The Legal Framework Governing Aggregator Contributions for Gig and Platform Workers in India

Introduction

India’s employment landscape has undergone remarkable transformation over the past decade, particularly with the explosive growth of the gig economy. The rise of digital platforms connecting service providers with consumers has created millions of work opportunities, yet simultaneously exposed significant vulnerabilities in worker protection mechanisms. As of recent estimates, the gig workforce in India comprises approximately 7.7 million workers, with projections indicating this number could surge to 23.5 million by 2029-30.[1] These workers, employed by platforms such as Uber, Ola, Swiggy, and Zomato, operate outside traditional employment relationships, often lacking access to fundamental social security benefits that regular employees enjoy. This structural gap has prompted the Indian government to mandate aggregator contributions for gig workers’ welfare, though the implementation remains fraught with ambiguity and challenges.

Understanding the Gig Economy Framework

The gig economy represents a fundamental departure from conventional employment models. Workers in this sector engage in temporary, flexible work arrangements facilitated through digital platforms, earning income based on completed tasks rather than fixed salaries. Unlike traditional employees who benefit from provident funds, health insurance, paid leave, and job security, gig workers function as independent contractors, bearing the full burden of their operational costs and risks. The platforms themselves have consistently maintained that they merely provide technological infrastructure connecting supply with demand, explicitly disclaiming any employer-employee relationship with the workers who deliver services through their applications.

This classification has significant legal and financial implications. By categorizing workers as independent contractors rather than employees, platforms have historically avoided obligations under various labour statutes, including the Employees’ Provident Fund Act, the Employee State Insurance Act, and the Minimum Wages Act. The absence of regulatory oversight has enabled platforms to exercise substantial control over workers through algorithmic management systems that determine work allocation, pricing, and performance ratings, while simultaneously denying them the protections afforded to formal sector employees. This paradox, where platforms exert employer-like control without corresponding responsibilities, has become the central point of contention in India’s evolving labour jurisprudence.

The Code on Social Security, 2020: A Legislative Breakthrough

The enactment of the Code on Social Security, 2020 marked a watershed moment in Indian labour law, representing the first central legislation to formally recognize gig workers and platform workers as distinct categories deserving social protection. This Code consolidates nine previously existing social security enactments into a unified framework, extending coverage to workers who had hitherto remained outside the formal labour protection system.[2] The legislation defines a gig worker as a person who performs work or participates in work arrangements and earns from such activities outside of traditional employer-employee relationships, while a platform worker is specifically defined as someone engaged in or undertaking platform work through digital intermediaries.

Aggregator Contributions: Mandatory Obligations for Gig Workers

The Code introduces the concept of aggregators as digital intermediaries or marketplaces that connect buyers or service users with sellers or service providers. Section 114 of the Code empowers the Central Government to formulate and notify social security schemes for gig and platform workers, covering life and disability insurance, accident coverage, health and maternity benefits, old age protection, creche facilities, and other welfare measures as determined appropriate. Significantly, the Code mandates financial contributions from aggregators to support these schemes, establishing a funding mechanism that distributes responsibility among multiple stakeholders.

Aggregator contributions are a critical component of how gig workers access welfare benefits. The contribution structure prescribed under the Code ranges from one to two percent of the aggregator’s annual turnover, with an important caveat that such contributions cannot exceed five percent of the total amounts paid or payable to gig and platform workers in any financial year.[3] This dual limitation ensures that aggregator contributions support gig workers meaningfully while preventing disproportionate financial burdens that could threaten business viability. The contributions flow into a Social Security Fund, which serves as the financial reservoir for implementing various welfare schemes designed specifically for unorganized, gig, and platform workers.

Registration and Implementation Mechanisms

The Code mandates compulsory registration of all gig and platform workers on a government-specified online portal, with eligibility restricted to individuals between sixteen and sixty years of age. Registered workers receive a unique identification number linked to their Aadhaar, creating a unified database that facilitates benefit portability across platforms and states. This registration system aims to address one of the fundamental challenges facing gig workers, namely the inability to accumulate continuous social security benefits when switching between different platforms or geographic locations. The Code also establishes a National Social Security Board, which includes representation from aggregators, workers, government ministries, and civil society organizations, tasked with advising on scheme formulation and monitoring implementation effectiveness.

