Karnataka HC Refuses to Stay Gig Workers Act, Orders Platforms to Deposit Welfare Fee
The Karnataka High Court has denied a stay on the Gig Workers Act and ordered app-based platforms to deposit a welfare fee within three weeks, pending further review.
The Karnataka High Court has refused to put a stay on the implementation of the Karnataka Platform Based Gig Workers (Social Security and Welfare) Act, 2025. Justice M. Nagaprasanna directed app-based service providers, including Eternal, Swiggy, Zepto, and Urban Company, to deposit the mandated "welfare fee" with the court registry within three weeks.
"The amount demanded by the State is not sought as charity, benevolence, or voluntary contribution. It is demanded pursuant to a statutory mandate flowing from a duly promulgated legislation. That legislation is presently under constitutional scrutiny before this Court," Justice Nagaprasanna stated. However, he also ruled that no coercive action can be taken against the app-based aggregators until the next hearing, scheduled for August 14, 2026.
The Internet and Mobile Association of India (IAMAI) and several aggregator platforms had filed a petition challenging the Act's constitutional validity. Their argument centers on the claim that the state legislation conflicts with the Centre's Code on Social Security, 2020, making it unconstitutional under Article 254 of the Indian Constitution.
Petitioners, represented by senior advocates, argued that the Karnataka Act encroaches upon the central legislation designed to ensure the welfare of unorganised sector workers, including gig workers. They also contended that depositing the welfare fee would lead to a cash drain and negatively impact their profit-and-loss statements, noting that no welfare schemes have yet been established to disburse the collected funds.
The state government countered by asserting there is no conflict between the central code and the state act. They argued that platforms cannot claim surprise, as they participated in extensive deliberations regarding gig worker welfare and fee structures before the legislation was enacted. The government also pointed out that similar welfare legislations in other states have been complied with by these platforms.