Employment Laws in a GIG Economy


What Is the Gig Economy?

The term ‘gig economy’ is not unfamiliar to us anymore. Factors like the internet, digitalization, and advancement in information technology have changed the overall functioning of the market dynamics across the world.

The gig economy, also known as “on-demand”, “open talent” or “sharing economy”, is currently one of the most contentious trends in employment law. Its caretakers state that it provides vast innovation and empowers both workers and entrepreneurs, while critics argue that it marginalizes the workforce and undermines worker’s rights.

  • The gig economy can help workers, businesses, and consumers by making work more flexible to the needs of the moment and demand for elastic lifestyles.
  • At the same time, the gig economy can have shortcomings due to the corrosion of traditional economic relationships between workers, businesses, and clients.
  • In a gig economy, large numbers of people work part-time or momentary positions. The result of a gig economy is inexpensive, more proficient services, such as Uber or Airbnb, for those willing to use them.
  • There is an extensive range of positions that fall into the category of a gig. For example, assistant and part-time professors have contracted employees as opposed to tenured or tenure-track professors. Colleges and universities can cut costs and match professors to their academic needs by hiring more adjunct and part-time professors.
  • The gig economy is a move away from traditional “nine-to-five” jobs and towards technology-enabled “gigging” for multiple work providers, constitutes a modern challenge for employment law.

Criticisms of the Gig Economy                                                       

Despite its welfares, there are some weaknesses to the gig economy. While not all employers lean toward hiring contracted employees, the gig economy trend can make it harder for full-time employees to develop fully in their careers since temporary employees are often low-cost to hire and more elastic in their availability.

For some workers, the elasticity of working gigs can actually interrupt work-life balance, sleep patterns, and activities of daily life. In effect, workers in a gig economy are more like businesspersons than traditional workers. While this may mean better freedom of choice for the individual worker. It also means that workers are taking upon themselves a much greater share of the market threat of economic ups and downs, changing trends, and fickle consumer preferences.

The Indian employment laws mandate a person to fall under the definition of ‘employee’ in order to avail the underlying benefits. In this scenario, a gig worker (who is rather a freelancer working on short-term contracts) is often devoid of such benefits on account of no subsequent employer-employee relationship.

While the Employment Exchanges (Compulsory Notification of Vacancies) Act 1959 mandates a person to be employed in any establishment for remuneration to qualify as an employee, the Minimum Wages Act 1948 (MWA 1948) requires him to be employed for hire or reward in a scheduled employment in respect of which minimum rates of wages have been fixed.

Health and Safety Laws

One of the major employment law distress in relation to the gig economy is that there are no definite health and safety laws that govern gig workers. In most cases, gig workers do not perform their duty from a fixed office space or are required to travel from place-to-place to meet the needs of consumers. This model provides a number of issues that employers would have to consider, specifically:

  1. Protection from Sexual Harassment:

 The Sexual Harassment at Workplace (Prevention, Prohibition, and Redressal) Act, 2013 (“SH Act”) is the law that forbids sexual harassment of women at the workplace and requires that employers inform their employees to issues of sexual harassment and redress complaints in a private and time-bound manner.

  1. Working in the Nightshift: 

The laws related to shops, commercial establishments, and factories mandate certain conditions to be followed in relation to women working at night, to ensure their safety and security. However, given that gig workers are not ‘employed’ to work out of shops, commercial establishments or factories, the requirements of the platform in this respect are largely loose. 

  • Contract Labour Laws:

Engaging contract labour i.e., engaging workers through a third-party contractor to do specific tasks in connection with the work of an establishment, is regulated by the Contract Labour (Regulation and Abolition) Act, 1970 (“CLRA Act”).  There exists probable scope for gig platforms to be interpreted as contractors under the CLRA and this could accordingly activate responsibilities to obtain a license and comply with requirements under the Act.

  • Compensation in case of accidents: 

The law on compensation for injuries caused during the course of employment is chiefly governed by the Employees Compensation Act, 1923 (ECA). The ECA commands that an employer pays compensation for injuries caused due to accidents arising out of and in the course of employment, including cases where employees are required to travel on behalf of the employer. The applicability of this statute in relation to gig workers is yet to be tested in courts; however, given the intent of this statute, there is a possibility that courts may hold that gig workers be entitled to compensation for injuries incurred while providing services to consumers through the gig platform. 

High Courts with the Intervention

It is surprising how the High Courts across the country have walked in to resort to natural justice with the Supreme Court still unable to recognize it.

In JS Walia’s case1, a ruling of the Delhi High Court, a contractor had availed the services of a welder from time to time. It was opposed that there existed no employer-employee relationship. Moreover, since the welder did not work continuously for a period of 240 days, there was a justification to dismiss his services as well. But the holding of the Court stated that one should be aware of the fact that in most cases workmen do not have sufficient documentary evidence to show their employment and the same has to be separated from the circumstances, oral evidence and other material that may be placed on record.

But the issue still appears outside

The Supreme Court, as observed in SarvaShramikSangh’s case2, has been strict on its view that the sine qua non for application of the idea of unfair labour practice is the presence of a direct relationship of employer and employee.

Notwithstanding the above, it would be incorrect to state that efforts were never made by the Supreme Court. In Hussainbhai’s case3 it was held that the true test to regulate the employer-employee relationship is that of ‘economic control’ and thus where a worker or group of workers labours to produce goods or services and these goods or services are for the business of another, that other is, in fact, the employer. He has financial control over the workers’ subsistence, skill, and sustained employment.

Thus with the enclosure of several factors as a necessary prerequisite, it is hard to state that the Supreme Court is taking steps to identify the short-term contract workers as employees.


It is indeed a harsh reality that there is in an absence of related legislation which clearly lays down the law for the rapidly emerging gig economy, but the hesitancy on the part of the judiciary has undoubtedly made it frustrating for justice to be rendered by following the prevailing laws.

At the same time, it cannot be held totality that the present laws do not offer the inclusion of gig workers within the domain of employee. The definition provided under the MWA 1948 states that employee also includes one declared to be an employee by the appropriate Government. Thus, a mere notification declaring gig workers to be categorized as an employee would be sufficient.