Karnataka Ignites Gig Economy Welfare: Landmark Act Mandates 1.5% Aggregator Contribution for Worker Security

In a monumental stride towards ensuring the welfare of its burgeoning gig economy workforce, the Karnataka government has officially notified the Karnataka Unorganised Workers Social Security and Welfare Act. This landmark legislation, which garnered assent from Governor Thaawarchand Gehlot, heralds a new era of protection for millions of delivery partners, cab drivers, and other platform-based workers across the state.

At the heart of this pioneering act is a crucial provision: a mandatory 1.5% welfare cess to be levied on all transaction values by aggregator companies.

Major players like Ola, Uber, Swiggy, Zomato, and Amazon, among others, will now contribute this percentage of their gross earnings from transactions with gig workers towards a dedicated welfare fund. This move, initially proposed in the state budget, positions Karnataka at the forefront of national efforts to regulate and support the gig economy.

The collected funds will flow into the Karnataka Unorganised Workers Social Security and Welfare Fund, a robust mechanism to be administered by the state's Labour Department.

This fund is specifically designed to provide a much-needed safety net for gig workers, who often operate without traditional employment benefits. It aims to offer a comprehensive suite of social security benefits, shielding workers from the inherent uncertainties of their profession.

The benefits package envisioned under this act is extensive and impactful.

It includes vital provisions such as life and accidental insurance, ensuring financial security for workers and their families in unforeseen circumstances. Additionally, health benefits will provide access to crucial medical care, while maternity benefits will support female gig workers during a critical phase of their lives.

The fund will also encompass provident fund schemes and other essential social security measures, collectively aiming to elevate the quality of life and financial stability for this vital segment of the workforce.

This historic notification makes Karnataka the first state in India to implement such a comprehensive legislative framework for gig workers.

By mandating a direct contribution from aggregators, the act shifts the responsibility for worker welfare onto the platforms that profit from their labour, marking a significant step towards equitable distribution of wealth in the digital economy. The move is expected to serve as a blueprint for other states grappling with the challenges and opportunities presented by the rapidly expanding gig sector, promising a brighter, more secure future for India's unorganised workers.