Gig workers Bill may hurt ease of doing biz: Startups to Karnataka govt

A group comprising many top tech startups and unicorns have raised several “serious concerns” over a platform-based gig workers Bill proposed by the Karnataka government.

They told the state government that the Bill in its current form would hurt the ease of doing business, hamper operations and increase the regulatory and compliance burden on the nascent gig and startup economy, according to the sources. The group made the submission to the state government through various trade bodies such as the Confederation of Indian Industry (CII), the National Association of Software and Service Companies (Nasscom) and the Internet and Mobile Association of India (IAMAI).

A copy of the submission has been reviewed by Business Standard. Some of the companies that are part of the group include Swiggy, Ola, Zomato, Uber, Urban Company and Amazon, according to the sources.

 

The draft of the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Bill, 2024, provides a grievance redress mechanism for gig workers such as cab drivers, delivery people, carpenters, plumbers and repairers. The aim is to bring formal rights and social security to them. It also aims to protect workers from arbitrary termination and aims to ensure basic minimum social security for them. The Bill is likely to be tabled during the monsoon session of the Assembly.

The startup and tech company group said that very wide powers of inspection have been granted to the state government, which are excessively broad and vague. It requested the government to delete this section in the spirit of ease of doing business and trusting the industry.

“The Karnataka Bill introduces wide-ranging powers of inspection to the state government including algorithms, contracts, and day-to-day operations of platforms. This is akin to the Inspector Raj system of the 70s and 80s, and goes against the spirit of the Labour Codes and ease of doing business,” said one of the tech industry executives from the group. “Karnataka is a progressive state and the hub of startups in India. This Bill will surely impact the state’s reputation in the long term,” the executive added.

The group told the government that, unlike Rajasthan, the Karnataka Bill allows gig workers to seek grievance redressal under the Industrial Disputes Act of 1947, essentially equating them with ‘workmen’.

The Rajasthan Bill recognises gig workers to be outside the ‘traditional employer-employee relationship’, like The Code of Social Security (CoSS) 2020. The Karnataka Bill has deviated from the same and does not explicitly state that gig workers are outside the traditional employer-employee relationship. It tries to create a parallel system which essentially equates gig workers to full-time employees.

The group said the proposed personal liability for directors and employees in cases of offences is overly harsh. This could deter businesses from operating in Karnataka. Unlike Rajasthan, the Karnataka Bill affixes criminal liability for officers and directors, at a time when there is a push for labour codes and other laws to move towards de-criminalisation. This approach will breed mistrust with the industry.

There are several provisions which directly allow the state to mandate how companies will operate their business. They include a notice period to be served to gig workers and grounds for termination. They also include the number of orders gig workers can cancel per week. The provision mentions providing standard template contracts which might not consider sector-specific nuances. Other provisions include sharing and auditing of proprietary information about algorithms, and the manner and frequency of payment to gig workers.

“Information required to be shared by platforms is confidential and proprietary, proving the competitive edge for each platform. Such information may not be disclosed by platforms to gig workers without adequate safeguards in place,” said the submission.

It said that given the quantum and dynamicity of transactions, requiring aggregators to map every transaction onto the CTIMS (Central Transaction Information and Management System) will place an unduly onerous obligation on all aggregators. Instead of CTIMS, self-reporting and audited financial statements of the platforms should be relied on. The burden of building a holistic system and integrating it via application programming interfaces (APIs) with all platforms will make the whole exercise very challenging to implement.

The startup and tech company group also made a recommendation on the cess or welfare fee. Under the Karnataka Bill, it said the welfare fee should be levied at 1-2 per cent of the payout to the gig worker per transaction or 1-2 per cent of the state-specific net revenue of the aggregator (whichever is higher), capped at a maximum of Rs 1-2 per transaction. “Anything higher will be burdensome on platforms and may need to be passed onto customers or the gig workers, which will be counter-productive,” said the group.