Introduction

Defining the Gig Economy in India

The gig economy in India has witnessed explosive growth over the past decade, with millions engaged in flexible, on-demand work through digital platforms. Delivery executives, ride-hailing drivers, and freelance professionals have become a vital part of urban and semi-urban labour markets. Unlike traditional employees, these workers operate independently, often without formal contracts, fixed salaries, or social security benefits.

Despite the economic significance of gig workers, the absence of legal recognition left them vulnerable to income insecurity, health risks, and lack of retirement benefits. The new labour laws, particularly the Social Security Code, 2020, aim to bridge this gap by defining gig and platform workers, delineating their rights, and placing obligations on aggregators to ensure contributions to social security schemes.

Why Legal Recognition Was Long Overdue

Historically, Indian labour law was designed for structured, permanent employment relationships. The rise of app-based and platform-dependent work exposed a regulatory blind spot. Gig workers were often treated neither as employees nor as casual contractors, leaving them without social security coverage, paid leave, or accident insurance.

The COVID-19 pandemic further exposed the vulnerabilities of gig workers, highlighting the need for legal interventions that ensure welfare, occupational safety, and financial protection. Policymakers recognised that the gig economy cannot be ignored if India is to maintain inclusive growth and provide equitable access to social security benefits.

Core Question: What Protections Do Delivery and Ride-Hailing Workers Actually Gain?

While legal recognition marks a milestone, the practical scope of benefits and protections remains a subject of debate. Key questions include:

• How will social security contributions be collected and managed?
• What specific benefits will accrue to gig workers, and how accessible are they?
• Does recognition translate into real financial security, or is it primarily symbolic?

This article analyses the provisions of the Social Security Code, evaluates their implications for workers and aggregators, and contextualises India’s approach within global trends in gig worker welfare.

Legal Recognition Under the New Labour Codes

Definition of Gig, Platform Workers, and Aggregators

The Social Security Code, 2020, formally recognises gig and platform workers as a distinct category of the workforce. A gig worker is defined as an individual engaged in work arrangements outside traditional employment contracts, typically mediated through digital platforms. Platform workers are those who render services or perform tasks via an intermediary digital or online platform, which acts as the connecting interface between the worker and the consumer.

Aggregators, on the other hand, are the digital or online entities that facilitate the engagement of gig workers. They play a dual role: enabling work opportunities and being legally obligated to contribute to the welfare and social security of the workforce they aggregate. By providing statutory recognition, the law attempts to move gig workers from a grey zone of informal employment into a regulated framework where rights and benefits are clearly articulated.

Obligations on Aggregators: Social Security Fund Contribution

Under the Code, aggregators are mandated to contribute a certain percentage of the worker’s earnings to a Social Security Fund. This fund is designed to provide a range of benefits, including:

• Health and accident insurance, covering work-related and incidental risks.
• Retirement benefits, ensuring long-term financial security.
• Maternity and disability benefits, aligning with protections available to formal sector employees.

Aggregators are expected to maintain transparency in contributions and ensure timely remittance to the centralised fund, creating a structured mechanism for social protection where previously there was none.

Universal Account Number (UAN) & Portability of Social Security

To streamline benefits, the Code introduces a Universal Account Number (UAN) for each gig worker. This UAN acts as a unique identifier, allowing:

• Portability across platforms – workers can switch aggregators without losing accumulated benefits.
• Centralised tracking of contributions – providing transparency and reducing administrative bottlenecks.
• Ease of access to social security schemes – enabling workers to claim health, insurance, or retirement benefits directly.

Portability is especially significant in the gig economy, where workers frequently move between multiple platforms, ensuring continuity in social security coverage and preventing fragmentation of benefits.

Role of the National Social Security Board

The National Social Security Board (NSSB), established under the Social Security Code, serves as the apex body overseeing the implementation of social security provisions for gig and platform workers. Its key functions include:

• Policy formulation and monitoring of social security schemes.
• Advising central and state governments on fund allocation and sector-specific regulations.
• Auditing aggregator compliance, ensuring that contributions are accurately made and workers’ rights are protected.

The NSSB’s oversight aims to balance the flexibility of gig work with the accountability and structured protection typical of formal employment, bridging a long-standing gap in labour governance.

What Social Security Coverage Gig Workers Will Get

The Social Security Code seeks to extend a structured safety net to gig and platform workers, bringing them closer to the benefits traditionally reserved for formal sector employees. By mandating aggregator contributions to a central fund, workers gain access to several critical protections.

Old-Age / Pension Benefits

Gig workers are now entitled to retirement benefits, including old-age pensions or annuities, calculated based on contributions made during their engagement across platforms. This ensures a long-term financial cushion, addressing the uncertainty of earnings in gig work. Unlike informal arrangements previously, workers can accumulate pensionable service across multiple platforms via the Universal Account Number (UAN), providing continuity in retirement savings.

