Can Zomato Survive the Backlash by its’ Delivery Partners?

  • by THO
  • 2 weeks ago
  • news
  • 1


Introduction: 

People who work in the gig economy may enjoy various advantages, including the freedom to choose their hours, workdays, holidays, and preferred employers. However, fundamental disadvantages of working in the gig economy may include job insecurity, inconsistent pay schedules, unpredictable workload, and a lack of social benefits and/or legislative protection comparable to those of a permanent employee.

If you heard the term gig employment ten years ago, you might have imagined freelancers, perhaps creative professionals, taking on tasks as and when they pleased, with the opportunity to choose assignments that coincided with their interests and passions. The rise of service aggregators such as Uber and Ola for cabs and Swiggy and Zomato Ltd (NS:) for food delivery has robbed the term of any meaning in the recent decade.

It’s been repurposed as jargon to characterize the hundreds and thousands of people who work for these aggregators on a more or less regular basis, to make ends meet putting in up to twelve hours a day, seven days a week.

Same problem with every delivery partner:

The aggregators in India have methodically arranged their relationships with their works to circumvent any legal benefits and protections. They are referred to as partners. Their contracts are usually structured such that the worker uses the aggregator’s technology as a service and pays the aggregator a portion of the money they receive from their customers in exchange.

In September 2019, Zomato faced a similar backlash as its riders complained about a cut in basic pay and bonuses.

After everything that has been happening with the delivery partners, Zomato took a step under which Delivery executives would earn between Rs. 4000 and Rs. 5000 per week under Zomato’s new remuneration system. In Delhi, this technique is being evaluated on a pilot basis. However, under the new minimum guarantee payment scheme, Zomato has not provided any accident or health insurance benefits.

Currently, delivery workers for companies like Swiggy, and Dunzo are classified as non-contractual employees who do not have a permanent position on their payrolls. This is because gig economy workers are viewed as freelance employees who take on the job to make a fast buck or as a supplemental source of income around the world.
 
Even Zomato mentioned in their DRHP that the delivery partners are not their employees and also that the Government of India has introduced Wages codes, Social security but Zomato has not been notified by the Government of India, so they have not yet determined what would be the impact of it on them.

They are well aware that this is not a paradigm that can be sustained continuously. While their consumers are sensitive to price increases, especially during the Covid-19 crisis, when job losses and salary cuts are common, the great majority of gig workers have little choice but to work for Zomato, resulting in near-zero labour mobility. This means they can play with their formulae to effectively lower remuneration while remaining unaffected.

The Indian government appears to recognise the need for protection for gig workers since they have been included in the draft labour law revisions, but only under the Code on Social Security, not the rules dealing with salaries, occupational safety, or industrial relations. While social security benefits are critical, they will not be sufficient to adequately protect the interests of gig workers.

Comparison:

This is not a condition exclusive to India. Service aggregators use every trick in the book to avoid being legally obligated to offer minimum wages and other employee benefits to their workers all over the world. However, in recent years, lawmakers and courts in several countries, from France to California, have pushed back against such tactics.

California has approved legislation requiring aggregators like Uber and Door dash, the American equivalent of Swiggy, to recognise their workers as employees rather than independent contractors, and to provide them with all of the benefits they are entitled to. The aggregators are now paying $110 million to have the law put to a public vote and essentially repealed.

After losing a years-long legal battle to keep drivers from being designated as workers, Uber says it would provide benefits such as minimum wage and pensions to UK drivers. It’s an early indication of the challenges that firms like Uber will face as regulators try to figure out how to regulate the app-based gig economy.

When it comes to fair salaries, social security, health, and safety, or any other issue that affects the aggregator’s bottom line, the interests of aggregators and their workers will always conflict, just as they are with traditional employers and employees.

Conclusion:

It is a fundamental injustice to leave this enormous section of the economy completely uncontrolled as if it were a Wild West for aggregators. What’s needed is a policy framework that recognises that gig workers are in many ways similar to traditional employees, and that if aggregators persist in treating them as non-employees, they will be classified as a separate category, With qualifying requirements that may better suit the gig economy framework, benefits such as the ability to unionise, minimum salaries, and occupational safeguards were granted. The question of whether or not this government is willing or capable of making such policies is a topic for another day.



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