Gig Workers Under Social Security Code: Employer Obligations, Benefits & Legal Framework in India

Introduction – Gig Workers Under Social Security Code

In recent years, the rise of technology-enabled work models, especially those relying on on-demand services, has brought in a new type of workforce: individuals who are neither employees nor traditional contractors, but perform short-term or task-based assignments via digital platforms. These are the workers most people now refer to as part of the gig economy. The scale of such engagements, particularly through food delivery, ride-hailing, logistics, and freelance content platforms, has grown rapidly. But until 2020, there was no statutory framework that recognised this segment or its vulnerabilities.

That changed with the Social Security Code, 2020. The legislation was the first central enactment that defined and referred to both “gig workers” and “platform workers” in legal terms. It meant that, under Indian law, such individuals were no longer outside the formal labour framework. The Code does not classify them as “employees”, and their treatment under the Code remains separate, but they had a legal recognition that they were entitled to social welfare under the Code. That included life insurance, accident cover, maternity support, and old-age protection, among other things.

From the perspective of business, particularly aggregators and platforms, this also introduces a new set of legal duties. These are not framed as traditional employer-employee obligations, but the structure makes it clear that contributions to welfare schemes and enabling access to benefits would no longer be optional. In effect, the Code created a contributory model where the central and state governments would be designing the schemes, and the platform/aggregator is expected to finance a part of it.

The law also introduced definitions that, while broad, attempt to draw a line between gig workers and other classes of labour. The term “platform worker” was also used, typically for those who access work through an app or tech-enabled interface. In both cases, the benefits were meant to reach individuals who, until recently, had no access to any form of protection. The idea was to establish a baseline of support.

As of 2025, the implementation of the code is still staggered. State-level schemes are not uniformly active, and the central registry for workers is still evolving. However, the legislative framework is now in place. Businesses that rely on flexible or freelance work arrangements, especially those in logistics, delivery, transport, or even tech-enabled consulting, need to understand what the Code expects. Ignoring these requirements could lead to reputational or regulatory risk.

Legal Definitions Under Social Security Code

The Social Security Code, 2020, introduced in Indian law a formal classification for workers outside the conventional employment model. Until then, individuals working on a task-to-task basis through digital platforms, whether in logistics, ride-hailing, content services, or otherwise, remained largely outside statutory protection. This was not due to oversight, but more because there was no fitting category into which they could be placed.

The Code attempts to fix this by recognising, in specific terms, two classes of workers: “gig workers” and “platform workers”. These terms, though used often interchangeably in media and business discussions, have distinct definitions in the text of the legislation. As per Section 2(35) of the Code, a gig worker is defined as “a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationships.” Gig workers typically engage in temporary, flexible, or freelance jobs, and their income is often task-based or assignment-based. They do not have formal employment contracts and include individuals such as freelancers, delivery agents, or part-time service providers.

Further, Section 2(61) defines a platform worker as “a person engaged in or undertaking platform work.” Platform work itself is defined in Section 2(60) as “a work arrangement outside of a traditional employer-employee relationship in which organizations or individuals use an online platform to access other organizations or individuals to solve specific problems or to provide specific services or any such other activities which may be notified by the Central Government.” Platform workers depend on technology-based platforms, such as Uber, Ola, Zomato, Swiggy, or Urban Company, to offer or perform services and earn their livelihood.

Both these categories of gig and platform workers are treated distinctly from “employees” or “workers” as those terms are otherwise used in the Industrial Relations Code or other labour codes. Neither gig nor platform workers are entitled to traditional benefits like provident fund or gratuity, at least not automatically. However, by giving them recognition under the Social Security Code, the state now has the statutory basis to offer certain benefits, supported by contributions from aggregators or through direct government funding.

From an aggregator’s point of view, the definition has regulatory implications. If a business facilitates work through a platform and connects service providers to consumers, it may be considered an aggregator under the Code and thus be liable for compliance. Whether a worker is treated as a platform worker or a gig worker under that business model will determine the manner and extent of employer obligations for gig workers.

