Hire and fire is a loaded word, the American system is ‘employ at will’,” said Hari T N, Head HR, Bigbasket, one of India’s largest online supermarkets. The distinction sort of escaped me. “Here we have an employment contract.”
That was just the point, as we see the continuing and substantial shift in the job market to a contract-based system. “Firms would prefer to employ at will in practice and they are trying to circumvent the hiring and firing laws by having more workers on contract,” added Vidhya Soundararajan, Assistant Professor, IIM Bangalore.
The context was a query “On paper we are not a hire and fire economy but we seem to be heading there,” at a recent webinar on Formalizing the Gig Economy. A segment that is only a few years old in India but is growing bigger by the day, as more and more services move to a platform-based model, and more and more workers sign on to them to gain market access and customers.
The nearly two-month-long COVID lockdown brought tragically into the limelight two facts:
One, gig workers have no form of social security whatsoever and hence were among the hardest hit as they overnight lost all income.
And two, that the terms of conditions of their relationship with the platform were far from transparent. The platforms argue that they had no responsibility to help them out as they were not workers in the traditional legal sense but were “partners” or “independent contractors”.
What exactly do we mean by formalization?
Here, the discussion threw up a whole host of questions which neither the existing laws nor the new draft laws in the making address. Questions like what these gig workers are letting themselves in for, how their status should be defined, ensuring fair and transparent terms of engagement with the employer or platform.
That formalization will involve a combination of legislation, regulation and responsible corporate governance is accepted. Also, there is little argument that these platforms are a huge convenience to both customers and the workers they engage. “These gig workers are micro entrepreneurs and these platforms are providing them an easy way of procuring business and there is a push automatically for them to upskill,” said Hari.
All well and good in an earlier time. But going forward, the issue of who is the gig worker, how to ensure contracts are fair and transparent and creating a social security system for them assume greater significance.
Gig economy: New term, old problems
“The gig economy is a new avatar of contract labour which has been there for the last 30 years,” said Prof Vidhya. “And there are a number of things we can pick from the contract laws.”
Vidhya pointed out, “But before we go into social security etc, the fundamental question in formality is to know who the worker is. To create such a database is the first step in formalising. And it is easy to do since many of these workers are platform based. The state should organise this”.
One important issue that many gig workers face, especially taxi drivers who have signed up with aggregators like Ola and Uber, is the lack of transparency in the terms and conditions of their engagement. There is plenty of anecdotal evidence that there are significant variations in the kind of contracts workers sign.
Fair contracts which the worker clearly understands, which do not violate his basic rights and which offers the workers protection against unilateral change of working conditions and wages is an urgent need.
As indications are that a sizable number of MSME workers may not get back their old jobs, the chances that they will enter the gig workforce is high. And as the trend towards new kinds of apps and aggregation is likely to grow, ensuring fair contracts which the worker clearly understands which do not violate his basic rights and which offers the workers some protection against unilateral change of working conditions and wages is an urgent need.
“The ability to raise complaints about work is absolutely necessary and is a part of the formalization process,” added Sarayu Natarajan, founder, Aapti Institute.
Just how unfair and one-sided these contracts is best described by Tanveer Pasha, President of Ola-Uber Drivers’ and Owners’ Association.
“They don’t call us drivers as they don’t want to come under labour law. They say partners or some other term. The pandemic has hit taxi drivers hard and they are not getting any kind of help,” says Tanveer
What do Ola and Uber drivers sign?
Are the contracts fair?
“With companies like Ola and Uber whose drivers I represent, we have not signed any kind of contract. They have taken the applications through the app, saying ‘we agree to all terms and conditions’. When we try to log in, a pop up message appears saying click on ‘Agree to Terms and Conditions’,” explains Tanveer
Tanveer feels the platform companies are not ethical. He says they gave false assurances to capture the market, “In the beginning they gave a lot of false assurances — invest in a vehicle and you can earn 1 lakh or 2 lakh in a month. But after we bought the vehicle they said the plan has changed and now you can earn only Rs 50,000.” He says they take 25% of the revenue as commission, “If we complain, they say: if you are happy, work, otherwise you can leave”.
