Gig Workers in India: Employees or Independent Contractors?

INTRODUCTION

There's a straightforward question at the centre of India's platform economy debate, and it doesn't get asked directly enough: can a company simply choose not to be an employer by calling its workers something else?

Swiggy, Ola, and Urban Company classify their delivery riders and service providers as independent "partners." The label carries real consequences. It takes provident fund contributions, gratuity, and maternity benefits off the table entirely.

Gig work emerged in India through the mid 2010s, as smartphone penetration and cheap data made app-based dispatch viable at scale. Platforms built business models around treating labour as on-demand rather than fixed cost, drawing on a large pool of underemployed workers seeking flexible income. The Code on Social Security, 2020 was the first statute to formally define "gig worker" and "platform worker," recognizing the workforce as distinct from both traditional employment and self-employment.

For years, platforms have defended the "partner" classification by pointing to the flexibility workers enjoy. That defence is getting harder to maintain.

BACKGROUND

Indian labour law has always worked with two categories. An employee, as defined under Section 2(s) of the Industrial Disputes Act, 1947, is identified through the contract of service test, distinguishing direction and supervision from the independence of a contract for service, and receives statutory protections in return: provident fund contributions under Section 6 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, gratuity under Section 4 of the Payment of Gratuity Act, 1972, and maternity benefits under Section 5 of the Maternity Benefit Act, 1961. An independent contractor under a "contract for service" sets their own terms and has no claim to any of that. The distinction itself is not statutory but judicially developed, through the control test and integration test applied in cases such as Dharangadhra Chemical Works v. State of Saurashtra and Bangalore Water Supply v. A. Rajappa. Gig workers fit neither category well. They can choose when to log on. But once they do, the platform sets their pay rate, assigns them jobs, and tracks their performance through ratings they have no ability to contest.

The Code on Social Security, 2020 (CoSS) acknowledged this by introducing separate definitions. Section 2(35) defines a "gig worker" as a person who performs work outside the traditional employer-employee relationship and earns from such activities. Section 2(61) defines a "platform worker" as a person engaged in platform work, meaning a work arrangement outside the traditional employer-employee relationship in which organisations or individuals use an online platform to access other organisations or individuals to solve specific problems or provide specific services in exchange for payment.1 The definitions are significant, but not in a helpful way. By specifying that these arrangements exist outside a traditional employeremployee relationship, the legislature effectively used its own recognition of the problem to avoid solving it.

The Legal Problem: Determining Employment Status

This section addresses three questions:

1. Whether existing Indian labour law frameworks are adequate for determining employment status in platform-based work arrangements, given that judicial tests were developed in the context of conventional employer-employee relationships and have not been authoritatively applied to algorithmic work assignment.

2. Whether the Code on Social Security, 2020 creates a legal vacuum by formally recognising gig and platform workers under Sections 2(35) and 2(61) while simultaneously locating them outside the employer-employee relationship, thereby denying them access to the substantive protections that recognition would ordinarily trigger.

3. Whether India should adopt an intermediate worker category analogous to models adopted in the United Kingdom, the United States, and Spain.

The real question underlying all three is whether what platforms do to their workers resembles what employers do to employees. Indian tribunals have historically approached this through three tests, each developed through judicial interpretation rather than legislative prescription.

The control test, the oldest of the three, asks whether the hiring entity directs not only what work is done but how it is done. Its origins in Indian law trace to Dharangadhara Chemical Works Ltd. v. State of Saurashtra AIR 1957 SC 264, where the Supreme Court held that the existence of the right to control the manner of doing work, and not merely the result, is determinative of an employment relationship.2 On a gig platform, the fare is set by the algorithm, the route is suggested by the app, and customer ratings feed directly into a worker's continued access to the platform. The entity directing the "how" is the platform itself.

The integration test, drawn from the reasoning in Bank voor Handel en Scheepvaart NV v. Slatford [1953] 1 QB 248 and applied in Indian contexts thereafter, asks whether the worker is an integral part of the business or genuinely peripheral to it.3 A delivery platform without delivery riders is not a delivery platform. That level of structural dependence points toward employment rather than commercial contracting.

