The Karnataka cabinet on April 11 approved a bill proposing a 1–5 percent welfare fee to create a dedicated welfare fund for gig workers. The government plans to take the ordinance route to implement the bill.
Karnataka Platform-Based Gig Workers (Social Security and Welfare) Bill, 2024 proposes a welfare fee of not less than 1 percent and not more than 5 percent on each transaction or payout made by platforms to gig workers.
A separate body, 'Karnataka Platform-Based Gig Workers Welfare Board' will be established for the collection, management, and disbursement of funds to provide these social security benefits to eligible beneficiaries and their dependents.
Speaking to media, state’s law and parliamentary affairs minister HK Patil said the government would soon bring in an ordinance to implement the bill.
Under this bill, social security benefits—including accident compensation, natural death compensation, funeral assistance, maternity benefits, educational assistance for children, provident fund, housing support, skill upgradation, and old age assistance—will be extended to gig workers in a phased manner.
While exact data on the number of gig workers is not available, the NITI Aayog’s 2022 report estimates that apround 2.3 lakh gig workers are employed as full-time or part-time delivery personnel by platforms such as Swiggy, Zomato, ride-sharing services like Ola, Uber, Namma Yatri, and e-commerce or quick commerce platforms including Amazon, Flipkart, and BigBasket.
The decision follows a meeting between Chief Minister Siddaramaiah and Congress leader Rahul Gandhi in Delhi in which the bill was discussed amid disagreements within the cabinet.
The cabinet was earlier forced to defer the bill due to the differences.
Also, read: Karnataka Gig Workers' Bill: Nasscom says notice period for termination, data disclosures to hit operations
Sources said the IT-BT Department flagged that the Bill ignores the flexible nature of gig work, creates legal confusion, and adds heavy compliance burdens. It recommended capping welfare fees, avoiding overlap with central laws, and removing clauses on algorithm disclosure, strict contracts, and penalties.
State Commerce and Industry Department also raised concerns, noting the Bill treats gig workers as traditional employees, imposes criminal liability on company officers, and grants broad State control—potentially harming Karnataka’s startup ecosystem.
Labour department officials said they have revised the Gig Workers’ Bill based on feedback. "The Industrial Disputes Act has been removed, and grievance redressal will now be handled internally by platforms. The Bill only uses the employer-employee framework to extend basic social security benefits, in line with international standards and backed by a recent High Court judgment," the official said.
"Criminal penalties have been dropped. There will be no inspectors, and compliance will be through a self-reporting API system to ensure ease of doing business. Algorithm disclosure is not required—only transparency on how payouts are determined. Model contracts are optional, notice periods are flexible, and the welfare fee is capped at 1–2 percent of payouts. A sunset clause has been added to prevent dual contributions under central laws," the official said.
Also, read: Karnataka job quota-for-locals bill: IT-BT and Commerce and Industries departments kept in the dark
While gig workers and unions have welcomed the bill, industry bodies such as the National Association of Software and Service Companies (NASSCOM) and the Internet and Mobile Association of India (IAMAI) have raised concerns. Certain provisions could negatively impact aggregator businesses and hurt the ease of doing business in Karnataka, they have said.
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