The Karnataka Platform based Gig Workers (Social Security and Welfare] Act, 2025:  Precarity Unaddressed!

Picture from Hindustan Times

On 27th May 2025, the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Ordinance, 2025 was promulgated by the Governor of Karnataka and published in the Extraordinary Gazette, making it the second state in India to pass a legislation in the interests of gig and platform workers. 
 
Karnataka’s efforts to legislate on gig and platform work comes against the backdrop of a shift in the global employment model where work has increasingly shifted to digital pastures and towards insecure gig work. As per a NITI Ayog report, gig and platform work in India is expected to rise to a formidable 23.5 million workers by 2029-30, constituting almost 6.7% of India’s non-agricultural workforce. A 2023 World Bank report estimated that world-wide gig and platform workers numbered anywhere between 154 million to 435 million, accounting to 12% of the global labour force. 
 
In India, to date, there is no central legislation that specifically speaks to, or attends to the woes of gig and platform workers. Though reference is made to the gig and platform workers in the yet to be implemented Social Security Code, 2020, (SS Code), the protections available to this workforce is minimal. The SS Code neither recognises gig and platform workers as ‘workman’ who are entitled to the whole gamut of labour protections that labour law offers in India, nor does it spell out the social security rights workers are entitled to, instead merely offering a future promise of social security rights through schemes that the central government may choose to notify. 
 
In light of the lack of any central legislation and mechanism to protect the rights of gig and platform workers, state governments have led the charge to pass legislations for their benefit, beginning with passage of the Rajasthan Government’s legislation in 2023. Karnataka has now become the second state with a gig workers law, whereas in Jharkhand, and Telangana, the legislation continues to be in a bill format and in other states, its still awaiting passage. Notably, following a change of power in Rajasthan from the Congress to the BJP, the latter has failed to notify rules to activate the legislation, leaving the bill in cold storage. 
 
While various state government efforts must be commended for moving the needle on gig and platform workers’ rights, these legislations can at best be called as a mixed bag. Though this article will focus its critique on the Karnataka Ordinance, it must be noted that all proposed state legislations to date including the Rajasthan legislation sidestep the issue of ‘misclassification’ of gig and platform workers’. 

Misclassification and International Laws 

A central debate that dominated labour and employment laws since its inception has been whether a category of workers can be classified as independent contractors or whether they can be removed from the purview of traditional labour laws. This is the case with platform and gig workers too. While platform companies have categorised gig and platform workers as independent contractors who fall outside the realm of labour law protections, many gig workers and their unions around the world argue that the nature of their work is nothing but traditional employment relationships. They argue that their work is doused in precarity and exploitation, and in urgent need of protection. 
 
Several courts and governments have answered the call of gig and platform workers by taking cognizance of the issue of misclassification, and have evolved appropriate legal and jurisprudential tests in response. In 2019, the California state passed the Assembly Bill (AB-5) codifying the ABC Test which established a presumption of employee status unless the employer is able to meet the 3 factors of the ABC test and prove that a worker is in fact an independent contractor. The 3 factors test involves the employer proving in the affirmative if 1) the work is done without the direction and control of the employer 2) The work is performed outside the usual course of the employer’s business and 3) The work is done by someone who has their own, independent business or trade doing that kind of work. Using AB5, several government functionaries including the California attorney general and the California labor commissioner were able to successfully sue Uber and Lyft for misclassifying drivers as independent contractors. Though eventually, Uber and Lyft were able to use their extensive lobbying power to undercut the success of AB5 by carving out exceptions for themselves, this law marked an important watershed in categorising gig and platform workers under the law, and in protecting their rights. 
 
Halfway across the ocean from California, the European Union introduced a comparable approach with the adoption of the EU Platform Work Directive in 2024. This directive establishes a rebuttable legal presumption regarding the employment status of gig and platform workers. Under the directive, all EU member states are required to implement national legislation by 2026 that meets the directive’s minimum standards, including this presumption test. As a result, the burden of proof now shifts to employers, who must demonstrate that a worker is not in an employment relationship, rather than placing that responsibility on the workers themselves.

