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The slew of measures by the Centre seek to ensure formalization of drivers and make ride hailing firms more accountable. Mint
The slew of measures by the Centre seek to ensure formalization of drivers and make ride hailing firms more accountable. Mint

New regulations for cab aggregators to uplift drivers’ lives

  • A driver will get at least 80% of the fare per trip, while the aggregator can charge the remaining as commission

Drivers on cab aggregating networks may benefit from the government’s income and social security scheme, at a time when the covid crisis has exacerbated their financial woes.

The scheme, if implemented by states, will offer relief to the drivers, considering that the incentives granted to them have fallen significantly in the last few years, while commissions charged by aggregators on every ride have gone up, impacting their incomes.

On Friday, the Union road transport and highways ministry, in a first, issued guidelines to bring all vehicle aggregators, such as Ola and Uber, under the regulatory framework. The slew of measures announced by the Centre seek to ensure customer safety, formalization of gig workers, or drivers in this case, and make the ride hailing companies more accountable.

A driver will get at least 80% of the fare per trip, while the aggregator can charge the remaining amount as commission, according to the guidelines. As of now, there is no fixed commission on drivers, with the figures varying between 20% and 30% depending on the platform. A fixed commission rate, if implemented by states, can offer income security for drivers even as they are trying to strike a balance between their payment obligations on monthly instalments for car loans and limited income opportunities given the lower passenger counts as a result of covid-19.

The social security benefits mandates cab aggregators to ensure health and term insurance for each driver of not less than 5 lakh and 10 lakh, respectively, with 2020-21 as the base year, with a 5% increase every year. The biggest players in the market, Ola and Uber, had announced insurance policies three years ago for their driver partners, but it was limited to on-trip accidental death, disablement, and medical treatment.

They will have to ensure that a driver is not logged in for over 12 hours and there has to be a mandatory 10-hour break in case the driver works for more than those hours. To ensure the passenger, pedestrian, and driver’s health and safety, transport aggregators will have to develop a mechanism such that drivers registered on more than one platform do not drive beyond 12 hours. Drivers often work for over 12 hours a day to get additional income in the form of incentives.

The guidelines are a step in the right direction, but could be a setback for the business plans of cab operators as they will entail higher compliance cost, while restricting earning because of the cap on commissions, experts said. The guidelines are also in conflict with existing rules laid down by other Centre departments.

“There are areas where there is a duplication of costs with other regulations, wherein the aggregators have already been brought under the Code on Social Security, which mandates prescribed contribution by aggregators towards gig workers such as drivers under a national social security coverage through a separate scheme," said Rameesh Kailasam, chief executive officer, IndiaTech, an internet think tank. States must be careful while adopting these guidelines, Kailasam said.

Gig firms must make 1-2% of their annual turnover available for ensuring social security of their gig workers, draft rules by the labour ministry state.

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