Health Insurance, Disability Cover, and Life Insurance

Health and safety risks are intrinsic to gig work, especially for delivery and ride-hailing services. Under the new framework:

• Health insurance covers work-related injuries as well as general medical emergencies.
• Disability cover provides financial support for partial or permanent disabilities arising from occupational hazards.
• Life insurance ensures family members receive compensation in the event of the worker’s untimely death.

These protections address one of the most significant gaps in the gig economy, where workers previously bore the full risk of accidents or health emergencies themselves.

Maternity Benefits / Other Welfare Components

Female gig workers gain access to maternity benefits, ensuring paid leave and financial support during pregnancy and postnatal recovery. The law also contemplates other welfare measures, including:

• Skill development schemes to enhance employability.
• Support during periods of unemployment or work disruption, especially in platform-based work that fluctuates with demand.
• Access to grievance redressal mechanisms, allowing workers to claim benefits without legal barriers or procedural delays.

These measures collectively aim to formalise protections, promote workforce stability, and reduce economic vulnerability among gig workers, who were previously excluded from statutory social security frameworks.

Fnancial and Operational Implications for Aggregators

The formal recognition of gig workers under the new Social Security Code brings both financial responsibilities and operational changes for aggregators. While the law aims to ensure worker welfare, it also reshapes how companies structure their costs and compliance processes.

Contribution to Social Security Fund

Aggregators are mandated to contribute 1–2% of their turnover to a central social security fund for gig workers. The exact percentage may vary based on the sector and state notifications. Although seemingly modest, for large platforms, this translates into substantial recurring financial commitments. Companies must integrate these contributions into their financial planning without affecting core service delivery or profitability.

Compliance Costs, Reporting, and Administration

In addition to monetary contributions, aggregators must establish robust reporting and administrative mechanisms:

• Maintaining records of all active gig workers, including hours worked, earnings, and contributions.
• Coordinating with the National Social Security Board for fund transfers, compliance verification, and audit requirements.
• Providing UAN details and tracking portability, ensuring that workers moving between platforms retain their accumulated benefits.

This administrative overhead may require dedicated compliance teams or software solutions, adding to operational costs, especially for smaller aggregators.

Impact on Business Models: Ride-Hailing vs Delivery

The financial and operational implications are not uniform across gig sectors.

• Ride-Hailing Platforms: Lower margins per ride but higher frequency of transactions necessitate careful contribution accounting to avoid cash flow issues.
• Delivery Platforms: Typically involve larger workforce pools with variable working hours, creating complexity in computing contributions based on turnover and worker categorisation.

Overall, aggregators must rethink pricing, incentives, and workforce allocation to absorb social security costs without passing the burden disproportionately onto workers. While this may marginally increase operational costs, it formalises employment relationships, potentially improving worker retention and platform reputation.

Impact on Gig Workers (Drivers / Couriers)

The recognition of gig workers under the new labour codes marks a significant shift in the social and financial landscape for delivery and ride-hailing personnel. While these workers do not gain full employee status, the reforms provide a layer of protection previously absent in India’s gig economy.

Increased Social Security Without Employment Status

Gig workers now enjoy formal coverage under the Social Security Code, which ensures that contributions are made on their behalf, even though they remain independent contractors. This structure provides:

• Pension and old-age benefits, creating a reliable financial fallback after retirement.
• Health and life insurance, reducing vulnerability to accidents or unforeseen medical costs.
• Maternity and disability benefits, which were previously inaccessible for contract-based workers.

Despite these gains, gig workers remain outside the purview of traditional employment protections, such as minimum wage guarantees, paid leave, or termination benefits. This distinction has raised concerns about the limits of “protection without employment”.

Reduced Risk in Old Age and Accidents

The new framework mitigates the financial risks associated with gig work:

• Regular contributions to a social security fund ensure cumulative retirement savings.
• Accidents during work hours are now partially covered through insurance and disability benefits.
• Workers gain greater predictability in financial planning, unlike the previous informal arrangements.

However, these benefits require active awareness and engagement from workers, as access is contingent on correct registration and contribution tracking.

Challenges of Contribution Visibility and Benefit Access

While the law mandates contributions, practical challenges persist:

• Transparency Issues: Workers may not always know how much is being contributed on their behalf.
• Digital Literacy Barriers: Accessing UAN portals or understanding fund accumulation can be difficult for less tech-savvy workers.
• Delayed Payouts: Timely access to benefits like pensions or insurance claims requires effective administration by aggregators and government authorities.

In essence, gig workers gain financial security and formal recognition, but continued monitoring, awareness, and supportive infrastructure are essential to ensure that these benefits are fully realized.

Trade-Offs and Risks

While the recognition of gig workers under the new labour codes introduces long-awaited protections, it also brings economic and operational trade-offs that both platforms and workers need to navigate carefully.

Risk of Cost Pass-Through to Consumers

One immediate implication is that the additional social security contributions by aggregators—calculated as 1–2% of turnover—may eventually be passed on to consumers in the form of higher delivery fees or ride charges. While this protects workers, it could affect price competitiveness in a market where cost-sensitive consumers dominate.

