Written by Utkarsh Kumar, a 3rd-year Law Student at Hidayatullah National Law University, Raipur
I. Introduction
The global gig economy has enabled flexibility in the workplace but simultaneously institutionalised economic uncertainty among workers. This paradox is especially evident in the digital systems that manage modern platform labour. A structurally hidden workforce known as “Ghostcrafters” powers India as the global hub for the artificial intelligence (‘AI’) supply chain.
According to recent estimates, the gig economy workforce surged to approximately 12 million workers, up from 7.7 million in 2020 to 2021. An emerging structurally hidden gig workforce appeared around mid-2024, comprising roughly 50,000 freelance Indian annotators operating on international platforms. Industry experts predict that this hidden workforce will contribute towards processing over 7 billion United States Dollars’ worth of transactions to the global AI annotation industry by 2030.
Ghostcrafters refer to digitally enabled labourers performing microtask assignments remotely, such as data annotation and algorithmic training. Nondisclosure agreement binds Ghostcrafters who render structurally hidden labour, projecting automation in the AI ecosystem. Automation necessitates the presence of a hidden workforce capable of handling edge cases that machines fail to process. AI does not function without human intervention, which corrects errors and moderates text.
In response to archaic labour regulations, the Indian Government consolidated 29 labour legislations into four codes. The said codes include Code on Wages, 2019 (‘CoW’), the Code on Social Security, 2020 (‘SS Code’), and the Occupational Safety, Health and Working Conditions Code, 2020 (‘OSH Code’). Although such legislative initiatives intend to consolidate the protections available to workers, the codes possess a physical-world bias, failing to account for invisible digital labour.
This blog proceeds in three parts. Part I examines the structural gaps in the Labour Codes that leave Ghostcrafters vulnerable to algorithmic wage deductions, uncompensated labour time, and exploitative digital work arrangements. Part II examines the challenges posed by cross-border contractual terms and the resulting barriers to effective legal remedies. Part III draws from comparative international approaches to propose legal and policy reforms that can provide enforceable rights and meaningful protection to India’s growing digital workforce.
II. Critical Evaluation of Gaps and Structural Limitations
While these codes work to simplify issues of compliance for employers and employees, policymakers have failed to consider the peculiarities of digital ghostcrafters. The legislature takes a position that is predicated on the idea of typical workplaces and employment. Therefore, ghostcrafters are bound to be vulnerable to algorithmic technologies.
A. The Code on Wages and the Algorithmic Wage Deduction
The CoW provides stringent safeguards against any arbitrary deductions from salaries. Under Chapter III, section 18(1), employers cannot deduct any salary without the written consent of the worker. Moreover, section 18(3) strictly restricts permissible deductions up to fifty percent of total wages. Hence, this legislative provision aims to prevent exploitative practices wherein employers unilaterally decide to slash worker remuneration arbitrarily.
When ghostcrafters submit annotations for tasks assigned by algorithms, machines assess the quality of the completed assignment. Upon determination of substandard work, the system rejects the task outright, yielding zero wages. In a traditional setting, refusing to pay a worker for time spent constitutes a 100 per cent wage deduction, violating section 18(3) of the CoW. As the CoW restricts its application solely to traditional employees, automated wage theft remains permissible.
B. The Exploitation of Silent Labour Time
The gig economy presents yet another dimension in exploiting ghostcrafters’ labour task-seeking efforts, which are unremunerated in the process. When Ghostcrafters are engaged in looking for micro-tasks posted by decentralised platforms, this is referred to as “silent labour time”. Survey data indicates that almost 50 percent of their working hours consist of uncompensated silent labour. They must refresh web pages constantly to claim microtasks before competitors. The Economic Survey of India 2025-2026 highlighted this vulnerability, noting that approximately 40 percent of gig workers report low earnings.
Under the CoW, section 13 empowers the government to fix normal working hours, and section 14 mandates overtime rates at twice the normal wage. However, these sections assume continuous traditional employment. The law refuses to recognise that being logged in is a form of intensive labour, embedding structural poverty into the digital ecosystem.
C. Cross-Border Jurisdictional Evasion
The global AI annotation market is dominated by platforms headquartered in the Global North, while ghostcrafters are distributed across the Global South. Platforms leverage this geographic disparity through standard-form digital contracts of adhesion. These digital work contracts incorporate mandatory foreign arbitration clauses and an exclusive choice of court agreement, which facilitates jurisdictional evasion.
Upon termination of employment of an Indian ghostcrafter by the platform, it becomes impossible for the worker to avail itself of the contractual right due to such foreign jurisdictional clauses. The Supreme Court of Canada dealt with this exact situation in the landmark judgment of Uber Technologies Inc. v. Heller, wherein it nullified the foreign arbitration clause in favour of the Netherlands for being oppressive.
