Gig worker social security: meaning, how it works in India

Gig and platform workers do paid work outside a traditional employer-employee relationship. They work for apps such as food delivery, quick commerce, ride-hailing and home services, and they are usually paid per task. Most are classed as independent partners, so they have not received benefits like provident fund, insurance or paid leave.

The Code on Social Security, 2020 changed this on paper by naming gig and platform workers and creating a way to fund benefits for them. The code took effect with the other labour codes on 21 November 2025, according to law-firm summaries.

Sections 113 and 114 deal with registration and funding. A gig or platform worker can register on the government's e-Shram portal and get an Aadhaar-linked identity. Aggregators must share details of their workers and contribute to a national social security fund.

The contribution is set at 1% to 2% of an aggregator's annual turnover, capped at 5% of what it pays to gig and platform workers, according to law-firm and press summaries. The exact rate within that range is for the central government to notify, and at least one review notes that the rate was not yet notified under the draft central rules. As of November 2026 the rate should be checked in the latest notification.

• Who pays: aggregators such as delivery, ride and services platforms.
• How much: 1% to 2% of annual turnover, capped at 5% of payouts to workers.
• Where it goes: a social security fund for gig and platform workers.
• Who registers: workers on the e-Shram portal, linked to Aadhaar.

The cap is the key point. A platform with a large turnover but low payouts to workers pays less than the full 1% to 2%, because 5% of payouts sets the ceiling. A platform that pays most of its turnover to workers hits the percentage-of-turnover figure first.

Take a marketplace that keeps only a commission. Its turnover may be the full value of orders or only its own revenue, depending on how the rules count it, which makes the definition of turnover important. Companies and their lawyers watch for the final rules on this.

Rajasthan passed the Rajasthan Platform Based Gig Workers (Registration and Welfare) Act in 2023, one of the first state laws on this subject. It creates a welfare board and a welfare fee on platform transactions. Karnataka followed with its own gig-workers law in 2025, which sets up a welfare fund and a board, with a welfare fee paid by platforms.

Sources describe the Karnataka fee in different ways. One describes it as a share of each booking value, and another as a percentage of payouts, so the Act and the rules should be read for the exact base and rate. Other states have been reported to be considering similar laws. A startup operating in several states may face the central contribution and a state fee together.

The Union Budget of February 2025 announced identity cards and e-Shram registration for gig workers, and health cover under the government's PM-JAY scheme for around a crore of them, according to press reports. Under the code, benefits can include life and disability cover, health and maternity benefits, and old-age protection.

Benefits are designed to be portable, which means they follow the worker across platforms. Many gig workers use several apps, so a benefit tied to one platform would leave gaps.

Quick commerce, food delivery and ride-hailing already run on thin margins. A contribution of 1% to 2% of turnover can be a large share of profit for a company with low margins, though the cap at 5% of payouts limits it. Companies can absorb the cost, pass it to customers through fees or trim incentives for workers.

Investors look at this cost when they value platform businesses, and it is one of the items to watch in an IPO filing. This is a related theme in the food-delivery and quick-commerce models.

Several details are still being settled as of November 2026. These include the final rate, how turnover is defined for marketplaces, how workers who use several apps are counted and how aggregators share data with the government. Platforms have also argued about whether workers are partners or employees, a question the codes do not settle.

Gig workers' groups have asked for higher benefits and clearer grievance routes, while platforms have asked for a lower and simpler levy. The final rules will decide how heavy the cost is.

Employee benefits such as PF and ESI come from an employer-employee relationship and are paid from wages. Gig benefits are funded from a pooled fund, paid by the platform from turnover, and linked to the worker's e-Shram identity. A gig worker is not treated as an employee for leave, notice or wage rules under the codes.

This is why the contribution is a levy on the platform and not a deduction from the worker's earnings.

The rules also ask platforms to be transparent. An aggregator may need to share the number of workers it engages, the payouts it makes and how workers are rated or removed. Karnataka reportedly asks for notice before a worker is deactivated, and workers can raise a complaint to a state body. Such steps affect the design of the app, because ratings, incentives and blocking now carry legal weight.

For investors, the open question is whether the cost can be passed on. A platform that raises fees by a small amount may protect its margin, but a price-sensitive customer may order less. Earlier headlines about delivery fee increases and incentive cuts are often read in this light, though the cause in any single case is hard to prove.

• Employees: benefits tied to wages and employer.
• Gig workers: benefits from a central fund, tied to an ID.
• Platforms: pay a turnover-based contribution, not payroll tax.

A headline about a 'gig worker levy' usually refers to the central 1% to 2% contribution. A headline about 'Karnataka gig workers act' refers to the state law and its welfare fee, which is separate. Check whether the rate has been notified and from which date. This page is general information and not legal advice, so companies should check with a labour-law professional.