Karnataka's Gig Workers Bill seems progressive, but in reality, it falls short in critical areas; with key provisions diluted, it's just a facade of welfare
The world has come a long way since the app-based platforms first made their foray, promising their workers a good life and their customers ease and comfort at the swipe of their smartphones. But the harsh realities of app-based gig work, which promised flexibility, autonomy, and stable income, have come back to haunt the workers.
Most gig workers — delivery agents, ride-hailing drivers, and other service providers — face terrible working conditions. Their lives are driven by long hours at work, unstable incomes, and exclusion from any formal labour protection.
Meanwhile, customers, too, are disenchanted, many of them questioning the opaque and predatory practices of the platforms.
Faced with mounting criticism of the platforms from all sides, most notably the public sympathy for these platform workers, some state governments have attempted to intervene, ostensibly to protect the workers' interests. States such as Rajasthan have enacted legislation to address these issues.
Karnataka's symbolic effort
The latest such effort is the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Bill, 2024.
However, despite its apparently progressive veneer, the Karnataka Bill falls short in critical areas. Under pressure from powerful platform lobbies, key provisions have been diluted, and what remains is largely symbolic — a facade of welfare that will do little to materially improve the lives of gig workers.
In an increasingly job-scarce economy, platform-based gig work, characterised by algorithmic control, informality, and precarity has become one of the few employment options, especially for young people. According to NITI Aayog’s 2022 report, an estimated 7.7 million workers were engaged in the gig and platform sector in 2020–21.
Also read: Karnataka govt to set up gig workers welfare board
This is projected to reach 23.5 million by 2029–30.
Understanding the statutory architecture
The primary objective of this Bill is to introduce a statutory framework to provide social security and improve working conditions for platform-based gig workers in the state. The most important proposal is the formation of a welfare board, which will design and implement welfare schemes, manage funds, and oversee worker and platform registration.
On the financial side, the Bill proposes a welfare cess to be levied on platforms, ranging between 1 per cent and 5 per cent of every transaction or payout made to gig workers. The Bill further proposes that this amount will be deposited into a welfare fund to be utilised for social security protections for the workers.
The fund is to be managed by the board, in which all three stakeholders, the workers, the platforms, and the government, will be represented.
The Bill defines a gig worker as an individual engaged in piece-rate or contract-based work sourced through digital platforms, in service sectors listed under "Schedule I". Both gig workers and platforms are required to register with the Board to be covered under the law.
Employee or independent contractor?
This Bill-making process gained much attention in the media and from labour rights activists. Even so, it fails to address the most crucial question regarding the platform economy: Does it define an employee–employer relationship between platforms and their workers?
Also read: Domestic workers at the touch of an app: Exploitation in a new format?
The legal definitions are the lifeline for rights and liabilities because ultimately, your rights and liabilities depend upon the question of whether you satisfy the legal requirements for the definitions. For example, imagine a statute providing certain rights to employees; the first question when a claim arises would be whether the claimant qualifies as an employee as defined under the law.
Only when this is satisfied are other questions even considered.
Definitions play a central role in Indian labour laws, especially in determining the rights of employees and the liabilities of employers. Most labour rights in India, underwritten in statutes like the Industrial Disputes Act, 1947, Factories Act, 1948, the Industrial Employment (Standing Orders) Act, 1946, the Minimum Wages Act, 1948, etc., are conferred to the legally defined category of “employees” or “workmen”.
Individuals are entitled to these rights only if they fulfil the requirements of these definitions.
Fails to address core issues
Since the rise of gig work, the most debated legal question or jurisprudential issue regarding the platform economy has been the nature of the relationship between workers and platforms.
WATCH: 10 years of Gig Work, yet Invisible: The Untold Story
Throughout the world, this has engaged the attention of workers’ unions, lawmakers and regulators as they have grappled with regulatory structures that would bring a semblance of balance between the interests of the workers and the companies that run the platforms.
Generally, the gig economy business model attempts to avoid such classifications. Characteristically, they designate those who work for them – delivery agents, freelancers, and cab drivers – as “independent contractors”, “captains”, or “partners”.
This is a deliberate and well-articulated legal strategy to escape labour rights obligations. Once a platform is not defined as the employer, it escapes the legal obligation to confer rights that are due to those who work for it, simply because it evades the law that defines a worker.
This enables them to be absolved from the traditional liabilities of an employer, such as minimum wages, social security benefits, the right to form and join trade unions, collective bargaining protections, and the right to seek remedies through labour courts, among others.
Although gig workers have the flexibility of entry and exit from work, platforms enter into contracts with workers, allocate and control the work, define payout based on several factors, and even provide, in some cases, social security measures and accidental insurance. However, once we lift this illusion of flexibility and the pretence that platforms are merely tech intermediaries between the customer and worker, the reality of the workers’ economic dependency on platforms and the extent of control exercised by platforms over the workers becomes evident.
Unfortunately, the much-anticipated legislation from Karnataka does not address this issue. The legislation fails to eliminate the superficial classification of “independent contractors” created by the platform economy business model. It thus fails to extend formal labour rights to this rapidly growing workforce.
No minimum wage protection
The Karnataka Bill neither defines wages nor guarantees a minimum wage for gig workers. The only notable provision in this direction addresses income security, mandating that platforms explain any deductions made in the invoice to workers. Since the law does not define what constitutes wages or protect a minimum wage, this provision is toothless.
