Written by Devansh Awasthi, a B.A. LL.B. (Hons.) student at Dr. Ram Manohar Lohiya National Law University, Lucknow.
I. A Workforce Without Protection
The gig economy has become one of India’s largest sectors. According to the NITI Aayog, around 7.7 million people are currently working in this sector and it is expected to grow at an exponential rate over the next decade. The delivery rider weaving through the traffic of Ranchi, the cab driver working for 12 hours without a break, or the home service worker booked via an app are all part of an economic engine that generates billions of dollars. For most of the last ten years, these workers have had virtually no legal protections; they were legally viewed as neither workmen (as defined by the Industrial Disputes Act) nor employees (who would have received benefits such as a provident fund or insurance). The statutory framework for these types of workers simply did not exist up until 2025.
II. A Legal Shift
A landmark change occurred on November 21, 2025, when the four new Labour Codes were enacted by the Union Government. For the first time, the Code on Social Security, 2020 will legally define “gig worker” and “platform worker” and provide them with access to a broad range of social security protections. Aggregator companies will be required to pay a welfare cess (or fee) of 1 to 2% of their total annual turnover up to a maximum of 5% of the total paid to the workers to cover the cost of providing these benefits. With this legislative change, an entire workforce has been moved from an informal economy to a formal economy and now has access to legal protections.
The States have also recognized this gap in the legal framework and have moved quickly to enact their own legislation to protect gig workers. In particular, in 2023 Rajasthan was the first State in India to enact a dedicated law for gig workers. In 2025 the Karnataka government passed the Platform-Based Gig Workers (Social Security & Welfare) Act which came into effect May 30, 2025 with rules being notified in November. Jharkhand followed with a similar piece of legislation; they were the 4th state to do so. Bihar then created a similar solution in August 2025, and Telangana will potentially have the most comprehensive legislation to date. Each of these states is using essentially the same structure: workers must register for a unique identification number; a tripartite welfare board is created; a welfare fund is financed by the aggregators that use the services of gig workers (e.g., Uber, Zomato); and algorithmic-transparency provisions are being included in many states’ legislation.
III. Recognition Is Not Employment
With respect to Jharkhand (one of the few states rich in resources but also producing significant out-migration due to distress), the recognition of gig workers is significant because these jobs are now an acceptable alternative destination for workers who may otherwise migrate under precarious conditions. However, the new framework is being built on a deliberate and consequential choice. Through this recognition, each of these states has classified gig/platform workers as distinct categories of workers (not traditional employees or independent contractors); this is an example of welfare without a reclassification of any workers.
While the benefits of gaining access to welfare are clear for workers (e.g., access to government assistance programs), the worker will still not have access to core protections that come with being an employee (e.g., minimum wage, protections against arbitrary terminations, protection from having working hours regulated, or the right to engage in collective bargaining under the Industrial Relations Code). In addition, the worker definition adds a layer of risk. Several statutes that govern gig work are defined mainly by how the worker finds work (via a platform) instead of what the relationship between workers and platforms is. A broad definition like this could potentially allow platforms to classify workers who are functionally employees (as opposed to independent contractors) as “gig workers,” effectively pushing labour below the wage floor and out of stronger protections. This means that the laws themselves could become a mechanism for exiting responsibility instead of creating an entry point for being accountable. At some point in the future courts will have to determine whether form or substance of the relationship controls.
IV. The Gap Between Paper and Pay
The honest truth is that the recognition of workers on paper has not yet translated into the recognition of workers in pay. Although Rajasthan’s groundbreaking legislation from 2023 is now recognised as law, it has not yet been implemented because there are no rules. The Labour Codes have recently come into force but, again, they do not yet have final central and state rules, with full operationalisation targeted for around April 2026. The welfare boards must be established, the funds must be collected, and portals for worker registration (e.g., e-Shram) must functionally operate. A welfare cess (the statutory funds collected to support welfare programs) that has been legislated but not yet collected does not provide for the welfare of any individual.
An area in which Indian law is innovating quietly is the part of the law that involves algorithmic management. For example, the statute that governs gig work in Karnataka provides a gig worker with the right to decline a task without incurring any penalty. This is a direct response to how platforms are currently treating workers when they decline to accept a task (i.e., they penalise the worker by reducing their visibility and/or deactivate their account). The Telangana statute gives the worker the right to obtain information about the automated systems that determine their fare, income, and rating. Together these legal provisions touch on the welfare-related aspects of gig work and also the actual means of controlling gig workers. Whether these provisions will be of value is dependent on how well they are enforced.
V. A Bargain Still Unfinished
India has taken a different path than Europe. While Europe’s path, as demonstrated through the Platform Work Directive, seeks to establish a presumption of employment for gig workers, India has continued to rely upon the use of welfare boards to provide for workers in the informal economy, and thus, through the equivalent mechanism for gig workers. The unanswerable question for researchers and policymakers is whether creating a parallel welfare-based strategy to support gig workers is a sensible transition toward a more systematic approach or merely a method to create permanent second-class status for gig workers.
The most significant accomplishment of the year 2025 is to create a visibility of gig workers as legally recognised. However, visibility must lead to enforceable rights to be meaningful to the millions of gig workers in India. The true test lies ahead with the rules yet to be published, the funds yet to be received, and whether the strong promise regarding algorithmic transparency under the new laws will have any substantial legal force. Until some of those unknowns are resolved, gig workers in India hold something genuinely new yet genuinely incomplete: recognition, but not the full measure of rights. For students, researchers, and scholars of labour law, the upcoming year is not really an “end” but an “invitation” to analyse, challenge, and advocate for the emerging rules, to investigate whether welfare can replace security, and to make sure that the recently established legal visibility of gig workers transforms into enforceable protections as soon as practicable.
Caveat: The views, analyses, and information presented in this article are provided in good faith and for general informational purposes only. No representation or warranty, express or implied, is made regarding the accuracy, adequacy, validity, reliability, or completeness of the information. Readers should conduct their own research and seek professional guidance where appropriate. Neither the author nor the publisher shall be held responsible for any loss, liability, or consequence arising from reliance on this content.
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