many consultations were done via email.

Summary: Labour Committee’s recommendations on gig workers’ benefits under Code on Social Security, 2019

Key concerns raised by Congress against social security code

Congress MPs Manish Tewari and Shashi Tharoor were among those who opposed introduction of the three bills. Their key concerns were:

  1. Consult stakeholders again since new bill is different: Since all three bills have undergone substantial transformation per recommendations of the Standing Committee, “propriety demanded” that stakeholders, unorganised workers, and labour unions should have been re-consulted, according to Tewari. Even the government’s Pre-Legislative Consultation Policy mandates that every bill must be in the public domain for at least 30 days.
  2. Does not consider all labour laws: The Code on Social Security is discriminatory subsumes nine existing labour laws, but has left out those on beedi workers welfare fund and limestone workers. “Notwithstanding the government’s aim to consolidate multiple labour laws, there will still be multiple paradigms which will continue to exist, which will defeat the purpose of the exercise,” Tewari said.
  3. The bill has left a lot to delegated legislation: Tewari and Tharoor said this would lead to legislative powers being exercised by the executive branch. “Fundamental labour freedoms cannot be left to the vagaries of the executive or delegated legislation to be defined at the whim and fancy of whoever is in power,” Tewari said.
  4. The code has insufficient provisions to guarantee social security to the unorganised sector, including to women workers.

Tharoor added that it was unfair to expect MPs to go through a 150-page bill in a few hours and raise objections in the house. He urged the labour minister to consider the Standing Committee’s leftover recommendations and the objections raised, and then bring a revised bill. “The alternative is to face constitutional challenges in court,” Tharoor said.

What the 2019 code entitled gig and platform workers to

The old (2019) iteration of the Code on Social Security gave the following benefits to gig workers and platforms workers:

  • It empowered the central government to formulate schemes for gig workers and platform workers to guarantee life and disability cover, health and maternity benefits, old age protection, and any other benefits it determines. The scheme has to lay down how the benefits will be administered, the implementing agencies, the role of aggregators, sourcing of funding, and any other pertinent matters. [Section 114]
  • Allowed the central government to constitute a social security fund for gig and platform workers that could be centrally funded, funded in parts by employers, workers, and government, or funded by CSR funds [Section 109(4)].
  • Empowered the central government to frame a scheme for gig and platform workers and their family members under the Employees’ State Insurance Corporation [Section 45].

Separately, the bill effectively made Aadhaar mandatory for workers which would presumably include gig and platform workers requiring them to submit their Aadhaar to avail benefits, claim benefits, or claim insurance they are entitled to. Since the central government is empowered to notify the schemes for gig and platform workers, and the schemes may be governed by an agency, even these workers may need to submit their Aadhaar.