Labour Ministry Unveils Draft Amendment to Labour Code to Extend Social Security to Gig Workers

Gig-worker realities: The pressure behind the reform

While the gig economy has opened unprecedented employment opportunities, the lived experience of many gig-workers paints a more complex picture. Long hours on the road, algorithm-driven pay structures, unpredictable incentives, and sudden account suspensions create instability that traditional employees rarely face. Accidents, health crises and unexpected financial shocks often push workers into debt cycles.

Delivery riders frequently report 12–14 hour workdays to maintain earnings. Drivers face volatile commission cuts. Freelancers struggle with delayed payments and sudden project cancellations. Influencer-economy workers deal with inconsistent monetisation and opaque platform policies. These challenges have quietly accumulated for years — and the new draft amendment indicates that policymakers now recognise the urgency of addressing them.

Safety concerns in gig-work

Road accidents involving delivery riders have spiked in metropolitan cities. Traffic-heavy zones like Delhi NCR, Bengaluru, Hyderabad and Mumbai see dozens of gig-related accident cases each week. Most gig-workers lack comprehensive accident insurance, leaving them vulnerable to medical debt after even minor injuries.

Adding safety standards into the labour code — even at a basic level — could dramatically improve worker well-being. Proposals under consideration include:

• mandatory accident insurance for all app-based workers,
• platform contributions for health benefits above earning thresholds,
• integrated SOS features within gig-apps,
• night-shift safety protocols for riders and drivers.

Women gig-workers, especially in ride-hailing and delivery, face heightened vulnerability. Worker associations are demanding specific protections, including helpline access and platform accountability in harassment cases.

Payment structure transparency

One of the most frequent complaints among gig-workers is inconsistent or unclear payment structures. Platform-driven “dynamic incentives,” “surge bonuses,” and “ratings penalties” often change without advance notice. The draft amendment’s requirement for quarterly disclosures is designed to bring transparency to these practices.

Such disclosures could include:

• earnings patterns across cities,
• average commissions retained by platforms,
• algorithmic changes affecting worker payouts,
• deactivation and suspension frequency.

Labour economists argue that even basic visibility into platform operations may rebalance bargaining power towards workers.

Platform algorithms under scrutiny

Indian regulators are now paying close attention to the role of algorithmic management. Algorithms determine order allocation, pay bonuses, driver ratings, cancellation penalties, and even worker visibility on platforms. Workers often describe these systems as “opaque,” “unpredictable,” or “punitive.”

The draft amendment hints at the possibility of algorithmic accountability — a concept gaining ground globally — where platforms may be required to disclose high-level information about how work allocation and penalties are determined.

Worker associations welcome reform but demand more

Gig-worker unions and informal collectives have welcomed the draft amendment as a step forward but argue that it does not go far enough. Their demands include:

• minimum guaranteed earnings during low-demand windows,
• mandatory paid rest periods,
• penalties for unfair deactivation,
• government recognition of gig-worker unions,
• clear accident compensation ceilings.

Some collectives argue that unless platforms share revenue structures, workers will remain disadvantaged. Others believe that strong enforcement mechanisms must be built into the amendment or else it will remain symbolic.

Impact on freelancers and digital professionals

Not all gig-workers ride motorcycles or drive cabs. India’s fast-growing digital freelancing sector includes graphic designers, programmers, content writers, online tutors, animators, translators, and remote project managers. Many work with global clients through international freelance platforms but lack financial security.

The amendment’s broader definition of gig-workers may allow digital professionals to participate in pooled pension schemes or access catastrophic insurance coverage. If implemented effectively, it could bring millions of digital freelancers into India’s formal labour ecosystem.

Economic implications for platforms

Regulation inevitably increases operating costs. Analysts anticipate that major platforms may attempt to offset social-security contributions by:

• raising consumer fees,
• reducing worker incentives,
• tightening onboarding criteria,
• introducing subscription-based worker plans.

