Daybreak - Karnataka let gig workers ask their apps a question. Swiggy, Zomato took the whole law to court

Episode Date: July 1, 2026

Some of India's biggest consumer platforms, Swiggy, Zomato's parent Eternal, Zepto, Urban Company, and Meesho's logistics arm Valmo, have asked the Karnataka High Court to strike down the state's gig worker welfare law entirely.Their central argument is about money, a welfare fee they say duplicates a national contribution already required under the Code on Social Security. But the petition goes further, also targeting a clause that lets workers ask platforms how their pay and ratings get decided.A welfare fee is due July 5 regardless of how the case unfolds, and other states building similar laws are watching closely to see what survives. The platforms call the clause a threat to trade secrets. The law calls it a question a worker is allowed to ask. Which one is it?Tune in.*We want to get to know you a little better. Tell us what you think about Daybreak here.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

So before we start today, we have been thinking a lot lately about this show, about what it is, what it could be, and about you, the people who show up for it every single morning. And we realized, we don't actually know that much about you. So we have made this survey. It takes about three minutes and we are genuinely asking what's working, what isn't and what you want more. more of. The link is in the show notes and we promise to read every single response. Okay, let's get into it. On the 27th of June, five of India's biggest consumer platforms approached the Kronautica High Court challenging the state's gig workers' welfare law. The petitioners included Swiggy, Eternal which owns Sumato, Zepto, Urban Company and Misho's

logistics arm, Valmo, filing together with the Internet and Mobile Association of India. While they have contested different parts of the law and related notices that they received, they are actually demanding that the entire law be struck down. The Karnataka platform-based gig workers, Social Security and Welfare Act dates to September last year when Karnataka became one of the first Indian states to pass a dedicated legislation for platform-based gig workers. It mandated setting up a welfare fund,

registration system and a process for workers to contest unfair treatment. In fact, a welfare fee tied to this law is actually due on 5th of July and it is this deadline that pushed the platforms to court this week. The central argument that these platforms are making is basically about money and it carries real legal weight. They are saying that the parliament, that is the center, already passed a national law, which is the code on social security, requiring action. to fund gig workers' welfare across the country,

and that the Karnataka law fee actually duplicates that obligation instead of adding to it. The legal base for this is the doctrine of repugnancy under Article 254 of the Constitution. This provides that a state law cannot stand if it conflicts with a central law on the same subject. The petitioners are calling the Karnataka law for gig workers unconstitutional on this basis. But here is what I thought was very interesting. The petition actually goes on further than the fee to make its case. It also asks the court to specifically strike down Section 13 of the Act. The platforms describe this section as forcing them to disclose their pricing algorithms

and hand over their trade secrets. But if you read the law itself, it says something much narrower. Section 13 requires platforms to tell workers how they can request information about the automated factors that shape their fares, earnings and ratings. That's all. So the platforms call it a trade secret, but the law itself calls it a question that a worker is allowed to ask. Which one is it?

Welcome to Daybreak, a business podcast from the Ken. I'm your host Nicka Sharma and I Don't Chase the News Cycle. Instead, every day of the week, my colleague Rachel Varghiz and I will come to you with one business story that's worth understanding and worth your time. Today is Thursday, the 2nd of July. To understand whether the platform's money argument actually holds up, it helps to look at how the two contribution structures are built. Under the center one, which is the code on social security,

aggregators are required to contribute between 1 and 2% of their annual turnover to a central welfare fund, with that contribution actually capped at 5% of what they pay out to Gagan platform workers. Karnataka's law works differently. It charges a welfare fee of between 1 and 5% on every single payout made to a worker calculated per transaction rather than off-annual turnover. The two funds are built to serve the same broad purpose. Insurance, health cover, income protection for gig workers,

but they are collected through different formulas entirely. And this is where the platform's repugnancy argument gets its force. They are arguing that since the parliament already legislated a national contribution mechanism for the same category of workers, Karnataka, creating a second differently structured mechanism amounts to the state stepping onto the ground that the central government already occupies. But what most of the coverage of this case has missed is that the Karnataka law already anticipated this exact challenge. The Act specifically states that the welfare fee collected under it,

will count towards the total contribution and aggregator owes under Section 114 of the Central Code with any gap between the two reconciled annually. In other words, Karnataka didn't actually build a second competing tax. It built a state-level collection mechanism designed to feed into the same national obligation. Now, whether that is enough to survive a repugnancy challenge is a genuinely open legal question and it is the one that the Karnataka High Court will actually have to answer. But having two different formulas for collection that reconcile into one final number is obviously not the same thing as running a parallel regime that Article 254 was written to prevent.

Also, there is another detail worth looking at here. The central laws own welfare schemes, or the actual benefits gig workers are meant to receive in exchange for all this money being collected, haven't been notified yet, which means the national system itself is not fully built and functional yet. So, the court is essentially being asked to referee two funding mechanisms feeding into a national safety net that on the central side still hasn't defined what it pays out. That is the money fight. But that is only a part of what this petition is about. More on this in the next segment. Think about how a gig worker actually

experiences a platform's algorithm. They don't really see it. They only see the outcomes. One day brings a string of short, low-paying trips, another day brings a long ride that costs more in fuel than it earns. A rating rises or falls and income seems to follow it. But nobody at the company explains why. In fact, the Indian Federation of app-based transport workers has raised similar concerns

in the past consultations with the Labor Ministry. They pointed to accounts being suspended. with no explanations at all. Section 13 of the Karnataka Gig Workers Act was written to respond to exactly this. It requires platforms to tell workers in simple language that they understand how they can request information about the automated factors that shape their fares, earnings and customer feedback. So what the law does is create a procedure to ask a question.

It does not require platforms to publish their algorithm. or their source code or the logic behind it. But the platforms describe this clause differently in their petition. They argue that the pricing models, algorithmic systems, and operational methodologies are confidential assets that provide a competitive advantage in a fast-moving market. So, explaining which factors move of fare or a rating still reveals a piece of how the system works. In a market where rivals are studying each other's pricing and matching logic closely, even a partial glimpse could carry a real commercial weight. That is a serious legal position,

even though the law is actually more focused on the gig workers' right to request an explanation and not a disclosure of the method itself. But here is the part that I am thinking about. The platforms did not ask the court to weigh in on Section 13 based on its own merits. They bundled it into the welfare fee challenge asking for the entire law to be struck down. And this is worth noting, because if repugnancy argument carries real legal weight and if it succeeds, Section 13 also goes down with it, which basically means that a court ruling on double taxation would end up deciding the fate of a worker's right to ask about their pay. Anyway, a right as narrow as this was expected to be fragile.

It has no defined standard for what counts as an adequate answer from the platform, no one assigned to check if the platforms are complying, and now even this limited protection could vanish because of an outcome decided on an entirely different ground. So far, the case has not been listed for hearing yet. The fee is still due from the platforms on 5th of July. Karnataka is the first state to bear a welfare fund with algorithmic transparency, and other states weighing similar laws will be watching closely to see what survives. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform.

What you're listening to is just a small sample of a subscriber-only offerings and a full subscription offers daily, long-form feature stories, newsletters and a whole bunch of premium podcasts. To subscribe, head to the Ken.com and click on the red subscribe button on the top of the website. Today's episode was hosted and produced by my colleagues Niktha Sharma and edited by Rajiv CN.