‘Shared economy’, challenges of India’s employment laws

India, in line with its global peers, is witnessing a visible technology-driven evolution with newer tech platform-based models quietly unsettling traditional business models. As is always the case, the existing legal framework finds itself facing unique challenges as it prepares to embrace evolving market practices and an economy thriving on “shared resources”.

An interesting example of the evolutionary nature of business, and the onward march of technology giving rise to a need for purposive interpretation of existing laws, is a recent ruling by the California Labour Commissioner’s office. Upholding the rights of drivers for the ride-hailing/sharing service, Uber, to be classified as an “employee” as opposed to an “independent contractor”, the ruling paves the way for significant developments in interpretation of employment laws across the globe.

While this and similar propositions arising from the spread of technology have enabled a “sharing economy”, they have not yet been put to the test by Indian courts; it may now only be a matter of time. Until then, Indian companies engaging independent contractors should bear the following safeguards in mind.

ANSHUL PRAKASH is an associate partner at Khaitan & Co’s Mumbai office and VINAY JOY is an associate partner at the firm’s Bengaluru office. ABHISHEK THANVI, a senior associate at the firm’s Mumbai office, assisted with this article