The Karnataka Cabinet, on April 11, cleared the much-awaited Karnataka Platform-based Gig Workers (Social Security and Welfare) Bill, 2024, which is now expected to be introduced as an Ordinance. If passed, this would make Karnataka the second State in the country to introduce legislation for the welfare of platform-based gig workers after Rajasthan.
Why legislation?
Reports suggest that there are around 2 lakh platform-based gig workers in Bengaluru working with companies such as Swiggy, Zomato, Uber, Ola, Urban Company, Porter, Amazon, Flipkart and so on. An evolving and nascent sector, the gig economy is expected to create 23.5 million jobs in India by 2030 as per a 2022 NITI Aayog report.
Platform-based gig workers, who are not full-time employees and are often referred to as ‘partners’ by the aggregators, enjoy a certain degree of work flexibility unlike jobs in the formal sector.
However, given the employment is outside the traditional employer-employee relationship, workers do not have the safety of labour protection laws. Multiple instances of worker neglect and exploitation have been reported over the years necessitating the need for legislation to ensure the protection and welfare of the workers.
Although the Central government, in 2020, passed the Code on Social Security (CoSS) which defined gig workers for the first time in India, it is yet to be implemented. In 2023, the Congress government which was then in power in Rajasthan enacted the Rajasthan Platform-Based Gig Workers (Registration and Welfare) Act, 2023 just before the state elections. The subsequent BJP government in the State left the law unimplemented.
NEW DELHI, 09/04/2022: Blinket Delivery agent on way to deliver grocery in New Delhi on Saturday, April 09, 2022. Photo: R. V. MOORTHY / The Hindu
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MOORTHY RV
What’s the timeline?
It was in June 2024 that the Siddaramaiah-led government first published the draft of the Karnataka Platform-based Gig Workers (Social Security and Welfare) Bill. According to officials, the Bill was drafted after several meetings with various stakeholders.
While it was expected to be tabled in the monsoon session, industry bodies such as NASSCOM and IAMAI representing various tech companies registered strong opposition against several clauses of the draft Bill and demanded more time to submit their feedback. Following this, the draft Bill was put on the back burner, much to the dismay of gig worker unions, who have since been pushing for its passage at the earliest.
In the first week of April, the top brass of the Karnataka government met with Leader of the Opposition Rahul Gandhi, with whom the Bill was discussed. Legislation for gig workers was one of the promises of Congress before the general elections as well as the state elections in Karnataka. Following the meeting, Karnataka Labour Minister Santosh Lad confirmed that the Bill had been finalized and would soon be passed. On April 11, the Karnataka Cabinet cleared the Bill.
What are the key clauses?
The Karnataka Platform-based Gig Workers Bill defines a gig worker as a person who performs work or participates in a work arrangement that results in a given rate of payment, based on the terms and conditions laid out in such contract and includes all piece-rate work, and whose work is sourced through a platform, in the services specified in the Schedule – I.
The Bill that emphasizes the rights of gig workers aims to create a welfare fund for the workers, places obligations on aggregators, and proposes a welfare fee of 1%-5% of the payout to the worker during each transaction. All sum received will go to the welfare fund for the workers.
A gig workers’ welfare board will be established to ensure registration of workers by the platforms, welfare fee collection, and implementation of social security schemes. Aggregators are required to furnish their database of all gig workers to the board.
The proposed Payment and Welfare Fee Verification System (PWFVS) will track every payment made to the workers and the welfare fee deducted by the aggregators.
How does the Bill help?
The platforms are required to provide a work environment that is safe and without risk to the health of the worker and ensure that the worker has adequate periods of rest and access to sanitary and rest facilities.
Addressing arbitrary termination, which has been one of the major concerns of workers, the Bill notes that no worker can be terminated without a valid written reason and prior notice of 14 days, except in instances where they have caused bodily harm.
The Bill also mandates platforms to enter into transparent and fair contracts with the workers and stresses on the need for transparency with respect to the automated monitoring and decision-making system.