The current situation is quite bad for the drivers, “There is no guarantee on earnings. Even after working 20 hours we are unable to earn even Rs 200.”
Are regulations the solution?
Calling workers partners or whatever to circumvent labour laws that apply to workers too may “not be unfair”, feels Hari, who however admits it was wrong of these companies to raise false hopes with unsustainable offers.
Hari, however, cautioned on rushing into any new legislation and regulation. “Ultimately it has to be a good compromise between protecting the labour and allowing these platforms to survive. The requirement today definitely is not more regulation but to ensure what there is, is actually working on the ground”.
That the gig worker needs protection for the present and the future, however, is amply obvious. Yet, to expect this to be done entirely by the state may be an unrealistic expectation, especially given some of the specific characteristics of gig work like the worker can choose different platforms to work on, he can also do different kinds of work, volatility of wages, how the contracts are renewed etc.
“The thought that formalization has to come only from the state needs a rethink,” Sarayu Natarajan pointed out. “There are many aspects that can be brought about by the corp orates and platforms themselves. Empirical evidence shows that complaints are mainly against the platform and not the state.”
Sarayu cautions against viewing everything in terms of COVID, but agrees, “it does mark a shift in terms of the way we work and how we engage with society and of course the state and a lot of that is going to be mediated by technology”.
The necessity to give businesses a level playing field, to allow more of them to enter the field and grow is accepted. But workers need a level playing field too and here law and regulation is needed to deter unfair practices. Towards which a lot can and has to come from corporate governance. “Transparency is the first step”, states Prof Vidhya.
“It is necessary to hold firms responsible to some extent, as part of corporate governance, for its workforce,” adds Sarayu Natarajan. Specifically with regard to online contracts mentioned by Tanveer, she says “it resembles what is called a web trap contract. This resonates with our own empirical findings which show there is difficulty in accessing what the terms are. Also, the power differential in making these contracts cannot be ignored”.
The holy grail of social security
And then there is social security, the most important aspect of formalisation as the economy recovers. Basically, enabling workers to protect themselves when there is loss of income. In the absence of any kind of unemployment allowance from the state, the only option is for companies to introduce some kind of contributory savings scheme outside of the government legislated schemes like Provident Fund.
Hari says let the worker decide how he wants to save. “Every business has a certain capacity to pay that makes their business viable and sustainable. How you break it up between cash on hand and earnings for the future they can determine mutually”.
Unfortunately, that is the ideal situation. But given the predominant view that corporate governance is lacking in these areas there is unlikely to be any consensus on how to structure any contributory savings scheme that leaves out the state. But that such measures need to be considered, by the state and by the corporate, is more imperative and urgent now than ever, as we witness the ravages the pandemic has caused not only among gig workers but the entire range of daily wage and contract workers.
The current laws cannot prevent a new entrant from offering unsustainable wages and incentives which are then snatched away without notice, as in Ola and Uber case. Workers rarely tend to think too far into the future and go for the immediate gain. “If some new company comes and says they can earn Rs 5000 a day, workers will take it,” said Tanveer. “Workers need to ask companies to specify minimum earnings for a certain number of years”. And that is something the law can ensure as companies build into their business plan with the right kind of regulation and enforcement.
Gender issues get short shrift, like elsewhere
The last important aspect is gender issues in the work place, especially the pay gap which is very real, and protection from sexual harassment and abuse. The problem: with an office or factory, the work place is well defined. With gig work, there is no fixed work place and the task component is very different.
“These women experience threats and insecurity as their work is done in personal and intimate spaces,” pointed out Sarayu Natarjan. “We have heard some horrific stories. Formalization will have to address how women experience platform work”.
And we come full circle. For as with the taxi drivers and other categories of gig workers, when it comes to addressing their issues, employees, men and women, have no recourse from the platform at all.
So maybe the real question is how to make platform management responsible corporate citizens.