For The First Time, New Labour Codes Bring Gig & Platform Workers Into Social Security Net: What It Means

For the first time, Social Security Schemes Will Extend Beyond Formal Employees

For the first-time ever, the Indian government has recognized the economic contribution of gig or platform workers with the new labour codes. Under the Code on Social Security, 2020, “new definitions are included – “aggregator”, gig workers” and platform worker” to enable social security coverage.

Social security benefits extend to all workers, including unorganized, gig, and platform workers, meaning that they will be entitled for life, health, maternity, and provident fund benefits.

The provision also urges aggregators to contribute 1-2 per cent of annual turnover (capped at 5 per cent of payments to such workers).

The Code has express provisions for framing suitable social security schemes for unorganized, gig and platform workers by both Central and State Governments.

Until now, permanent formal employees avail the social security benefits under the existing EPF and ESI schemes for such workers.

This move will directly impact aggregators such as Eternal, Swiggy, Ola and so on.

New Social Security Schemes For Gig, Platform and Unorganised Soon

The expert however clarified that gig and platform workers do not directly become entitled to benefits under the Employees’ Provident Fund and Miscellaneous Provisions Act, the Employees’ State Insurance law, or traditional employment benefits under new labour codes.

Veena Gopalakrishnan Partner – Labour and Employment, Trilegal explained that The Code on Social Security formulates a mechanism requiring aggregators to contribute a portion of their annual turnover to a social security fund set up by the government, and the government is empowered to frame schemes for the benefit of gig workers such as, accident and disability insurance, life and health cover, maternity support, old-age protection, crèche facilities and skill development.

“This is a significant attempt to extend structured social protection to workers who have historically been outside the net, while maintaining the legal distinction between gig work and traditional employment,” Gopalakrishnan added.

Rajashree Karnik Sarna, Partner, Global People Solutions, Grant Thornton Bharat said that the central government will frame a Social Security Fund for social security and welfare of the unorganized, gig and platform workers.

“The scheme to framed for unorganised workers may be funded by central government, state government or both, or by the beneficiaries/ employers as specified in the scheme or funded from any other source including corporate social responsibility fund,” Sarna added.

The real test however will lie in the implementation of the Codes and the rules that will be framed, at the central and state levels, Gopalakrishnan added.

Burden On Platforms To Increase

Brokerage analysts estimate that the proposed changes could increase operating costs for food-delivery and quick-commerce platforms by about Rs 2–3 per order. For larger players, this may add an extra Rs 150–200 crore to their overall GMV-related costs.

Morgan Stanley noted that, on a steady-state basis, the impact could work out to around 4–10% of adjusted EBITDA across categories such as food delivery, quick commerce, and online home and beauty services.

Elara Securities added that introducing any direct monetary benefits for gig workers may lead to short-term demand softness until customers adjust to the higher prices. Analysts also pointed out that Eternal (Zomato + Blinkit) and Swiggy already allocate close to 1% of their revenue towards partner benefits like accident and health insurance.