Amazon, Flipkart, Swiggy, Zomato to contribute to fund for gig workers’ welfare

Introduction

In a landmark move, India’s new labour reforms mandate major gig economy platforms—including Amazon, Flipkart, Swiggy, and Zomato—to contribute a portion of their revenue toward a gig worker welfare fund. This is a significant step toward recognizing and institutionalizing the social security of gig workers, who have historically operated without the protections typically granted to full-time employees. The reform brings gig work under a formal welfare framework and seeks to ensure benefits like health insurance, accident coverage, and retirement support for millions of platform-based workers.

Background: Gig Economy & Policy Change

1. Definition and Context
   • For the first time, the Code on Social Security, 2020 defines the terms “gig worker,” “platform worker,” and “aggregator.”
   • Gig workers are those who perform work outside traditional employment relationships, such as delivery personnel or drivers.
   • Aggregators are digital intermediaries (platforms) that connect users with service providers.
2. Legal Reform
   • Under the newly notified labour codes (as of November 2025), aggregators must allocate 1–2% of their annual turnover into a dedicated welfare fund for gig workers.
   • However, this contribution is capped: at most 5% of the total amount payable to gig workers.
   • These funds will finance a wide array of social security schemes: life and disability insurance, accident compensation, health and maternity benefits, and a portable provident fund.
   • To enable portability and better tracking, gig workers will be registered via an Aadhaar-linked Universal Account Number (UAN).
   • A National Social Security Board will advise the government on creating and overseeing these welfare schemes.

Impact on Specific Platforms: Amazon, Flipkart, Swiggy, Zomato

1. Mandated Contributions
   • All four platforms—Amazon, Flipkart, Swiggy, Zomato—are explicitly brought under this mandate.
   • They must contribute 1–2% of turnover, subject to the cap.
   • According to some reports, their contributions will be considered part of corporate social responsibility (CSR), fines, and government grants.
2. Corporate Response & Business Implications
   • Swiggy and Zomato have publicly stated they do not expect a “material impact” on their business due to the new levy.
   • But analysts predict added costs: per-order cost could rise by ₹ 2–3, which could cumulatively lead to billions in extra expenses for platforms.
   • The cap (5% of payouts) helps moderate the burden, but this is still a non-trivial financial commitment for these companies.

Significance for Gig Workers

1. Social Security and Portability
   • For many gig workers, this reform provides portable social security—they can carry their benefits across platforms and across states, thanks to the Aadhaar-linked UAN.
   • They get access to health insurance, disability cover, maternity benefits, and other protections previously unavailable in a structured way.
   • Accidents during transit (e.g., commuting to pick up an order) will now be considered employment-related, making them eligible for compensation.
2. Formal Recognition & Rights
   • The reforms require that gig workers receive mandatory appointment letters, which formalizes their engagement with these platforms.
   • Over time, this can improve transparency, accountability, and worker voice in their relationship with platforms.
3. Financial Inclusion
   • By bringing gig workers into a formal social security system, they can build a track record that may enable better access to credit or financial services.
   • Their provident fund contributions will be portable, ensuring continuity even if they change platforms.

Challenges and Criticisms

1. Cost Burden & Pass-Through
   • The increased cost per transaction (estimated by analysts) may be passed on to end consumers, potentially hurting demand.
   • For platforms still striving for profitability, absorbing this levy without transferring costs may be difficult.
2. Implementation Risks
   • Effective implementation of the UAN-based system and national database will be crucial. If poorly executed, some workers might be excluded.
   • The National Social Security Board must be empowered and resourced well to design and monitor welfare schemes meaningfully.
3. Coverage Gaps
   • While the code mandates certain benefits, the actual depth and quality of those protections remain to be seen. For example: how generous will the insurance be?
   • Gig workers’ awareness and trust in the system will be important. Many may not fully understand or trust the new mechanisms.
4. Regulatory Compliance
   • Platforms might try to minimize their financial exposure by reducing payouts to workers or reclassifying “work” to avoid higher obligations.
   • Ensuring accurate reporting, especially with the 5% cap linked to payouts, will be a challenge.

Wider Implications and Significance

1. Precedent in Labour Reform
   • The reform marks a paradigm shift: for the first time, gig workers are formally recognized in labour legislation in India.
   • It could serve as a model for other countries grappling with the regulation of platform-based work.
2. Socio-Economic Impact
   • Gig economy workers in India number in the millions. According to sources, if structured well, these reforms could transform their economic security and life prospects.
   • Improving social security could reduce worker vulnerability and lead to better long-term outcomes (health, retirement).
3. Business Model Adaptation
   • Platforms will need to factor in these social costs into their business models. It may accelerate innovation in cost-efficiency, differential pricing, or even influence commission and incentive structures.
   • The move could push platforms to internalize more of their “social cost,” rather than externalize risk and cost onto gig workers.
4. Policy Evolution
   • The new labour code also sets up a National Social Security Board, which could evolve into a powerful body guiding future welfare schemes.
   • The reform might spur further state-level innovations. For example, Karnataka’s ordinance mandates a “welfare fee” per transaction (1–5%) for platforms.
   • By tying welfare contributions to turnover (instead of headcount), the law aligns more closely with platforms’ business realities.

Conclusion

The decision to mandate 1–2% turnover contributions from Amazon, Flipkart, Swiggy, and Zomato toward a gig worker welfare fund is a historic and transformative moment in India’s labour policy. It signals a recognition that gig workers, despite their “non-traditional” employment, deserve structured social protection. These reforms have the potential to deliver portable benefits, reduce precarity, and build a more inclusive gig economy.

However, translating this policy ambition into meaningful change will require robust implementation, regulatory oversight, and collaboration between the government, platform companies, and worker communities. If done well, this could reshape the narrative of gig work in India—from being a marginal, informal livelihood to a more secure and dignified form of employment.