Authored by Khushi Jain, Dr. Ram Manohar Lohiya National Law University, Lucknow

INTRODUCTION

The rapid expansion of the gig economy has introduced unprecedented flexibility while simultaneously creating new forms of economic precarity. In FY 2024–25, India’s gig workforce surged to approximately 12 million workers, up from 7.7 million in 2020–21, marking a 38% year-on-year increase. While the growth is driven by several factors including digital connectivity and urbanisation. However, it also demonstrates the vulnerabilities faced by gig workers including lack of social security, income instability, and limited access to healthcare and other benefits.

The Karnataka Platform-Based Gig Workers (Social Security and Welfare) Act, 2025 (“The Act”) is an important step towards regulating gig economy and protecting the gig workforce through the establishment of authorities and technological integration. Through this, though Karnataka is not the first state to legislate on the gig worker welfare but it is the first to pair social security provisions with a structured regulatory architecture for aggregator compliance and algorithmic accountability. While the Act has a progressive approach, yet it fails to address some of the key structural and operational challenges faced by gig workers.

The blog critically examines the legal framework of the Act to assess its effectiveness in addressing the needs of gig workers. It explores potential areas for reform to ensure comprehensive protection and welfare for this growing segment of the workforce. Towards the end, the blog suggests plausible reforms and policy measures to help achieve the aims and objectives of the Act.

INSTITUTIONAL, FINANCIAL, WELFARE AND REGULATORY ARCHITECTURE

Section 2 (B) of the Act defines ‘aggregator’ as a digital intermediary for a buyer of goods or user of a service to connect with the seller or the service provider, and includes any entity that coordinates with one or more aggregators for providing the services. The definition is comprehensive since it recognises the multi-layered nature of platform operations and reflects an advanced understanding of platform interdependence and digital value chains.

Under Section 6 and 7 of the Act, a Gig Workers Welfare Board is established to allocate the power to implement required provisions of the Act and address their grievances.  Further, section 13 also addresses linguistic barriers by institutionalising use of simple and local languages. Section 15 safeguards gig workers from unfair practices by aggregators by ensuring that reasons for deduction of payment are given with due reason. For the same purpose, a verification system i.e., the Payment & Welfare Fee Verification System (“PWFVS”) is introduced for monitoring payments and welfare fee deductions. Section 20 also levies Gig Worker’s Welfare Fees ranged between 1% to 5%, possibly with different rates for different categories.

Furthermore, the Act provides provisions to ensure transparency and accountability. Section 12 of the Act mandates contract to have fair and transparent terms related to rate norms including payments, deductions, incentives and calculations of all work done. Gig workers must also be registered, and each worker will receive a unique identification number to ensure traceability of welfare entitlements. Platforms are required to register with the Board and disclose information regarding their operational models, algorithmic management systems, and the manner of payment calculation. Section 12(3) of the Act also requires platforms to provide clear notice (14 days) before any modification or termination of a worker’s contractual terms, and to maintain at least one human grievance redressal contact point to supplement automated systems.   

CRITICAL EVALUATION OF GAPS AND STRUCTURAL LIMITATIONS

Section 2 (e) of the Act defines Gig Worker as platform-based independent contractors. It excludes them from dimensions of mainstream labour laws related to minimum wages, provident fund, gratuity, and maternity benefits. It streams an absence of clear employer–employee relationship. It thus risks undermining structural goal of social justice for gig workers since it perpetuates the same precarity it seeks to remedy, offering welfare benefits without conferring enforceable employment rights.

Scope and precision of other definitions including ‘platform-based gig worker’ and ‘aggregator’ under Section 2(b) of the Act are ambiguous. This could lead to exclusion of workers operating on less conventional or hybrid digital arrangements. The overlap with the central Code on Social Security, 2020 further complicates compliance and raises questions of federal jurisdiction.

The Act under Section 13 provides for reasonable working conditions yet it does not mandate any form of minimum guaranteed earning or compensation for waiting time, leaving workers vulnerable to fluctuating algorithmic incentives and market demand. Provisions relating to working hours, rest breaks, and sanitary facilities are couched in vague terms such as “as far as reasonably practicable,” weakening their enforceability. Consequently, gig workers may continue to face long, irregular workdays and income instability despite the law’s welfare intent.

