India’s Labour Codes Formalize and Protect the Gig Economy
Central Government has brought into effect the four new Labour Codes, replacing 29 fragmented central labour laws.
This major structural reform aims at simplifying regulations and modernizing the workforce.
It is particularly significant for the millions of workers powering India’s burgeoning gig and platform economy.
The new legal system formally integrates this traditionally excluded workforce segment for the first time upon implementation.
They are now part of the national social security framework.
Labour Codes: Formal Recognition of the Gig Economy
The cornerstone of this reform is the Code on Social Security, 2020.
This Code legally recognizes and defines ‘gig work,’ ‘platform work,’ and the ‘aggregators’ who facilitate them (such as ride-hailing and food delivery companies).
This legislative recognition closes a longstanding gap.
Millions of app-based drivers and delivery partners operated without any formal safety net due to the absence of a traditional employer-employee relationship.
This formalization is essential for unlocking welfare entitlements.
Mandated Social Security and Funding
Under the new code, gig and platform workers will gain access to comprehensive social security benefits.
These benefits include life and disability cover, health and maternity benefits, provident fund (PF) schemes, and old-age protection.
Crucially, the law establishes a specific mechanism for funding these schemes.
Aggregators are mandated to contribute 1–2% of their annual turnover to a dedicated Social Security Fund.
This contribution is capped at 5% of the total amount paid to gig and platform workers. This creates a sustainable financial basis for their welfare.
Labour Codes Ensuring Portability and Oversight
To ensure that these benefits remain accessible and portable for a workforce characterized by high mobility, the government is establishing a national database.
All registered gig and platform workers will receive an Aadhaar-linked Universal Account Number (UAN).
This UAN ensures that benefits can be seamlessly accessed across states.
This applies regardless of where the worker is currently operating or how many platforms they work for.
A National Social Security Board has also been established.
Its purpose is to advise the government on formulating, monitoring, and reviewing suitable welfare schemes for these workers.
Wider Impact on the Workforce
While the focus is heavily on gig workers, the new codes introduce universal protections for the entire workforce.
The Code on Wages guarantees a statutory minimum wage for all workers—organized and unorganized—backed by a national floor wage.
Furthermore, the reforms improve conditions for other temporary workers: Fixed-Term Employees (FTEs) now enjoy equal benefits as permanent staff, and their eligibility for gratuity has been reduced from five years to just one.
The overhaul also promotes gender equality by legally prohibiting pay discrimination and allowing women to work night shifts across all sectors, subject to consent and mandated safety measures.
The new Labour Codes represent a fundamental shift, moving a significant portion of the informal economy into a structured safety net and laying the foundation for a more inclusive and modern labour ecosystem in India.
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