Eternal, Meesho, Other Consumer Tech Unicorns Challenge Karnataka’s Gig Worker Law
Major consumer internet companies have jointly moved the Karnataka High Court challenging the constitutional validity of the Karnataka Platform Based Gig Workers Act. The companies argue that the law creates a parallel regulatory framework to the Centre’s existing social …
Intelligence analysis by Llama 3.3 70B
The Karnataka Platform Based Gig Workers Act introduces a welfare fee on platform transactions, which will be collected for the first time on July 5. The companies argue that this fee is arbitrary and infringes on their fundamental rights.
Imagine you work as a delivery person for a food company. The government wants to make sure you have some protection in case you get hurt or can't work. So, they made a law that says the company has to pay a little extra money for each delivery you make. But the companies don't want to pay this extra money, so they're challenging the law in court.
Analysis
Introduction to the Dispute
The Karnataka Platform Based Gig Workers Act, 2025, was notified in September 2025, making Karnataka the first state to enact a dedicated law for platform-based gig workers. The law establishes a welfare board and fund for gig workers, as well as introducing social security protections for gig workers. However, major consumer internet companies, including Eternal, Meesho, and Swiggy, have challenged the constitutional validity of the Act, arguing that it creates a parallel regulatory framework to the Centre’s existing social security framework for gig workers.
The Welfare Fee Dispute
At the heart of the dispute is the welfare fee introduced under the law. The Karnataka government has imposed a 1% welfare fee per transaction on the platform aggregator, which will be collected for the first time on July 5. The companies argue that this fee is arbitrary and infringes on their fundamental rights. The fee is capped at ₹0.50 per transaction for food and grocery delivery platforms, while ride-hailing platforms will pay up to ₹0.50, ₹0.75, and ₹1 for two-wheelers, three-wheelers, and four-wheelers, respectively.
Implications for the Gig Economy
The challenge to the Karnataka Platform Based Gig Workers Act has significant implications for the gig economy in India. The outcome of the case will determine the validity of state-level regulations on gig workers and the extent to which companies must contribute to their social security. If the Act is upheld, it could set a precedent for other states to introduce similar regulations, leading to a fragmented regulatory landscape for gig workers. On the other hand, if the Act is struck down, it could lead to a lack of social security protections for gig workers, leaving them vulnerable to exploitation.
Key points
- Major consumer internet companies have challenged the Karnataka Platform Based Gig Workers Act
- The companies argue that the law creates a parallel regulatory framework to the Centre's existing social security framework
- The law introduces a welfare fee on platform transactions, which will be collected for the first time on July 5
If the court rules in favor of the companies, it could lead to a more streamlined regulatory framework for gig workers, with the Centre's social security framework providing a uniform set of protections across the country. This could reduce the compliance burden on companies and make it easier for them to operate across different states.
If the court upholds the Karnataka Platform Based Gig Workers Act, it could lead to a fragmented regulatory landscape for gig workers, with different states introducing their own regulations and fees. This could increase the compliance burden on companies and make it harder for them to operate across different states, potentially leading to higher costs and reduced employment opportunities for gig workers.
