Gig firm contributions towards staff social security to be mandatory soon

Uber drivers are not employees of the company and can log off anytime.
Gig companies will be asked to make a contribution towards social security funds set up for platform workers, according to the social security code approved by the Union Cabinet on Tuesday.

The code will also have enabling provisions to allow self-employed workers to make voluntary contribution towards the Employees’ Provident Fund (EPF) schemes, said a senior government official.

“The code has made provisions for contribution from companies towards gig workers. There will not be worker-based contribution, but some monetary contribution towards funds meant for social security cover of gig workers,” the official said.

Further, workers employed in the gig economy will also be eligible for insurance benefits provided by the state-run Employees’ State Insurance Corporation.

This is the first time such workers will be covered under India’s social security law. Gig workers are usually spoken of in the context of the ‘sharing economy’, like Uber, Ola drivers, delivery personnel for Zomato and Swiggy and so on. Essentially, these are jobs enabled by a tech-enabled platform where the worker is not bound to the organisation and can choose to work for as long he/she wants.

At present, gig workers, often treated as independent workers, are bereft of social security cover since they are not covered under the country’s labour law legislation.

“The code has specific provisions for ensuring social security cover for gig workers,” the official added. The previous version of the code had mentioned that gig and platform workers will be entitled to life and disability cover, health and maternity benefits, old-age protection, and “other benefits, as determined by the central government”.

The previous draft of the law had defined gig workers as those “who perform work or participate in a work arrangement and earn from such activities outside of traditional employer-employee relationship”.

“The Bill will have enabling provisions to allow workers to voluntarily contribute towards social security schemes, including the EPF,” the official said.

At present, companies hiring at least 20 workers are required to make EPF contribution, which includes both workers’ and employers’ contribution of 12 per cent of wages each. “A separate EPF scheme can be framed for self-employed workers and workers not covered under the EPF law,” the official added. There is no provision in the law to allow self-employed workers to contribute towards EPF schemes.

The social security code will subsume nine laws, including The Employees’ Compensation Act, 1923, The Maternity Benefit Act, 1961, The Payment of Gratuity Act, 1972, and The Unorganised Workers’ Social Security Act, 2008.

The Union Cabinet on Wednesday approved the codes on industrial relations, social security and, occupational safety, health and working conditions. All three codes will be taken up for discussion in the upcoming session of Parliament to begin next week.

To help industries in hiring contract workers directly, the government has proposed to introduce the concept of fixed-term employment in the industrial relations code, along with relaxing norms for retrenchment.

The occupational safety, health and working conditions code will allow single registration and a single licence for executing various projects for a period of five years for companies, among other changes.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel