Gig firms to contribute 1-2% of turnover for social security of workers

Workers will be entitled to life and disability cover, accident insurance, health and maternity according to proposal to be introduced in Lok Sabha today.

Gig companies will soon have to allot one-two per cent of their annual turnover for social security funds of their workers, according to a new labour law scheduled to be tabled in the Parliament on Saturday.

This is the first time that “aggregators”—ride-sharing services, food and grocery delivery, logistic services, e-market places among them”—will be asked to contribute for the social security of gig economy workers.

The Code on Social Security Bill, 2020 however, puts a cap on the total contributions companies have to make. The contribution “should not be more than 5 per cent of the amount paid to gig workers” and “the annual turnover of an aggregator shall not include any tax, levy and cess paid or payable to the Central Government” for the purpose of the calculation.

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.

Gig workers will be entitled to life and disability cover, accident insurance, health and maternity benefits, old age protection, crèche, among others. Companies will be required to pay them interest in case of “delayed payment or less payment or non-payment of contribution” towards the social security fund.

A National Social Security Board will be set up which will have representatives from gig workers, companies, state and central governments and experts to frame the social security scheme for this segment.

Gig workers older than 16 will have to be registered for receiving social security benefits based on a self-declaration, which would include their Aadhaar number. Such workers will get a “distinguished” identity number. Self-registration will also be made possible.

A toll-free call centre or helpline will also be set up which will disseminate information on available social security schemes for the unorganised workers, gig workers and platform workers, facilitate filing, processing and forwarding of application forms for registration of such workers and enroll them towards social security schemes.

Apart from receiving contribution from gig companies, the government may also tap into the corporate social responsibility funds of corporate and “from the composition of the offences” under the proposed labour law.

The definition of gig workers is pretty elaborate in the social security code. A gig worker would be “a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship.”

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 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. It is scheduled to be introduced by Union labour and employment minister Santosh Kumar Gangwar in the Lok Sabha on Saturday.