Introduction
India’s gig economy has moved from the margins to the mainstream. Food delivery riders, ride-hailing drivers, warehouse pickers, and app-based service providers now form a visible and indispensable layer of urban labour. Yet, for years, this workforce existed in a regulatory vacuum, described as “partners” rather than workers and excluded from traditional labour protections.
The Code on Social Security, 2020, marks the first serious legislative attempt to respond to this gap. By recognising gig and platform workers as a distinct category and mandating that aggregators contribute 1-2% of their annual turnover to a Social Security Fund, the State has acknowledged that platform labour cannot remain outside the welfare framework.[1]
This blog examines what this contribution actually means in practice. It breaks down the legal structure of the fund, the rationale behind the turnover-based model, its implications for aggregators and workers, and whether it meaningfully advances social security or merely symbolises concern.
Recognising Gig Workers Without Reclassifying Them
One of the most striking features of the Code is what it does not do. Gig and platform workers are recognised, but not classified as “employees”.[2] This choice reflects a deliberate balancing act. The legislature avoids disrupting the flexible business models of platforms while still extending a degree of welfare protection.
Section 2(35) of the Code defines gig workers as those who earn through work arrangements outside the traditional employer-employee relationship.[3] This definition captures flexibility but also codifies precarity. By stopping short of employment status, the law sidesteps minimum wages, collective bargaining rights, and job security.
Instead, social security becomes the chosen compromise. The aggregator contribution is the price platforms pay for retaining flexibility without assuming employer obligations.
The 1–2% Turnover Contribution Explained
Section 114 of the Code empowers the Central Government to frame welfare schemes for gig and platform workers, funded partly through contributions from aggregators.[4] The contribution is capped at 1-2% of the aggregator’s annual turnover, subject to a ceiling linked to the amount payable to workers.[5]
The choice of turnover rather than profit is significant. It prevents platforms from minimising obligations through accounting strategies and ensures predictability in funding. At the same time, the low percentage reflects sensitivity to the evolving nature of the platform economy and concerns about over-regulation.[6]
From a policy perspective, this model treats social security as a collective responsibility rather than a contractual entitlement.
Why a Fund-Based Model?
India has historically relied on welfare funds for unorganised workers, ranging from construction workers to beedi labourers. The Social Security Fund for gig workers follows this tradition.[7] The idea is to pool contributions and finance schemes such as accident insurance, health coverage, maternity benefits, and old-age protection.
However, experience with welfare funds has been mixed. Courts have repeatedly flagged under-utilisation, lack of awareness, and administrative opacity in similar schemes.[8] The success of the gig workers’ fund, therefore, depends not merely on collection but on delivery.
Registration: The First Barrier
Access to benefits under the Code is conditional upon registration. Draft rules require gig and platform workers to self-register on a national portal, likely linked to Aadhaar.[9] While digital registration promises efficiency, it also introduces barriers related to digital literacy, documentation, and language access.
The burden of registration rests almost entirely on workers, despite platforms possessing the data and communication infrastructure needed to facilitate enrolment. Government assurances that registration will be simple remain aspirational unless supported by proactive outreach.[10]
Without widespread registration, the Social Security Fund risks becoming a repository of unused contributions.
What Do Aggregators Actually Owe Beyond Payment?
Legally, very little. Once the contribution is deposited, aggregators have no statutory obligation to assist with registration, benefit awareness, or grievance redressal. This narrow framing of responsibility reduces compliance to a financial transaction.
In reality, platforms exercise significant control through algorithms, ratings, and access to work. Scholars have argued that excluding platforms from welfare implementation ignores the practical realities of platform labour.[11] The absence of shared responsibility may weaken accountability and leave workers navigating bureaucracy alone.
Adequacy of the Contribution Model
A recurring concern is whether a 1-2% contribution is sufficient. When spread across millions of workers, the per-worker benefit may be modest, particularly if schemes cover health, insurance, and pensions.[12]
Traditional social insurance systems in India rely on higher employer contributions, often supplemented by employee and State funding.[13] In contrast, the gig worker fund depends heavily on aggregator contributions, with no guaranteed State matching.
This raises an uncomfortable question: does the fund provide real security, or merely minimal relief?
