The Aakhya Weekly #151 | Is Karnataka’s Gig Law Built to Last?
In Focus: Karnataka’s Soft Launch of Welfare
More than 40 million jobs were lost in India in April 2020 alone due to the COVID-19 pandemic. Yet, amidst the crisis, the gig and platform economy continued to expand. India's share of the global online worker population, as tracked by the Online Labour Index, rose from 25% in 2017 to 33% in 2021. For many workers in India, platform apps such as food delivery or ride-hailing have become a practical way to earn a living, especially in the absence of stable jobs in traditional formal sectors.
According to NITI Aayog, about 7.7 million workers were engaged in gig work in India between 2020 and 2021. Many of them were young, unskilled, or previously unemployed. Gig work offers flexibility and quick entry into the job market. But it also means long hours, volatile income, and little protection. Since platform workers exist outside a formal employer-employee relationship, they are excluded from most social security frameworks.
India has been exploring the concept of gig worker welfare for years. The Code on Social Security (CoSS), 2020, was meant to be the big leap. It legally recognised gig workers and proposed a national framework for their welfare. Five years on, however, the Code is yet to be enforced. The Centre has tried to fill the vacuum in part by expanding the e-Shram portal and announcing plans to register gig workers under Ayushman Bharat in the 2025 Budget. When it comes to delivery, however, the momentum has largely shifted to the states.
Rajasthan became the first state to introduce a dedicated gig worker welfare law in 2023, albeit with vague objectives and operational ambiguity (See Aakhya Weekly #56 ); however, this legislation is yet to be implemented. Last Month, Karnataka followed suit with the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Ordinance, 2025. The accompanying rules are yet to be notified, but even as a draft, the Ordinance is more technically sound than Rajasthan’s version.
Regardless, does it fix the algorithmic reality of platform work?
Understanding the Ordinance
At its core, the Karnataka ordinance, which affects over 0.2 million platform-based gig workers in Bengaluru alone, is an attempt to give gig workers a formal identity in the welfare ecosystem. This ordinance does not change their employment status, but it does try to provide benefits through a separate channel.
The law establishes a new state Welfare Board, which requires platforms to register themselves and their gig workers. The Board is responsible for collecting welfare contributions, implementing benefit schemes, handling grievances, and carrying out other designated functions. To fund these schemes, the law introduces a transactional levy called the Gig Work Welfare Fee, ranging from 1 to 5% of the payout for each task completed by a gig worker. The metrics will be notified by the government and will apply to individual transactions, instead of the platform’s overall revenue. Every gig worker onboarded by an aggregator must be registered with the Board by them and issued a unique ID, meant to track their work, eligibility, and benefits. Moreover, the law also addresses the opacity of platform algorithms, and the ordinance introduces a provision on automated decision-making, requiring companies to inform workers about the procedure to seek information on algorithms that affect work allocation, fares, earnings, or deactivation. This is a first for any Indian state law. During consultations earlier this year, unions such as the Indian Federation of App-Based Transport Workers (IFAT) had demanded precisely this kind of transparency.
The ordinance also sets up a two-tier grievance mechanism. Aggregators will be required to establish internal committees forA dispute resolution, and unresolved complaints can be escalated to the Board. Platforms must also file periodic returns capturing worker payouts, welfare contributions, and compliance metrics. A Payment and Welfare Fee Verification System (PWFVS) will track such transactions and payouts in real-time or near-real-time, requiring platforms to share detailed payment data for each task and worker with the state. Platforms face a 12% interest for delayed payments and fines up to ₹1 lakh for repeated non-compliance.
On paper, this creates a much-needed institutional response to the power imbalance between platforms and their workers. The real test, however, depends on whether this framework translates to outcomes, and that is where the gaps begin to surface.
The Cracks Underneath
Despite the structural improvements over previous state efforts, Karnataka’s ordinance stops short of offering tangible guarantees to workers. It sets up a fund without specifying what workers will receive. There is no mention of accident insurance, maternity coverage, or income support, leaving the decision to future rules and schemes. Without defined entitlements, the promise of welfare is merely that, a promise.
The Board, tasked with administering the entire system, is given sweeping responsibilities without a blueprint or measurable outcomes to achieve. While the law permits up to 5% of the welfare fund to be used for administrative expenses, it is unclear how the Board will be staffed, monitored, or implemented in practice. India’s experience with other sectoral welfare boards—like those for construction workers—shows how ineffective these structures can become when implementation is treated as an afterthought. Hopefully, the accompanying rules will address this.
Even the algorithmic transparency provision, while groundbreaking, remains surface-level. Platforms must disclose the use of automated systems to workers who seek the information, but neither the law requires these systems to be fair and auditable, nor does it mandate human oversight in critical decisions like account deactivation. A platform can still suspend a worker algorithmically, as long as it provides a reason and 14 days’ notice. Unlike Europe, where workers have the right to a human review, Karnataka stops at procedural compliance. The right to seek this information is provided only to workers, while denying it to the Welfare Board. That’s a missed opportunity. If the Board is to regulate fairly and resolve disputes effectively, it too needs the ability to scrutinise algorithmic decisions. Relying on individual workers to challenge systems with limited understanding creates a significant asymmetry.
Adding to this, even definitional issues persist. The law links eligibility to a minimum number of transactions per quarter but leaves the threshold to be notified by the Welfare Board. Does it mean logging in daily? Weekly? Working across multiple platforms? Without clarity, eligibility could be interpreted narrowly, or create duplication and confusion for platforms. Another challenge concerns systems, wherein India already has a national database, i.e. e-Shram, and a parallel central law, in CoSS. Karnataka’s ordinance creates a standalone system. Instead of integrating with existing schemes, it risks duplicating infrastructure, an issue that has historically plagued welfare delivery.
The compliance burden for platforms is also substantial. They are required to register every worker, report every transaction, put personnel in charge, and manage grievances, effectively acting as real-time data processors. Smaller platforms or those operating across multiple states could find this difficult to scale. Platforms are also expected to provide reasonable working conditions; however, given that fixed workplaces and choice on working hours do not apply to gig workers, enforcing rest breaks and access to washrooms will be challenging. As other states roll out similar laws, this burden will multiply rapidly.
Lastly, there’s the cost issue. The welfare levy is directly linked to gig worker payouts, meaning it could be passed on to consumers or even to the workers themselves. The ordinance neither explains how the actual percentage of contribution will be determined nor does it define the structure of worker contributions. Without clarity, the costs of this well-meaning welfare push could end up being regressive.
A Better Frame, Still Not a Guarantee
None of this is to say Karnataka’s ordinance is irrelevant. It is more thoughtful than Rajasthan’s bill, marking a significant step toward recognising the rights of platform-based workers. However, as with most Indian laws, the devil is in the details, and those details are yet to come.
Until we see the rules, the solutions remain inconclusive. It is a framework with potential. A sharper frame, yes, but a fragile one at that. Karnataka has shown us ‘what could’ transpire. It is yet to tell us ‘what will’.
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