Indian Laws and Gig Workers

In India too, courts have evolved tests to determine whether someone is an ‘independent contractor’ or an employee. Though these tests are not applicable for workers of gig economy in India today, it holds huge significance to evaluate the form and nature of employment. 
 
The tests that have been developed by the Supreme Court to look at whether work is controlled and supervised by the employer, whether the employer can control the manner of doing work and take disciplinary action etc, whether the work in perennial in nature and incidental to the process of the company, etc. In fact, in one case in 1974, the Supreme Court noted that  “A person can be a servant of more than one employer. A servant need not be under the exclusive control of one master... There is of course no reason why a person who is only employed part time, should not be a servant and it is doubtful whether regular part time service can be considered even prima facie to suggest anything other than a contract of service” [Silver Jubilee Tailoring House and Ors. v Chief Inspector of Shops and Establishments, AIR 1974 SC 37]. 
 
The courts have also held that the real employer cannot escape from liability. In Hussainbhai, Calicut v. The Alath Factory Thezhilali Union, Kozhikode and Ors [AIR1978SC 1410], the Supreme Court held as follows:

“5. The true test may, with brevity, be indicated once again. Where a worker or group of workers labours to produce goods or services and these goods or services are for the business of another, that other is, in fact, the employer. He has economic control over the workers' subsistence, skill, and continued employment. If he, for any reason, chokes off, the worker is, virtually, laid off.”

If these tests were to be fairly applied to the gig and platform economy, a substantial proportion of gig and platform workers would be entitled to be recognised as workers and granted protections under labour laws. The scope of existing labour laws would be broad enough to impose substantial liability on the platforms. However, the structural vulnerability of gig work makes a long legal battle impossible for workers. Ultimately, on the ground, there is a total lack of regulation of the rights of gig and platform workers and the liabilities of the platforms towards them. In this context, bringing in a labour legislation to specifically protect the welfare of such workers and grant social security is welcome but not sufficient because employers are being relieved of their responsibility of providing welfare and social security to their own workforce. 

The Law in Karnataka

In Karnataka, a Draft Karnataka Platform Based Gig Workers (Social Security and Welfare) Bill, 2024 was circulated by the labour department on June 29, 2024 calling for comments, and was reportedly likely to be tabled in the Monsoon session 2024. The Joint Committee of Trade Unions (JCTU), which includes AICCTU, submitted their objections and suggestions to the Bill, noting that “the proposed bill provides an opportunity to fix accountability and to provide a form of economic and social security to the workforce in the platform economy. The government and the labour department must look at the opportunity to regulate the sector and provide succour to the workers and in the case of all labour legislation, welfare of the workers must trump all other considerations.”  JCTU also pointed out various shortcomings in the Bill and gave its suggestions. While the 2024 Bill contained certain commendable clauses, it fell short of recognising any relationship of employment between workers and the platforms. On the other hand, platform and aggregator lobbies strongly opposed the law. National Association of Software and Service Companies (Nasscom) opposed the Bill on grounds that it lays down onerous and prescriptive obligations on aggregators like (indicative) minimum notice period for termination, algorithmic disclosures, monitoring and tracking mechanism. Due to strong opposition and lobby from NASSCOM and other platforms, the 2024 Bill was never introduced. 
 
Thereafter, in April 2025, the Karnataka Cabinet suddenly approved an amended version of the 2024 Draft Bill, and now, the same has been promulgated as an Ordinance.

Ordinances Are Undemocratic 

At the outset, the move to pass the law by promulgating an Ordinance is a serious problem, and one for which there is no justification. By bypassing legislative approval, which would ensure sanctity and continuance of the law, the Karnataka Congress government has only taken approval of the Karnataka Cabinet for the 2025 Bill. This mode is subject to Constitutional limitations under Article 213. The Constitution empowers the Governor to promulgate ordinances when the legislature is not in session, however, circumstances must necessitate immediate action. Not only this, but Ordinances, by nature, are of limited duration. They must be laid before the legislative assembly and council and would cease to operate if they are either disapproved by the legislature or on the expiration of 6 weeks from the reassembly of the legislature. Repeated repromulgation of ordinances has also failed constitutional scrutiny.

