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The Karnataka Platform-Based Gig Workers (Social Security and Welfare) Ordinance, 2025, was promulgated by the Governor of Karnataka on May 27, 2025, making it the second state in India to pass legislation for gig and platform workers. This comes against the backdrop of a shift in the global employment model, where work has increasingly shifted to digital pastures and towards insecure gig work.
As per a NITI Aayog report, gig and platform work in India is expected to rise to a formidable 23.5 million workers by 2029-30, constituting almost 6.7% of India’s non-agricultural workforce.
In India, there is no central legislation that specifically attends to gig and platform workers. Though reference is made to them in the yet-to-be-implemented Social Security Code, 2020 (SS Code), the protections available to this workforce are threadbare.
The SS Code neither recognises them as ‘workman’ (workers) who are entitled to protections under Indian labour law nor does it spell out the social security rights workers are entitled to. Instead, it merely offers a future promise of social security rights through schemes that the Union government may choose to notify.
In light of the lack of any central legislation, state governments have led the charge to pass legislation for the workers’ benefit, beginning with the Rajasthan government in 2023. Karnataka is now the second state with a gig workers law. In Jharkhand and Telangana, the draft legislation is still awaiting passage. Notably, however, following a change in power in Rajasthan from the Congress to the BJP, the latter has failed to notify rules, effectively leaving the bill in cold storage.
While these state governments must be commended for moving the needle on gig and platform workers' rights, these legislations can at best be celebrated as a mixed bag. Though this article will focus its critique on the Karnataka ordinance, it must be noted that all state legislations to date sidestep the issue of ‘misclassification’ of gig and platform workers.
Workers still categorised as independent contractors
A central debate that has dominated labour law since its inception has been whether a category of workers can be classified as independent contractors or as workers in need of protection under traditional labour law. This is the case with platform and gig workers, too. While platform companies categorise them as independent contractors who fall outside the realm of labour law protections, many workers argue that the nature of their work closely resembles traditional employment relationships. They claim that their work is precarious and in urgent need of protection.
Several courts and governments have heeded the call of gig and platform workers and have evolved appropriate legal tests to the conundrum of misclassification. In 2019, the US state of California passed the Assembly Bill (AB-5), codifying the ABC Test, which establishes a presumption of employment unless the employer can prove otherwise by meeting a three-pronged test, which involves proving in the affirmative if:
1) The work is done without the direction and control of the employer
2) The work is performed outside the usual course of the employer’s business
3) The work is done by someone who has their own, independent business or trade doing that kind of work.
Using the AB5 test, several government functionaries, including the California attorney general, were able to successfully sue Uber and Lyft for misclassifying drivers as independent contractors. Though Uber and Lyft were able to eventually undercut the success of AB5 by carving out exceptions for themselves through extensive lobbying, this test marked an important watershed in how gig and platform workers could have their rights protected under the law.
In 2024, the EU followed suit with the adoption of the EU Platform Work Directive. Similar to the AB5 test, the directive establishes a rebuttable legal presumption regarding the employment status of gig and platform workers.
Under the directive, all EU member states are required to implement national legislation by 2026 that meets the directive’s minimum standards, including this presumption test. As a result, the burden of proof now shifts to employers, who must demonstrate that a worker is not in an employment relationship, rather than placing that responsibility on the workers themselves.
In India, too, the courts have evolved tests to determine whether someone is an ‘independent contractor’ or an employee. These tests look at whether work is controlled and supervised by the employer, whether the employer can control the manner of doing work and take disciplinary action, etc. Though this development has not occurred in the context of the gig economy, it holds huge significance for this form of employment.
In fact, the Supreme Court in 1974 observed, “A person can be a servant of more than one employer. A servant need not be under the exclusive control of one master... There is, of course, no reason why a person who is only employed part-time should not be a servant, and it is doubtful whether regular part-time service can be considered even prima facie to suggest anything other than a contract of service.”
The courts have also held that the real employer cannot escape liability. In Hussainbhai, Calicut vs The Alath Factory Thezhilali Union, Kozhikode and Ors, the Supreme Court held as follows:
“ Where a worker or group of workers labours to produce goods or services, and these goods or services are for the business of another, that other is, in fact, the employer. He has economic control over the workers' subsistence, skill, and continued employment. If he, for any reason, chokes off, the worker is, virtually, laid off.”
