Major platform companies including Swiggy, Zomato, Zepto and Urban Company have challenged the Karnataka Gig Workers Welfare Act, 2025 before the Karnataka High Court, arguing that it conflicts with the Central social security framework and imposes excessive compliance burdens. A group of major online platform companies, including Swiggy, Zomato (Eternal Ltd.), Zepto, Urban Company and Valmo Transportation (Meesho), along with the Internet and Mobile Association of India (IAMAI), has approached the Karnataka High Court challenging the constitutional validity of the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Act, 2025, and the Rules framed under it.
The petitioners have sought the striking down of the State legislation and the quashing of notices recently issued by the Karnataka Government and the Karnataka Gig Workers Welfare Board directing companies to pay welfare fees and respond to show-cause notices. The matter is yet to be taken up for hearing by the High Court.
At the heart of the challenge is the argument that the field of social security for gig and platform workers is already covered by the Code on Social Security, 2020, enacted by Parliament. According to the petitioners, the Central law is a comprehensive framework that specifically recognises gig workers and platform workers and lays down provisions for their welfare and social security.
The companies contend that Karnataka has legislated on a subject already occupied by Parliament and that the State law is therefore inconsistent with the Central enactment. Relying on Article 254 of the Constitution, which deals with repugnancy between Central and State laws, they have argued that the Karnataka Act cannot survive constitutional scrutiny. The petition states that companies operating digital platforms are already obligated to contribute towards social security measures under the Central framework. They argue that the Karnataka law imposes an additional financial burden by requiring payment of a welfare fee on every transaction carried out through their platforms.
According to the petitioners, this dual contribution mechanism creates overlapping obligations and significantly increases compliance costs for businesses operating in the gig economy. They have submitted that imposing separate financial liabilities under both Central and State frameworks defeats the objective of having a uniform national regime for gig workers. The challenge also raises concerns regarding the implementation of the State law.
The companies have argued that although they have been directed to deposit welfare fees by July 5 and comply with periodic audits, the State Government has not yet formally notified any concrete welfare schemes for gig workers. In the absence of identified benefits or schemes, they contend that compulsory collection of welfare fees lacks legal justification.
The petition further questions the validity of quarterly audit requirements imposed under the legislation. According to the companies, compelling businesses to make payments and undergo compliance processes before the welfare architecture is operational creates uncertainty and administrative burdens without corresponding benefits. Another significant challenge has been mounted against Section 13 of the Act. The petitioners argue that the provision requires platform companies to disclose details relating to their automated monitoring systems and pricing algorithms. These systems, they submit, form the core of their business operations and constitute proprietary commercial information.
The companies have maintained that mandatory disclosure of such information would compromise trade secrets and intellectual property rights. They argue that pricing models, algorithmic systems and operational methodologies are confidential assets that provide competitive advantage in a rapidly evolving digital marketplace.
At the same time, the petitioners have clarified that they are not opposed to measures aimed at improving the welfare of gig workers. They have informed the Court that several platform companies already provide benefits such as health insurance coverage, accident insurance and maternity support through voluntary welfare initiatives. However, they contend that parallel regulatory structures created by the Centre and the State have generated uncertainty for businesses and could lead to conflicting obligations. The petition points out that companies are being asked to comply with multiple frameworks governing the same category of workers. The petitioners have also relied on a recent communication issued by the Union Ministry of Labour and Employment.
According to them, the communication indicates that responsibility for providing social security to gig and platform workers rests with the Central Government under the existing statutory framework.
On these grounds, the companies have urged the Karnataka High Court to declare the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Act, 2025 unconstitutional and to set aside the notices issued by the State Government and the Karnataka Gig Workers Welfare Board. The writ petition was filed before the High Court on June 27 and is yet to be listed for hearing.
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