Certain Features of the Ordinance 

The 2025 Ordinance Bill has some provisions that appear to be welcome provisions whose evaluation needs to be seen in a process. Some of them include:

  1. Though the law does not recognise gig workers as ‘workers’, it specifies in Section 26 that its provisions are in addition and not in derogation of any other law for the time being in force. Effectively, this law does not close the doors for a gig worker to claim relief under the ID Act, 1947 or any other existing labour law.
  2. The law requires algorithmic transparency in respect of all decisions that impact the working conditions on the gig workers. This is vital, since algorithms have become nothing more than an obscure tool used to perpetuate unfair labour practices and discrimination on gig workers. For example, currently, many workers speak to the fact that if a bonus would be payable to them for completing a certain number of tasks, the last task would not be allotted  Moreover, different workers receive different pay for the same duties with no clarity on the reason. The law also terms these algorithms as ‘Automated Monitoring and Decision making systems, and broadly defines this to allow for decisions made by automated means with or without human intervention. Now, for all such algorithms,  the aggregator/platform is required to inform the worker the procedure to seek the information in respect of all algorithms that impact their working conditions.
  3. The law also imposes an obligation on the aggregator to enter into fair contracts which must be transparent, comply with fair rates, and would explicitly allow for the right of the worker to refuse tasks offered. 
  4. Since this law addresses new and developing forms of employment relations, it defines ‘termination’ in broadest terms, including any material restriction to access of digital platforms by the gig worker. This will accommodate the new forms of punishment imposed on workers who no longer receive dismissal orders. Moreover, compliance of principles of natural justice have been brought into the termination clause, requiring the platforms to give the worker an opportunity to place his case before unilateral termination. 
  5. The law provides for registration of workers and platforms, which will enable imposition of fair liability on the platforms.
  6. Importantly, the law requires all workers to be provided with a human point of contact for all clarifications, in Kannada, English or any other vernacular language. One of the main complaints of workers is that in case of any grievances, they are faced with opaque algorithms and Bot replies to questions. The Ordinance also creates a grievance redressal mechanism and appellate mechanism through the labour department for grievances of gig workers. Initially, the aggregator would constitute an internal Dispute resolution committee, and thereafter, the Appellate authority as prescribed by the Government could hear appeals. 
  7. The Ordinance creates a Welfare fund for Gig workers, and requires aggregators and platforms to pay a transaction based Welfare Fee as notified by the government. This imposes limited financial liability on the aggregators towards the gig workers, though it may be argued that it relieves the management of real responsibility for their welfare
  8. The Ordinance mandates provision of a safe working environment ‘as far as it is reasonably practicable, including adequate periods of rest, access to sanitary and rest facilities and reasonable travel time to such facilities. 
  9. The Ordinance creates a Payment and Welfare Fee Verification System (PWFVS) to be administered by the State government that will monitor all payments made by the platforms to workers for each transaction and the welfare fee deducted towards such transaction. The form for this would be prescribed in the Rules.

On the other hand, the Ordinance also fails to adequately protect the rights of gig workers in a number of ways: 