If this test were applied fairly to the gig and platform economy, a significant number of workers would qualify for protections under labour law. However, legal battles in the courts are particularly prolonged and burdensome. As such, legislative recognition would have been the most effective—an opportunity regrettably missed by the Karnataka law.
Moreover, the move to pass the law by promulgating an ordinance is a serious problem, as it limits the life of this law. Ordinances by nature are of limited duration and will cease to operate unless approved by the legislature within six weeks from re-assembly. Repeated repromulgation of ordinances has previously failed constitutional scrutiny.
The Karnataka ordinance also suffers from several other significant shortcomings. Most notably, its structure closely mirrors that of the largely ineffective Unorganised Workers’ Social Security Act, 2008.
Access to benefits is subject to government discretion
The 2008 Act was enacted in response to long-standing demands from unorganised workers and their unions for social security protections—rights traditionally reserved for workers in the formal sector. However, instead of guaranteeing these protections as enforceable rights, the Act merely empowers the government to introduce social security schemes at its discretion. This framework – where access to benefits is not a legal entitlement but subject to government discretion – has rendered the law ineffective. As a result, very few workers today derive any tangible benefit from the Act.
The Karnataka law replicates this flawed model. It does not guarantee social security as a right, nor does it clearly define what forms of protection or benefits workers are entitled to. Instead, it states that social security measures will be introduced later through schemes notified by the state government.
Even the funding mechanism for these schemes lacks clarity. While the law introduces a Platform-Based Gig Workers Welfare Fee, it only specifies a broad range—no less than 1% and no more than 5% of each transaction payout to the worker—leaving the exact rate to the discretion of the state government.
It is not just social security provisions that are left vague and discretionary. The law leaves numerous aspects to be determined by future government notification. These include occupational safety and health standards, the management and use of the welfare fund, disclosure requirements, database sharing by platforms, grievance redressal procedures, aggregator registration, and transparency in automated decision-making systems.
The Karnataka law also falls short in addressing workers' income security. Rather than ensuring a minimum income that supports a decent and adequate standard of living, the law merely requires platforms to adhere to contractual terms and justify any deductions from workers’ earnings. There is no commitment to a guaranteed minimum wage to protect workers from economic precarity.
The ordinance broadly defines ‘termination’ to include material restriction to access of digital platforms by the worker and requires natural justice to be followed before termination, providing the worker an opportunity to place their case before imposition of penalty. However, the law permits termination of a worker without notice in ‘cases of bodily harm’ without prescribing what constitutes harm and what opportunity is available to the worker to make their case.
That said, the Karnataka law is not without its merits. One significant advancement over the Rajasthan legislation is its explicit recognition of the algorithmic control exerted over workers – from their salary and working time to termination and even access to livelihood – a critical aspect of their working conditions that has long been overlooked.
Companies can no longer hide behind algorithms
For long, companies have justified the opacity of algorithms in the name of business secrets and proprietary information, keeping workers in the dark about the ways they are managed by algorithms. This is no longer possible under the Karnataka law. Workers can now demand explanations from the platform on a range of factors, including how work is allocated, how their earnings are determined, and how incentives are decided.
Another positive feature is the law’s obligation that all workers be provided with a human point of contact for clarification regarding their work. This provision directly responds to widespread worker complaints about the lack of transparency in dealing with algorithmic systems and the frustration of receiving automated, bot-generated replies to their grievances. By mandating human intervention, it is likely that workers’ concerns will be addressed more effectively and empathetically.
In sum, while bringing in legislation for gig and platform workers' rights is absolutely crucial – considering the burgeoning numbers of workers turning to this form of work – half-baked measures like the Karnataka ordinance will not be the panacea it hopes to be. Though the law offers certain benefits that may aid workers, it does not address the root of their precarity. Genuine progress requires their unambiguous legal recognition as workers so they can demand better wages and protection of working conditions under existing labour laws and thereby a better life.
This crucial step is within reach. While the Karnataka law does not recognise gig and platform workers as workmen under labour law, it does not obstruct them from being recognised as such either. By stating that the Karnataka law is in addition and not in derogation of any other law for the time being in force, the pathway for being recognised as workmen is kept open under the law. This provides the Karnataka government with a valuable opportunity to lead by example—by amending the law to formally recognise gig and platform workers as workmen under labour law and setting a precedent for other states to follow.
Avani Chokshi is a labour lawyer and a National Council member of the All India Central Council of Trade Unions. Madhulika T is a labour researcher working at the Center For Labour Studies, National Law School of India University, Bangalore. Views expressed here are the authors’ own.