Aggregators Seek Clarity On Social Security Contribution For Gig Workers

India’s Platform Companies Seek Clarity On ‘Turnover’ For Contribution To Social Security Of Gig Workers

SUMMARY

In the Code on Social Security, 2020, the Centre stated that companies would have to contribute 1-2% of their annual turnover or 5% of the wages paid to gig workers, whichever is lower, for a social security scheme for gig workers

The companies that would fall under this scheme, have sought that ‘turnover’ should mean revenue for just the unit that hires gig workers and not the company’s overall turnover

Aggregators providing ride-sharing services, food and grocery delivery services, content and media services, and e-marketplaces would fall under the new scheme

Ecommerce platforms such as Amazon, Flipkart, Ola, Uber and Urban Company are reported to have asked the ministry of labour to clarify the definition of ‘turnover’, which is to be used to calculate the company contribution to a proposed social security fund for gig or platform workers.

In the Code on Social Security, 2020, passed by the parliament in September last year, the centre stated that companies would have to contribute 1-2% of their annual turnover or 5% of the wages paid to gig workers, whichever is lower, to a corpus that will be used to fund a social security scheme for gig workers. The companies that would fall under this scheme feel ‘turnover’ should only account for revenue from the unit that hires gig workers and not the company’s overall turnover.

For instance, Flipkart has multiple divisions, one of which hires gig workers. So ‘turnover’ should mean the revenue generated by the unit that hires these workers, and not the total revenue of the company. But there’s no clarity on this at the moment.

“Turnover for aggregators should be restricted to net annual revenues from operations as recorded in the audited financial statements and not include revenue earned by subsidiaries or holding companies having a business which does not qualify as an aggregator in India,” Abhay Mathur, senior vice president at Urban Company told ET, which first reported the development.

The government has specified a list of aggregators that would under the company contribution scheme. These are ride-sharing services, food and grocery delivery services, content and media services, and online marketplaces. The code mentions that besides the central government that will set up a social security fund, state governments will also set up and administer separate social security funds for unorganised workers. It also makes provisions for registration of all three categories of workers — unorganised workers, gig workers and platform workers. Beneficiaries of the scheme will be eligible for medical, maternity, disability and other benefits. The scheme could be possibly rolled out from April 1, 2021.

Meanwhile, the Motor Vehicle Aggregator Guidelines, 2020, issued by the road transport ministry in November last year, also mandated ride-hailing companies to provide health and term insurance to drivers.

Rameesh Kailasam, CEO of IndiaTech, an association representing Indian consumer Internet companies and their investors, told Inc42 that by making provisions for health and term insurance for cab drivers, the new guidelines create an overlap with the Code on Social Security, 2020, which also talks about companies contributing towards a social security scheme for gig workers, as mentioned above.

The government’s move to ensure social security for gig workers comes at a time when protests by cab drivers and food delivery workers are still happening across the country. Protesting gig workers have complained about a fall in their wages amid the pandemic, the commission charged by cab aggregators and the removal of monthly incentives for food delivery workers.

Meanwhile, leading platform companies in India scored poorly when judged for the work conditions prevalent there for gig workers, in the Fairwork India Ratings 2020: Labour Standards in the Platform Economy. While Swiggy, Zomato and Uber scored 1 out 10, Ola, Housejoy, BigBasket and Amazon scored 2 out of 10. Grofers and Dunzo managed to score 4, Flipkart at 7 and Urban Company ranked at the top with a score of 8 out of 10.