Some platforms may adopt hybrid employment models to comply — offering limited fixed pay supplemented with incentive structures. Others may invest more in automation, such as AI-driven route optimization, autonomous delivery pilots and automated task scheduling.

However, economic models indicate that social-protection reforms can have long-term benefits by stabilizing workforce availability and reducing attrition, which is notoriously high in the gig economy.

Global lessons for India

Countries like Spain, Portugal and the UK have experimented with “worker status” classifications for gig-workers, offering partial protections without fully treating them as employees. Other countries have introduced platform taxes to fund social security.

India appears to be pursuing a hybrid pathway — retaining flexibility but providing a baseline safety net. Global experts caution that India’s model must avoid pitfalls seen elsewhere, such as excessive enforcement costs or platform exit threats.

Administrative challenges for the government

Implementing social-security protections for gig workers is far more complex than enforcing labour laws for regular employees. Challenges include:

• tracking millions of workers with inconsistent working hours,
• integrating platform-generated data into government systems,
• ensuring compliance across thousands of digital-task platforms,
• resolving cross-state jurisdiction issues.

To address these challenges, the government is establishing an integrated gig-worker registry under the e-Shram portal, which already houses more than 285 million informal workers.

State governments prepare parallel frameworks

Some states are considering supplementary protections, including:

• state-level health-insurance subsidies for gig workers,
• driver-welfare boards,
• accident-response centres for delivery riders,
• registration windows for freelancer cooperatives.

Karnataka, Rajasthan, Delhi and Tamil Nadu are among the states exploring additional gig-worker welfare boards.

Long-term transformation of India’s workforce

Gig-work is no longer a fringe model. It represents nearly 10 percent of India’s urban employment. As automation and AI transform traditional sectors, gig-work will continue expanding across logistics, mobility, care-economy services, consulting, content creation and micro-entrepreneurship.

The new amendment signals a shift in India’s understanding of employment itself. The rigid binary of “employee vs contractor” may be replaced by a more nuanced category that reflects the fluidity of modern digital labour markets.

Could this raise India’s global competitiveness?

Multinational companies often hesitate to contract gig-workers in unregulated markets due to compliance risks. A robust legal structure could make India a more attractive destination for global gig-work outsourcing — especially in areas like digital design, engineering, cloud monitoring, medical documentation and remote sales support.

By formalizing the gig economy, India could become a global hub for remote-work platforms and edge-service providers.

Conclusion of Part 2

The draft amendment marks a turning point, sparking wide debate across workers, platforms, industry bodies and policymakers. What comes next will determine whether India creates a digital labour system that is sustainable, fair and globally competitive — or one that deepens inequalities in the race to scale platform efficiencies.

The financial architecture behind gig-worker social security

One of the most important elements of the new amendment is the financial mechanism that will support gig-worker social security funds. Unlike traditional employees, gig-workers do not have a fixed employer responsible for provident-fund or insurance contributions. Instead, contributions will come from a hybrid pool:

• Platform contributions: A percentage of each transaction value.
• Government co-contributions: For low-income workers during the initial rollout.
• Voluntary worker top-ups: For pension and savings schemes.
• Fintech-enabled micro-deductions: Allowing small, automated contributions without reducing take-home pay significantly.

This multi-layered model is inspired by India’s large-scale digital-benefit systems, including the PM-JAY (Ayushman Bharat) and the e-Shram registry.

Digital compliance backbone: India’s platform advantage

The amendment relies heavily on India’s digital public infrastructure. Systems such as Aadhaar, UPI, DigiLocker and e-Shram make it feasible to register millions of gig workers and track contributions without high administrative overheads.

Key mechanisms under development include:

• automated worker onboarding via platform apps,
• digital identity verification through Aadhaar,
• real-time payment linkage for contribution deduction,
• benefit distribution directly into bank accounts.

Unlike many countries struggling with fragmented digital systems, India’s unified stack helps streamline gig-worker regulation at scale.

