INTRODUCTION
The gig economy provides flexibility and independence for workers; it is also a cheaper way for businesses to operate. Bridges have been created in this regard with the likes of Uber, Zomato, and Fiverr, along with other online platforms, enabling people to work based on contracts or freelancing for businesses. The surge in the gig economy has helped people access work-from-home opportunities and take assignments in small businesses instead of committing to full-time jobs, thus changing the very nature of employees and enumerating the challenge of existing labour laws and regulations.
Nonetheless, the aspect of the gig economy heralded for ushering in new job opportunities and transforming workers’ autonomy in scheduling their jobs appears to have a flip side, specifically in terms of workers’ rights, job security, and employer obligations. Besides, after all the dissension in legislation concerning the status of gig work, employment, wages, or even social security, most nations have a legacy, though still unclear, legal framework in the area. All of a sudden, most laws of minimum wages, social security, benefits, collective bargaining rights, etc., have stopped existing for gig workers.[1]
Adding to that, the algorithmic management of gig platforms has raised socio-ethical issues regarding fairness, transparency, and accountability.[2] Algorithms can manipulate the scheduling, payment, and even termination decisions, minimising the opportunities for workers to contest the outcomes of such decisions. The problems brought about by regulatory ambiguities have raised lawsuits and discussions on policies in several jurisdictions.
How to regulate the gig economy is not a challenge only faced by governments and policymakers, but by the judiciary across the globe. While some have attempted to pass some new laws or amend older ones on a fair balance between employee flexibility and worker protection, others are still battling it out at a more enforcement-related level. This short piece thus discusses some of the legal dilemmas in regulating the gig economy and suggests possible solutions to ensure fair dealing with gig workers.
THE EMPLOYMENT STATUS DILEMMA
One of the greatest legal issues in the gig economy is whether gig workers can be classified as employees or independent contractors. Because the distinction determines minimum wages, social security, and job security entitlements. Most such companies classify workers as independent contractors to escape employer obligations-including health insurance and paid leave. Conflicting with such an assumption were various jurisdictions’ courts on the ground that gig workers are required to work within a strict company guideline that considers them more akin to employees than independent contractors.
For instance, in the case played in the Supreme Court of the United Kingdom, Uber BV v Aslam[3], Uber drivers were classified as workers and not as independent contractors. This ruling enabled Uber drivers to have a minimum wage and holiday pay. Similar judgments have been delivered in other countries; yet, that would not mean that gig workers enjoy such consistent legal status across jurisdictions.
WAGE AND SOCIAL SECURITY CONCERNS
Most of these gig workers lack minimum labour protection measures, such as a minimum wage guarantee and social security. They do not earn salaries like regular employees, and income varies widely among the majority of gig workers. Most of these gig workers deduct their income from platform fees and commissions, which reduces the money they take home.
Social security is another concern. Traditional employees had their employees benefit from health care, pension, and unemployment benefits. For gig workers, such benefits can only be acquired from personal savings or private insurance policies. Some countries, like France and Spain, have implemented social security protections for gig workers, although these are not widespread. Without social security, gig workers lack safety nets in financial terms and are usually caught unprepared in case of emergencies, like in times of COVID-19.
LACK OF JOB SECURITY AND COLLECTIVE BARGAINING RIGHTS
On note, such types of workers are currently not under any formal contract of employment. As a result, they can be removed from a platform without notice at any time. This has been one of the biggest battlegrounds for labour rights advocates. What is more interesting is the fact that several gig workers cannot claim the right to form trade unions or the right to bargain collectively for better pay and working conditions.[4]
Some state enactments have only now begun to engage in addressing the matter. A good example is California, where the assembly in 2019 passed Assembly Bill 5 (AB5), which is supposed to reclassify a large number of gig workers as employees. However, companies protested it, claiming that such would ruin the gig economy model. The subsequent referendum, Proposition 22, allowed app-based firms to retain the classification of their employees as independent contractors but with restricted fringe benefits.
THE CHALLENGE OF ALGORITHMIC MANAGEMENT
On note, such types of workers are currently not under any formal contract of employment. As a result, they can be removed from a platform without notice at any time. This has been one of the biggest battlegrounds for labour rights advocates. What is more interesting is the fact that several gig workers cannot claim the right to form trade unions or the right to bargain collectively for better pay and working conditions.
Some state enactments have only now begun to engage in addressing the matter. A good example is California, where the assembly in 2019 passed Assembly Bill 5[5], which is supposed to reclassify a large number of gig workers as employees. However, companies protested it, claiming that such would ruin the gig economy model. The subsequent referendum, Proposition 22, allowed app-based firms to retain the classification of their employees as independent contractors but with restricted fringe benefits.
Aspects concerning algorithmic administration are distinctive in the gig economy: the job and pay of the workers are determined by automated systems. Algorithms do not just monitor gig workers’ performances; they allocate penalties and assign tasks based on how an individual perceives them to be doing their work. The workers who make use of this algorithm have little to no understanding of how these algorithms work. Questions related to fairness and potential discrimination have also been raised owing to the entwined nature of their operation.
Algorithmic management can deactivate a worker’s account without reason in most cases, leaving few avenues for appeal. The EU has already made certain moves towards remedying this by instituting the Platform Work Directive, which intends that gig workers may be entitled to human oversight when algorithmically decided.
INTERNATIONAL LEGAL APPROACHES AND POTENTIAL SOLUTIONS
Countries have different approaches to regulating the gig economy: some countries establish stringent labour protection, while others only partially give benefits, with regulations stopping short of complete employee classification.[6]
UK: Gig workers would not be full employees but classified as workers, thereby ensuring certain rights such as minimum wage and holiday pay without all entitlements under employee status. [7]
Spain: The legislation states delivery workers will be considered employees unless a company proves otherwise.
India: It has introduced the Code on Social Security, 2020, stating social security benefits’ provisions for gig and platform workers while laying some preconditions for regulating the sector.[8]
In that case, policy responses to legal challenges may include hybrid employment regimes, measures securing fair algorithm management, and measures towards achieving collective bargaining for gig workers. Also, an internationally harmonised framework would assist in addressing disparate and sometimes competing national regulations and make it much more secure for gig workers across the globe.
CONCLUSION
Thus, openings are possible within the gig economy. But gig work has its own merits and demerits. While overpaid flexibility and self-employment may seem a sought-after prize, paradoxically, they also hide insecurities about jobs, lack of payment, and absence of social protections. All these would cause the laws and the world to lag behind changing realities, thus creating regulations far from similar. If there is to be justice in the future of the gig economy, a balanced blend of worker protections and flexible gig work needs to be brought to the fore. The future of work will thus depend on the balance struck between flexibility and security in this evolving gig economy.
Author’s Name: Nikita Tayal (Bennett University, Greater Noida)
[1] Gig Economy and Labour Law Challenges, Harvard Law Review 2022, 135(4), 897
[2] (Rosenblat & Stark, 2016) International Journal of Communication, 10, 3758–3784
[3] Uber BV v Aslam [2021] UKSC 5
[4] Collective Bargaining Rights for Gig Workers, Journal of Industrial Relations 2022, 64(3), 87
[5] California Proposition 22 (2020)
[6] Future of Work Regulation, World Economic Forum Report, 2023 <www.weforum.org> accessed 17 March 2025
[7] UK Supreme Court. (2021). Uber BV v Aslam [2021] UKSC 5
[8] Ministry of Labour and Employment, Government of India. (2020). The Code on Social Security, 2020
