Karnataka Government Proposes Differential Fee on App-Based Aggregators for Gig Workers’ Welfare

The Karnataka government is working on a differential fee system for app-based aggregators, such as cab-hailing services, to fund the welfare of gig workers. The fee will vary based on the revenue of businesses, with higher revenue-generating platforms expected to pay a higher percentage. This initiative is part of the government’s efforts to enhance gig worker welfare through a proposed bill that seeks to provide social security and other benefits.

Key Points of the Proposal

Differential Fee Structure

• Fee Range: The fee payable by platforms will range from 1% to 5% of the commission paid to gig workers. The exact percentage will depend on the size of the commission earned by the platform.
• Cap on Fee: The Code on Social Security caps the fee at 5% of the amount paid to gig workers.
• Revenue-Based Levy: Higher-revenue businesses, like large cab-hailing services, will pay a higher fee to contribute more towards the welfare fund.

Government Process and Timeline

• Ordinance Route: To implement the bill, the government will take the Ordinance route, with plans to enact the Karnataka Platform-based Gig Workers (Social Security and Welfare) Bill 2024.
• Stakeholder Consultation: After the law is drafted, it will be placed in the public domain for stakeholder feedback for a month. The government will incorporate suggestions before finalizing the rules.
• Implementation Timeline: The levy will likely be rolled out within six months after the rules are framed and the system for payment and welfare verification is developed.

Gig Workers Welfare Board

• The Karnataka government plans to establish a Gig Workers Welfare Board to manage and implement the welfare schemes and oversee the contributions to the fund.

Legislative Context

1. Karnataka’s Bill vs. Rajasthan’s Law

• Rajasthan’s Initiative: Rajasthan passed the first law for platform workers in July 2023, although it is yet to frame rules for its implementation.
• Karnataka’s Leadership: Once passed, Karnataka will be the first southern state to implement such welfare programs for gig workers.

2. Political Support

• Rahul Gandhi’s Advocacy: The idea gained momentum after Rahul Gandhi discussed it with Karnataka Chief Minister Siddaramaiah in April 2024. Gandhi had campaigned for gig worker welfare during his Bharat Jodo Yatra in 2022, adding political weight to the proposal.

3. Future Prospects for Other States

• Telangana’s Interest: Telangana, governed by Congress, has expressed interest in adopting similar legislation, with the state collecting a copy of Karnataka’s draft law for potential implementation.

Karnataka’s initiative to impose a differential fee on app-based platforms for gig workers’ welfare is a significant step towards providing social security benefits to gig workers. By implementing a system of financial contribution from platforms based on their earnings, the state aims to protect the rights and improve the living conditions of gig workers, setting a precedent for other states in India.

TET