Karnataka HC Refuses Stay Gig Workers Act, Orders Platforms To Deposit Welfare Fee

The Karnataka High Court on July 3 declined to stay the implementation of the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Act, 2025, but issued an interim direction requiring major digital platforms, including Zomato, Swiggy, Blinkit, and Zepto, to deposit the disputed welfare fee for the second quarter with the court registry within three weeks.

The order was passed by Justice M Nagaprasanna while hearing petitions filed by the Internet and Mobile Association of India (IAMAI) along with several platform aggregators challenging the constitutional validity of the Act and its accompanying rules.

The petitioners argued that the state law conflicts with the Centre’s Code on Social Security, 2020, and is therefore unconstitutional under Article 254 of the Constitution, which deals with repugnancy between central and state legislation.

To maintain balance between the interests of gig workers, the state, and platform companies, the court directed that the disputed welfare contributions should not be paid directly to the government but instead deposited with the court until the case is resolved.

The court also directed the state government to file its objections by July 30 and scheduled the next hearing for August 14.

The court clarified that no coercive action will be taken against the companies as long as they comply with the interim order. It also rejected the petitioners’ request to substitute the deposit with an unconditional bank guarantee.

During the proceedings, the court observed that while the central government’s Social Security Code appears to occupy the legislative field, it would examine whether the state law can coexist by offering additional benefits to gig workers under a harmonious interpretation.

The state government argued that the welfare fee—capped at 50 paise per two-wheeler ride, 75 paise for three-wheelers, and ₹1 for four-wheelers, along with a 1% levy on food and grocery deliveries—is solely intended to fund gig worker welfare schemes.

The platforms, however, contended that the levy would directly impact their financial statements and pointed out that no actual welfare scheme has yet been operationalised using the collected funds.

The petitions also challenge notifications establishing the Gig Workers Welfare Board, activating the welfare fee mechanism, and mandating Internal Dispute Resolution Committees for platforms.

Published on: Saturday, July 04, 2026, 10:25 AM IST