To simplify, here’s how the legal categories currently stand:

• An “employee” is in a direct employment relationship, with fixed duties, wages, and service terms;
• A “gig worker” works independently, usually on temporary or project-based assignments, and not through an app necessarily; and
• A “platform worker” uses a digital interface to secure and perform services for customers or businesses.

Benefits Extended to Gig & Platform Workers

The benefits framework introduced under Chapter IX of the Code is, in practical terms, more of an enabling provision than a self-executing one. It allows, rather than mandates, the Centre or respective State Governments to roll out schemes for categories of workers who don’t otherwise qualify as employees. Whether or not those schemes are operational, and how quickly they come into effect, is a separate matter. That uncertainty still exists.

What the Code does is establish a kind of platform, where workers, who until recently had no formal status, can be brought under social security coverage. It doesn’t define the entire system in detail. Instead, it leaves room for the authorities to design and notify schemes for things like accidental death cover, long-term health assistance, maternity benefits, or even training grants. There’s flexibility, but also a certain vagueness in how much of this is implementable without strong administrative follow-up.

The contribution model is not like the usual ESI or EPF setup. Here, the worker may or may not pay, and the aggregator, essentially the platform that facilitates the work, is expected to contribute a fixed portion of its revenue (as per Section 114). It’s not tied to payroll. That’s the key difference. The government’s share may vary from scheme to scheme. Voluntary top-ups or opt-in arrangements could also apply, though they haven’t been detailed out as of now.

To understand what’s envisioned, take the example of accident cover. If a food delivery rider working for an app suffers a fatal road incident while on duty, there’s currently no consistent, statutory benefit payable. The Code anticipates a model where, once registered, the worker would be eligible for government-backed insurance. But that coverage won’t apply by default. The aggregator must have complied, the scheme must have been notified, and the worker’s registration must be active.

Maternity support is another area where the Code could be a game-changer, particularly for women working in establishments such as on-call salon services, courier delivery, etc., where there’s usually no provision for income protection during that period. Some States have shown intent to create a co-funded model. The aggregator may be required to register eligible workers and possibly co-pay premiums, though the finer details are still pending.

Pension is mentioned in Section 109, but this remains largely aspirational at present. The idea is to allow registered workers, those with a consistent contribution record, to receive some form of monthly income support once they cross a certain age.

As for benefit types

Benefit Type	Likely Beneficiaries	Aggregator’s Role	Status (Mid-2025)
Accidental Death Cover	All registered gig/platform workers	Contribute + register workers	Notification in progress, partial rollout
Maternity Support	Registered women workers	Support onboarding + co-funding	Model discussed in states like Delhi, Karnataka, etc.
Pension Support	Workers with long-term registration	Optional contribution (if any)	Notified in concept, rules pending
Training/Tool Grants	Skill-based platform users	Facilitate nominations	Pilot schemes under discussion
Family/Education Aid	Workers with declared dependents	Registration support only	Varied state-level initiatives

Employer Obligations for Gig Workers

Aggregator Classification under the Code

The Social Security Code 2020 doesn’t describe aggregators as employers in the classical sense, but includes any platform that enables services to be delivered through independent individuals, including delivery, transport, repair, personal services, and even certain categories of freelance work.

The classification doesn’t depend on what the aggregator calls its workers. Whether they’re labelled partners, service providers, or freelancers is irrelevant. If the platform connects a customer to a worker through a digital interface, it likely falls within the legal framework now recognised under the Code.

Financial Contribution Obligation (1–2% of Turnover)

Section 114 lays down the actual financial requirement. Aggregators are required to contribute a portion of their annual turnover to a welfare fund. The rule prescribes a range,  typically 1% to 2% of gross turnover, but includes a cap. The contribution cannot exceed 5% of total payouts made to gig workers in that financial year.