  1. Of course, in terms of the larger picture, passing of a welfare law that fails to recognise platforms as the employer at all is contrary to our understanding of the evolving nature of the gig economy, where the largest workforce is controlled, supervised and employed by the platform. Importantly, even a provision in the 2024 Bill that safeguarded the right to gig workers to seek resolution of disputes through the Industrial Disputes Act mechanism has been dropped. 
  2. The Ordinance effectively mirrors the format of the Unorganised Workers (Social Security) Act 2008, wherein a Board is created, workers are registered and are entitled to social security through schemes that would be implemented by the Board. These schemes are also made contributory in nature. On one hand, this means that the law itself does not provide any social security in itself. On the other, this may further the stance of the Platforms/managements that gig workers form part of the unorganised sector workforce and as such are not entitled to benefits from the platforms. Importantly, older laws that followed this model, such as the Building and Other Construction Workers Act, 1996, include important statutory protections by referencing provision for ailment, loan, maternity benefit, pension, education etc.
  3. The Board itself lacks representative character. Of the 15 members that compose the Board, only 4 are representatives of gig and platform workers. These representatives too are not democratically elected, but are appointees of the government. This creates the danger of fermenting a situation where unions are forced into patron - client relations with the government. Since it is unlikely that the government will appoint union members genuinely agitating for workers’ rights but it is most likely that management sponsored union members would be appointed. The past experience of boards is instructive in this regard - especially BOCW board etc, where decisions taken are taken not in the interests of workers.
  4. Another problem is the failure of the government to publish a note outlining the financial and other implications of the law, as required in the Pre legislative consultation policy put out by the Legislative Department of the Ministry of Law and Justice. The Congress government has a history of implementing welfare measures without proper budgeting, which have resulted in diversion of other funds. 
  5. The Ordinance also leaves the content of most rights to the whims of the bureaucracy and the ruling classes. This includes the percentage of cess to be collected under the law to fund social security measures for workers. The ordinance states that a welfare fee known as the Platform Based Gig Workers Welfare Fee will be charged, which will be not less than 1% but not more than 5% of the payout to the platform based Gig worker of each transaction, leaving the decision on the exact percentage of cess to the whims of the state government. In fact, the words ‘as may be prescribed’ have been used as many as 20 times, and delegate power to the government to decide, amongst others:                                                 
    • Occupational safety and health standards
    • Manner of utilisation and management of welfare Fund
    • Manner of publishing disclosure obligations
    • Manner for providing database of gig workers by platform/aggregator
    • Procedure of disposal of petition and appeal
    • Manner of registration of aggregators in the Board
    • Information pertaining to automated monitoring and decision making systems in respect of which transparency is required As a result, the exact nature of obligations and duties of the platforms and rights of the workers are neither statutorily comprehensive nor clear. 
  6. The law in section 12(3) allows for unilateral change in contract terms by the platform, at the cost of the worker by merely imposing notice requirements. 
  7. In Section 14(2), the Ordinance permits termination of a worker without notice in ‘cases of bodily harm’ without prescribing how this harm is to be made out and what opportunity would be given to the worker to make out his case. 
  8. Most egregiously, the Section titled ‘Income security’ does provide for any income security at all. Rather it states that contractual payment must be made and deductions must be justified with reasons. However, the law falls short of recognising minimum wages for gig workers, though as early as 1948 the legislature in the Minimum Wages Act recognised piece rate minimum wages. 

The real working conditions of gig and platform workers have been in free fall for the past couple of years as evidenced by several reports that have been released, notably a 2024 report titled ‘Prisoners on Wheels’, which found cab and food delivery workers earning poverty wages and working overtime as a structural necessity to make ends meet. It was found that 43.10% of cab drivers earned less than Rs 500 per day, and 32% of food delivery workers earned between Rs 200-400 per day after deducting costs such as food and fuel while over 60% of surveyed cab drivers worked over 12 hours a day, and 55% of food delivery workers worked at least 10 to 12 hours a day.
 
In sum, while bringing in legislation for the protection of gig and platform workers’ rights is absolutely crucial - especially given the burgeoning numbers of workers turning to gig and platform work everyday - half-baked measures like the Karnataka Ordinance will not be the panacea it hopes to be. Though the law, by appearance, offers certain provisions that may aid workers, it does not address the root of their precarity. Genuine progress requires the unambiguous legal recognition of gig and platform workers as workers - which can act as a gateway for these workers to demand for better wages and protection of working conditions - and thereby a better life. This crucial step is certainly within the reach, and the Karnataka Government can pave the way by passing fresh legislation accordingly.