State-Level Legislative Initiatives

The Rajasthan Precedent

Even before the central labour codes became operational, several states recognized the urgent need for gig worker protection and initiated their own legislative frameworks. Rajasthan became the trailblazer in 2023 with the enactment of the Rajasthan Platform Based Gig Workers (Registration and Welfare) Act, 2023, establishing a comprehensive regulatory structure for platform-based work within the state.[4] This legislation mandates the registration of aggregators, primary employers, and gig workers with the Rajasthan Platform Based Gig Workers Welfare Board, which functions as the primary administrative body overseeing worker welfare in the state.

The Rajasthan Act requires aggregators and employers to deposit a monthly welfare cess designated as the Platform Based Gig Workers Welfare Cess, which flows into the Rajasthan Platform Based Gig Workers Social Security and Welfare Fund. All transactions involving gig workers are tracked through a Central Transaction Information and Management System, creating transparency in payment flows and ensuring contribution compliance. The Act represents a significant departure from the purely voluntary welfare approaches that had previously characterized the gig economy, imposing mandatory obligations on platforms to contribute toward worker protection regardless of their claimed relationship with service providers.

Karnataka’s Regulatory Framework

Following Rajasthan’s example, Karnataka promulgated the Karnataka Platform Based Gig Workers (Social Security and Welfare) Ordinance, 2025, later replaced by the Karnataka Platform Based Gig Workers (Social Security and Welfare) Bill, 2025. This legislation establishes the Karnataka Platform Based Gig Workers Welfare Board and creates the Karnataka Gig Workers’ Social Security and Welfare Fund, financed through welfare fees collected from aggregators, contributions from gig workers themselves, and grants from central and state governments.[5] The Karnataka framework is particularly notable for its emphasis on algorithmic transparency, requiring aggregators to provide information about automated monitoring and decision-making systems that affect work allocation, earnings determination, and performance evaluation.

The Karnataka legislation mandates that aggregators execute fair contracts with gig workers, written in languages comprehensible to the workers, with fourteen days’ advance notice required for any contract modifications. Arbitrary termination is prohibited, with platforms required to specify predetermined grounds for contract termination and provide adequate notice periods. For aggregators engaging more than fifty gig workers, the law requires establishment of Internal Dispute Resolution Committees, providing workers with accessible grievance redressal mechanisms without necessitating recourse to expensive and time-consuming court proceedings.

Telangana’s Proposed Framework

The Draft Telangana Gig and Platform Workers (Registration, Social Security, and Welfare) Bill, 2025 proposes a similar regulatory architecture, establishing a welfare board, mandating worker registration with unique identifiers, and requiring aggregators to pay welfare fund fees ranging from one to two percent of relevant metrics.[6] Notably, the Telangana draft characterizes failure to pay the welfare fund fee as a criminal offense, potentially punishable with imprisonment up to one year, a fine of up to two lakh rupees, or both. This criminalization represents a significantly more stringent enforcement approach compared to other state frameworks, signaling serious governmental intent to ensure compliance with contribution obligations.

Judicial Interpretation and Case Law Development

The Indian Federation of App-Based Transport Workers Case

The most significant ongoing judicial consideration of gig worker rights is the public interest litigation filed by the Indian Federation of App-Based Transport Workers (IFAT) before the Supreme Court of India. In this case, IFAT, representing approximately 35,000 drivers and delivery workers associated with platforms including Uber, Ola, Zomato, and Swiggy, has challenged the classification of gig workers as independent contractors, arguing that this designation violates fundamental constitutional rights guaranteed under Articles 14, 21, and 23 of the Constitution.[7] The petitioners contend that the refusal to recognize gig workers as employees or unorganized workers under existing social security legislation denies them equal protection under law, violates their right to life and dignity, and effectively subjects them to exploitative working conditions amounting to forced labour.

The petition specifically seeks recognition of gig workers as unorganized workers under the Unorganised Workers’ Social Security Act, 2008, and other applicable social security legislation, which would automatically entitle them to various welfare benefits. IFAT argues that platforms exercise comprehensive control over all aspects of service delivery, including pricing, route determination, customer allocation, performance monitoring, and disciplinary action, thereby establishing a de facto employer-employee relationship regardless of contractual labeling. The Supreme Court issued notice to the Central Government and concerned platforms in December 2021, and the matter remains pending adjudication, with its eventual resolution likely to have far-reaching implications for the entire gig economy sector.

