Legal Protections for Gig Economy Workers in Nepal: Navigating Current Gaps and Potential Reforms

The emergence of the digital age in Nepal has dramatically altered employment relationships. Such change has created significant legal uncertainty with regard to the application of employment rules in work and workers who primarily function through cyberspace. The use of technology in business organisations has paved a new way, making traditional employees less essential. New companies and business organisations in the customer service sector, driven by the concept of ‘gig’ economy, connect customers directly with individual service providers. The emergence of this new model in business has resulted in the relegation of employees to the status of temporary/self-employed workers, and thereby, making them dispensable. Through this article, the author tries to explore the current gaps in the labour jurisprudence with regard to gig workers in Nepal and the potential reforms to improve their condition.

The concept of gig economy

The concept of gig economy is at a nascent stage in Nepal. The gig economy refers to an informal labour market which is connected and facilitated through the use of digital platforms. Generally, gig economy workers operate on a freelance basis, offering short-term or project-based services to clients as independent contractors. These gig workers work independently through digital platforms to find and get connected with clients. The digital platforms connect gig workers with a diverse range of works including ridesharing, food delivery, freelancing, etc.

In Nepal, the gig economy market has grown significantly over the past half-decade, with a remarkable increase of about 67% as per the Online Labour Index. This growth has been exemplified by various local ride-sharing platforms like Pathao and inDrive, food delivery companies like Foodmandu, and online marketplaces such as Daraz. 

Gig economy and labour relationships: Navigating current gaps and potential reforms

With the exponential growth of the gig economy in the labour market, various legal and regulatory concerns have come to the limelight. The first concern that needs to be addressed is the legal question of whether gig workers can be considered as ‘employees’. Fitting into the legal definition of ‘employees’ is crucial to avail various statutory and social protection benefits under labour jurisprudence. The second concern is the policy issue regarding potential reforms required to protect the interests of gig workers while striking the right balance to protect the interests of the employers.

The gig economy: Currents gaps in the labour market in Nepal

Lack of legal clarity

There is currently no legal definition of a gig worker in Nepal, and this lack of clarity has created challenges surrounding their employment status. While Nepali labour laws have various provisions that protect employees, there is no clarity if gig workers can be classified as employees to avail the said statutory protections. The legal provisions only benefit workers in the formal sector and have left workers in the informal sector at risk. The majority of workers in the informal sector such as gig workers are excluded from benefits incorporated by the laws such as health and accident insurance, minimum wage, salary increment, compensation, provident fund, gratuity and paid leaves, leaving them in a vulnerable position. The Constitution of Nepal, 2015 safeguards the constitutional right of every individual to work in a safe environment. However, the protection mechanisms are often implemented only on paper, and only benefit formal workers, leaving informal workers, including gig workers, predominantly in a vulnerable situation. 

Misclassification of gig workers as self-employed workers

Those advocating for gig workers’ classification as self-employed individuals often point to the facts that gig workers work through digital platforms, own their own work tools and materials, choose their working hours and schedule, in contrast with a traditional employer-employee relationship. However, the classification of gig workers under the category of self-employed workers has led to various heated discussions and debates around the world, questioning the employment status of gig workers. In this regard, opponents of such misclassification have argued that work done by workers when organised, directed and utilised by the company may result in classifying gig workers as employees even if they enjoy some degree of autonomy. It is, therefore, very crucial to determine if gig workers are employed under the control and direction of the company. Control and direction of the employer plays an important role in determining if gig workers can be classified as employees.

In the gig economy, it is an undisputable fact that online platforms allow gig workers to choose their working hours and schedules as per their convenience. However, a certain degree of freedom exercised in their mode of work does not distort the dependency relationship of gig workers with the company, which is much like the traditional employer-employee relationship. The company still controls the work of gig workers by allowing clients to evaluate the performance of such workers, which can influence decisions on dismissals. Mere freedom to workers in some aspects of work does not make workers self-employed. This principle has been supported by the Karnataka High Court in the Dunzo Duel case, which held that delivery executives, who were under the control and supervision of Dunzo, shall be considered to be employees and are entitled to minimum wages, overtime and other statutory benefits. Further, the US regulatory body is also advocating to classify gig workers as employees based on the six factors economic realities test which include, (a) opportunity for profit or loss depending on managerial skill; (b) investments by the worker and the potential employer; (c) degree of permanence of the work relationship; (d) nature and degree of control; (e) extent to which the work performed is an integral part of the potential employer’s business; and (f) skill and initiative. In legal vacuum, Nepali lawmakers may look to how other prominent common law countries are developing and applying legal principles to deal with the specific matter.

Gig economy: Potential reforms

Collaboration with multiple stakeholders to establish regulation:

The issues pertaining to the gig economy in Nepal are complex and multifaceted, which require special attention from multiple stakeholders. The Government of Nepal, business organisations, lawmakers and worker representatives can collaborate to develop policies and programmes that facilitate fair and equitable working conditions for gig workers. They can frame a special regulation to incorporate gig economy workers within the scope of employment law, so that they can avail various statutory benefits like traditional employees.

Skills development programmes:

With the increase of gig economy in the market, it is very pertinent for gig workers to stay abreast with new developments and emerging trends. For this, they can be engaged in various skills development programmes, training sessions, mentorship and networking events to remain competitive in the market. 

Collective action and advocacy:

History has witnessed that when workers have been boxed into vulnerable positions because of existing legal vacuums, they have resorted to advocacy tactics like unionising, protesting, striking and engaging in awareness campaigns, to raise their concerns to the forefront. If the concerns regarding gig workers’ labour protection aren’t given urgent attention, it will come as no surprise if similar collective action takes shape in the Nepali context.

Conclusion

The gig economy market is constantly growing in Nepal, with the emergence of the digital age. However, the lack of legal protection has become a significant issue that needs to be taken into account to ensure equal protection and fair compensation to gig workers. The gig economy not only provides new opportunities for workers in Nepal but also promotes the country’s economic growth. It is, therefore, very crucial to create a fair and equitable legal framework to protect the rights and interests of gig workers.