Constitutional Dimensions of Gig Worker Welfare
The right to social security has been read into Article 21 of the Constitution through judicial interpretation.[14] In Bandhua Mukti Morcha v Union of India, the Supreme Court emphasised the State’s obligation to protect vulnerable workers.[15]
Gig workers, marked by income instability and lack of bargaining power, fall squarely within this category. While the Code acknowledges their vulnerability, the discretionary nature of welfare schemes raises concerns about enforceability.
If contributions are collected without delivering meaningful benefits, constitutional scrutiny may not be far behind.[16]
Worker Voice and Democratic Deficit
Another limitation of the framework is the absence of worker representation. Gig workers have no formal role in designing or monitoring welfare schemes funded in their name.[17]
Indian labour law has traditionally recognised the value of worker participation in welfare administration, especially in unorganised sectors.[18] A purely top-down model risks being disconnected from worker needs, particularly given the diversity of platform work.
Balancing Innovation and Protection
From an aggregator’s perspective, regulatory certainty matters. Ambiguity around turnover calculation, auditing, and penalties creates compliance anxiety.[19] Overly aggressive enforcement could stifle innovation, while lax oversight risks rendering the law toothless.
A cooperative compliance approach, marked by transparency and predictability, may strike the right balance.[20] Social security should not be framed as a punishment for innovation, but as its ethical counterpart.
The Road Ahead
For the Social Security Fund to move from promise to protection, three shifts are necessary.
First, welfare schemes must evolve towards enforceable entitlements rather than discretionary benefits.[21] Second, registration should be actively facilitated by platforms and the State, not left solely to workers.[22] Third, contribution rates must be periodically reviewed to ensure adequacy as the gig economy expands.[23]
Courts may eventually be called upon to assess whether the framework satisfies constitutional standards of fairness and reasonableness.[24]
Conclusion
The 1–2% turnover contribution required from aggregators represents an important first step in bringing gig workers within India’s social security imagination. It acknowledges that flexibility cannot come at the cost of dignity.
Yet, recognition alone is not enough. Without adequate funding, clear entitlements, worker participation, and effective implementation, the Social Security Fund risks becoming symbolic rather than transformative.
India’s gig economy thrives on technological ingenuity. Its social security framework must show equal imagination, ensuring that progress is measured not only in efficiency, but in human security.
Author(s) Name: Kaushiki Dubey (Deen Dayal Upadhyay Gorakhpur University, Gorakhpur)
References:
[1] Code on Social Security 2020, s 2(35).
[2] Ministry of Labour and Employment, Government of India, Report of the Committee on Platform Economy (2020).
[3] Code on Social Security 2020, s 114(1).
[4] Code on Social Security 2020, s 114(1).
[5] Code on Social Security 2020, s 114(4).
[6] Lok Sabha Secretariat, Statement of Objects and Reasons, Code on Social Security Bill 2019.
[7] Code on Social Security 2020, s 114 Explanation.
[8] People’s Union for Democratic Rights v Union of India (1982) 3 SCC 235.
[9] Ministry of Labour and Employment, Government of India, Draft Code on Social Security (Central Rules), 2020.
[10] Press Information Bureau, Government of India, ‘National Database for Unorganised Workers (NDUW) Portal’ (2021).
[11] Prassana S, ‘Gig Workers and the Right to Social Security in India’ (2021) 13 NUJS Law Review 87.
[12] NITI Aayog, India’s Booming Gig and Platform Economy (2022).
[13] Employees’ Provident Funds and Miscellaneous Provisions Act 1952.
[14] Olga Tellis v Bombay Municipal Corporation (1985) 3 SCC 545.
[15] Bandhua Mukti Morcha v Union of India (1984) 3 SCC 161.
[16] Maneka Gandhi v Union of India (1978) 1 SCC 248.
[17] Guy Davidov, ‘The Status of Uber Drivers’ (2017) 38 Comparative Labor Law & Policy Journal 1.
[18] Consumer Education and Research Centre v Union of India (1995) 3 SCC 42.
[19] Code on Social Security 2020, s 114(5).
[20] Organisation for Economic Co-operation and Development, The Role of Digital Platforms in the Labour Market (OECD 2019).
[21] International Labour Organization, World Employment and Social Outlook: The Role of Digital Labour Platforms (ILO 2021).
[22] Press Information Bureau, Government of India, ‘Government to Extend Social Security Benefits to Gig and Platform Workers’ (2021).
[23] International Labour Organization, Non-Standard Forms of Employment (ILO 2016).
[24] Supreme Court of India, In Re: Problems and Miseries of Migrant Labourers (2020) SCC Online SC 684.