Aggregator Pressure and Possible Shift in Commissions

Platforms may respond to the new obligations by restructuring their payment models. Potential measures include:

• Reducing driver or courier commissions per trip or delivery.
• Increasing reliance on dynamic pricing mechanisms to offset added costs.
• Limiting the number of gig workers engaged to reduce total contribution liabilities.

These adjustments could inadvertently offset some of the intended benefits for workers if not carefully regulated.

Monitoring, Grievance Redressal, and Implementation Lag

Effective implementation hinges on robust monitoring and grievance mechanisms. Challenges in this domain include:

• Delayed fund transfers or contribution mismatches.
• Limited awareness among gig workers regarding their entitlements and procedural steps.
• Enforcement gaps at state and aggregator levels, leading to potential disputes.

Without timely grievance redressal, the protective intent of the law may be undermined, leaving workers partially exposed despite formal recognition.

In summary, while the law establishes a structural safety net, the practical realization of benefits depends on the coordinated action of government regulators, aggregators, and workers themselves. Balancing worker protection with platform sustainability remains the central policy challenge.

State-Level and Sectoral Realities

The implementation of social security for gig workers is not uniform across India, as states exercise significant discretion in operationalising these provisions. For instance, Karnataka has pioneered the formation of a Gig Worker Welfare Board, which actively monitors contributions, facilitates benefits disbursement, and provides a structured grievance redressal mechanism.

Other states, however, show considerable variation:

• Some states have yet to formalize local welfare boards or issue detailed operational guidelines.
• Enforcement mechanisms differ, leading to disparities in coverage and benefit delivery.
• The pace of compliance by aggregators varies, with some entering partnerships with state agencies to streamline contributions, while others display resistance or delay citing operational challenges.

Sectoral differences also emerge. Ride-hailing platforms generally have higher contribution compliance due to structured trip data, whereas delivery platforms, with a larger and more fragmented workforce, face logistical hurdles in contribution tracking and benefit allocation.

Thus, while the legal recognition is nationwide, the ground reality is shaped by state-level execution and sectoral nuances, affecting the actual experience of gig workers.

Comparative Perspective

India’s recognition of gig workers under the Social Security Code represents a significant step forward, but it also differs from international models in important ways. Many developed economies have experimented with social security frameworks for non-traditional workers, yet approaches vary widely.

• European Union: Countries like Germany and France extend partial social security coverage to freelancers and gig workers through contributory schemes, often tied to income thresholds.
• United Kingdom: Gig workers receive limited statutory benefits, such as minimum wage protections and pension contributions, but full employee rights remain conditional.
• United States: Gig workers are generally classified as independent contractors, with access to social security largely dependent on voluntary retirement savings plans or state-specific programs.

In contrast, India’s approach is innovative in that it mandates aggregator contributions into a central social security fund, aiming to provide universal portability of benefits regardless of the number of platforms a worker engages with. While this is progressive, challenges remain in monitoring, enforcement, and ensuring timely benefit access, distinguishing it from more mature, administratively robust international models.

Policy Significance

The recognition of gig workers under the new labour codes marks a pivotal shift in India’s labour policy, reflecting a broader goal of formalising the gig economy. By legally defining gig and platform workers, the government aims to bring a previously unregulated workforce within the ambit of social security. This formalisation provides a foundation for predictable contributions, benefit entitlements, and accountability on the part of aggregators.

From a long-term social protection perspective, the inclusion of pension schemes, health insurance, and disability benefits offers gig workers financial resilience against old age, accidents, or health contingencies. These measures also contribute to economic stability, as a protected workforce is less vulnerable to shocks and can participate more sustainably in the economy.

The policy shift carries broader implications for labour equity. Historically, gig and platform workers were excluded from welfare systems, creating disparities compared to traditional employees. The new codes aim to reduce these inequities, creating a more inclusive labour ecosystem that balances flexibility with security.

Key points include:

• Formalisation provides legal clarity for workers and aggregators.
• Mandatory contributions ensure long-term financial protection for a flexible workforce.
• Enhances equity in social security, bringing gig workers closer to traditional labour standards.

Conclusion

The legal recognition of gig workers represents a pragmatic compromise rather than a revolutionary overhaul. While it does not confer full employee status, it establishes a framework for social protection that was previously absent. Workers now gain access to pension schemes, insurance, and welfare benefits without sacrificing the flexible nature of gig work.

For policymakers, the challenge lies in ensuring effective implementation, monitoring aggregator compliance, and streamlining benefit disbursement. Aggregators must balance compliance costs with sustainable business models, while workers need to actively engage with the new system, tracking contributions and understanding their entitlements.

The road ahead involves:

• Policy refinement to close gaps in enforcement and eligibility.
• Aggregator cooperation to ensure transparent, timely contributions.
• Worker education to maximise uptake and benefit realisation.

Ultimately, the recognition of gig workers under India’s labour codes is a significant step toward inclusive social security, but its success will depend on execution, oversight, and continuous adaptation to the evolving dynamics of the gig economy.