Major platforms including Swiggy, Zepto, and Meesho have deposited welfare fees with the Karnataka High Court. While platforms comply with the interim order, they continue to challenge the state's 2025 Gig Workers Act in court. This ongoing legal battle centers on potential conflicts between state and central legislation regarding social security contributions for delivery partners.
Detailed Coverage
Several major internet platforms have deposited the mandatory gig worker welfare fee with the Karnataka High Court, following a directive issued earlier this month. The compliance involves companies such as Swiggy, Zepto, Urban Company, and Meesho. This action comes as these businesses, represented by the Internet and Mobile Association of India (IAMAI), continue their legal efforts to contest the constitutional validity of the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Act, 2025.
The core of the legal dispute lies in the argument that the state’s new law may conflict with the central government’s Code on Social Security, 2020. Platforms have raised concerns that overlapping statutory requirements could create an unnecessary financial and administrative burden. By challenging the Act under Article 254 of the Constitution, the petitioners are seeking clarity on whether state-level mandates can exist alongside or supersede central legislation. The companies have argued that the current levy, though small on a per-transaction basis, adds costs without a clear roadmap for how the collected funds will be utilized for specific worker welfare schemes.
Court Order and Ongoing Proceedings
On July 3, 2026, the Karnataka High Court refused to stay the implementation of the state’s Gig Workers Act. In an interim order, Justice M Nagaprasanna directed the delivery and e-commerce platforms to deposit the welfare fee for the second quarter within a three-week window. The state government has defended the law, asserting that the fee is a necessary measure specifically designed to fund social security benefits for gig workers. As the litigation proceeds, the court is expected to examine the jurisdictional boundaries between the state and the center.
Investor and Business Perspective
For investors, this development highlights the regulatory uncertainty facing the rapidly growing gig economy. Companies in this sector often rely on lean operating models, and changes in mandatory contributions can affect profit margins if costs cannot be passed on to consumers or adjusted within the delivery ecosystem. While the platforms maintain that they already provide independent insurance and welfare programs, the shift toward state-regulated contributions introduces a new layer of compliance monitoring. The next major update will be the court’s final ruling on the Act’s validity, which will determine whether these welfare fee requirements remain in place or if the state government must align its regulations more closely with central standards.