Decoding Gig Worker Security: An In-Depth Look at Karnataka’s Ordinance

– Dr Basavaraju R Shreshta and Mr Athreya Hebbar 

Introduction

The Karnataka Platform-based Gig Workers (Social Security and Welfare) Ordinance, 2025, is seen as a transformative step initiated by the Government of Karnataka, aimed at improving the social security status of gig workers by imposing an obligation on the aggregators. The state government has developed a keen interest in enhancing labour welfare in the gig sector, recognising that this segment of the workforce has historically been excluded from the ambit of formal social security schemes. From the government standpoint, the platform companies or aggregators have overlooked the welfare of the partners or it is not adequately addressed. Aimed at regulating the sector and ensuring a fairer future for gig workers, the ordinance, despite its good intent, falls short of fulfilling its own envisioned provisions. 

The Promise vs The Plan

The current ordinance has only assured to provide the social security benefits for the platform-based gig workers, but it has failed to present a design, nature, and scope of the schemes it intends to implement. However, drawing inference from the current Karnataka State Gig Workers’ Insurance Scheme indicates that the protection is only against accidents without including wider coverages. At least in the current ordinance or the draft rules, the wider social security benefits such as health, maternity benefits, upskilling or career growth opportunities, and retirement benefits seem to be absent. 

This omission raises the fundamental question ‘whether a standalone legislation is justified if its primary deliverable is accidental insurance?’ Arguably, such coverage could be guaranteed by regulatory guidelines that mandate aggregators to provide accident insurance directly to their partners. In the absence of a broader framework, the ordinance risks falling short of its intended goals. So, the state government must think beyond accidental coverage and focus on other aspects of social security to ensure a holistic approach.

The mammoth numbers

Moreover, the introduction of a welfare fee ranging from 1-5 % implies that the state will collect substantial funds from aggregators. The primary issue is that the wide margin between the minimum and maximum rate lacks rationale or a criterion to justify it. Further, the preliminary estimates based on limited data from Bengaluru alone underscore the significant financial implications of this provision. At the upper range of 5%, the unit economics confirms the estimated daily inflows from major platforms would amount to approximately ₹5.2 lakh from Zomato, ₹9.6 lakh from Swiggy, ₹14.72 lakh from Ola, and ₹12 lakh from Uber. For the calculations of daily inflows, the final payout (net earnings) to the rider or delivery partner excluding the platform fees, commissions and delivery charges was taken into account. This figure is then multiplied by the average rides or deliveries per day in Bengaluru, subsequently by the proposed welfare fee at 5% rate. Based on this methodology, the estimated daily contributions from these top four companies towards the welfare fund comes around Rs 41.52 lakhs. When projected for a month and factoring in contributions from additional platforms and other regions from Karnataka, the fund is poised to accumulate a substantial corpus. The magnitude of the fund collection draws attention to the transparency, scope of benefits, rationale for fund size, and potential indirect cost to be borne by the customers and gig workers. Importantly, it is imperative for the government to clearly articulate the rationale and supporting evidence behind determining the welfare fee range. Furthermore, it is evident that in the absence of a robust and well-defined action plan, the effectiveness of resource mobilisation will be compromised. The Karnataka government must avoid repeating the precedent set by its other welfare boards, ensuring that the funds of the Karnataka Platform-Based Gig Workers Welfare Board is utilised for the right cause. Despite getting audited by the Accountant General of the state, unspent and poorly utilisation will lead to a squandered opportunity. 

Skipping Basics  

The state government’s approach to this policy is in contrast with the traditional policy sequence, which entails needs assessment and scheme design, followed by budget allocation. An approach that initiates resource mobilisation without outlining  specific schemes is likely to reduce the chances of achieving meaningful outcomes.

Legal Overreach? 

CSR regulation and tax policy are under the authority of the central government. The ordinance provisions for voluntary contributions from aggregators to the welfare fund to qualify as Corporate Social Responsibility (CSR) expenditures and claims to make them eligible for tax deductions under the Income Tax Act, 1961. 

Redundant framework and rising costs 

At the centre, the Code on Social Security, 2020, was enacted to provide for the establishment of a welfare fund to support gig workers. A similar initiative by the state can lead to possible ambiguity and a significant policy overlap. The state government has to coordinate on the same with the central government and clarify the policy nuances to the stakeholders. In the case of welfare funds both at the centre and state can potentially increase the welfare fee burden on the end users.  Such redundancies need to be avoided to facilitate smooth implementation.

Charting a coherent path forward

To conclude, despite its welfare-driven intent, the ordinance falls short of the structural clarity, legal coherence and policy depth required for policy implementation. To uphold its objectives, the state, based on the need-assessment should finalise the social security schemes including health coverage, retirement benefits and other wider coverages. In the later stage, the budgeting process could be carried out to decide on the welfare fee rate thereby fulfilling the policy procedures and providing a rationale for its decisions. While legislating, the state needs to account for the centre-state relations to ensure smooth implementation. This way, the ordinance can evolve into a truly transformative tool that mobilizes resources and delivers meaningful protections for Karnataka’s gig workforce. Without such course correction, the ordinance risks becoming a well-intentioned yet underperforming policy instrument.

(About the authors: Dr Basavaraju R Shreshta is the Executive Director of Grassroots Research And Advocacy Movement, having a deep understanding of Skill Development and Employment ecosystem of Karnataka, having worked at the grassroots and authored policies and vision documents. 

Mr Athreya T Hebbar is from Gokhale Institute of Politics and Economics pursuing MSc Economics(Public Policy) and currently interning at GRAAM)