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ESIC, other social security safety nets to cover gig economy workers

The Budget for 2021-22 (April-March) also proposes to launch a portal that would collect relevant information on gig economy workers, including those working in building and construction, among others.

Written by Aashish Aryan | New Delhi |
February 2, 2021 3:50:48 am
The amount has been disbursed by the Maharashtra Building and Construction Workers Welfare Board, the nodal organisation that maintains the registration and funds collected through cess on new building projects. (Representational)

With the Covid-19 pandemic increasing the focus on gig economy and its workers, Finance Minister Nirmala Sitharaman on Monday said that the law on minimum wages would now apply to workers of all categories including those associated with platforms. Such workers would now be covered by the Employees State Insurance Corporation (ESIC), Sitharaman said.

“Women will be allowed to work in all categories and also in the night-shifts with adequate protection. At the same time, compliance burden on employers will be reduced with single registration and licensing, and online returns,” she said. The Labour Ministry defines a gig worker as any person “who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship”.

The Budget for 2021-22 (April-March) also proposes to launch a portal that would collect relevant information on gig economy workers, including those working in building and construction, among others. This portal, Sitharaman said, will help formulate relevant policies for health, housing, skill, insurance, credit and food schemes for such workers.

Extending safety net of ESIC and other social security to gig economy workers was proposed by the government as a part of the reforms to the three labour codes, passed by the Lok Sabha in September last year. The safety net, however, came with its own set of limitations as the same set of reforms to the labour codes allowed firms greater flexibility in hiring and firing workers without any permission from the government.

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Currently, neither the central government nor the states have any data on the possible number of gig economy workers in the country. Industry executives, however, estimate that there could be over 130 million gig economy workers with many more expected to join the freelance work force as formal jobs slowed dry up.

The extension of safety net to gig economy workers was welcomed by platforms such as Urban Company and Snapdeal, who said it will help the sector grow in a sustained manner.

“The move towards providing social security benefits for gig workers will add a much-needed safety net that will help this sector grow in a sustainable way and help the many millions that are a part of it,” said Kunal Bahl, co-founder and chief executive officers of online shopping website, Snapdeal.

Apart from the workers, the budget for 2021-22 has also proposed measures aimed at easing the compliance burden for startups as well as larger companies. Having decriminalised several procedural and technical compoundable offences under the Companies Act, the government now aims to do the same for the Limited Liability Partnership Act, Sitharaman said. Companies which have paid up capital of up to Rs 2 crore and turnover of up to Rs 20 crore, up from Rs 50 lakh and Rs 2 crore, respectively, will be considered under the definition of small companies from the new fiscal, Sitharaman said. The government has proposed to incentivise the setting up of one-person companies (OPC) by allowing them to grow without any restrictions on paid-up capital and turnover, with an option to convert into other companies at any other time. The residency limit for an Indian citizen to set up an OPC has also been cut down to 120 days from 182 days, while also allowing non-resident Indians to start OPCs in India.

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