Karnataka Gig Workers Act: A Model for India

Source: The post “Karnataka Gig Workers Act: A Model for India” has been created, based on “Karnataka Gig Workers Act: A Model for India” published in “The Hindu” on 10 October 2025. Karnataka Gig Workers Act: A Model for India.

UPSC Syllabus: GS Paper 2 – Governance

Context: The gig economy in India has expanded rapidly in recent years, driven by platforms such as Ola, Uber, Swiggy, and Zomato. However, gig workers classified as independent contractors—remain outside the protection of traditional labour laws, leaving them without access to social security, healthcare, insurance, or job stability. Recognising this gap, the Government of Karnataka enacted the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Act, 2025, becoming the first Indian state to create a comprehensive legal framework for the welfare of gig workers.

Need for the Act

1. According to NITI Aayog (2022), India’s gig workforce is expected to grow from 8 million in 2020–21 to 24 million by 2029–30.
2. Despite their growing role in the digital economy, gig workers face income insecurity, lack of health benefits, and no protection against arbitrary terminations.
3. The COVID-19 pandemic exposed the vulnerability of this workforce, highlighting the urgent need for formal recognition and social protection.
4. The Karnataka Act aims to address these issues through a structured and transparent system of welfare and accountability.

Key Features of the Karnataka Gig Workers Act, 2025

1. Welfare Fund Creation: The Act mandates all aggregator platforms to contribute 1–5% of each transaction’s payout to a Gig Workers Welfare Fund. This fund will finance healthcare, accident insurance, and financial protection for gig workers.
2. Establishment of a Welfare Board: A Gig Workers Welfare Board based in Bengaluru will manage the fund and oversee implementation. The Board is chaired by the State Labour Minister and includes officials from labour, IT, taxation, and civil society.
3. Transparency and Accountability: Platforms must maintain transparency regarding payments, deductions, and incentives. Companies are required to disclose algorithmic decision-making processes and provide a human grievance contact for workers.
4. Registration and Identification: All platform-based workers will be registered and assigned unique identification numbers to access welfare schemes.
5. Grievance Redressal Mechanism: The Act introduces a two-tier dispute resolution system:

• Internal Dispute Committee within platforms.
• Gig Workers Welfare Board for appeals and independent review.

1. Compliance and Penalties: Companies must file quarterly compliance reports. Non-compliance can lead to penalties up to ₹1 lakh.
2. Administrative Efficiency: Administrative expenses are capped at 5% of the welfare fund, ensuring that most contributions go directly to worker benefits.
3. Fair Work Standards: The Act mandates rest breaks, payment timelines, and basic working condition standards for gig workers.

Significance of the Act

1. The law provides legal recognition and protection to gig workers for the first time in India.
2. It establishes a structured welfare mechanism ensuring access to social security, insurance, and healthcare.
3. It promotes transparency and fairness in the gig economy by regulating payments and algorithmic decisions.
4. The Act enhances accountability of aggregator platforms, making them responsible for worker welfare.
5. It serves as a replicable model for other Indian states and could inform a national policy for gig worker protection.
6. By institutionalising welfare contributions, Karnataka has taken a progressive step in labour reform in the digital era.

Challenges and Concerns

1. Compliance Issues: Ensuring all platforms, including small and informal aggregators, follow the law may be difficult.
2. Sustainability of the Welfare Fund: The long-term financial viability of the fund depends on regular contributions from platforms.
3. Industry Resistance: Platforms may view mandatory contributions as a financial and administrative burden, leading to potential non-compliance or delays.
4. Impact on Consumers: Companies may pass on costs to customers, increasing service prices and slowing growth.
5. Exclusion of Informal Gig Workers: The law may not cover workers employed by unregistered or semi-formal platforms, creating a two-tier system of protection.
6. Administrative Bottlenecks: Effective monitoring, registration, and grievance resolution will require strong institutional capacity.

Way Forward

• The state must ensure strict enforcement of the Act across all types of gig platforms.
• The Welfare Fund should be monitored regularly to ensure transparency, sufficiency, and accountability.
• The government should include informal and unregistered platform workers within the Act’s ambit.
• A national framework for gig worker welfare, aligned with the Karnataka model, should be developed for uniform protection across states.
• Periodic stakeholder consultations involving gig companies, workers, and policymakers can strengthen cooperation and implementation.

Conclusion: The Karnataka Gig Workers Act, 2025, marks a historic step toward recognising the rights and welfare of India’s gig workforce. By creating a dedicated welfare fund, establishing accountability mechanisms, and ensuring transparency in platform operations, the state has set a progressive benchmark for digital labour reform.

For the Act to truly succeed, consistent enforcement, adequate funding, and cooperative participation between the government, platforms, and workers are essential.  If implemented effectively, Karnataka’s model could pave the way for a national policy framework that ensures fairness, dignity, and social security for millions of gig workers across India.

Question: The Karnataka Gig Workers Act, 2025 seeks to provide social security and legal recognition to platform-based workers. Discuss its significance and challenges as a model for labour reform in India.