To summarise:

• Calculate total turnover for the year;
• Calculate 1–2% of that turnover;
• Calculate 5% of the total amount paid to registered gig/platform workers; and
• Whichever is lower becomes the contribution.

Additional Responsibilities Beyond Payment

Aside from the financial contribution, the platform must also handle a number of compliance actions, which fall under indirect employer obligations.

These include:

1. Preparing and maintaining a real-time database of all workers engaged during the financial year;
2. Filing periodical returns (frequency to be prescribed);
3. Facilitating Aadhaar-linked worker registration on government platforms;
4. Cooperating with audits or inquiries raised by the appropriate board; and
5. Ensuring scheme awareness and coordination once benefits are notified.

In effect, the platform becomes the de facto interface between the worker and the welfare system. It doesn’t decide eligibility,  but it is responsible for helping the worker become visible to the system.

What Happens if You Don’t Comply?

Sections 142–146 lay out the enforcement structure. Financial penalties would be the immediate risk,  but reputational and legal consequences may be more serious. If the State issues a compliance audit or show cause, and the aggregator has neither paid its contribution nor maintained records, it may be deemed as having failed its duty.

Possible consequences include:

• Monetary penalties for delay or under-reporting;
• Compounding of default if more than one financial year is affected;
• Regulatory disqualification for licenses or permits (in repeat cases); and/ or
• Criminal sanctions in case of wilful concealment of worker information.

Implementation Status & Enforcement Challenges

Centre vs State – The Implementation Divide

The gig economy framework introduced under the Social Security Code is not centrally implemented in full. The Central Government notified the Code, but actual execution, funds, and benefit rollout lie with the States. That’s where the delay is coming from.

Some States have already published their rules under the Codes, but others have done little. Even where draft rules have been prepared, they are often stuck in inter-departmental coordination or pending final gazette notification.

This has created a confusing compliance environment. Aggregators don’t know where to send contributions or whether their obligations are active in every State they operate in.

Identification and registration of Gig Workers

One of the key challenges is the identification and registration of informal, gig, and platform workers, many of whom operate outside formal systems and frequently change employers or work platforms. Ensuring that these workers are accurately brought into the database and updated regularly is a major logistical task.

Platform & Gig Worker Registration Framework

Mandatory Worker Registration via Aadhaar

The Code, while not explicitly prescriptive about exact processes, clearly envisions that all eligible gig and platform workers under the Social Security Code should be brought into a national registry. Aadhaar is expected to be the base identity layer for this,  since every official communication since the Code’s passage has leaned on Aadhaar as the primary means of worker authentication.

This has practical implications. A lot of gig and platform workers,  particularly in logistics, delivery, transport, or beauty service sectors,  may not currently be on any formal payroll. They’re mobile, often multi-platform, and sometimes even work under aliases or nicknames. That makes unique identification harder.

Now, the registration system needs to be linked to something verifiable, and the most preferred real-time system that exists is Aadhaar. This is also what the government has used for informal worker registration under the e-Shram portal. It’s reasonable to assume that the same approach will apply to gig economy workers.

An additional operational challenge lies in the mistrust many workers have toward government platforms. Concerns around income visibility, potential loss of subsidies, or misuse of personal data often deter voluntary registration—even when tangible benefits are offered. Addressing this hesitancy will require more than policy notifications; it calls for targeted outreach and credible assurance.

Aggregator Duty to Facilitate Enrollment

Technically, the law says the government “may” frame schemes and “shall” maintain records. But in practice, aggregators are being looked at as the implementing conduit. They’re expected to educate, onboard, and verify the individuals working through their platforms. This falls squarely within evolving employer obligations,  even if the term “employer” isn’t legally applied.

