Explained: Employment ambit may get extended, what will be the impact

A Swiggy Delivery boy | Representative image

The government is reportedly considering making changes to the definition of 'employment' to extend coverage to gig workers and platform workers.

Anganwadi or rural childcare workers may also be categorised as employees in a new set of reforms under the New Employment Policy, the report stated.

Moneycontrol explains what the present definition of employee is, benefits denied to gig and platform workers, and what the impact of the change in definition will be.

 What is the definition of employee?

Under the Industrial Relations Code, 2020, that was passed in the monsoon session of Parliament last year, an employee is any person (other than an apprentice engaged under the Apprentices Act, 1961) “employed by an industrial establishment to do any skilled, semiskilled or unskilled, manual, operational, supervisory, managerial, administrative, technical or clerical work for hire or reward”.

An employer is one who employs, directly or indirectly, a worker or worker.

This definition assumes an employer-employee equation that is absent in the case of gig workers and aggregators.

What are gig and platform workers, and why have they approached the Supreme Court?

Gig workers are those who are engaged in hourly or part-time jobs. Unlike a full time employee, they do not have a standard work arrangement with their employers and share a non-traditional employer-employee relationship.

Platform workers are individuals who use an app or a website to match themselves with customers in order to provide services in return for money.

The Indian Federation of App-based Transport Workers (IFAT) led by Shaik Salauddin, National General Secretary, IFAT  filed a legal petition before the Supreme Court in September this year challenging the ‘unorganised’ status of gig economy workers.

The public interest litigation (PIL) seeks to classify gig workers as ‘wage workers’ with better social security and employment benefits that white-collar workers enjoy.

Gig and platform workers are treated as partners and contractual workers which includes fewer benefits and little control over wages. The PIL claims that companies do not make an employment contract with the workers and instead classify them as partners which takes away the employer-employee relationship.

What does the Social Security Code envisage for gig and platform workers?

 The Code on Social Security, 2020, has for the first time extended social security benefits like maternity leave, disability insurance, gratuity, health insurance and old age protection to workers in the country’s booming unorganised sector. These include gig workers, platform workers, contract workers, freelancers and home-based workers.

The code proposes the creation of a social security fund for extending these benefits to workers in the unorganised sector. The scheme for the social security fund envisages that the platforms and aggregators make contributions to the fund that would be either 1-2 percent of the turnover or 5 percent of the worker’s wages.

 What will be the impact of change in definition?

A revamp in the definition of employment is expected to address the problem of disguised employment. The inclusion of gig, platform and anganwadi workers as employees means they will be eligible to avail the privileges and benefits that the white collar workers enjoy.

A change in definition would also lead to an increase in the formal workforce.

According to an International Labour Organisation report published earlier this year, there are currently 400 million unorganised workers in India.