Legislative Brief: Karnataka Gig Workers Welfare Bill 2025

 The following is the full text of the State Legislative Brief on The Karnataka Platform based Gig Workers (Social Security and Welfare) Bill, 2025, published by PRS Legislative Research on August 13, 2025.

Overview of Key Features

• Registration: Gig workers sourcing work via platforms will receive a unique ID. A Welfare Board will oversee the registration of both workers and aggregators, while also creating and monitoring social security schemes.
• Welfare Fund: A Social Security and Welfare Fund will be established, funded by aggregators, gig workers, and both central and state governments.
• Transparency: Aggregators are required to inform workers about work parameters and the impact of automated monitoring and decision-making systems on their working conditions.

Key Issues and Analysis

• Definition: The Bill’s definition of gig work is based primarily on the manner of obtaining work rather than conceptual features, which may lead to the misclassification of traditional employees as gig workers.
• Financing: There is an ongoing debate regarding who should bear the primary cost of social security—aggregators, workers, or the government.
• Business Models: Determining welfare fees as a percentage of payout may result in uneven treatment of similar services depending on an aggregator’s specific business model.

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PART A: HIGHLIGHTS OF THE BILL

Context

The gig economy in India is growing rapidly. NITI Aayog estimated that in 2020-21, 77 lakh workers (1.5% of the workforce) were engaged in gig work, a number expected to rise to 2.35 crore (4.1%) by 2029-30. While the central Code on Social Security, 2020 provides for such workers, it is not yet in effect. Consequently, states like Rajasthan and Bihar have passed their own laws, while others like Telangana and Jharkhand have invited public consultation. Karnataka initially promulgated an Ordinance in May 2025 and released Draft Rules in July 2025 before introducing this Bill in the Legislative Assembly on August 12, 2025.

Key Features

• Gig Worker: Defined as someone in a contractual, piece-rate arrangement through a platform for a given rate of payment. They must be electronically registered by the Board within 30 days of onboarding.
• Aggregator: Defined as a digital intermediary connecting buyers and sellers. Aggregators must register with the Board within 45 days of the Act’s commencement and provide data on registered workers.
• Transparency: Contracts must be transparent, including terms for payments, deductions, and incentives. Workers must have the explicit right to refuse tasks.
• Grievance Redressal: Workers can file grievances against aggregators or the Board. Payout or termination disputes go first to the aggregator’s Internal Dispute Resolution Committee; if unresolved in 14 days, the Board makes a final decision.
• Gig Workers Welfare Fee: A fee between 1% to 5% of the payout per transaction will be collected from aggregators.
• Welfare Fund: This fund will consist of welfare fees, worker contributions, government grants, and donations. Administrative costs are capped at 5% of the fund.
• Welfare Board: Chaired by the state Labour Minister, the Board includes government secretaries, a CEO, and representatives from gig workers (4), aggregators (4), and civil society (2).
• Penalties: Failure to pay the welfare fee incurs 12% annual interest. General contraventions carry fines ranging from Rs 5,000 to one lakh rupees.

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PART B: KEY ISSUES AND ANALYSIS

Defining Gig Work

A major challenge is that gig work blurs the lines between employment and self-employment. The Bill defines gig work based on how it is sourced (through a platform) rather than the nature of the relationship (lack of mutual obligation or degree of control).

Table 1: Comparison of Work Forms

Parameter	Employer-Employee	Contract Labour	Freelance	Gig Work
Engagement	Written, permanent contract.	Via agency/contractor.	Direct, referrals, or online.	Via platform/aggregator.
Flexibility	None.	Limited.	High (clients, pay, hours).	Choice of hours/location; platform constraints.
Control	Direct control.	Supervisory (employer); Ultimate (contractor).	Minimal.	Ratings, pricing, location tracking.
Income	Remuneration; no competitors.	Multiple (if part-time).	Multiple projects.	Multiple platforms.

Judicial precedents, such as a Karnataka High Court ruling on Ola drivers and a UK Supreme Court ruling on Uber, suggest that high levels of control over fares and routes can mean workers should be classified as employees rather than independent contractors.

Platform-Only Benefits

The Bill only extends benefits if work is obtained through an online platform. This creates a distinction between workers performing identical tasks (e.g., an Uber driver vs. a traditional taxi driver) solely based on the technology used to source the job.

Financing Social Security

Financing models vary globally. In India, the Employees’ Provident Fund involves joint contributions from employers and employees. The Karnataka Bill follows a tripartite model involving aggregators, workers, and the government.

Table 3: International Financing Models

• UK: Funded by national insurance and tax; gig workers pay specific national insurance.
• USA: Contributions by employers, employees, and self-employed.
• Australia: Public funds and mandatory employer "superannuation" payments if the worker meets the "employee" definition.
• Singapore: Platforms and workers both contribute to the Central Provident Fund.

Business Model Disparities

Because the welfare fee is a percentage of the payout, business models where the customer pays the worker directly (e.g., Namma Yatri or Rapido) might result in a zero payout from the aggregator, exempting them from the fee. Conversely, platforms that handle the transaction (e.g., Uber or Ola) would be obligated to pay, leading to unequal treatment of similar services.

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Comparison of State Laws

Feature	Karnataka (Bill)	Rajasthan (Act)	Bihar (Act)	Telangana (Draft)	Jharkhand (Draft)
Gig Worker Def.	Via platform; pay by terms.	Outside ER-EE relationship.	Outside ER-EE; piece-rate.	Outside traditional ER-EE.	Same as Rajasthan.
Worker Reg.	By Board (30 days).	By aggregator (60 days).	By aggregator (60 days).	Self-registration.	Same as Rajasthan.
Transparency	Parameters/algorithm.	No provision.	Criteria/data/ratings.	Same as Karnataka.	Ratings/data/class.
Termination	14-day notice.	No provision.	Same as Telangana.	7-day notice/written.	Same as Karnataka.
Welfare Fee	1% to 5% of payout.	% of transaction value.	1% to 2% of payout.	Same as Rajasthan.	% of transaction value.