Introduction
The rapid expansion of platform-mediated work in India has produced a class of workers who occupy an uncomfortable legal limbo. Drivers who ferry passengers for Ola and Uber, delivery executives who shuttle food from Swiggy and Zomato kitchens, and domestic service providers who accept Urban Company jobs through a smartphone application are, in the formal legal sense, neither employees nor independent contractors in the traditional mould. They are something genuinely new, yet Indian labour law has not kept pace with the economic reality they inhabit. The question of how to classify these workers, and what obligations flow from that classification, has become one of the most consequential debates in contemporary Indian labour jurisprudence.
The stakes are enormous. India is estimated to have between fifteen and twenty million gig workers, a number that is projected to grow to ninety million by 2030 according to estimates from NITI Aayog’s 2022 report on India’s booming gig and platform economy. These workers generate substantial value for aggregator platforms, yet they access almost none of the protections that the Indian state has, over decades, constructed for workers in the formal sector, including minimum wage guarantees, provident fund contributions, employee state insurance coverage, and protection against arbitrary dismissal. The legal architecture that governs their working lives is built on the fiction that they are independent entrepreneurs freely choosing their working hours, a fiction that bears little resemblance to the algorithmic control, price-setting, and rating-based discipline that actually structures their days.
This article examines the definitional challenge at the heart of gig worker classification, the inadequacy of the Code on Social Security 2020’s response to this challenge, the pioneering legislative effort undertaken by Rajasthan in 2023, emerging state-level frameworks in Karnataka, and the lessons that comparative international experience offers for India’s policy choices.
Legal Framework
The Code on Social Security 2020 represents Parliament’s first statutory acknowledgement that platform workers exist as a distinct category requiring regulatory attention. Chapter XIII of the Code, comprising Sections 114 to 117, defines a “gig worker” as a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationships. An “aggregator” is defined as a digital intermediary or marketplace that connects buyers of services with service providers. The Code mandates that aggregators, along with the central and state governments, contribute to a social security fund for gig and platform workers.
However, the architecture of Chapter XIII is notable for what it does not do as much as for what it does. It does not classify gig workers as employees. It does not extend to them the protections of the Industrial Relations Code 2020, which covers retrenchment compensation, standing orders, and collective bargaining rights. It does not give them minimum wage protection under the Code on Wages 2019, because that code’s protections attach to the “employee” relationship, which gig workers formally lack. The Code on Social Security’s approach is, in essence, to create a parallel welfare architecture for workers who are acknowledged to exist but are not brought within the mainstream of labour law protection.
The definitional boundary between a “gig worker” and an “employee” in Indian law has never been subjected to systematic legislative clarification. The courts have applied a patchwork of common law tests, including the control test, the integration test, and the economic reality test, depending on the context and the era of the decision. The Supreme Court in Hussainbhai Calicut v. Alath Factory Thezhilali Union (1978) articulated a functional approach emphasising economic dependence rather than formal contractual labels, but this approach has not been consistently applied in the context of digital platform work.
The Rajasthan Platform Based Gig Workers (Registration and Welfare) Act 2023 is India’s first state-level legislation specifically addressing platform workers. The Act establishes a welfare board, requires registration of platform workers and aggregators, creates a contribution-based social security fund to which aggregators must contribute a percentage of each transaction involving a gig worker, and provides grievance redressal mechanisms. Critically, like the central Code, the Rajasthan Act does not reclassify gig workers as employees. It operates alongside the existing employment law framework, providing welfare benefits without disturbing the contractual relationship that aggregators have constructed.
Judicial Developments
Indian courts have not yet had occasion to rule directly on the employment status of platform workers in the manner that courts in the United Kingdom and the Netherlands have done. The closest analogues in Indian jurisprudence are cases involving contract workers, piece-rate workers, and homeworkers, where courts have periodically looked past the form of the contract to the substance of the work relationship.
The absence of definitive Supreme Court authority on platform worker classification is itself significant. It reflects both the relative novelty of the phenomenon in India and the tendency of aggregator platforms to resolve worker grievances through private arbitration or by invoking their contractual status as technology intermediaries rather than as employers, thereby avoiding litigation that might produce unfavourable precedents.
The National Consumer Disputes Redressal Commission has, in a different context, considered whether platforms exercise sufficient control over their service providers to attract liability for deficiency in service, and has in several instances held platforms responsible for the conduct of their delivery executives. While these are consumer law determinations rather than labour law ones, they reflect a judicial instinct to look through the platform’s claimed role as a mere marketplace when the operational reality is one of significant control.
In contrast, the UK Supreme Court’s decision in Uber BV v. Aslam (2021) is a landmark that Indian policymakers cannot ignore. The Court unanimously held that Uber drivers are “workers” within the meaning of UK employment legislation, entitling them to the national minimum wage and paid holiday. The Court found that Uber drivers are in a position of subordination and dependency relative to Uber, that Uber sets the fare and drivers cannot negotiate it, that Uber controls the information flowing between drivers and passengers, and that Uber uses ratings to discipline and ultimately exclude drivers. The economic reality of the relationship, the Court held, is one of work for Uber, not entrepreneurship by drivers as principals of their own businesses.
The Dutch Supreme Court’s 2024 decision in the Deliveroo case, affirming lower court findings that Deliveroo couriers are employees entitled to collective agreement coverage, and the Amsterdam labour court’s earlier decision in the same direction, further illustrate the direction that judicial analysis has taken in comparable economies.
