Consumers in Karnataka may have to pay more for cab rides, food deliveries and other services. Here's why

Time of India

29-05-2025

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Karnataka is preparing to bring in a new welfare law for gig and platform workers. According to a TOI report, while the move has been widely appreciated, it may result in consumers paying more for cab rides, food deliveries, and other app-based services.The proposed Karnataka Platform-based Gig Workers' (Social Security and Welfare) Ordinance, 2025 includes a 1%–5% cess to create a welfare fund for nearly 30,000 gig workers in the state. Officials said the cost would be shared between customers, platforms, and the workers themselves, though the end user is expected to bear the most.The Karnataka cabinet's decision to introduce the ordinance has been seen as a positive step. But the real challenge lies in how the cess will be collected and the law enforced on the ground.Dr Manjunath, Additional Labour Commissioner, said, as quoted by TOI, 'The Act has been framed in such a manner that all three stakeholders can contribute to the welfare fund.' He added that gig workers could also voluntarily contribute more to improve their social security. He said the rules will likely be finalised within a week.However, concerns have been raised about the fine print. Balaji Parthasarathy, Principal Investigator at Fairwork India and professor at IIIT-Bengaluru, told TOI, 'The legislation outlines the terrain, but implementation will hinge on rules, particularly how wage protection, dispute resolution, and algorithmic accountability are addressed.'He warned that there's no wage-floor guarantee. 'Transparency in deductions is a start, but without clear limits on payout cuts, platforms can reduce per-task payments to make up for the cess,' he said. Parthasarathy also noted, as quoted by TOI, that while platforms don't talk to worker groups, they have made collective representations through bodies like Nasscom and IAMAI to oppose parts of the bill.From a legal perspective, the law is a formal recognition of gig work. However, Vikram Shroff, partner at AZB & Partners, said as quoted by TOI, that some of the termination-related clauses may face legal challenges, especially if they clash with current agreements between platforms and workers.Shroff also warned of possible confusion once the national social security code is implemented, saying, 'Two sets of laws may govern gig worker entitlements, potentially leading to regulatory overlap.'According to the draft rules, platforms will be placed in different cess slabs depending on whether they provide delivery, transport, or personal services. Officials expect to raise around ?150 crore a year through this cess.Despite the worries, some companies support the plan. Athira, Vice-President for Public Policy at Porter, called the ordinance a 'progressive and much-needed step' that recognises gig workers and their social security needs. 'We remain committed to working with both state and central governments,' she said, as quoted by TOI.Inputs from TOI