Research Papers

The origins of gig economy can be traced to 19thcentury. The advent of internet, mobile, and platforms coupled with the deregulation in the developed world during the 1970s and 80s, along with globalisation accelerated the gig-economy. America’s truck drivers and railroad workers were hugely affected by this phenomenon.

India’s urban economy relies heavily on gig workers. Delivery riders, couriers, drivers, beauticians and domestic are ubiquitous, all working on behalf of digital platforms that ostensibly call them “partners” but in reality, treat them as anything but. Yet if a platform collapses, gig workers may discover that their place in the insolvency queue is at the bottom of the pyramid alongside operational creditors and far from that of formal workers.

By 2030, India may have 90m gig workers, according to one estimate. Their legal status remains ambiguous, and in insolvency proceedings they risk losing unpaid dues, incentives, or social-security contributions. In India the ranks of gig workers swell partly because of high youth unemployment. The lived reality is grim; harassment, musculoskeletal injuries and extreme conditions are common. Platforms can deactivate accounts based on opaque ratings, with little recourse.

Half-hearted steps have been taken to address the matter. The Code on Social Security 2020 (COSS), though not yet notified, defines gig and platform workers. Yet crucially, the COSS places gig workers outside the traditional employer–employee framework. A few states i.e., Rajasthan, Karnataka, and Telangana have gone further. 

Further, COSS grants priority to claims relating to provident fund, insurance, gratuity, etc. during insolvency, but it specifically excludes Chapter IX, which covers social security for unorganised, gig, and platform workers.

Indian courts have long interpreted “workman” broadly, piercing the corporate veil when companies hid behind contractors. Supreme Court rulings suggest that gig workers could well be considered employees under a functional test of control and integration.

In some parts of the world, momentum is clear. The European Union, Mexico, British Columbia and Ontario in Canada have taken steps that treat gig workers favourably in an insolvency. Some legal precedents from insolvencies abroad too are instructive.

The anomaly of gig-workers in insolvency needs to be addressed and reforms need to be undertaken. The key being to amend the IBC to recognise gig workers as “workmen,” revise the COSS to ensure their claims are prioritised and institute appropriate regulations so that information memorandum exhibits gig workers as a separate class.

Municipalities have to undertake massive capital expenditure to build

infrastructure and fulfil their obligations to the citizens as envisaged in the

Constitution. However, they are faced with dwindling revenues, high

administrative expenses, deteriorating credit profiles, borrowing restrictions,

and conditionalities on receipt of the grants. As a result, municipalities need

to find novel methods to enhance their revenue-generating and fund-raising

capabilities. Introducing legislation for the insolvency of municipalities and

similar local bodies will help spur infrastructure financing. Though the

Constitution will determine the bounds of such an insolvency law, an

insolvency law will bring transparency, mitigate risk, lower borrowing costs,

garner a wider pool of capital, delineate principles between public interest

and creditor rights, and signal to lenders that debt restructurings will be

predictable. Additionally, certain novel methods, which are currently sparsely

used, may see wider usage by municipalities to bolster their financial position

on introducing such a law. Concurrently, numerous best practices and

precedents established in the corporate insolvency resolution process can be

transitioned into a municipal insolvency law, enabling a smoother

implementation.

Arresting climate change requires recalibration of the global financial and insolvency systems. The dichotomy between insolvency law and environmental law arises when a debtor enters insolvency and has not fulfilled its part of the bargain on the environmental regulations and the environmental claims are treated as unsecured. This incompatibility will cease to exist if environmental claims are given the same status as that of secured creditors. 

Evolution of insolvency laws, both, globally as well as in India, are a testament that the insolvency laws had been malleable. The insolvency literature is amenable to grant environmental claims a secured status if clarity exists in the law and the participants in the ecosystem are aware of the same. 

Jurisprudence across the globe is pivoting towards treating environmental claims favourably and vis-à-vis one aspect, the contamination of land and its abandonment the judgements are analogous. India has a plethora of laws on environment including for contamination of land; a charge on assets is created, effectively granting a “secured-equivalent” status, for recovery of expenses incurred by the pollution board. However, the question has not yet been tested in the Indian courts. Furthermore, based on evolving judicial precedents, it is probable that, in future, insolvency professionals and lenders to the corporate debtor may be held liable for environmental liabilities on the grounds of “capacity of influence”; probability of systemic risk exists due to climate emergency. Thus, granting a secured status to environmental claims will obviate such professional liabilities as it would be in the interest of all stakeholders to give primacy to environmental laws.