De-risking the gig ordinance

The gig economy has undeniably reshaped India’s urban landscape, offering unprecedented flexibility and income opportunities to millions. From food delivery to ride-sharing, this sector has flourished, largely driven by its inherent agility and minimal regulatory barriers. Karnataka, a hub for innovation and technology, has been at the forefront of this transformation. It is against this backdrop that the Karnataka Platform Based Gig Workers (Social Security and Welfare) Ordinance, 2025, emerges – a well-intentioned legislative effort to provide a safety net for this burgeoning workforce.

As the second state in the country to venture into this complex domain, Karnataka’s intent to safeguard gig workers and impose obligations on aggregators is commendable. However, a closer examination reveals that while the spirit is progressive, the current form of the Ordinance risks unintended consequences, potentially stifling the very dynamism that defines the gig economy.

Our analysis, informed by both global experiences and grassroots realities, points to several critical concerns. First, the Ordinance suffers from a vague definition of a ‘gig worker’ itself. Without a clear, comprehensive understanding of who it aims to protect, implementation could face significant legal and practical impediments. More fundamentally, the necessity for such an extensive regulatory framework, especially when the gig economy has thrived organically, is not adequately justified. If the objective is solely social security, simpler, less intrusive policy alternatives might exist, perhaps leveraging existing mechanisms rather than creating new, cumbersome government machinery.

A glaring omission in the Ordinance is the absence of robust financial projections and a clear rationale for the proposed welfare fee (1% to 5% of payout per transaction). How will the significant financial burden, potentially amounting to lakhs daily from top companies alone, be allocated? Will it be absorbed by the platforms, passed on to the end-customers, or impact worker earnings? Without transparent calculations for fund collection and scheme implementation, the Ordinance risks becoming a financial quagmire, deterring investment and growth.

Perhaps the most critical concern is the Ordinance’s subtle drift towards re-establishing an employer-employee relationship. The gig economy’s allure for both workers and platforms lies in its flexibility, autonomy, and low entry barriers. Imposing stringent obligations and oversight, as seen in global precedents, often compromises these distinct features. Over-regulation can inadvertently stifle innovation, reduce worker flexibility, and even prompt companies to cap employment or exit markets due to increased compliance costs.

The question of accountability

Furthermore, the Ordinance exhibits accountability gaps. It largely overlooks mechanisms for gig worker accountability (e.g., notice for quitting and service standards) and, crucially, lacks clarity on the State’s accountability in effectively delivering the social security benefits. The scope of social security also appears narrow, primarily focusing on accidental benefits rather than a comprehensive range of provisions like disability, health, old age, upskill or maternity benefits. There’s also significant room to enhance gender and disability sensitivity within the policy.

So, what is the path forward? A facilitative, rather than purely regulatory, approach is needed: 

1. Comprehensive definition: Develop a precise, context-relevant definition of a ‘gig worker’ based on thorough needs assessments, without giving room for ambiguity and loose interpretation. 

2. Justified framework: Clearly articulate the problem the Ordinance seeks to solve and explore leveraging existing social security mechanisms (like ESIC/PF or insurance companies) to minimise new bureaucratic burdens. 

3. Robust financial planning: Provide transparent calculations for the welfare fund, detailing its collection, allocation, and the range of comprehensive social security schemes it will support. 

4. Balanced accountability: Establish clear responsibilities for both workers and the State, alongside aggregators. 

5. Multi-stakeholder consultation: Engage workers, platforms, industry specialists, and civil society in an ongoing dialogue to craft a balanced and sustainable policy framework. 

6. Facilitative government role: The government should enable social security through streamlined mechanisms, preserving the gig economy’s inherent flexibility and dynamism.

The Ordinance is a significant opportunity. However, its true success hinges on a nuanced approach. By adopting precise definitions, a transparent framework, greater inclusivity, and balanced accountability, while ensuring limited and targeted government intervention, Karnataka can deliver meaningful and sustainable protections for its gig workers. This balanced approach will ensure that the gig economy fosters growth and innovation, without inadvertently stifling its potential.

(The writer is a policy researcher and Executive Director of Grassroots
Research and Advocacy Movement – GRAAM)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.