What that means, realistically:

• The aggregator must inform eligible workers that a registration scheme exists;
• They must enable the worker to access that system,  whether online or via assisted enrolment.
• They must store and verify key data (name, Aadhaar, mobile, platform earnings); and
• They may need to nominate workers for benefit eligibility once schemes are notified.

There were also talks (in some States) of APIs being given to large platforms so they can upload worker data in bulk, which hasn’t happened yet. But once it does, the expectation will be: if the aggregator has data, it must share it.

State Welfare Board Coordination

The actual mechanics of registration,  how the data is stored, validated, and linked to benefits,  will be handled by State-level welfare boards. The Code anticipates the creation of such boards to administer benefits for unorganised workers, including those in gig work.

Now, here’s the issue: many States haven’t yet set up those boards. Others have created them on paper but not operationalised them. As a result:

• Registration data may not be processed quickly.
• Workers may not receive enrollment confirmation; or
• Platforms don’t have a clear nodal point for submissions.

This puts aggregators in a compliance trap. They’re expected to facilitate something,  but no agency is ready to receive it. So companies do internal registrations, wait for circulars, and hope there’s no audit until the system matures.

Table: Step-by-Step Gig Worker Registration (Anticipated Flow)

Step	Actor	Action	Remarks
1	Worker	If contact details are valid	May require OTP or KYC
2	Aggregator	Uploads data to State/central portal (via CSV/API or dashboard)	Not all States might have activated portal access
3	Welfare Board	Validates data; generates worker ID	Delay expected in some States
4	Worker	Receives confirmation SMS or passbook entry	If contact details valid
5	Aggregator	Links ID to platform records for benefit nominations	Optional, but expected as compliance practice

 

Comparative Insight: Global Approach to Gig Worker Welfare

The EU’s Directive on Platform Work (2021–2023)

Europe has moved more aggressively in reclassifying gig work. In late 2021, the European Commission proposed a directive aimed at regulating employment conditions for platform workers. The central question was simple: when does platform work become de facto employment?

Key features of the EU approach:

• Establishing a legal presumption of employment if certain conditions are met;
• Shifting the burden of proof onto the platform,  not the worker;
• Mandating transparency in algorithmic decision-making; and
• Requiring collective bargaining rights.

In short, the EU views this not just as a labour issue but as a structural reform.

California, AB5 vs. Prop 22

The United States has taken a more chaotic route. California passed Assembly Bill 5 (AB5), which aimed to classify gig workers as employees using a three-part “ABC” test. But major platforms pushed back, and in 2020, a ballot measure called Proposition 22 overturned that law for app-based services.

What Prop 22 did was:

• Carve out a special status for ride-hailing and delivery platforms;
• Create a new category: “independent contractor plus”;
• Offer limited benefits like minimum earnings guarantees and health stipends; and
• Prevent local governments from imposing stricter rules.

This model has been criticised for weakening worker protection. Still, it shows that legal reform in gig work is often contested,  and platform lobbying power can shift the outcome.

Singapore’s Hybrid Worker Protection Model

Singapore, known for pragmatic regulation, has proposed a more moderate model. The idea was to let gig workers remain self-employed but still receive specific protections like:

• CPF-style retirement contributions (partial matching);
• Workplace accident insurance; and
• Medical leave benefits, funded jointly by the platform and the worker.

There was a plan to allow sectoral collective representation. For example, all ride-hailing workers may have a single body representing their interests with the Ministry of Manpower.

India’s Unique Approach: Funding without Reclassification

Unlike the EU or California, India has not attempted to reclassify gig workers as employees. The Social Security Code 2020 benefits are designed to coexist with the gig structure,  not override it.

What makes India’s approach distinctive:

• No change in employment status, gig workers are still not “workmen” or “employees”;
• Contribution is based on platform turnover, not per-worker contract;
• Benefits are routed through government schemes, not private insurance; and
• Focus is on building a welfare net, not imposing employer liability.

This model assumes a collaborative arrangement, an aggregator, a worker, and a government, all contributing in some form.