The economic reality test asks whether the worker is genuinely operating an independent business. Workers who derive the majority of their income from a single app, have no say in pricing, and cannot negotiate their contractual terms are not, in any economically meaningful sense, independent operators. This test has gained traction in comparative jurisdictions: in Uber BV v. Aslam [2021] UKSC 5, the UK Supreme Court applied it to hold that Uber drivers were "workers" entitled to statutory protections, rejecting Uber's characterization of the contractual relationship as determinative.4

Platforms rely heavily on the flexibility argument: workers can log off, decline assignments, and are not obligated to maintain fixed hours. That argument is thinner than it appears. Flexibility at the point of entry does not mean freedom within the relationship. Once logged in, the platform controls the fare, assigns the task, and evaluates performance through a rating system the worker cannot meaningfully contest or appeal. Flexibility of access and subordination within the relationship are not mutually exclusive, and conflating them is what allows platforms to sustain a classification that would not survive serious judicial scrutiny. Whether algorithmic oversight of this kind constitutes "control" in the legal sense remains an open question in Indian courts, but the existing tests, properly applied, provide adequate tools to answer it.

CRITICAL ANALYSIS

The case for maintaining contractor classification rests almost entirely on contractual freedom. Gig workers, the argument goes, chose this arrangement. Indian courts have already established the principle that should settle this, just not yet for this category of worker. In Dharangadhra Chemical Works Ltd. v. State of Saurashtra, the Supreme Court held that the central indicator of an employment relationship is the right to control how work is performed, not merely what is produced, and that what the contract called the arrangement did not settle the question; the substance of the relationship mattered, not the label. Two decades later, in Bangalore Water Supply and Sewerage Board v. A. Rajappa, the Court took an explicitly purposive approach to labour statutes: if protective legislation could reach economically vulnerable workers, it should.5 Read together, the two cases map directly onto the gig economy. A platform calling a rider a "partner" does not settle the legal question any more than a salt company calling its labourers independent contractors did in 1957.

The problem is that gig workers did not really choose anything in the negotiating sense. The contract is standard-form, drafted entirely by the platform, non-negotiable. The Supreme Court has recently affirmed that standard-form contracts are prima facie evidence of unequal bargaining power between the drafting party and the party who merely accepts the terms, in Vijaya Bank & Anr. v. Prashant B Narnaware (2025).6 The Court did not strike down the clause at issue there, since it found the specific restriction reasonable on its facts, but the underlying principle holds: a contract offered on a take- it-or-leave-it basis is not the product of negotiation between equals, and courts are required to examine such contracts with that imbalance in mind. A prospective Swiggy delivery rider cannot push back on pay rates or dispute algorithmic deactivation procedures. The choice is to accept the contract whole or not work. That is not freedom in any contractual sense that labour law has ever treated seriously.

Algorithmic management deserves more scrutiny than it typically gets. Platforms can suspend or permanently deactivate a worker's account, ending their livelihood, with no explanation and no hearing. Scholarship on algorithmic management describes this as a structural erosion of due process: traditional employment relationships generally afford some right to be heard before disciplinary action is taken, while platforms route the equivalent decision through an automated system that requires no human sign-off and no stated reason. The decision determining whether a worker keeps earning a living is taken by a system that does not explain itself, and there is no mechanism within the platform relationship for the worker to contest it before the harm occurs. That kind of unilateral power is a feature of employment, not commercial relationships between equals. A company with a trading partner does not have the power to simply terminate the partner's business and refuse to explain why. Platforms do exactly this, and it is not clear why the contractor label should insulate them from any procedural obligation.

There is also a constitutional thread worth pulling. Fundamental rights operate against the State rather than private actors, but labour legislation is consistently interpreted against constitutional values. Article 14's guarantee against arbitrary state action, Article 21's expansive reading of life and dignity to include livelihood, as confirmed in Olga Tellis v. Bombay Municipal Corporation,7 and the Directive Principles in Articles 38, 39, and 43 directing the State toward humane conditions of work and social justice all give courts a legitimate basis for reading protective statutes broadly. This is what the Court did in A. Rajappa, and there is no obvious reason it could not do the same for gig workers.