This aligns with the decision of the Supreme Court of India in Central Inland Water Transport Corporation v. Brojo Nath Ganguly, which established that an unfair clause in a standard form contract violates section 23 of the Indian Contract Act, 1872. It is worth noting, however, that due to the absence of an explicit provision in the Labour Codes invalidating foreign choice of court agreements, indigent workers would be obligated to launch complex litigation to prove inequality of bargaining powers
III. Way Forward: Reforming the Welfare to Rights Paradigm
Regulators around the world have begun developing laws to address the challenges faced by gig and digital workers. India can learn from these approaches and build a framework that gives workers meaningful and enforceable rights, rather than offering protection only after exploitation has already occurred.
A. Neutralising Algorithmic Wage Theft
Indian legislators should try to emulate the Freelance Is Not Free Act (‘FIFA’) pioneered in New York. The Act was specifically designed to redress the rampant non-payment of independent workers. The FIFA sidesteps the controversy concerning the misclassification of workers. The law requires a formal, written contract for any freelance gig that carries an aggregate value of 800 USD within 120 days. The contract must explicitly include a detailed itemisation of the services, rates for compensation, and dates of payment.
In the event of non-payment, underpayment, or late payment by a digital platform, the freelancer will be able to claim statutory double damages and full attorney fees. The adoption of a law akin to the FIFA within the Labour Codes of India would instantly neutralise any threat of algorithmic wage theft. Stiffer statutory fines may compel artificial intelligence platforms to factor the costs of opacity within their algorithm.
B. Compensating Silent Labour Time
To address the issue of uncompensated wait time, India must turn to the Fair Labor Standards Act (‘FLSA’) of the United States. In the American jurisdictions, a differentiation is drawn between the waiting time spent on being available to work and the time spent being engaged to work. In Armour & Co. v. Wantock and Skidmore v. Swift & Co., the Supreme Court of the United States established that waiting time can be legally classified as working time. A predominant benefit test was laid down to determine if the employee was engaged to wait during the specified time.
Since ghostcrafters are required to constantly stay online and update their statuses without any compensation, Indian legislators must amend the CoW to incorporate the aforementioned doctrine. The explicit stipulation that a person engaged to wait constitutes working hours shall establish a minimum floor of income for all such freelancers.
C. Dismantling Jurisdictional Evasion
In order to address the cross-border jurisdictional evasion, India must overhaul the laws pertaining to digital jurisdiction. . The European Union (‘EU’) provides an effective blueprint through the Brussels I Regulation Recast. Section 5 of the Regulation protects employees as weaker contractual parties, granting them the inalienable right to sue in their habitual place of work. Crucially, Article 23 of the Brussels I Regulation precludes employers from imposing unfavourable pre-dispute jurisdiction agreements. Any foreign choice of court clause embedded in a standard contract is rendered legally void.
Indian lawmakers must introduce a protective provision in the Indian Contract Act, 1872, and the Labour Codes that mirrors the Brussels framework. The inclusion of a statutory territorial jurisdiction clause shall ensure that all employers are answerable to Indian courts in the event of a dispute.
IV. Conclusion
The rise of Ghostcrafters reveals an inherent inequity in the contours of modern labour laws of India. It is impossible, indeed, to allow technology to become legally invisible. Though the new Labour Codes are an attempt to consolidate disparate labour laws, their essentially mundane conception of work leaves digitally-connected workers open to the exploitative tendencies of algorithmic wage theft, unpaid working hours, and international contractual discrepancies. Consequently, regulation of technology per se is not sufficient. Regulation of the employment relationship associated with such technologies becomes vital.
India needs to shift its welfare paradigm to a rights-based paradigm, wherein the latter emphasises the economic worth of the invisible digital labourer. Workers need to have enforceable rights, ranging from timely payment to compensation for extra-task labour, algorithmic explainability, and domestic remedies. A truly futuristic AI economy cannot be built on the back of legally invisible workers. If India is to lead the global AI economy, it must also recognise the people working behind the technology. Those who train, correct, and sustain AI systems should not remain invisible or treated as expendable labour, but should be recognised and protected as an essential part of the digital economy.
Caveat: The views, analyses, and information presented in this article are provided in good faith and for general informational purposes only. No representation or warranty, express or implied, is made regarding the accuracy, adequacy, validity, reliability, or completeness of the information. Readers should conduct their own research and seek professional guidance where appropriate. Neither the author nor the publisher shall be held responsible for any loss, liability, or consequence arising from reliance on this content.
Leave a Reply