New era for gig workers: What Swiggy, Zomato and their ilk must do under India labour codes
India's new labour codes mandate social security contributions from the likes of Swiggy and Zomato for the gig workers they employ.
The government has formally implemented India's four new Labour Codes, replacing 29 fragmented labour laws, in what is seen as a pivotal moment for gig workers in the world's fourth largest economy.
Essentially, the likes of Swiggy Ltd., Zomato, Blinkit and Zepto can no longer view their delivery partners as independent contractors. They now have a responsibility towards their social security.
Defining the Undefined: A Formal Recognition
India's new labour codes, particularly the Code on Social Security, 2020, finally defines who a gig worker and who employs them.
- A gig worker works outside a traditional employer-employee setup.
- A platform worker provides service via access to online platforms.
- An online aggregator connects a service provider to the customer.
This lays the foundation for extending welfare benefits to an estimated 40 crore workers in the unorganised sector.
The Financial Mandate: Social Security of Gig Workers
The biggest and most immediate obligation is social security contribution for gig workers by aggregators such as Swiggy and Zomato.
Under the Code on Social Security, 2020, aggregators are required to contibute 1-2% of their annual turover to social security of the gig workers they employ. This amount is capped at 5% of the total amount paid or payable by the aggregator to the gig workers.
This shifts the responsibility of providing basic social security to the companies that benefit from their services.
The Implementation — A Statutory Duty
For Swiggy, Zomato, and other aggregators, compliance will require significant operational and structural changes. They must move beyond voluntary moves and establish comprehensive, transparent systems to fulfill their new statutory duties.
1. Establishing a Welfare Fund Mechanism: Companies need to mandate a continuous, auditable contribution mechanism to remit the 1-2% turnover fee into the Social Security Fund. This fund will finance welfare schemes covering essential benefits such as:
- Health and maternity benefits
- Life and disability cover
- Accident insurance
- Old-age protection/pension.
2. Universal Worker Registration: To ensure the benefits are accessible, platforms must collaborate with the government to fully register all their gig and platform workers. This registration is expected to be linked to an Aadhaar-linked Universal Account Number, ensuring the benefits are easily portable across state lines, a crucial feature for the often-migratory gig worker.
3. Formalizing Worker Entitlements: While the code does not classify gig workers as “employees” in the traditional sense, the new framework mandates other protections seen in the formal sector. Aggregators must ensure their working practices align with the broader spirit of the codes, which include:
- Minimum Wages: Although the application for gig workers is still being detailed, the codes guarantee a statutory minimum wage for all workers, setting a precedent that platform pay cannot fall below a certain floor.
- Occupational Safety: Provisions within the Occupational Safety, Health and Working Conditions Code, 2020, will necessitate that platforms address safety for their workers, including ensuring basic welfare facilities.
The Road Ahead: Compliance and Cost
The implementation of India's new Labour Codes is a stride toward formalising a rapidly growing segment of the Indian workforce.
For Swiggy, Zomato, and their peers, this means higher operating costs and a necessary shift from a purely transactional relationship to one that involves social responsibility. The key challenge now lies in the operationalisation of the contribution mechanism and the effective delivery of benefits to the workers on the ground.