The Kavita Sharma Consumer Forum Decision

In a separate but related development, the Thane District Consumer Forum delivered a significant ruling in Kavita S. Sharma v. Uber India in October 2022, holding Uber liable for actions of its drivers despite the absence of a formal employment relationship. This decision, arising from a consumer complaint rather than a labour dispute, established that platforms cannot disclaim responsibility for service quality and safety merely by characterizing workers as independent partners. While this judgment did not directly address social security obligations or aggregator contributions, it represents judicial recognition that contractual labels cannot override substantive control relationships, potentially opening pathways for similar reasoning in employment law contexts.

Pending Questions and Judicial Precedents

Indian courts have historically applied multifactor tests to determine employment relationships, considering elements such as control exercised by the employer, supervision of work, conditions of employment determination, disciplinary authority, provision of tools and materials, insurance contribution deductions, and mutual obligations between parties. The landmark Supreme Court judgment in Hussainbhai v. Alath Factory established that where workers labour to produce goods or services for another’s business, an employment relationship may exist regardless of formal contractual arrangements. Whether courts will extend this reasoning to platform-based work remains uncertain, particularly given the novel characteristics of algorithmic management and the absence of traditional workplace structures in the gig economy.

Implementation Challenges and Practical Concerns

Definitional Ambiguities

Despite the progressive intent underlying recent legislation, significant ambiguities plague the implementation of aggregator contribution schemes for Gig and platform workers. The definition of gig workers remains sufficiently broad to potentially encompass various forms of contractual employment that were not intended to fall within the regulatory framework. Similarly, the calculation methodology for aggregator contributions contains inconsistencies across different legislative texts, with some provisions referencing gross turnover while others refer to gross revenue, creating interpretational challenges that may lead to litigation and compliance difficulties.

Interstate Coordination Challenges

The proliferation of state-level legislation, while demonstrating governmental responsiveness to worker needs, creates potential coordination problems and compliance burdens for platforms operating across multiple states. Different contribution rates, registration requirements, reporting obligations, and enforcement mechanisms across states could significantly complicate operational compliance, particularly for smaller platforms lacking extensive legal and administrative resources. The inconsistency in aggregator contributions across states creates confusion for gig workers, as the absence of harmonized national standards may inadvertently disadvantage certain categories of workers or create forum-shopping opportunities where platforms structure operations to minimize contribution obligations.

Awareness and Accessibility Gaps

Even well-designed legislative frameworks remain ineffective if intended beneficiaries lack awareness of their entitlements or face barriers accessing benefits. Many gig workers, particularly those operating in smaller cities and rural areas, remain unaware of registration requirements, available schemes, and grievance redressal mechanisms. Despite mandated aggregator contributions for gig workers, language barriers, digital literacy challenges, and the absence of worker organizations capable of facilitating registration and benefit claims further compound accessibility problems. The gap between legislative promise and ground-level implementation remains substantial, requiring sustained governmental efforts in awareness generation, capacity building, and simplified administrative procedures.

International Comparative Perspectives

India’s approach to gig worker protection through aggregator contributions can be usefully contextualized through comparison with international regulatory models. The United Kingdom Supreme Court’s landmark ruling in Uber BV v. Aslam established that Uber drivers qualify as workers entitled to minimum wage, paid leave, and other employment benefits from the moment they log onto the application and remain available for work. This decision fundamentally rejected Uber’s characterization of drivers as independent contractors, recognizing the reality of platform control over working conditions. Similarly, California’s Assembly Bill 5 initially reclassified many gig workers as employees, though subsequent developments including Proposition 22 have created a hybrid model with limited benefits but continued independent contractor status.

The European Union has proposed the Platform Work Directive, which would establish a rebuttable presumption of employment relationship when platforms exercise control over working conditions, with member states required to ensure appropriate social protection for platform workers. These international developments demonstrate a global trend toward enhanced worker protection in the gig economy, with various jurisdictions experimenting with different regulatory approaches ranging from employee reclassification to intermediate worker categories to mandatory benefit schemes funded through platform contributions. India’s model, emphasizing contribution-based welfare schemes without full employment reclassification, represents a middle path attempting to balance worker protection with platform business model flexibility.