It proposes a two-tiered grievance redressal mechanism wherein the worker is required to approach the internal dispute resolution committee first. If the committee fails to provide an ‘Action Taken Report’ in 14 days or the worker is unsatisfied, the grievance will be forwarded to the board.
BENGALURU KARNATAKA 14/12/2022 : Gig workers employeed by Food delivery service platforms Zomato and Swiggy, on their way to delivery of food to the customer at home, at Jalahalli cross, in Bengaluru on December 14, 2022. Photo MURALI KUMAR K / The Hindu
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MURALI KUMAR K
What were the objections?
Following the publishing of the draft Bill in 2024, industry bodies, the Department of Electronics, IT-BT and Science & Technology, and Commerce & Industries department had raised several objections.
The key concerns included how the bill defined ‘gig worker’, welfare fee per transaction, duplicate obligation for aggregators once CoSS 2020 is implemented, clarity on how the welfare fund would be utilised, grievance redressal mechanism under the Industrial Disputes Act and criminal liability on platforms for non-compliance, among others.
While CoSS 2020 defined a gig worker as a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationships, the Karnataka bill did not explicitly mention that the gig work was outside traditional work relationships. Hence, it was demanded that the bill align its definition of gig worker with that of CoSS instead of creating a parallel system which equates gig workers to full time employees.
What were the reasons for objections?
A note from the IT-BT department argued that the welfare fee on a per-transaction basis was not suitable for all business models. It contended that the fee must be 1-2% of a platform’s state-specific turnover or 5% of gig workers’ payout, whichever is lower. To avoid duplicate obligations for platforms to contribute to both state and central funds, it also demanded a sunset clause or transition mechanism that addressed this issue once CoSS was implemented.
The previous version of the Bill proposed a grievance redressal mechanism under the Industrial Disputes Act. This was strongly opposed citing that the Act was applicable only to workmen covered under conventional labour laws.
Clarity on welfare fund utilisation was sought, and objections were raised to the central transaction information and management system (CTIMS), citing the compliance burden on platform companies. The draft Bill’s demand for platforms to disclose their algorithmic decision-making process was also opposed, contending that the anonymised nature of it was their competitive edge.
There were also objections regarding the 14-day notice period for workers before termination.
Commerce and industries department argued that wide ranging powers to the state government allowing it to interfere with the algorithms, contracts and day to day management of platforms was against the spirit of ease of doing business.
What were the changes made?
Following the objections, a few amendments were made to the draft Bill.
The grievance redressal mechanism was removed from the ambit of the Industrial Disputes Act, and criminalisation for non-compliance was ruled out. While the Bill retained the 14-day notice period, a provision was added that it was not required in situations where bodily harm was caused.
The Bill gave more clarity regarding the welfare fee compared to the initial draft which was ambiguous regarding the deductions.
In its response to the objections made, the labour department noted that rules would be framed separately for platforms, taking into consideration sector-specific business models and without disturbing financial sustainability, cross-subsidisation and job creation in the industry.
It also pointed out that a sunset clause was introduced to the Bill and platforms need not contribute to CoSS if they are already contributing under the state bill.
Regarding the objection to CTIMS, the department argued that aggregators are already tracking and storing data at an individual level. CTIMS was changed to Welfare Fee Verification System (WFVS), which only requires integration with the API and no additional compliance, it said.
The Bill adhered to its definition of ‘gig worker’ noting that it assumed employer-employee relationship only to the extent of providing basic minimum social security benefits and clarified that traditional labour laws do not apply to the sector.
“Although there is flexibility of work for workers, platforms enter into contracts, define their payout, allocate and control work and in some cases provide benefits and insurance. So, ethe mployer-employee relationship exists to an extent. The bill addresses this unique nature of evolving relationships in the labour market by using a definition of Gig worker without establishing any explicit partnership status,” noted the response from Labour Department.
Published – April 16, 2025 06:33 am IST