Potential for a national Gig-Worker ID

Officials are exploring a “Gig-Worker ID,” integrated with e-Shram, that will track:

• total annual earnings,
• platform contributions,
• insurance status,
• grievance-history logs,
• skill-development enrollment,
• pension top-ups.

A unified ID could follow workers across platforms, allowing gig-professionals to build portable benefit profiles regardless of where they work.

Skill-upgradation and future-employability measures

The amendment also includes language encouraging platforms to provide skill development opportunities. These could range from safety-training modules to advanced digital-skills courses for freelancers. Skill-upgradation is expected to increase employability, improve earnings, and enable gig-workers to transition to higher-value roles.

Government-industry partnerships may soon offer subsidised skill-certification courses under existing digital-India programmes.

Long-term benefits: A social-security net for a new generation

If fully implemented, the social-security framework could reshape India’s labour landscape. Gig-workers would gain:

• basic income stability,
• medical and life cover,
• occupational safety protections,
• pension accumulation pathways,
• formal verification of work history.

In the long run, this could reduce vulnerability, improve financial planning, and enhance the dignity of a workforce that has powered India’s digital boom.

Fear of over-regulation — can innovation and protection coexist?

While worker protections are essential, some analysts warn that over-regulation could drive platforms to:

• limit worker onboarding,
• automate aggressively,
• shift to part-time employee models,
• add hidden charges to maintain margins.

Balancing flexibility and security will be the central challenge. Policymakers believe phased implementation and platform-specific customisation can achieve this balance without disrupting India’s fast-growing digital-service industry.

Broader economic impact: Formalising India’s informal economy

The gig-economy reform is part of a larger shift: bringing India’s informal workforce into formal, trackable, benefit-enabled systems. With over 80 percent of the workforce still informal, the gig-worker framework could eventually serve as a blueprint for other sectors like construction, domestic work, retail and micro-entrepreneurship.

Formalisation leads to better productivity, improved tax compliance, higher financial access, and expanded credit opportunities for low-income workers.

Urban governance implications

City governments may also see significant impact. Gig-workers dominate urban mobility, food delivery, hyperlocal logistics and e-commerce flows. As gig-work expands, municipal authorities must adapt urban planning to include:

• designated rest stops for delivery workers,
• public charging stations for e-two-wheelers,
• safer traffic zoning for high-volume gig corridors,
• emergency response units for road accidents.

Some cities are already exploring “gig-worker zones” integrated with EV infrastructure and micro-mobility lanes.

Political response strengthens as elections approach

With nationwide elections nearing, political parties across the spectrum are recalibrating gig-worker outreach. Parties may include gig-worker protections in manifestos, offer subsidies or propose expanded welfare coverage.

Analysts predict gig-worker protection could become a significant narrative in upcoming campaigns — the first time India’s digital workforce enters electoral discourse at scale.

Challenges ahead: The road to implementation

Despite widespread support, the road to implementation is long and complex. Major questions remain:

• How will the fund manage contributions from thousands of platforms?
• Which ministries will coordinate enforcement?
• Will small platforms be exempt from certain obligations?
• How will cross-state gig-work be regulated?
• Will global platforms comply with Indian requirements?

Policymakers are aware that without clear enforcement, the amendment risks becoming a symbolic reform. The next two years will be crucial in shaping practical frameworks.

International observers watch India’s move closely

Countries with rising gig economies—including Indonesia, Brazil, the Philippines, Nigeria and South Africa—are watching India’s model as a potential template. If successful, India could lead a new global standard for hybrid labour systems that balance worker protection with digital innovation.

Conclusion: A historic shift in India’s labour future

The draft labour-code amendment to include gig-workers marks one of the most significant labour reforms in India’s post-independence history. It acknowledges the reality of the digital age — that millions of Indians now work outside traditional employment structures, yet deserve safety, dignity and long-term security.

Whether the reform delivers lasting impact will depend on implementation, enforcement and how effectively platforms collaborate with regulators. But for now, the amendment signals a historic recognition: gig-workers are central to India’s economic engine, and the nation’s labour policy must evolve to reflect this modern workforce.