Future Outlook and Policy Recommendations

The implementation of the four labour codes, including the Code on Social Security, 2020, which became effective from November 2025, represents a transformative moment for India’s labour regulatory framework.[8] The success of this transformation hinges on several critical factors. First, the Central Government must expeditiously notify specific welfare schemes under Section 114 of the Code, detailing benefit structures, eligibility criteria, contribution collection mechanisms, and disbursement procedures. Without these operational details, the legislative framework remains merely aspirational rather than practically enforceable.

Second, effective enforcement mechanisms must be established, including adequate inspection capacity, penalty structures that deter non-compliance, and streamlined grievance redressal systems that enable workers to vindicate their rights without prohibitive costs or delays. Third, coordination between central and state governments must be strengthened to harmonize differing legislative approaches, prevent regulatory arbitrage, and ensure portability of benefits for workers moving across state boundaries. Fourth, technological infrastructure supporting registration, contribution tracking, and benefit disbursement must be robust, user-friendly, and accessible to workers with varying levels of digital literacy.

Looking ahead, policymakers may need to consider whether the current contribution-based welfare model adequately addresses the structural vulnerabilities facing gig workers or whether more fundamental reforms, such as the creation of an intermediate worker category with enhanced protections falling short of full employment status, might better serve worker interests while preserving platform business model viability. The pending Supreme Court decision in the IFAT case will likely provide crucial guidance on constitutional requirements for gig worker protection, potentially necessitating legislative amendments to ensure compliance with fundamental rights guarantees.

Conclusion

The aggregator contribution framework for gig and platform workers in India represents a significant but incomplete step toward addressing the social security deficit that has characterized the informal economy for decades. The Code on Social Security, 2020, along with pioneering state-level legislation in Rajasthan, Karnataka, and Telangana, establishes mandatory financial obligations on platforms to support worker welfare, breaking from the purely voluntary corporate social responsibility approaches that previously predominated. However, the effectiveness of this regulatory architecture depends critically on implementation quality, administrative capacity, and genuine commitment to worker protection rather than mere symbolic gestures.

The tension between platform business models predicated on labour cost minimization and worker demands for decent work conditions, fair compensation, and social security will likely persist, requiring ongoing legislative refinement, judicial interpretation, and stakeholder dialogue. As India’s gig economy continues its rapid expansion, the choices made in structuring aggregator contributions and worker protections will determine whether gig and platform workers gain a pathway to economic opportunity and security or face mechanisms perpetuating precarity and exploitation. The legal framework governing aggregator contributions, though promising in conception, must be translated into meaningful worker welfare improvements through diligent implementation, adequate funding, accessible administration, and sustained political will.

References

[1] NITI Aayog, “India’s Booming Gig and Platform Economy,” June 2022. https://www.niti.gov.in/sites/default/files/2022-06/Policy_Brief_India%27s_Booming_Gig_and_Platform_Economy_27062022.pdf

[2] Ministry of Labour and Employment, Government of India, “The Code on Social Security, 2020,” https://labour.gov.in/sites/default/files/SS_Code_Gazette.pdf

[3] “Code on Social Security, 2020 and Gig Workers,” Drishti IAS, https://www.drishtiias.com/daily-updates/daily-news-analysis/code-on-social-security-2020-and-gig-workers

[4] “Regulation of Gig Work,” ICRIER Policy Bank, February 2025. https://icrier.org/policy_bank/regulation-of-gig-worker/

[5] “Karnataka Platform-Based Gig Workers Bill,” PRS Legislative Research, https://prsindia.org/bills/states/the-karnataka-platform-based-gig-workers-social-security-and-welfare-bill-2025

[6] “Telangana Gig and Platform Workers Bill,” PRS Legislative Research, https://prsindia.org/bills/states/the-draft-telangana-gig-and-platform-workers-registration-social-security-and-welfare-bill-2025

[7] “Indian Federation of App-Based Transport Workers v Union of India,” BIICL Gig Workers Litigation Database, https://www.biicl.org/gig-workers-litigation-database/indian-federation-of-app-based-transport-workers-v-union-of-india-2021

[8] “Gig Workers Secured Under New Labour Codes as Aggregators Must Pay 2% of Turnover,” Outlook Business, November 21, 2025. https://www.outlookbusiness.com/start-up/news/gig-workers-secured-under-new-labour-codes-as-aggregators-must-pay-2-of-turnover

[9] “Rules Governing India’s Gig Economy,” International Bar Association, https://www.ibanet.org/rules-governing-india-gig-economy