Worker Awareness – Make or Break Social Security Delivery

Policy Recognition Means Little Without Ground-Level Understanding

From a regulatory design point of view, the Code is progressive. It recognises that flexible workforces, even those outside formal employment contracts,  deserve basic protection. But the entire model of social security under the Code assumes that workers will willingly register, stay enrolled, and later access benefits through government machinery.

The problem? Most workers don’t know any of this is happening.

As of 2025, widespread awareness of the Social Security Code 2020is still missing. Many gig workers, especially in Tier 2 and 3 cities,  assume that social security only applies to government jobs or factory labour. Others believe the Code is a tax registration scheme in disguise.

So even if a scheme is notified, and even if the aggregator is ready to contribute, the actual last-mile connection,  worker to benefit,  remains broken.

The Consequence of Low Awareness: Low Uptake, High Attrition

Let’s take a simple example. A delivery worker might not have formal onboarding, no written contract, and no direct contact with HR. He might not have heard of any gig worker insurance scheme.

This is the default state of awareness for a large segment of gig workers in India.

When awareness is this low:

• Worker enrollment into central portals stays stagnant;
• Registration numbers may get fabricated just to satisfy reporting.
• Benefits remain undisbursed, even when funds are available.
• Workers keep switching platforms, reducing continuity for eligibility; and
• Aggregators struggle to maintain clean databases (no Aadhaar, duplicate names, etc.).

This defeats the legislative intent behind extending SS Code benefits in India and makes every part of the system look non-functional, even if funding and technology are in place.

Common Worker-Level Barriers to Registration

Even when a worker is informed of the scheme, several practical issues limit uptake. These include:

•  Inconsistent mobile numbers tied to Aadhaar,  OTPs might not land, registration might fail;
• No active bank account, the worker receives cash or wallet transfers only;
• Switches between multiple platforms lead to fragmented records.
• Poor digital literacy,  doesn’t understand app prompts or SMS alerts;
• No visible proof, no card, passbook, or SMS confirmation convinces them they’re enrolled;
• Fear of income tracking,  suspicion that scheme participation might trigger GST or IT returns;

Aggregators Must Shift from Backend Compliance to Frontline Communication

So far, most platforms have treated social security compliance as a back-office legal issue. They are waiting for the rules to be published. But that’s not enough. Unless platforms actively build trust and understanding at the worker level, benefits will stay unused, and the risk of policy failure grows.

What should platforms do?

• Make scheme education part of onboarding.
• Use WhatsApp videos, audio prompts, or IVR calls in regional languages;
• Show real examples;
• Offer small incentives for first-time Aadhaar registration, such as early access to shifts.
• Assign field staff or call centre teams to handle one-on-one registration drives;
• Log all interactions as proof of compliance support

Table: Worker Awareness Barriers vs. Aggregator Mitigation Options

Worker Obstacle	Why It Matters	Aggregator Response Strategy
Doesn’t understand scheme purpose	Won’t initiate self-registration	Use videos/audio in local language
Doesn’t trust government-led schemes	Fears data sharing, tax tracking	Share successful claim stories, case studies
Can’t complete OTP or app-based KYC	Process fails, no fallback	Offer in-person support or assisted kiosk flow
Switches platforms frequently	Breaks work continuity, eligibility missed	Use multi-platform recognition via API tracking
No bank account	Cannot receive cash benefits	Help open Jan Dhan-style zero-balance accounts

Analysis & Interpretation

Why the Gig Worker Social Security Model is Innovative but Risky

From a legal policy standpoint, what India has done with the Social Security Code 2020 is unusual. It recognised the gig and platform workers under the Social Security Code as a distinct category, but without reclassifying them as employees. So we now have statutory protection without traditional employment rights.