The exclusion from collective bargaining and industrial dispute mechanisms under the Industrial Disputes Act, 1947 closes off the other obvious route. The Act's machinery—works committees, conciliation, recognition of trade unions, and protection against unfair labour practices—is built around the statutory term "workman" under Section 2(s). A person outside that definition has no standing to invoke any of it. This is not a hypothetical gap. In Indian Federation of App-Based Transport Workers (IFAT) v. Union of India, gig and platform workers have had to argue for recognition as "unorganised workers" under the Unorganised Workers' Social Security Act, 2008 instead, precisely because the 1947 framework's collective mechanisms are closed to them by definition.8 The practical effect is that workers who are individually powerless within the platform relationship also have no formal mechanism to negotiate at scale or challenge unfair treatment collectively. A single rider disputing a deactivation has no works committee to approach and no recognised union with statutory standing to negotiate on their behalf, so disputes that would ordinarily be absorbed through collective machinery are left for each worker to fight alone, against a platform that drafted the only contract on the table.

The flexibility argument, that bringing gig workers under standard employment frameworks would undermine the model, has some real content. Flexibility genuinely matters to some gig workers who rely on the ability to manage their own schedules. But that is an argument for designing a framework that accommodates flexibility, not for having no framework at all.

COMPARATIVE ANALYSIS

India's CoSS creates a separate social security fund for gig workers, financed through a levy on aggregators under Chapter IX, titled "Social Security for Unorganised Workers, Gig Workers and Platform Workers."9 It represents genuine statutory recognition: the category exists, the fund exists, and the levy mechanism, set between 1 and 2 percent of an aggregator's annual turnover, capped at 5 percent of payments made to gig and platform workers, is in place. What it does not do is address minimum wages or working hours, which are arguably more pressing for workers whose entire income depends on the platform. Trade unions have criticised this gap directly, noting that without addressing minimum wages and employment security, social security benefits alone cannot substantially improve a worker's material position. Draft rules notified in December 2025 have begun to extend minimum wage coverage to gig and platform workers, but the underlying Code itself, as enacted, still does not.

The UK went further through its courts. Uber BV v Aslam [2021] UKSC 5 established that platform workers could hold a "worker" status intermediate between employee and independent contractor under the Employment Rights Act 1996, a category which does not carry the full range of statutory rights attached to employees, such as protection against unfair dismissal, but which does carry minimum wage and paid holiday entitlements, the very protections India's CoSS leaves out. The UK Supreme Court reached that conclusion by examining the economic reality of the relationship rather than the label in Uber's contract, finding that Uber set the fare, constrained drivers' ability to decline trips without penalty, and monitored performance closely enough that drivers were in fact working under Uber's direction. India has no equivalent intermediate category. That absence forces courts to choose between two options that do not fit the reality particularly well, and probably discourages litigation in the first place.

Spain took the regulatory route furthest. Ley 12/2021, the Riders' Law, created a rebuttable presumption of employment for platform delivery workers whose terms of work are determined through an algorithm, shifting the burden onto the platform to prove the worker is genuinely selfemployed rather than leaving the worker to prove the opposite.10 The law also introduced a right to algorithmic transparency, requiring platforms to disclose to workers' representatives how the algorithm affects task allocation, pay, and access to work. The presumption did not resolve the question cleanly; major platforms responded unevenly, with some converting their workforce to direct employment and others restructuring around subcontractors to limit the law's reach. But the legal architecture itself, presumption plus disclosure, addresses both halves of the problem this essay has traced: classification and the opacity of algorithmic control.

California's AB-5 took a different approach, legislating an ABC test that presumed employment and required hiring entities to satisfy three specific conditions to rebut it.11 Platform companies spent heavily to reverse it, and largely succeeded through Proposition 22 in 2020. The lesson there is less about which legal test is best and more about timing: once a platform-dependent workforce reaches a certain scale, reclassification becomes politically very difficult. India is approaching that point, if it has not passed it.

Across all jurisdictions, the direction of travel is the same. Courts and legislatures are moving toward examining what the work relationship actually involves rather than what the contract says it is. The pace varies enormously, and platform companies have significant resources to slow it.

