Gig Economy: A Guide To Drafting Contracts And Resolving Issues

By Debarati Chakraborty

There can be no denying that India’s gig economy is witnessing a steady growth. This boom, also acknowledged by the Government of India, has prompted the need to bring in a new social security Code to protect gig workers of the country.

The Code, once implemented by the government, will be the first of its kind, as gig workers in India are currently not covered under any Indian law. The only legal recourse available for them is under contract laws, placing reliance on the contracts signed with clients for protection of their rights.

The Importance Of Contracts In A Gig Economy

In India, like all other employment contracts, a gig contract is also governed by the Indian Contract Act, 1872. As per this Act, when a contract is broken, the party who suffers is entitled to receive compensation for any loss or damage caused to them by the party who has broken the contract.

Because of the absence of any other legal protection, gig workers should ideally pay attention to even the minutest of details in contracts. Drafting or reading a contract can be tough in the beginning and so it can be a good option to consult an experienced person, like a legal or recruiting expert.

Even though a gig worker may have exchanged emails with the client, regarding work and payment details, it is advisable for the parties to sign a mutually-acceptable contract. In the case of breach of contract, a long email chain, without signatures, is not the best proof in a court of law.

Check For These Details In A Contract

A contract is an agreement between the client/clients and the gig worker that comprises details like project deliverables and duration, remuneration process, additional clauses, etc. It acts as a legal document and can be produced in court if necessary.

A gig contract must include the following:

• Legal Names and Signatures
• Scope of Work
• Project Deliverables
• Delivery Schedule
• Commercials
• Payment Schedule
• Ownership of Work
• Termination or Cancellation

1. Legal Names and Signatures

The contract should include the legal names and signatures of the client/clients and the gig worker. It can be a good idea to mention a single point of contact or the person that the gig worker would be reporting to. This will bring in clarity and eliminate ambiguities for both the parties.

2. Scope of Work

The contract should spell out the scope of the project or work that the gig worker is being hired to do. This includes what they are supposed to do or achieve for the client, what the client’s role is, what the duration of the project is, etc.

3. Project Deliverables

The contract should outline project deliverables and highlight what the final result of this association is expected to be. It is important for the client to understand what the gig worker is bringing to the table, and for the gig worker to know the client’s expectations.

4. Delivery Schedule

The contract should include agreed-upon delivery dates or deadlines. The client and gig worker should work on this schedule, keeping in mind all the milestones that need to be reached. Keeping a buffer of a few extra days, in the case of emergencies, can be a good idea. Firm deadlines for client interaction and feedback, research, edits and revision should also be included.

5. Commercials

The contract should clearly outline the remuneration package and mode of payment, whether through cheque or bank transfer or cash. It should also mention if Income Tax deduction would be made at source. Agreed-upon charges for revision of work or additional research should be added as well.

6. Payment Schedule

The contract should include a specific schedule of when the gig worker would be paid, for example after every 30 days or after two months of project completion. For short term projects, the gig worker may check whether the client is open to paying a certain percentage of the total amount before work commences. Creating a section on delayed payment is useful, wherein the client can agree to pay a small percentage of the total amount as penalty.

7. Ownership of Work

The contract should spell out what kind of rights the gig worker would have on their work after project completion. For gig workers, future projects often depend on existing work samples. Hence, it is important to know if the client would have sole rights of their work or if they may showcase their work on job portals, social media, their resume or portfolio. Along with who owns the intellectual rights to the finished product, for example a brand logo, the contract should also outline when the rights of ownership would be transferred to the client. This ideally should be after the final payment is cleared.

8. Termination or Cancellation

The contract should mention all possible conditions in which the gig worker’s services may be terminated. It should then mention how the commercials would be calculated and paid. Details should also be included as to what percentage of the total amount would be paid to the gig worker in case the client decides to pause or cancel a project.

Discuss Ambiguities With Experts

With legal processes being laborious, time-consuming and expensive, and without the safety net of a fixed income, agreed-upon and well-drafted contracts act as the sole protection for gig workers. Such workforces in India are not yet eligible to approach a labour court. And so, if disputes with clients are not settled amicably, the only recourse for them is to approach civil courts.

Hence, it becomes important for gig workers to spend enough time on each contract, study all clauses and terms in them and then request changes if needed.

In case gig workers have to draft contracts, they can approach a legal expert or recruitment professional for advice. They may also request consultation with someone from the client’s HR team.

If certain terms or conditions seem ambiguous when the contract is sent from the client’s end, it is best to have a round of discussion with the client and the HR person.

If the contract is sent by a third party, like a recruitment company or employment portal, then all terms and conditions should be discussed with their representative.