Karnataka Governor Thawarchand Gehlot on May 27 approved the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Ordinance, 2025, paving the way for a dedicated welfare framework for gig workers.
The ordinance mandates that aggregator platforms like Zomato, Ola, Swiggy, Amazon and others pay a welfare fee ranging from 1 to 5 percent of every transaction made with a gig worker. This will be the primary funding source for a new social security system aimed at supporting lakhs of workers in the platform economy.
The state government will notify the exact fee structure for different categories of platforms within six months. Aggregators will be required to deposit the fee quarterly. The amount will count toward contributions under the Code on Social Security, 2020, with annual reconciliation allowed for any differences. Platforms failing to comply will be liable to pay interest on the overdue amount.
To track and verify payments and deductions, all transactions involving gig workers will be recorded through a new Payment and Welfare Fee Verification System (PWFVS), overseen by a soon-to-be-formed Karnataka Gig Workers Welfare Board. Until the system becomes fully operational, platforms that self-report quarterly payouts may be granted temporary exemptions.
The ordinance seeks to address longstanding gaps in protections for platform-based workers such as food delivery personnel, drivers, and freelance service providers. The welfare fund will be financed by contributions from platforms, workers, and government grants, and will support schemes offering healthcare, income security, maternity benefits, and coverage in cases of old age or disability. Special provisions are included for women workers and persons with disabilities.
All aggregators operating in Karnataka will be required to register with the Board, and gig workers will receive a unique ID valid across platforms. Contracts must clearly outline payout terms, incentives, and rights, including the right to refuse tasks. Workers cannot be suspended or terminated without a written explanation and a 14-day notice, except in cases involving violence or bodily harm. A two-level grievance redressal system will handle disputes.
The ordinance also mandates that platforms disclose how their automated systems make decisions affecting workers. These systems must not discriminate on the basis of gender, caste, religion or other factors.
To ensure fair compensation, the ordinance sets timelines for disbursing payments—daily, weekly, biweekly or monthly—without unjustified delays. Deductions must be transparently stated in invoices. Non-compliance with these provisions may attract penalties, including interest on unpaid dues. The ordinance will remain in effect until it is formally enacted by the state legislature.
Also, read: Congress woos gig workers with welfare fund from transaction fee on aggregator platforms
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
