Karnataka HC Refuses Stay On State’s Gig Workers Act, Directs Platforms To Deposit Welfare Fee

The petitioners contend that the Act, which was enacted after the Parliament's introduction of the Code on Social Security, 2020 (COSS), is redundant and undermines the comprehensive national framework designed to govern the welfare of gig and platform workers. The COSS aims to provide a structured approach to identifying gig workers, implementing welfare schemes, and requiring aggregator contributions, thereby making the state-level legislation unnecessary.

In their petition, the consortium alleges that the Act and its accompanying rules are arbitrary and violate Article 14 of the Indian Constitution, which guarantees equality before the law and prohibits discrimination. They claim that the provisions of the Act infringe upon other fundamental rights enshrined in Part III of the Constitution, which includes rights related to freedom of expression, the right to livelihood, and the right to work.

In addition to seeking to annul the Act and its rules, the petition challenges the notifications that established the Karnataka Platform Based Gig Workers Welfare Board and other notices issued under the Act. These notifications include the establishment of Internal Dispute Resolution Committees (IDRCs), mandates for platforms to furnish information about their workers, and show-cause notices regarding compliance with the law. Notably, a welfare fee notice dated June 22 directed companies to deposit the welfare fee and provide proof of payment by July 5.

Understanding Karnataka’s Gig Workers Policy

The Karnataka Platform Based Gig Workers (Social Security and Welfare) Act, 2025, represents a landmark legislative effort, as it was notified in September 2025, making Karnataka the first state in India to enact a dedicated law for platform-based gig workers. The law aims to establish a welfare board and fund specifically for gig workers, introducing various social security protections that have been largely absent in this rapidly growing sector.

Central to the Act is the establishment of a two-tier grievance redressal mechanism intended to address issues such as arbitrary suspensions and account deactivations that gig workers often face. Under this framework, every platform must create an IDRC to handle complaints related to payouts, deductions, suspensions, and terminations. If a worker does not receive a satisfactory response within 14 days or is unhappy with the resolution provided, they have the right to escalate their complaint to the Welfare Board. This mechanism aims to enhance accountability and transparency within the gig economy.

Moreover, the law mandates that platforms provide written justifications before terminating or deactivating a worker’s account, with exceptions only in specified emergency situations. This requirement is designed to protect workers from sudden and unexplained job loss, which is a significant concern in the gig economy.

According to the Karnataka government, approximately 12 aggregators have reported details of nearly 12 lakh active gig workers. However, officials have acknowledged that these figures may include duplicate registrations until unique IDs are issued to each worker, highlighting challenges in accurately tracking the workforce.

One of the most contentious aspects of the law is the welfare fee introduced in February 2026. This fee, set at 1% of the transaction value for platform aggregators, has specific caps depending on the type of service provided. For instance, food and grocery delivery platforms are capped at ₹0.50 per transaction, while ride-hailing services like Uber and Rapido face varying caps based on the type of vehicle used. Logistics platforms such as Porter will pay between ₹0.50 and ₹1.50, while professional services platforms like Urban Company are subject to the highest cap of ₹1.50 per transaction.

The first collection of this welfare fee is scheduled for July 5, with funds allocated to the Karnataka Platform Based Gig Workers’ Fund. This fund is intended to provide essential benefits to gig workers, including life and accident insurance, disability coverage, medical assistance, maternity benefits, and old-age protection. The establishment of such a fund is a significant step toward improving the social security net for gig workers, who have historically lacked access to these types of protections.

In addition to the welfare fee, the law requires platforms to file quarterly returns and report worker payments through a payment and welfare fee verification system (PWFVS). Platforms that delay their welfare fee payments may incur an annual interest rate of 12%, while repeated violations can lead to penalties of up to ₹1 lakh. These stringent measures reflect the Karnataka government's commitment to ensuring compliance and safeguarding the rights of gig workers.

The ongoing legal proceedings surrounding the Karnataka Platform Based Gig Workers (Social Security and Welfare) Act, 2025, highlight the complex interplay between state legislation and national frameworks governing social security. As the gig economy continues to expand, the implications of this law—and the challenges it faces—will likely resonate throughout India and may set precedents for how gig workers are treated in other states and at the national level. The outcome of this legal battle will not only affect the companies involved but also the millions of gig workers who rely on these platforms for their livelihoods.