From 21 November 2025, new labour codes require online aggregators and platform businesses to set aside 1-2% of their annual turnover for the welfare of gig and platform workers.
This article explains what this means, why it matters, how it will work, and what consequences it may bring.
What’s the rule exactly?
Under the newly notified labour codes (effective 21 Nov 2025) in India:
- Aggregators and platform-businesses (those employing gig/platform workers) must contribute 1-2% of their annual turnover to a social security fund for gig and platform workers.
- This contribution is capped at up to 5% of the amount paid or payable to those gig/platform workers.
- The codes formally define “gig worker”, “platform worker”, and “aggregator” for the first time in India.
- The welfare fund will finance benefits like health insurance, accident/disability cover, maternity support, old-age benefits and more.
Why this move matters
1. Formal recognition of gig & platform work
For years, gig workers (delivery partners, ride-share drivers, quick-commerce riders etc) operated in a largely informal space, without standard welfare, social security or even clear definitions. The new rule changes that
2. Shift in cost burden for platforms
Platforms like Swiggy, Zomato, Urban Company, Amazon and Flipkart will now face an additional compliance/cost layer — the 1-2% contribution based on their turnover.
3. Improving worker welfare and portability
The contribution helps fund welfare benefits. The code also introduces Aadhaar-linked Universal Account Number (UAN) for gig/platform workers so their benefits (like provident fund, insurance) are portable across states.
4. Potential for systemic change in labour market
By covering gig/platform work under statutory welfare regimes, the reform is a step toward integrating the ‘unorganised/gig’ workforce into a more formalised protection system.
5. Implementation & compliance challenge
While the rule is now notified, the actual implementation (rules, monitoring, enforcement) will determine how effective it is. Platforms will need systems to register, track, contribute, and workers will need support to access benefits.
How will this be implemented?
Here’s a breakdown of the operational side:
- Platforms will need to record their annual turnover and compute the portion (1-2%) that goes into the fund.
- They must also track the total payments made/payable to gig/platform workers (since the cap is 5% of that amount).
- A national/welfare board (and likely state boards) will be formed/expanded to manage the “gig worker welfare fund”.
- Workers above age 16 engaged via platforms must register, declare status, link Aadhaar for UAN, enabling portability.
- Draft rules by the central government and state governments will provide details on categories, rates, verification, usage of the fund.
- Platforms will need to adapt compliance, reporting, data-sharing with government boards, and possibly face penalties for non-compliance.
Implications & potential challenges
For platforms
- Cost increase: The 1-2% of turnover is significant, especially for high-volume, low-margin businesses.
- Compliance burden: Platforms will need to update their governance, data tracking, contracts with workers, disclosures.
- Business model adjustments: Some may re-assess how they classify workers (employee vs independent contractor), pricing models, discount structures.
For gig/platform workers
- Better protection: Access to social security, insurance, possibly pension, accident/disability cover even though they’re non-traditional employees.
- Portability: With UAN and national registration, benefits can move across jobs/states — important for mobile gig workforce.
- Still some gaps: Many operational details may lag (e.g., how quickly fund gets disbursed, how easily workers register, whether small platforms comply).
For the economy/labour market
- Formalisation push: The move may accelerate formalising the gig workforce – good for labour statistics, social security coverage.
- Competitive effects: Platforms may compress margins, increase service charges, reduce incentives for workers — unintended side-effects.
- Implementation risk: If rules are vague or enforcement weak, the benefit may be limited or unequal across states and platforms.
What to watch next
- Rule-making and notifications: When centre and states publish draft rules detailing exactly how the 1-2% contribution is calculated, administered and audited.
- Platform response: How quickly large platforms adjust; whether smaller/medium platforms struggle to comply or lobby for relief.
- Worker registration & UAN rollout: The pace of registering gig/platform workers and issuing UANs will determine benefit access.
- Usage of welfare fund: Tracking how the contribution is utilised — are funds reaching workers? Which schemes are launched?
- State-level variation: Since labour is state subject in many respects, states may have their own models/accelerations (e.g., Karnataka, Telangana already have earlier bills). The Times of India
- Worker voice & grievances: Whether mechanisms are robust for worker complaints, wrongful exclusion, misuse of funds, delays.
Conclusion
The new rule that gig platforms contribute 1-2% of turnover toward worker welfare marks a landmark shift in India’s labour-law regime. For the millions of gig and platform workers, it signals a step toward formal protections, social security, and dignity. For platforms, it introduces a significant compliance and cost dimension. The success of this reform will hinge on effective rule-making, transparent fund usage, and strong enforcement across states and businesses.
As India’s workforce and economy evolve, this reform could serve as a model for how gig work is integrated into welfare systems globally.
