Digital Labor Platforms and the Regulatory Challenges in Nepal

Jun 11, 2020

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The concept of Digital Labor Platform has become one of the crucial foundations of discussions within the sphere of the Internet and its emergence has initiated a major transformation in the realm of work worldwide over past decade. Growth of digital labor platforms has mounted nearly by one-third between July 2016 and March 2019.[1] One of the major reasons as to why people prefer being a “crowd worker” (the workers of digital platforms) is because of the ‘flexibility’ it provides as to the time, location and the method of completion of a given work. A comprehensive study on digital labor platforms in 75 countries has revealed that, it is the main source of income for 1 in every 3 workers. [2]

The advantage of flexibility being stated, we could not however deny the regulatory challenges it holds therein, mostly, in terms of the implementation of labor laws and protection of labor rights. Article 34 of the Constitution of Nepal has ensured social security, collective bargaining, appropriate remuneration and other basic rights of the labor involved in any “physical” or “mental” works as a fundamental right.[3] Nevertheless, these are the exact regulatory challenges that can be spotted in the Digital labor platforms at outset.

The Challenges of Digital Labor Platforms

Social security funds

Workers in the digital labor platforms (hereinafter “Platform”) are named as an “independent contractors” or “self-employee” and thereby out right deprived from employer provided social security benefits. Exemplifying it, Amazon Mechanical Turks in their participation agreement states, “Workers perform Tasks for Requesters in their personal capacity as an independent contractor and not as an employee of a Requester or Amazon Mechanical Turks.”[4] This means that the “independent contractors” as they name, are not entitled to enjoy any benefits that AMT’s employee gets such as vacation pay, sick leave, health insurance programs and so on.

Nevertheless, some platforms do provide health insurance benefits yet the problem in implementation is always there. For an instance, if Amy is working in a digital labor platform and Amy needs to buy a pen to write something related to the work, she goes to a stationary and buys a pen. On her way back home, she gets into an accident. Now, in this case; the challenge of determining whether the accident is an “employment related accident” or not always sustains.


Rejection of the work without remuneration and any justification is seen as yet another problem amongst the crowd workers. [5] Besides, the earning below minimum wage also continues due to their inability to obtain tasks on a continuous basis.

In the United States case, Otey v. Crowdflower,[6] the complaint was filed against Crowdflower for failing to pay workers a minimum wage, the platform, however, contended that the workers were “independent contractors” and not an employee and thus had no rights to demand for a minimum wage. The case was settled before a ruling was made; however, the settlement included an award equivalent to the payback for the missing wages in addition to the attorneys’ fees.

Apart from the remuneration issue, currently the freelancing platforms charge workers a commission for working on their platform based on the projects. At Upwork, they charge 5-20% commission.[7] Other platforms make the workers’ pay regularly or on a time-to-time basis.

Collective bargaining

The ILO Declaration on Fundamental Principles and Rights at Work (1998), has ensured right of collective bargaining as a universal rights of all the workers. Nonetheless, this is another challenge for the platform workers. Although the labor laws of most of the states has provisionally incorporated this right, it becomes impossible for the workers to exercise the right of collective bargaining since crowd workers are dispersed throughout the globe and does not reside in the same location. The enjoyment of collective bargaining hence could be difficult even if provisionally protected.

In lieu of Conclusion: the way ahead

In January 2019, the ILO’s Global Commission on the Future of Work called for the “development of an international governance system for digital labor platforms that sets and requires platforms to respect certain minimum rights and protections.”[8] Thus a separate Law (apart from Labor law) needs to be adopted to regulate the crowd workers. While doing so, the following recommendations can be kept in consideration.

a. The tag “independent contractor” needs to be removed and their employee status should be recognized. Digital labor platforms recruit their workers by promising independence and flexibility in regard to the amount of work, schedule and the location, however, by classifying them as an “independent contractors”, such platforms in one way or the other abstain themselves from legal as well as social responsibilities including minimum wages and other humane facilities. Regardless of their status, a legally binding mechanism needs to be implemented and a way for them to put forth their needs and desires to platform operators, via union membership shall be ensured.

b. In absence of collective bargaining agreements, a proper code of conduct needs to be implemented by the platforms so those employees are given with an opportunity of expressing their needs and problems. The platform shall further demonstrate the enforcement of these codes.

c. One of the progressive developments in the context of crowd workers is 2017’s “Code of Conduct, Ground Rules for Paid crowdsourcing/ Crowdworking” [9] and Ombudsman’s office established therein. This has been adopted by German trade union, IG metal and 9 other digital labor platforms to resolve the labor dispute arising in the platform. The Ombudsman office has so far resolved more than 20 cases submitted by the workers via online form.

d. The minimum wage for crowd workers (based on their location) needs to be determined and legally implemented. Strict law should be promulgated to restrict the no-payment tendency. The customer who denies on paying the charge after completion of work should meticulously be held liable. At the same time, workers should have a proper platform or a way to review their clients.

e. Proper flexibility as to their working hour shall be maintained and the workers should not be penalized for declining to work at certain hours. In the same vein, workers should not be made to pay for lost time or work because of certain technical problems.

f. A proper ‘jurisdiction’ to settle the platform related issues should be identified and implemented. Thus a representative board to adjudicate disputes between platforms, clients, and workers should be established.


1. Otto Kassi and Vili Lehdonvirta, ‘Online labor index: Measuring the online gig economy for policy and research’ (2018) 137 Technological Forecasting and Social Change 241-248 accessed 06 June 2020.

2. ILO Work Quality Department and DDG/P Office, ‘Policy responses to new forms of work: International governance of digital labor platforms’ (Background paper prepared for the 2nd meeting of the G20 Employment Working Group under the Japanese G20 presidency, Tokyo, 22 April 2019) 4 accessed 11 June 2020.

3. Constitution of Nepal, 2072, art.34.

4. Amazon Mechanical Turk, ‘Participation agreement’ (Amazon Mechanical Turk, 25 March 2020) accessed 6 June 2020.

5. Johnston David et.al, ‘Taking rejection personally: an ethical analysis of work rejection on Amazon Mechanical Turk’ (ECSI 2018) 3 accessed 5 June 2020.

6. Christopher Otey et.al v CrowdFlower Inc el.al (2013) ECF no. 46

7. Upwork, ‘Freelancer service fees’ (Upwork Help) accessed 6 June 2020.

8. ILO Work Quality Department and DDG/P Office (n 2) 7.

9. Code of Conduct, ‘Ground Rules for Paid crowdsourcing/Crowdworking’ (Crowdsourcing Code.com) accessed 11 June 2020.

Tags : Nepal , Digital Platform

Arzoo Karki is a student of BA.LLB 5th year from Kathmandu School of Law, Nepal.