On May 27, 2025, the Government of Karnataka promulgated Karnataka Platform Based Gig Workers (Social Security and Welfare) Ordinance, 2025 (“Ordinance”) to protect the rights of platform based Gig workers, to place obligations on aggregator or platform in relation to social security, occupational health and safety, transparency in automated monitoring and decision-making systems, to provide dispute resolution mechanisms, to establish a Welfare Board and create a welfare fund for platform based Gig workers, to register platform based Gig workers and aggregator or platform in the State.
The Ordinance route was chosen since the Karnataka Legislative Assembly and the Karnataka Legislative Council are presently not in session and the Governor of Karnataka is satisfied that the circumstances exist which render it necessary for him to take immediate action to promulgate the Ordinance.
The Ordinance applies to (i) every aggregator or platform operating or providing any one or more services specified in the Schedule under the Ordinance within the State of Karnataka and as amended by the Government from time to time (ii) every platform and (iii) every gig worker registered with the Board.
As per the Ordinance, “Aggregator” means a digital intermediary for a buyer of goods or user of a service to connect with the seller or the service provider, and includes any entity that coordinates with one or more aggregators for providing the services
“Platform” means any arrangement providing a service through electronic means, at the request of a recipient of the service, involving the organization of work performed by individuals at a certain location in return for payment, and involving the use of automated monitoring and decision-making systems or human decision making that relies on data.
“Gig worker” means a person who performs work or participates in a work arrangement that results in a given rate of payment, based on terms and conditions laid down in such contract and includes all piece-rate work, and whose work is sourced through a platform, in the services specified in the Schedule. As per the Schedule, the following providers of Services by aggregator or platform are gig workers:
- Ride sharing services.
- Food and grocery delivery services.
- Logistics services.
- e-Market place (both marketplace and inventory model) for wholesale/retail sale of goods and/or services Business to Business /Business to Consumer (B2B/B2C).
- Professional activity provider.
- Healthcare.
- Travel and hospitality.
- Content and media services.
Key Features of the Ordinance Impacting Employers in Karnataka are as follows:
1. Mandatory Registration & Data Reporting
- All platforms in Karnataka must register with the Karnataka Platform Based Gig Workers Welfare Board within 45 days of the ordinance’s commencement. Employers must submit a comprehensive database of gig workers, including real-time updates on onboarding/offboarding. Non-compliance could lead to penalties.
2. Welfare Fee Levy
- Platforms must contribute 1–5% of each transaction value to the state-managed Gig Workers Welfare Fund. This fee is in addition to existing payments to gig workers, increasing operational costs for employers. All payments made to workers generated on platform shall be mapped on to a Payment and Welfare Fee Verification System (PWFVS) administered by the State Government and monitored by the Board.
3. Termination of employment
- The contractual agreement entered into between the aggregator and the platform based Gig worker shall contain an exhaustive list of grounds for termination of contract by the aggregator or deactivation of the Gig worker from the platform. An aggregator or the platform shall not terminate or deactivate a Gig worker without giving valid reasons in writing and with prior notice of fourteen (14) days and following the principles of natural justice.
4. Income security
- In the cases of payment deductions, the aggregator or platform must inform the Gig worker about the reasons for such deductions within the invoice raised for the work performed by the Gig worker. Every aggregator or platform shall mandatorily make payout as per the contract and such payment shall be made either daily or weekly or biweekly or monthly payout cycle. The aggregator or platform must compensate the Gig workers at least on a weekly basis with no delay in disbursal of pay.
5. Reasonable working conditions.-
- The aggregator or platform must provide and maintain, as far as is reasonably practicable, a working environment that is safe and without risk to the health of the Gig worker. “Reasonable working conditions” means a work environment that is safe and without risk to the health of the Gig worker includes ensuring that the Gig worker shall have adequate periods of rest during the work day and during the work week, access to sanitary and rest facilities, including reasonable travel time to and from such facilities.
6. Transparency in Algorithmic Systems
- Employers must disclose automated monitoring and decision-making systems (e.g., performance metrics, termination algorithms) to gig workers and the Board. Systems must be auditable, with human oversight for disputes.
7. Social Security Obligations
- "Social security" means the measures of protection afforded to gig workers and platform workers to ensure access to health care and to provide income security, particularly in cases of old age, unemployment, sickness, invalidity, work injury, maternity or loss of a breadwinner by means of rights conferred on them and schemes framed, under this Ordinance. Employers must facilitate access to state-notified benefits. Contributions are linked to gig workers’ Unique IDs, ensuring portability across platforms.
8. Dispute Resolution Mechanisms
- The registered Gig Workers are entitled for redressal of two-tier grievances (a) against the aggregator or platform; and (b) against the Board. A dedicated grievance redressal system mandates employers to resolve worker complaints within thirty (30) days. Persistent disputes may escalate to the Board or labor authorities.
Ramifications for Employers in Karnataka
- Increased Compliance Burden
- Employers must now invest in systems for real-time data reporting, welfare fee calculations, and algorithmic transparency. Small platforms may struggle with these infrastructural costs.
- Financial Impact
- The 1–5% welfare fee could impact the profit margins, particularly for low-margin sectors. Employers may face pressure to absorb costs or adjust pricing, risking competitiveness.
- Operational Adjustments
- Algorithmic transparency requirements may force platforms to revise performance metrics and termination protocols. HR policies must align with mandated social security benefits, potentially increasing administrative complexity.
- Strategic Risks
- Non-compliance risks reputational damage and legal action. Overregulation might deter innovation or investment in Karnataka’s gig economy
Anhad Law’s Perspective
The Ordinance represents a pioneering effort to formalize the Gig economy in Karnataka, where a large number of workers engage in short-term, freelance work through platforms.
Promulgated by the Governor under Article 213 of the Constitution of India, this Ordinance carries the force of law but is temporary, requiring presentation before the Karnataka Legislative Assembly and Council within six (6) weeks of their reassembly. If not replaced by a Bill, it will lapse, underscoring its interim nature.
Nonetheless, the Ordinance enhances protections for gig workers in Karnataka through social security, fair contracts, and grievance redressal, but it also imposes significant compliance burdens on aggregators and platforms, including welfare fee contributions and transparent systems.
As many significant provisions, such as platform registration and publication of registers, await detailed Rules, the final legislative framework will shape its long-term impact.
In the meantime, employers must prepare for increased regulatory scrutiny while seizing opportunities to foster equitable practices, positioning themselves as leaders in Karnataka’s evolving gig economy
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
