May 30, 2025

Karnataka is set to implement the Karnataka Platform-based Gig Workers' (Social Security and Welfare) Ordinance, 2025, which includes a proposed 1%-5% cess to create a welfare fund for approximately 30,000 gig workers in the state. The ordinance aims to distribute the contribution among consumers, digital platforms, and gig workers themselves, with the heaviest burden likely falling on end users. The announcement has been met with overall approval for recognizing and supporting the welfare of gig workers. However, the focus has now shifted to the practical aspects of collecting the cess effectively on the ground. Dr. Manjunath, additional labour commissioner, mentioned that the law allows all stakeholders to contribute to the welfare fund, including gig workers who can enhance their social security by making additional payments to the board. The finalization of rules is expected within a week. Despite the inclusive framework, experts have expressed concerns regarding the practical implications of the policy. Balaji Parthasarathy, principal investigator at Fairwork India and professor at the International Institute of Information Technology, Bengaluru, emphasized that the success of the legislation will depend on the implementation, particularly in areas like wage protection, dispute resolution, and algorithmic accountability. He highlighted the absence of guaranteed wages and raised apprehensions about platforms potentially reducing per-task payments to offset the cess. Parthasarathy also criticized the lack of balanced stakeholder engagement, noting that platforms tend to avoid negotiating with worker collectives while being represented through bodies like Nasscom and IAMAI. From a legal perspective, the ordinance represents a formal recognition of gig worker arrangements, which could help in preventing misclassification risks. However, Vikram Shroff, partner at AZB & Partners, warned that termination provisions in the ordinance might face legal challenges, especially if they conflict with existing contracts between aggregators and workers. Shroff also pointed out the complexity arising from overlapping regulations due to the national social security code's eventual rollout. Draft rules specify that platforms will be categorized into cess slabs based on their business nature, such as delivery, transportation, or personal services, with an estimated annual corpus of around Rs 150 crore from the cess. Despite concerns raised by experts, some platforms have welcomed the initiative. Athira, vice-president of public policy and government relations at Porter, lauded the ordinance for recognizing the pivotal role of gig workers and the significance of social security. She expressed commitment to collaborating with state and central governments to enhance the welfare ecosystem for gig workers nationwide.

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Tags: Gig workers, Welfare fund, Karnataka, Platform-based workers,