Karnataka's High Court just ordered major gig platforms to deposit a 1% welfare contribution. The decision escalates a constitutional battle over state versus central authority on gig worker welfare. Companies like Swiggy and Zepto now face a potential patchwork of state-level compliance rules across India.
How We Got Here
The dispute began after Karnataka operationalised its Platform-Based Gig Workers Act (2025) and started issuing 1% welfare levy notices. Aggregators like Swiggy and Zepto, backed by IAMAI, challenged this, arguing the state law is "repugnant" to the Centre's Code on Social Security (2020).
The Numbers
- The Karnataka High Court refused to stay the Act, directing platforms to deposit the second quarter's disputed welfare contribution within three weeks.
- The Internet and Mobile Association of India (IAMAI) filed the challenge alongside Swiggy, Zepto, Urban Company, Eternal, and Meesho's logistics arm Valmo.
- Petitioners argue Karnataka's Act (2025) is "repugnant" to the Centre's Code on Social Security (2020), which already covers gig workers.
- Justice M. Nagaprasanna, hearing the case, acknowledged a "peripheral examination" suggests repugnancy but questioned if states could improve on central welfare frameworks.
What Happens Next
🇮🇳 Why This Matters for India
For founders building platform businesses in logistics or last-mile delivery, especially those expanding beyond Bangalore, this means navigating potentially varied state-level compliance costs.
The Take
The immediate losers here are platform aggregators, who will now absorb the 1% levy. This case will ultimately determine if the gig economy faces a single, federal welfare framework or a fragmented state-by-state compliance maze, adding significant operational overhead.
Source:
Inc42 ↗