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The Impact of Indias New Labour Laws on The Gig Economy

The past few years have seen an unprecedented rise in the gig economy. While freelancing has been around for a long time, it wasnt until the entrance of Uber, Ola, Swiggy, and other similar apps that it became a commonplace form of employment.

Today, many jobs fall under this category, including taxi drivers, delivery people, writers, producers, and more. According to the Economic Survey 2020-2021, tabled in the Parliament last month, India is home to one of the largest markets for flexible staffing in the world. This is due to the widespread adoption of eCommerce and online retailing. This sector saw growth during the COVID-19 lockdown. It gave a lifeline to both employees and employers who were bearing the brunt of COVID-19.

According to estimates, the gig economy now accounts for around 56% of new employment. It was only a matter of time for the government to take note of this blooming workforce. In September last year, Parliament passed three important Labour Bills. This is a gigantic document with over 300 pages. It contains 411 clauses that impact every employed person in India. We shall explore how these labour laws specifically impact the gig economy in India.

The Impact of Indias New Labour Laws on The Gig Economy

They may increase the number of gig employees in the market.

These new laws aim to safeguard the interests of the people. Companies with over 300 employees need government approval for retrenchment, a number that has been increased from the previous 100. Now, workers can go on strike only after providing a 60-day notice to the concerned authorities. The government can leave out any new establishment from many regulations, including those that ensure workers safety. These laws are going to push more workers into the gig economy.

Furthermore, the gig economy consists of a wide array of workers. This includes consultants, contract workers, cleaners, delivery personnel, drivers, freelance writers, bloggers, and more. Women feel encouraged to enter this workforce as there is more flexibility of hours and other intangible benefits. All of this will increase the number of gig employees there in the market.

There are new provisions to protect gig workers.
The major barrier to entering this domain of contractual working for many is the lack of benefits. Working for organisations usually comes with perks such as social security. But now, it seems that gig employees wont be left out. The government has proposed to create a National Social Security Board. This will work with the central government to craft schemes that will cover contractual labour. For unorganised workers, the Centre plans on creating a social security fund that will require contributions from aggregators or employer companies. Gig workers will also have to pay 1-2% of their monthly income towards these social security benefits. Unorganised establishments with less than 10 workers dont have to opt for this.

In a heartening show of support, companies such as Flipkart, Swiggy, Amazon, Uber, and Ola have pledged Rs. 500 crores to the governments proposed social security fund already. This will even provide health insurance to over one million gig workers.

This also means that there will be a minimum wage set for gig workers. This move is the first of its kind. Additionally, these policies encourage women to take part, even in night shifts, along with adequate protection.Another change is that the minimum service tenure to withdraw gratuity has been decreased from five years to only one year.

These policies are mostly applicable to unskilled labour. But its a starting point to formalise the whole gig economy. Eventually, these will grow to include skilled freelancers as well. This will be a welcome addition to the lives of contractual staff as these securities act as a safety net and boost worker morale. After all – gig employees dedicate as much time (if not more, by some estimates) to their work as permanent employees do. Benefits such as these only serve to encourage contractual staff to do their best work.

Budget 2021
Along with the labour laws, the government has recently published the Budget for the new fiscal year. This budget has many additions for gig workers that will enhance their operations. Some of the salient features of this are:


    • Welcome changes in the rules for one-person companies (OPC) under the Companies Act, 2013

      The OPC Act was used to define various aspects of companies that included a single individual. The changes are:

      – Reduction in the residency period for Indian citizens from 182 days to 120.
      – No restriction on paid-up capital.
      – Allowing conversion to public or private at any time.
      – Allowing non-resident Indians to incorporate OPCs in India.

These would encourage many freelancers operating as OPCs or agencies to make the move to becoming LLPs/PLCs over time.

    • More focus on digital payments

      The new budget has put more emphasis on digital payments. The Finance Minister has allotted Rs. 1,500 crores just to boost digital payments. There is a proposed increase in the audit exemption limit for micro, small, and medium-sized enterprises. The finance minister has suggested increasing it from an annual turnover of Rs 5 crore to Rs. 10 crores, if 95% of the transactions are online. Not only does this increase transparency, but this will also encourage freelancers and gig workers to adopt digital -payments which will in turn transform the face of the economy.


Going forward, the government can undertake measures to improve connectivity, Internet access, cybersecurity, power supply infrastructure, and stronger policies for entities to adhere to project contracts. After a point, ease of financial transactions with international employers would be an added benefit that would only strengthen the countrys economy. These would also further enhance the efficiency of the flexible workforce itself. It would help millions of people find gainful employment. These additions would enhance the current labour laws that have been drafted. Until then, were definitely on the right track. Our policies are paving the way forward for the future of work.