Let gig workers be with social security

Let gig workers be with social security

Californians voted not just to elect the 46th president of the US but also to designate gig workers such as Uber and Lyft drivers as ‘independent contractors’ rather than as employees. This measure, known as Proposition 22, will have far-reaching impact on labour in the US and beyond. India’s new social security code offers an example of mandating social security contributions for gig workers, without changing their status to employees.

Employees in the US are entitled to benefits such as paid sick or personal leave, healthcare insurance and unemployment insurance. Independent contractors do not get such benefits from those who utilise their services. Uber, Lyft and DoorDash spent $205 million to support Proposition 22, making it the most expensive ballot measure in California’s history. It overturned the California Supreme Court’s Dynamex ruling and Assembly Bill 5 mandating companies to treat gig workers as employees. Uber argues that it is not a transport company with drivers but a tech platform on which independent contractors provide service to consumers. Labour argues that gig workers should receive employment benefits, an argument that Biden supported. As compromise, Prop 22 offers limited benefits for gig workers. Companies using gig workers will try replicate the California outcome across the US and abroad.

India’s new labour code precludes a Prop 22-like situation. The recently legislated Social Security Code 2020 extends social security benefits to gig and unorganised sector workers. While the how of this is yet to be worked out, that goal sets a benchmark. A portion of the fees paid to a contractor can mandatorily be set aside for pension.