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

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On the 27th of June, five of India's biggest consumer platforms approached the Karnataka High Court, challenging the state's gig workers welfare law. The petitioners included Swiggy, Eternal, which owns Zomato, Zepto, Urban Company, and Meesho'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 the 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 aggregators 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 the 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?
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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 of 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 on to 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 an 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 Law's own welfare schemes or the actual benefits gig workers are meant to receive in exchange for all this money being collected and 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.