But the model’s innovation is also its primary weakness. Since benefits depend on schemes being notified and platforms voluntarily facilitating registration, the system is only as strong as its weakest link. If aggregators delay compliance, or if States don’t operationalise welfare boards, workers might fall through the cracks. And there’s no automatic trigger for enforcement,  which means it may be years before consistency appears. Most aggregators do not have the infrastructure to support real-time registration, benefit tracking, or compliance across State lines.

Recommendations for Policy & Industry Stakeholders

If the intention behind the Code is to extend meaningful social security for gig economy workers, certain operational realities need to be addressed,  both by government and by aggregators.

Here’s what industry, counsel, and regulators should prioritise:

1. Standardise State rollout timelines. Fragmented notification schedules create legal risk for pan-India platforms. There needs to be a single dashboard that tracks the State-wise activation status.
2. Clarify contribution timing and enforcement rules. At present, most aggregators don’t know when the Code will be enforced. The ambiguity must be removed.
3. Fund technical integration between platforms and the government. Instead of burdening companies with manual CSV uploads or field surveys, an API-based integration model should be created. It would reduce friction and ensure that every worker mapped by the platform is accounted for in the system.

Three Essentials for Effective Implementation:

• Treat platforms as compliance partners, not enforcement targets, and co-design the rollout.
• Keep contribution and benefit calculations transparent and auditable; and
• Build flexibility for pilot schemes at the State level, with aggregator-specific variants.

Frequently Asked Questions (FAQs) – Gig Workers Under Social Security Code

Who qualifies as a gig or platform worker?

Under the Social Security Code 2020, a “gig worker” is someone who performs work outside a traditional employment contract. A “platform worker” is someone who accesses work through a digital interface,  like an app or portal. So a person delivering food via an app, a freelance content writer working through a platform, or a driver accepting rides via a dashboard could all qualify,  as long as there’s no employment contract in place.

Are gig workers employees under Indian labour laws?

No. Gig workers are not “employees” in the conventional legal sense. They don’t qualify for PF, ESI, or gratuity by default. That said, the Code gives them separate recognition. So they’re not regular employees,  but they would be legally visible. This distinction matters because employer obligations stem from an employment contract, but from the aggregator’s business model.

How will aggregators contribute to gig worker benefits?

Aggregators must contribute between 1% and 2% of annual turnover,  subject to a 5% cap on total gig worker payouts. This money is to be paid into a government-notified fund that will support benefits like life insurance, health aid, and possibly pensions.

The amount is not to be deducted from the worker. It will be paid by the aggregator, based on platform financials.

What are the penalties for non-compliance?

The Code includes fines for non-payment, misreporting, or refusal to file returns. These can range from ₹1 lakh upwards, depending on the nature of the breach. There’s also provision for additional daily penalties and potential prosecution,  though usage of the latter is expected to be rare. But what’s more likely will be regulatory notices or audits once the Code is in effect, and the State boards will be active.

Conclusion – Gig Workers Under Social Security Code

The Social Security Code 2020 introduced a structural shift in how informal labour, especially platform-based and gig workers, was treated under Indian labour laws. For the first time, the law extended a legally recognised framework to a class of individuals who previously existed in regulatory limbo. Gig and platform workers under the Social Security Code will not be classified as “employees,” but neither will they be invisible anymore.

For businesses operating as aggregators, the implications are significant. Once the statutory definition of an aggregator is triggered, the employer obligations would apply. And those obligations are not just financial, they’re structural.

To recap, key responsibilities include:

• Contribution of 1–2% of annual turnover (subject to 5% cap on payouts);
• Maintaining updated worker databases;
• Facilitating Aadhaar-based worker registration;
• Filing compliance documents with welfare boards; and
• Preparing for scheme rollouts and eventual benefit distribution.

Failure to comply could lead to penalties, audits, and, eventually, public scrutiny. That’s especially relevant for businesses, investor-facing companies, or aggregators in consumer-sensitive sectors. Regulatory exposure would not just mean financial penalties; it could also mean loss of goodwill or platform trust.

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