Contemporary Workforce Engagement Models In The Changing Indian Labour Landscape
Workforce models in India have never been as varied as they are today. Factors such as the boom of the aggregator business (think Ola, Uber, Swiggy, Zomato etc.) and the rise of remote working brought about by the pandemic, have been pivotal in driving the growth of these varied workforce models. These models have now become an integral part of our society and have worked to the benefit of both, corporations and individuals. On the one hand, organisations are able to tailor their workforce according to their business needs and move away from traditional full-time employment to hire fixed-term employees and gig workers. On the other hand, individuals now have the opportunity to choose engagement models best suited to them, giving them more flexibility and increasing their earning potential.
In this article, we have examined key non-standard workforce models that have come to the forefront in recent times, in the backdrop of the current legal regime. Where relevant, we have also examined the model vis-a-vis the proposed Labour Codes (which consolidate existing central labour laws and are expected to come into force over the next year or so).
The engagement of gig workers, including matters pertaining to their working conditions and social security benefits, is presently unregulated. Interestingly, the Chief Minister of Rajasthan, while presenting the state budget for the financial year 2023-24, announced that legislation would be enacted to ensure the protection of gig workers from exploitation. While an official draft of the bill has not generally been made available to the public, news reports suggest[²] that the bill requires the registration of all gig workers and their aggregators and seeks to set up a welfare board, which will formulate schemes for the benefit of the gig workers, offer health insurance cover under state government schemes, provide a gratuity, pensions etc. If this bill translates into legislation, Rajasthan will become the first state in India to regulate the engagement of gig workers.
On the judicial side, litigation concerning gig workers in India is still at a nascent stage. While gig workers have made claims against aggregators for treatment as regular employees and provision of corresponding social security benefits under existing laws, where the courts will land on this issue is yet to be seen.
The proposed Code on Social Security, 2022 (SS Code) however recognises gig and platform workers (essentially gig workers who work on online aggregator platforms) as a separate class of workers. In fact, one of the most distinguishing features of the SS Code is that it seeks to extend a variety of benefits to gig and platform workers, funded by contributions from the Central and State Governments and aggregators.
2. Consultants: Consultancy arrangements are not governed by any labour and employment laws. By their nature, consultants are not treated as employees and are accordingly not extended protections and benefits similar to regular employees. Previously, individuals were mostly engaged as consultants in specific occupations or at very senior levels. However, an increasing recognition of the flexibility a consultancy arrangement affords employers (no statutory benefits are required to be provided, arrangements may be terminated easily etc.) and individuals (engagements are usually non-exclusive, allow for better tax structures etc.), has resulted in a considerable increase in the number of consultants engaged in all sectors and across all levels.
3. Fixed-term employees: Fixed-term employment has largely been unregulated in India (apart from in specific sectors such as apparel). However, in 2018, the Central Government amended the Industrial Employment (Standing Orders) Central Rules, 1946 to recognise fixed-term employees in all sectors and required that all benefits available to permanent employees be provided to fixed-term employees as well, on a proportionate basis (although this may not extend to gratuity). A similar amendment was also introduced by several states.[³]
In recent years, organisations have been engaging a larger number of fixed-term employees, especially for temporary or seasonal jobs where demand-based recruitment needs to be made. Organisations are also considering fixed-term employment as an alternative to contract labour arrangements.
The Labour Codes also recognize fixed-term employees as a distinct category of employees and require that all benefits provided to permanent employees (including gratuity) be provided to them, on a proportionate basis.
4. Contract labour arrangements: Arrangements, where contractors provide services to clients through their own personnel, are generally regulated under the Contract Labour (Regulation and Abolition) Act, 1970 (CLRA). Here, the employer-employee relationship is between the contractor and the individual personnel (referred to as contract labour), who will be deployed at the workplace of the client i.e., the principal employer, to carry out the work of that client. Under the CLRA, principal employers are required to obtain a registration and will be liable to discharge other obligations in respect of the contract labour (such as paying wages and providing welfare facilities) in case the contractor fails to discharge these obligations.
Contract labour was and continues to be a workforce arrangement widely prevalent in India. Organisations engage contract labour for all activities ranging from core activities of the organisation to support activities such as housekeeping, security etc.
It is expected that a significant change in contract labour engagement practices will be seen once the Labour Codes come into force. Under the Labour Codes, engagement of contract labour in core activities is generally prohibited (under the CLRA, this prohibition is only in force in a few states such as Andhra Pradesh and Telangana). Further, workers who are regularly employed by the contractor for any activity of his establishment are not considered contract labour. This express exclusion of the regular workforce of a contractor from the ambit of ‘contract labour’ will result in several arrangements not being considered as contract labour arrangements, consequently doing away with the need to comply with any principal employer or contractor-specific obligations. It is expected that this change will result in organisations engaging more third-party personnel.
Especially with India embracing the title of the most populous country in the world, there has been increased chatter about how India can create job opportunities for its entire working-age population and leverage its demographic dividend. The varied and continuously evolving workforce models discussed here will no doubt play a pivotal role in this. The law will of course have to keep pace with the workforce models and walk the fine line between enabling organisations to innovatively expand their workforce in models most suited to them and ensuring that individual rights are adequately protected. Witnessing and being a part of this evolution in the coming years will certainly make an exciting journey.
All of the above said, organisations should be wary of conducting a majority of their business through flexible arrangements such as those described above, since this approach could be construed as a sham to deprive individuals of their legitimate employment benefits.
[1] Policy_Brief_India's_Booming_Gig_and_Platform_Economy_27062022.pdf (niti.gov.in)
[2] Rajasthan outlines plan for gig workers’ welfare | Latest News India - Hindustan Times; Gig workers, not lesser workers of the economy (freepressjournal.in)
[3] Karnataka, Punjab, Haryana Bihar, Rajasthan, Goa etc.