Furthermore, wide range of possible rates under Section 20 (as discussed above) and lack of clarity regarding the base for calculation (whether on gross or net payouts) create uncertainty and potential for arbitrary imposition. Smaller aggregators with low margins could be disproportionately affected. The possibility of these costs being passed on to consumers raises concerns about inflationary effects on fares and delivery prices. Clarity on whether the fee is calculated on gross revenue or net payout is also required. Similarly, while Section 22 of the Act provides a grievance redressal mechanism and penalty structure, the fines prescribed are modest and may not serve as effective deterrents for large platforms.

Additionally, many critical aspects like rates, definitions, caps, schedules of services covered, etc. are left for subsequent legislations. For example, the stance on what benefits are included as “social security” is ambiguous. Whether it includes maternity leave, provident fund, health insurance, etc. is not addressed. Similarly, the Act refers to “state-notified benefits” but details are missing. It highlights excessive delegation of substantive provisions to future rule making. It may result in unprecedented delays, inconsistent application, or dilution of intended protections. Furthermore, significant administrative capacity is required for monitoring algorithmic management systems, ensuring transparency in deductions, and verifying welfare fee remittances. Similarly, while PWFVS is logically coherent but practically it may encounter serious implementation challenges related to data accuracy, privacy, and inter-platform coordination.

WAY FORWARD: REFORMING THE WELFARE-TO-RIGHTS PARADIGM

There should be revisit of the legal classification of gig workers. In Germany, the Federal Labour Court has followed the concept of “arbeitnehmerähnliche Personen” (employee-like persons), referring to individuals who, while formally self-employed, are economically dependent on a single entity and thus entitled to social protections, including paid leave and access to collective bargaining mechanisms. Similarly, the Act should introduce dependent worker category to recognise the economic dependence of gig workers on aggregators. It would enable them to access key employment rights such as minimum wages, insurance, and collective bargaining, without entirely imposing traditional employer–employee obligations. Such legal clarity would help balance flexibility with fairness.

Furthermore, algorithmic transparency provisions in the Act should be strengthened to require independent audits of platform practices, ensuring that automated systems do not exploit workers through opaque performance metrics or surge-based manipulation. Introduction of minimum earning threshold and fair algorithms that prevent arbitrary deactivation, and mandating compensation for waiting time would substantially improve livelihood stability.

PWFVS must be backed by real-time data-sharing obligations and penalties for misreporting. The state should create a dedicated inspectorate or ombudsman for gig work, empowered to handle disputes quickly and enforce compliance with welfare and safety norms. Digital platforms should be legally mandated to cooperate with the Board in data verification, while workers’ privacy must be safeguarded through transparent consent mechanisms.

In Italy, legislation extended certain employment protections to gig workers, particularly food delivery riders. The law mandates minimum pay per delivery, mandatory insurance against accidents, and the recognition of platform control in determining work allocation. The Italian model highlights a sector-specific approach where algorithmic control and task allocation are explicitly regulated. Drawing lessons, India could also model sectoral policies through identifying gig sectors where workers face high income volatility, occupational hazards, or intense algorithmic management. Sectoral focus allows regulations to be tailored to the unique risks, workload patterns, and remuneration structures in each domain.

Act should explicitly list core entitlements such as health insurance, accident coverage, maternity benefits, and old-age pension. Integration with existing state and central welfare schemes like the Employees’ State Insurance (ESI) and Atal Pension Yojana could ensure coherence and prevent duplication of benefits. This would make the welfare framework more predictable and sustainable.  Alongside, the ordinance route should give way to participatory legislative review, involving gig workers’ unions, platform representatives, digital labour scholars, and legal experts. Periodic review of the law’s implementation and mandatory public disclosure of welfare fund utilisation will strengthen accountability and public trust.

CONCLUSION

Addressing challenges such as the absence of minimum income guarantees, ambiguous welfare fee mechanisms, weak enforcement, and the lack of formal employer recognition would certainly strengthen the Act. However, a deeper structural problem persists. The essence of platform-based work characterised by algorithmic control, unpredictable demand, fragmented labour arrangements, and limited collective bargaining creates systemic precarity that legislation alone cannot eliminate. This raises a pressing question: can any law, however well-designed, truly secure economic stability, fairness, and dignity for workers whose livelihoods remain inherently contingent and mediated by digital platforms?