CONCLUSION

The Code on Social Security, 2020 marks a significant development in India's labour law framework. For the first time, gig and platform workers have received statutory recognition, ending their previous status as legally invisible participants in the economy. Yet recognition alone cannot substitute for rights.

The central problem is that the Code identifies gig workers without adequately protecting them. A delivery rider whose account is deactivated after years of service may fall within the statutory definition of a gig worker and may theoretically benefit from future welfare schemes, yet remains without meaningful protection against arbitrary deactivation, loss of income, or unfair platform practices. The gap between recognition and enforceable rights remains substantial.

What is required is a more nuanced regulatory approach. Rather than forcing all gig workers into the traditional employee model, India should adopt a hybrid worker framework. Under such a framework, a worker would be presumed to be an employee where the platform exercises significant control over the working relationship, particularly where the platform determines remuneration, controls ratings and performance metrics, retains the unilateral power to deactivate accounts, or provides more than 50% of the worker's income. In such circumstances, the economic reality of the relationship resembles employment more closely than independent contracting.

Correspondingly, platforms should be required to provide a core set of protections, including transparent contracts drafted in plain language, procedural safeguards against arbitrary deactivation, minimum earnings standards, accident insurance, maternity benefits, and access to social security measures. These protections would not eliminate the flexibility that makes platform work attractive. Instead, they would ensure that flexibility does not become a mechanism for avoiding responsibility.

Ultimately, the debate is not whether gig workers should be classified as employees or independent contractors in every case. The real question is how the law should respond when platforms exercise employer-like control while disclaiming employer-like obligations. The Code on Social Security provides an important starting point, but there remains a considerable distance between statutory recognition and meaningful protection. Bridging that distance will determine whether India's gig economy develops as a model of innovation or a framework for precarious work.

REFERENCES

Primary Legislation & Statutes:

California Assembly Bill 5 (AB-5), Chapter 296, Statutes of 2019 [Codified as Cal. Lab. Code § 2775].

Constitution of India, 1950 (Articles 14, 21, 38, 39, 43).

Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (Section 6), Act No. 19 of 1952.

Employment Rights Act 1996 (United Kingdom), c. 18.

Industrial Disputes Act, 1947 (Section 2(s)), Act No. 14 of 1947.

Ley 12/2021, de 28 de septiembre (Spain) [The Riders' Law].

Maternity Benefit Act, 1961 (Section 5), Act No. 53 of 1961.

Payment of Gratuity Act, 1972 (Section 4), Act No. 39 of 1972.

The Code on Social Security, 2020 (Sections 2(35), 2(61), and Chapter IX), Act No. 36 of 2020.

Unorganised Workers' Social Security Act, 2008, Act No. 33 of 2008.

Judicial Precedents:

Bangalore Water Supply and Sewerage Board v. A. Rajappa, AIR 1978 SC 548.

Bank voor Handel en Scheepvaart NV v. Slatford, [1953] 1 QB 248.

Dharangadhra Chemical Works Ltd. v. State of Saurashtra, AIR 1957 SC 264.

Indian Federation of App-Based Transport Workers (IFAT) v. Union of India, Writ Petition (Civil) No. 1068 of 2021 (Pending before the Supreme Court of India).

Olga Tellis v. Bombay Municipal Corporation, AIR 1986 SC 180.

Uber BV v. Aslam, [2021] UKSC 5.

Vijaya Bank & Anr. v. Prashant B Narnaware, Civil Appeal No. of 2025 (Supreme Court of India).

Secondary Sources & Reports:

5 Indian Federation of App-Based Transport Workers (IFAT). (2025). Memorandum on Minimum Wage Coverage and Algorithmic Grievance Redressal for Platform Workers. Submitted to the Ministry of Labour & Employment, Government of India.

Ministry of Labour & Employment. (2025). Draft Rules under the Code on Social Security, 2020. Gazette of India.

De Stefano, V. (2016). The rise of the "just-in-time worker": Innovation or the erosion of labor standards?

International Labour Organization (ILO) Conditions of Work and Employment Series No. 74.