The Karnataka High Court has declined to stay the implementation of the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Act, 2025, while directing app-based platforms challenging the law to deposit the disputed welfare fee with the court registry within three weeks, according to recent reports. The court also restrained the state government from taking any coercive action against the petitioners, provided they comply with the interim directions. The matter has been posted for further hearing on July 31, with the Karnataka government directed to file its objections by July 30. As per Business Standard, the court has now directed companies including Swiggy, Zomato, Blinkit, and Zepto to deposit the welfare fee for the second quarter.
Under the notified rules, the welfare fee is capped at 50 paise for each two-wheeler ride, 75 paise for three-wheeler services and Re 1 for four-wheeler trips, as reported by recent sources. Food and grocery delivery services are also subject to a 1% welfare fee on worker payouts, with the proceeds earmarked to fund welfare measures through the Karnataka Platform-Based Gig Workers Welfare Board. The legislation allows the state government to levy between 1 to 5 per cent of the worker payout, though Karnataka has notified a 1 per cent fee with transaction-wise caps for different services. The companies have argued that this creates additional financial obligations despite the existing framework under the Code on Social Security, 2020.
Platforms including Eternal (which owns Zomato and Blinkit), Swiggy, Zepto, Urban Company and Valmo Transportation have challenged the legislation in court, arguing that the law conflicts with the Parliament's Code on Social Security (COSS), 2020, which already provides a framework for social security contributions by aggregators. The companies contend that Section 114(4) of the Code on Social Security already requires aggregators to contribute to the Social Security Fund, and that Karnataka has effectively imposed an additional levy despite not notifying any welfare schemes for gig workers. Their objections broadly centre on constitutional concerns questioning the legislation's validity, arguing that the Act exceeds the state's legislative powers in areas already covered by central law. According to Business Standard, the petitions also raise concerns about overlap with central law, higher compliance burden, welfare fee impact on costs, and constitutional validity of both the Act and the Rules framed under it.
According to reports, the Karnataka government enacted the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Act, 2025 in 2025 to provide a social security framework for gig workers. The legislation applies to workers providing services through digital platforms including food and grocery delivery, ride-hailing, ecommerce, home services, and freelance or professional services booked through apps. The Act requires platforms operating in Karnataka to register under the legislation, while eligible gig workers can register to access welfare schemes. The court's decision to direct companies to deposit fees with the registry instead of the state government represents a balanced approach to address the interim legal uncertainty while maintaining the welfare framework for gig workers. The legislation follows similar efforts by Rajasthan (2023), Bihar (2024), Jharkhand (2025), and Telangana (2026) in establishing state-level gig worker welfare frameworks.
