Position of Gig Workers under India’s New Labour Code Framework: What Businesses Need to Know

Introduction

India’s workforce has undergone a significant transformation over the last decade, driven by the rapid growth of digital platforms, app-based services, and independent contracting. Food delivery executives, ride-hailing drivers, freelance professionals, home-service providers, and numerous other workers now operate outside the traditional employer-employee relationship. 

Recognising this shift, the Code on Social Security, 2020 (“Social Security Code”) became the first central labour legislation in India to formally recognise gig workers and platform workers as distinct categories of workers. While these workers are not treated as employees under the labour law framework, the Code introduces a mechanism for extending social security benefits without altering their independent status. The evolving legal framework has important implications for businesses operating digital platforms, aggregators, and technology-enabled service models, particularly as several states have begun introducing dedicated legislation governing gig and platform workers. 

Understanding Gig Workers and Platform Workers

The Social Security Code defines a gig worker as an individual who performs work or participates in a work arrangement outside the traditional employer-employee relationship and earns from such activities. A platform worker, on the other hand, is a person whose work is organised through an online platform or digital aggregator. Every platform worker is therefore a gig worker, although not every gig worker necessarily performs work through a digital platform. 

Examples include: 

• Ride-hailing drivers  
• Food delivery partners  
• E-commerce delivery executives  
• Home-service professionals  
• Freelance professionals working through online marketplaces  

Unlike employees, these individuals are generally engaged as independent contractors or service providers and enjoy greater flexibility in deciding when and how they perform their work. 

Recognition Without Employee Status

One of the most significant aspects of the Social Security Code is that it recognises gig and platform workers without converting them into employees. This distinction is crucial. Traditional employees work under the direct supervision and control of an employer and are typically subject to: 

• Fixed working hours  
• Attendance requirements  
• Reporting obligations  
• Performance management  
• Internal disciplinary policies  

Gig workers, by contrast, generally retain greater autonomy regarding how, when, and where they perform their services. The absence of a conventional employer-employee relationship remains the defining feature of gig work. Accordingly, the recognition of gig workers under the Social Security Code does not automatically entitle them to all statutory employment benefits available to employees under labour laws. 

Social Security Benefits under the Code

The Social Security Code seeks to extend welfare measures to gig and platform workers through specially notified schemes. The Code contemplates social security benefits relating to: 

• Life and disability cover  
• Accident insurance  
• Health benefits  
• Maternity benefits  
• Old-age protection  
• Other welfare measures as may be notified by the Central Government  

Unlike traditional employees, these benefits are intended to be provided through government-backed social security schemes rather than employer-funded statutory benefits such as provident fund or gratuity. 

Aggregators’ Contribution to the Social Security Fund

To finance these welfare measures, the Social Security Code requires specified aggregators to contribute towards a dedicated social security fund for gig and platform workers. The contribution is prescribed at 1% to 2% of the annual turnover of the aggregator, subject to a ceiling of 5% of the amount payable by the aggregator to gig and platform workers during the relevant financial year. 

The Code also identifies various categories of aggregators, including businesses operating in sectors such as: 

• Ride-hailing services  
• Food and grocery delivery  
• E-commerce logistics  
• Professional service platforms  
• Home-service platforms  

This represents one of the first attempts in India to create a statutory funding mechanism specifically for the welfare of gig workers. 

Registration and the e-Shram Portal

The Government has introduced the e-Shram Portal to create a national database of workers in the unorganised sector, including gig and platform workers. Eligible workers may register on the portal using their Aadhaar details to obtain a unique identification number, enabling access to notified welfare schemes. The portability offered by the portal is particularly relevant for gig workers who may simultaneously work for multiple platforms or frequently switch between aggregators. 

However, businesses should note that the availability of benefits continues to depend upon the implementation of specific schemes by the appropriate government, and registration alone does not automatically create statutory entitlements. 

Can an Employee Be Converted into a Gig Worker?

Many businesses increasingly engage professionals as independent consultants or freelancers. However, simply redesignating an employee as a “gig worker” or “independent contractor” will not alter the legal nature of the relationship. Indian courts have consistently examined the substance of the relationship rather than its contractual label. A genuine independent contractor arrangement typically requires that the individual: 

• Exercises significant control over how the work is performed;  
• Is free to determine working hours and methods;  
• May undertake assignments for multiple clients, subject to contractual restrictions;  
• Bears a degree of commercial independence and business risk.  

Where the employer continues to exercise substantial supervision and control similar to an employment relationship, merely changing the contractual designation may not withstand legal scrutiny. Businesses should therefore carefully structure engagement models and contractual documentation to ensure that the actual working relationship aligns with the intended legal classification. 

Applicability of Traditional Employment Benefits

Gig workers are not ordinarily covered by statutory employment benefits that arise from an employer-employee relationship, such as: 

• Employees’ Provident Fund (EPF)  
• Gratuity  
• Paid leave  
• Other employment-linked benefits under applicable labour laws  

Instead, the Social Security Code envisages a separate welfare framework specifically designed for gig and platform workers. Their tax treatment and contractual rights also differ from those applicable to employees and generally depend upon the nature of the contractual arrangement and applicable tax laws. 

Emerging State-Level Regulation

While the Social Security Code establishes the national framework, several states have also begun introducing dedicated legislation to regulate platform-based work. States such as Rajasthan and Karnataka have enacted laws addressing matters including: 

• Registration of aggregators  
• Social security contributions  
• Grievance redressal mechanisms  
• Transparency regarding algorithmic decisions  
• Worker welfare funds  

Other states have also proposed or are considering similar legislative measures. Businesses operating across multiple states should therefore monitor both central and state-specific compliance requirements, as obligations may vary depending on the applicable legislation. 

Key Considerations for Businesses

Organisations engaging gig or platform workers should carefully assess whether their engagement model genuinely reflects an independent contractor relationship. Particular attention should be paid to: 

• Drafting robust service agreements;  
• Defining the scope of independence and control;  
• Evaluating compliance obligations under the Social Security Code and applicable state laws;  
• Monitoring evolving requirements relating to social security contributions, worker registration, and grievance redressal.  

Given the rapidly developing regulatory landscape, businesses operating digital platforms should periodically review their contractual structures and compliance frameworks to minimise legal risk. 

Conclusion

The recognition of gig and platform workers under the Social Security Code marks a significant development in India’s labour law landscape. Rather than bringing these workers within the traditional employer-employee framework, the legislation seeks to balance workforce flexibility with access to basic social security protections. 

As central and state-level regulations continue to evolve, businesses engaging gig workers should proactively evaluate their contractual arrangements, compliance obligations, and workforce models. A carefully structured engagement framework will be critical to managing legal risk while adapting to India’s expanding gig economy. 

Co authored by: Priyanka Kwatra

Last Updated on 5 August, 2026