Social security for gig workers of Uber, Ola still a distant dream

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    Social security for gig workers of Uber, Ola still a distant dream

    Drivers are saddled with the burden of repaying their loans and the deduction of commissions. Low earnings, the ratings game and algorithm-driven systems need to go hand-in-hand with stringent laws, strict enforcement, and proper disclosures by the aggregators.

    By Himani Mishra

    Bhavish Aggarwal tried to address the popular question “Why does my driver cancel my Ola ride?” in a tweet on 21 December 2021. He proposed that the issue can be redressed only if the driver knows the approximate location and payment mode. Rather than addressing the question from the driver’s perspective, the co-founder of Ola Cabs made sure that the revenues of the company would remain unaffected.

    A conversation with Ola drivers would have revealed that if riders agree with cancelling rides on the app and the driver is able to convince the rider to complete the ride offline, the drivers will be able to save lots of money. By completing the ride offline, the driver will not have to pay a commission to Ola or Uber, which goes up to 35 per cent of the fare. Aside from this, the drivers also have to shell out the money for insurance, maintenance and loan repayment out of their pockets, leaving hardly any money at the end of the month. Many of the drivers take loans to purchase cars. However, when revenues fall, paying monthly installments becomes increasingly difficult. Rising fuel bills and the COVID-19 pandemic made things worse. One of the main problems the drivers face today is the burden of repaying their loans. According to a survey published by Inc42, Ola and Uber lost over 30,000 cabs because of the drivers’ inability to make monthly payments.

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    Unfair algorithms

    The aggregators charge 35 per cent commission despite the transport ministry stipulating that the maximum commission that can be charged is 20 per cent under the Motor Aggregator Guidelines 2020. The guidelines also stipulate the provision of health and term insurance coverage of Rs 5 lakh and Rs 10 lakh respectively with 5 per cent increase every year. As there is no supervising enforcement agency, the ride-hailing apps rarely comply with these norms. Conversations with Ola and Uber drivers reveal that Uber charges 20 per cent commission while Ola charges 30 per cent, blaming the extra 10 per cent on taxes. The drivers say that no insurance coverage is being provided by the aggregators at present.

    Low earnings, the ratings game and algorithm-driven systems cause a lot of stress for these drivers. Though both Ola and Uber announced their support for drivers who tested positive for COVID-19, they did not offer much support to the families of drivers who died due to COVID-19. While Ola gave no compensation to the families, Uber paid Rs 75,000 each to the families of deceased drivers.

    In the Fairwork India Report 2021, an annual study of working conditions of gig workers on digital platforms, Ola and Uber scored a shocking 0 /10. The five principles on which the report assessed the employers were fair pay, fair conditions, fair contracts, fair management and fair representation.

    Gig workers and labour codes

    Gig workers are not included or defined in the Wages Code 2019 or the Industrial Relations Code 2020. No state has included gig workers under scheduled employment. Only Social Security Code 2020 recognised the concept of gig and platform workers for the purpose of formulating appropriate social security schemes. In September 2021, the Indian Federation of App-based Transport Workers (IFAT) filed a public interest litigation seeking an employer–employee relationship with the platforms they are associated with or included in under the Unorganized Workers Act, 2008 so that they can come under a social security system.

    According to IFAT, denying these workers social security has resulted in their exploitation through forced labour as defined in Article 23 of the Constitution and the right to livelihood in good and fair conditions. The failure to register them as unorganised employees and provide them with social security, it says, is a violation of their rights under Article 21 of the Constitution.

    Global developments bring hope

    Court rulings worldwide have accepted employer-employee relationships between aggregators and drivers. In September 2021, a Dutch court held that “The legal relationship between Uber and these drivers meets all the characteristics of an employment contract,” in a case filed against Uber by the Federation of Dutch Trade Unions. After losing a Supreme Court appeal in February 2021 in the UK, Uber announced in March that it would recognise workers’ rights including minimum pay for the 70,000 plus British drivers associated with it. The UK court ruled that Uber must treat drivers as workers, giving them access to vacation pay, rest breaks and minimum wages while they are using the app. Uber also faced legal challenges in the US with the Supreme Court rejecting its attempt to dodge a lawsuit on whether its drivers are employees or independent contractors in May 2021.

    The Assembly Bill 5 authorised by the California Court was created to evaluate whether an individual should be classified as an independent contractor or an employee. To determine which qualification is accurate, ABC test was designed, which asks the following questions:

    • Is the individual free of the hiring firm’s control?
    • Is the individual delivering a service that is not the primary business of the hiring company?
    • Is the individual actually engaged in operating a business similar to the service offered to the hiring company?

    If answer is to all three questions is yes, they are classified as an independent contractor. However, if any of the question are answered negatively, an employment relationship is formed. A similar law can be enacted in India to establish employer-employee relationship between the drivers and the aggregators.


    The Supreme Court of India noted on May 24, 2021 that governments must speed up the registration of unorganised workers, gig workers and platform workers so that they would come under social security programmes. However, there is still silence on the authorities’ end about the employer-employee relationship which is gaining validation throughout the world.

    The government should make the Motor Aggregator Guidelines 2020 a law to provide legal protection to gig workers. Also, a designated law enforcement authority like state labour commissioners should be set up to ensure proper implementation of the law and redressal of complaints in case of non-adherence on the side of the cab aggregators.

    Transparency and disclosure are needed from cab aggregators in issues related to drivers. The companies should produce self-disclosure and compliance certificates showing their adherence to the Motor Aggregator Guidelines 2020 and publish them on their websites. The details furnished could include wages paid, commission charged, hours worked, insurance coverage given, ratings, and the number of passengers. This would induce public accountability among the aggregator apps, thus reducing the blur in the picture. As reported in the Fairwork Report, Urban Company has expressed its willingness to publish an earning index for its workers every six months. A similar model can be opted by other platform economy apps to ensure transparent operations.

    Workers, not contractors

    Criticism of gig work’s informal and independent contract nature is frequently countered by the claim that this type of job provides flexibility and gives workers the freedom to choose their working hours and location. The gig workers in India, however, opt for such options to earn a decent living. The lack of employment opportunities does not allow them to enjoy freedom and flexibility. The current situation, in which the livelihoods and health of a large workforce are in jeopardy, demonstrates that flexibility cannot come at the expense of basic human rights.

    Gig workers should get access to healthcare and financial support in case of a crisis. In this regard, the COVID-19 pandemic should be treated as a wakeup call to revamp social security systems for gig workers and to question their position as independent contractors. By ensuring legal and social security protection, the government can provide some respite to these workers who are already distressed by the effects of the pandemic.

    This piece has been sourced from Policy Circle —

    Himani Mishra is pursuing doctoral research at the Indian Institute of Foreign Trade, New Delhi.



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    Policy Circle
    Policy Circle
    Policy Circle is a digital platform for informed discussions on economy, policy, governance, and sustainable development.


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