Also read: Union Budget | Govt's steps for gig workers half-hearted: Congress
Ensuring a minimum wage can be the most important provision for the welfare of gig workers. Currently, the earnings of gig workers are determined by various non-transparent factors, such as unpredictable algorithms, customer demand, penalties, and platform commissions. Without the assurance of a minimum wage, achieving economic stability in this sector is nearly impossible.
According to a 2022 study by the Fair Work India project, over 90 per cent of gig workers in India earned below the hourly minimum wage rate prescribed for their respective states. In metros like Bengaluru, workers widely report meagre earnings, sometimes just 20 to 30 rupees per task after fuel and other expenses.
By not addressing this core issue, the bill leaves gig workers vulnerable to exploitation and economic instability. A welfare labour law regime that fails to secure a minimum income standard cannot be considered genuinely protective or empowering for the workforce.
There is a strong argument that a protective labour measure like minimum wage is not possible or extremely difficult to implement in sectors like the platform economy, due to technological complexities. However, this argument needs to be demystified.
In reality, India’s current statute on the matter, the Minimum Wages Act 1948, provides flexible methods for the state to implement minimum wages, including time or piece rates. If the state is willing to recognise gig workers as employees of platforms, nothing stops it from extending these rights to them. The real issue here is political will, not legal complexity.
Ambiguity abounds
Ambiguity and lack of clarity characterise the bill. For example, one of the important provisions of this bill is the levy of a cess amounting to 1-5 per cent of the payout made to gig workers. But what exactly is the calculation method here?
WATCH | Union Budget: Gig workers get Social Security Scheme
In a ride-sharing app, for example, a large chunk of the money paid by the customer goes to the driver, and a small fraction will be taken by the platform, as the driver is responsible for fuel and other costs. But in the case of a food delivery app, it is just the opposite, as the platform is responsible for the cost of the item delivered, and the delivery worker gets a smaller commission. So, what ought to be taken as the base amount for calculation?
It will also be extremely easy for the platforms to pass the additional burden onto the end customer by increasing the platform fee or any other component of the price. This will imply that the social security responsibilities can be easily transferred onto the customer, allowing the platform to escape its liabilities.
Protections only on paper
The bill makes a provision to create social security programmes entrusted to the welfare board. But what exactly are these social securities or the benefits they are going to provide? It is left to the boards to come up with such programmes. The design of this Bill indicates that there is no intention to include gig workers in existing social security systems like the Provident Fund or the Employee State Insurance.
The Bill makes a provision to ensure reasonable working conditions which are safe and without risk to the health of the workers. The same provision also makes a point to provide adequate resting time between work. These provisions look fair, but if you have a sense of how the legal system works, you can easily understand that these are paper tigers.
When the law does not define or restrict working time, the ‘adequate resting time’ will be left to the arbitrary decision of the platform. Similarly, since the bill does not define exactly what safe working conditions are, like in legislations such as the Factory Act, ultimately, platforms will have more room for arbitrary manoeuvres.
The Bill also makes a provision for some regulation on the termination of the work. The platform must serve a 14-day notice period, and it should make clear the grounds for termination. There is another provision which states that the grounds for termination must be mentioned in the contract between the platform and the worker.
Here again, a lack of genuine interest in protecting the workers is visible. The platform, which obviously has an upper hand in drafting the contract, will be allowed to add as many grounds for termination as it sees fit, since the state is not interested in restricting those grounds.
Lobbies dilute provisions
The drawbacks of this Bill are not surprising, as the drafting process saw significant lobbying efforts from departments closely aligned with industry interests. The lobbies were particularly active and conveyed their interests through the department of electronics, information technology, biotechnology and science and technology, and the department of commerce and industries.
These departments strongly objected to attempts to formally recognise gig workers as employees, arguing that such a move would fail to appreciate the "distinct character" of the gig economy. They claimed that the “ease of doing business” would suffer. Such a move would also tarnish the state’s pro-startup image, they claimed.
The lobbies’ imprint on the heavily watered-down Bill is obvious.
On October 9, 2024, the department of electronics, information technology, biotechnology and science and technology department vehemently opposed the idea of categorising gig workers as ‘Workmen’ under the Industrial Disputes Act 1947. It claimed that treating gig workers as ‘workmen’ would be “problematic, as gig workers do not fall within the traditional definition of workmen”.
The lobbies were also against regulating contractual terms between platforms and workers, arguing that it would undermine the ‘flexibility’ of conducting business. “While we support fairness in contracts, the Bill’s prescriptive requirements regarding contractual terms, notice periods, and the rejection of leads impose undue restrictions on platforms. Aggregators need the flexibility to design contracts based on their specific business models,” the department contended.
Similarly, the same department, firmly opposed to any kind of inspection system for this sector.
Clearly, acting on behalf of the lobbies working from behind the scenes, it claimed the Bill “grants broad and vague powers of inspection to the state government.” This, it contended, would result in “an overly intrusive regulatory environment.”
The department said the industry had sought a dilution of these provisions, which would result in a “trust-based approach.”
These strong objections appear to have forced the labour department to tone down the original provisions of the Bill. This is obvious from the response notes given by the department, which are available with this writer.
The Karnataka Bill was an obvious reaction to the popular latent demand among a large section of this growing but grossly exploited workforce that the state needs to step in to regulate the whimsical practices of the platforms. The fact that the lobbies have had their way yet again in another state only highlights the long road ahead for this class of workers in their struggle for a fair set of rules.
(The Federal seeks to present views and opinions from all sides of the spectrum. The information, ideas or opinions in the articles are of the author and do not necessarily reflect the views of The Federal)