Contemporary Issues and Analysis
The IFAT, the Indian Federation of App-based Transport Workers, has for several years organised around demands for minimum wage guarantees, accident insurance, and recognition as workers rather than partners. Their campaigns highlight the concrete consequences of misclassification. A driver who is seriously injured in a road accident while on duty for Ola or Uber cannot claim workmen’s compensation under the Employee Compensation Act 1923, because that act applies to employees and the driver is classified as an independent contractor. The driver’s only recourse is a general insurance claim, if the platform provides voluntary accident cover (which it often does in minimal form), or a tort claim against the driver who caused the accident.
The algorithmic dimension of platform control deserves particular attention in any analysis of classification. Gig workers on major Indian platforms experience a form of supervision that is arguably more intensive than that experienced by many formal employees. The application tracks their location in real time, assigns work algorithmically without their meaningful participation in the assignment decision, uses customer ratings as a continuous performance evaluation that can result in deactivation (which is, in effect, termination), and imposes penalties for cancellation. The platform sets prices, defines service standards, and determines which workers receive work. This is not the profile of an independent contractor who freely controls their economic activities.
The Karnataka Gig Workers Welfare Bill, under discussion since 2024, proposes a similar welfare board structure to Rajasthan’s, with mandatory aggregator contributions and a unique identification number for all registered gig workers. If enacted, it would apply to one of India’s largest concentrations of platform economy workers, given Bengaluru’s status as a hub for app-based transport and delivery services.
Comparative and International Perspective
The European Union’s Platform Work Directive, agreed in 2024, takes a structurally different approach from both the Indian central and state frameworks. The Directive establishes a rebuttable presumption of employment for platform workers when certain control-indicating criteria are met. The presumption shifts the burden of proof onto the platform to demonstrate that the worker is genuinely self-employed. This is a significant departure from the conventional approach of requiring the worker to prove employment status, a task that is practically difficult and costly for individual workers with limited resources.
The EU Directive also imposes transparency obligations regarding algorithmic management systems, requires human oversight of automated decisions affecting workers, and ensures that platform workers are covered by applicable collective agreements where they exist. These provisions reflect a recognition that the employment status question is inseparable from the question of algorithmic control and the information asymmetries that digital platforms create.
California’s AB5, enacted in 2019 and subsequently modified by Proposition 22, represents a different legislative model: applying an “ABC test” under which a worker is presumed to be an employee unless the hiring entity can prove that the worker is free from control, performs work outside the usual course of business of the hiring entity, and is customarily engaged in an independently established trade or occupation. This test, if applied to Indian platform workers, would likely result in the majority being classified as employees.
India’s resistance to employment classification for gig workers appears to reflect a combination of concerns: the fear that mandatory employment classification would raise labour costs sufficiently to threaten the growth of the platform economy, the difficulty of enforcing formal employment obligations across a sector characterised by high worker turnover and informal working patterns, and the political economy dynamics of a state that depends on the platform economy to absorb a large workforce that the formal industrial sector cannot employ.
Practical and Policy Implications
The current framework creates concrete harms that policy must address. Gig workers injured on the job lack meaningful compensation. They have no access to ESIC’s healthcare benefits. They accumulate no provident fund contributions toward retirement security. They cannot form or join trade unions recognised under the Industrial Relations Code. They have no protection against arbitrary deactivation from platforms that is equivalent to the retrenchment protections available to formal employees.
The Rajasthan model offers a partial solution. By creating a welfare board funded by aggregator contributions, it provides a mechanism for delivering social security benefits without requiring the reclassification of workers as employees. The contribution mechanism (a percentage of each transaction) is administratively elegant because it ties the welfare fund to the actual economic activity generating the worker’s income, rather than to a fixed employment relationship.
However, the Rajasthan Act has significant gaps. The contribution percentage is modest and the fund’s governance is unclear. The grievance redressal mechanism is untested. And because the Act operates at the state level, workers who operate across state boundaries (as app-based transport workers frequently do) may face gaps in coverage.
Suggestions and Reforms
India should move toward a three-tier classification that formally distinguishes employees, dependent workers (a middle category), and genuinely independent contractors. Platform workers who work more than a threshold number of hours per week for a single aggregator, or who derive more than fifty percent of their income from a single platform, should be classified as dependent workers entitled to minimum wage protection, accident insurance, and provident fund contributions while remaining outside the full employer-employee relationship.
The central government should notify the rules under Chapter XIII of the Code on Social Security without further delay and set a minimum aggregator contribution rate that is actuarially sufficient to fund meaningful welfare benefits. A national platform worker registry, analogous to the e-Shram portal already in operation, should be mandatory for all registered aggregators.
The EU’s presumption of employment model deserves serious consideration for adoption in India, at least for workers meeting specific intensity-of-work thresholds. Shifting the burden of proof to platforms in classification disputes would reduce the barriers that individual workers currently face in challenging their classification.
Collective bargaining rights, even in a modified form appropriate to the triangular relationship between platform, worker, and customer, should be extended to gig workers. IFAT and similar organisations should have a recognised legal status to negotiate with aggregators on behalf of their members on matters including algorithmic transparency, deactivation procedures, and minimum earnings floors.
Conclusion
The gig worker classification question is not merely a technical legal puzzle; it is a question about what kind of society India wishes to build as its labour market is fundamentally reshaped by digital platforms. The choice between employment classification, the dependent worker middle category, and welfare-board-based parallel protection reflects different visions of how labour law should respond to economic transformation. The Rajasthan Platform Workers Act represents an important first step, but it is not a sufficient one. India needs a coherent national framework that provides real protections to platform workers without stifling the platform economy’s capacity to generate livelihoods. The international experience, particularly from the EU and the UK, demonstrates that such frameworks are possible. What is required is the political will to build one.
