Telangana Pioneers India’s First Comprehensive Gig Workers Welfare Law

When the Telangana Cabinet approved the country’s first comprehensive welfare bill for gig and platform workers last week, it marked a major turning point in India’s labour regulation landscape. For the first time, a state government has formally recognised app-based drivers, delivery partners, and other on-demand service providers as a distinct workforce entitled to social security and welfare protections.

The proposed legislation, expected to be tabled in the state assembly shortly, mandates digital platforms, including ride-hailing, food delivery, and e-commerce aggregators, to contribute to a dedicated welfare fund. The fund will finance benefits such as health insurance, accident coverage, and skill development initiatives for gig workers. Officials familiar with the bill described it as an effort to “bridge the legal vacuum that has left millions of workers outside the formal safety net.”

As India’s gig economy expands—employing an estimated 7.7 million people in 2024, projected to grow to over 23 million by 2030—Telangana’s move could serve as a legislative template for other states and potentially shape the contours of national policy.

A Growing Workforce Without a Safety Net

Gig and platform work in India has grown rapidly over the past decade, fueled by the rise of delivery and mobility platforms like Swiggy, Zomato, Ola, Uber, Dunzo, and Amazon. While the sector has created flexible employment opportunities, it has also exposed workers to financial insecurity and lack of basic protections.

Unlike traditional employees, gig workers are treated as “independent contractors,” which excludes them from the purview of labour laws governing minimum wages, social security, or dispute resolution. Many of them work without written contracts, accident insurance, or retirement benefits, despite working full-time hours.

A 2022 NITI Aayog report noted that nearly 90% of gig workers in India operate without any form of social protection. During the pandemic, when lockdowns froze demand, thousands of drivers and delivery agents were left without income or welfare support. This gap prompted growing calls for a regulatory framework balancing flexibility with protection.

Telangana’s Framework: Key Features of the Proposed Law

According to officials familiar with the draft, the Telangana Gig and Platform Workers (Welfare and Social Security) Bill envisages a tripartite structure involving the government, platform companies, and workers.

Key provisions include:

• Welfare Fund: A dedicated fund will be created to extend benefits such as health insurance, life insurance, and accident coverage to all registered gig workers in the state.

• Platform Contributions: Aggregator platforms will be required to contribute a fixed percentage (likely 1–2%) of their annual gross revenue or a per-transaction levy to the fund.

• Registration and Data Sharing: All gig workers operating in Telangana will be registered under a unified digital portal. Platforms will be obligated to share anonymized worker data with the government for monitoring and compliance.

• Grievance Redressal Mechanism: A state-level welfare board will be constituted to address worker grievances, coordinate training programs, and oversee fund disbursements.

• Skill Development and Financial Inclusion: The law also proposes partnerships with skilling agencies and financial institutions to enhance workers’ employability and access to credit.

If enacted, Telangana would become the first Indian state to operationalize a statutory social protection regime for gig workers—beyond pilot schemes or voluntary corporate initiatives.

A Balancing Act: Between Flexibility and Protection

The proposed framework seeks to reconcile two competing objectives—preserving the flexible nature of gig work while ensuring a minimum layer of security for those engaged in it.

Industry observers note that mandating employer-like contributions could prompt pushback from aggregator companies, many of which operate on thin margins and have argued that they are “technology intermediaries,” not employers. However, policymakers counter that the model does not redefine the employment relationship but rather introduces a social welfare obligation, similar to existing models in parts of Europe.

Experts suggest that by treating social security contributions as a cost of doing business—rather than as wages or benefits—Telangana’s approach could withstand legal scrutiny and avoid disrupting the flexible work arrangements that attract both companies and workers.

Lessons from Abroad: Global Precedents

Several countries have attempted to regulate gig work without stifling innovation.

• United Kingdom: Following the 2021 Supreme Court ruling in Uber BV v Aslam, ride-hailing drivers were recognized as “workers” entitled to minimum wage and paid leave, leading to hybrid employment models.

• European Union: The EU’s proposed Platform Work Directive requires companies to prove that workers are genuinely self-employed, shifting the burden of classification.

• United States: States like California have experimented with hybrid approaches, such as Proposition 22, which provides limited benefits while maintaining independent contractor status.

Telangana’s proposed law mirrors aspects of these models but adapts them to India’s federal and socio-economic context. Unlike the UK’s classification-based approach, Telangana’s framework focuses on collective welfare, sidestepping the contentious “employee vs. contractor” debate.

Wider Implications: Setting a Policy Precedent

If successfully implemented, Telangana’s legislation could become a benchmark for other states grappling with similar policy dilemmas. Karnataka and Rajasthan have previously announced intentions to draft gig welfare laws, but none have reached the legislative stage.

For the central government, Telangana’s move could also influence the framing of national guidelines under the Code on Social Security, 2020, which empowers states to notify schemes for gig and platform workers. The Centre’s proposed rules under this Code have been pending finalization, partly due to the complexity of defining beneficiaries and funding models.

By acting first, Telangana not only addresses an urgent state-level concern but also contributes to the evolving federal framework of labour regulation in India.

Challenges to Implementation

While the initiative has been widely praised, several challenges lie ahead.

1. Compliance and Enforcement: Monitoring contributions from numerous digital platforms—many headquartered outside the state—will require robust data-sharing and enforcement mechanisms.

2. Worker Identification: Given the transient nature of gig work, ensuring accurate registration and avoiding duplication will be complex.

3. Fiscal Sustainability: The adequacy of the welfare fund will depend on the contribution rate and the number of participating platforms. Experts caution that underfunding could limit the scope of benefits.

4. Coordination with Centre: Overlap between state schemes and central social security codes may create legal ambiguities requiring harmonization.

Nonetheless, Telangana’s move reflects growing political will to recognize the gig workforce as an integral part of India’s labour market.

Voices from the Ground

Early reactions from worker collectives have been cautiously optimistic. The Telangana Gig and Platform Workers Union hailed the announcement as “a long-awaited step towards dignity and protection,” urging that workers be consulted during the rule-making process.

Platform companies, while supportive of the welfare intent, have emphasized the need for “predictable and proportionate regulation.” A representative of a major food delivery platform stated, “We hope the government engages with industry to design a practical and scalable contribution framework that doesn’t disrupt livelihoods.”

This dialogue between workers, companies, and policymakers will be crucial in shaping the final contours of the law.

A Turning Point in Labour Policy

Telangana’s decision comes at a time when India’s workforce is undergoing rapid transformation. With automation and digitalisation reshaping employment, the rise of non-traditional work arrangements has outpaced existing laws.

The state’s willingness to innovate in social policy could mark the beginning of a new era in Indian labour regulation—one that extends protection beyond factory floors and office cubicles to the millions who power the digital economy.

If successful, Telangana’s gig workers welfare law may do more than provide insurance or training—it could redefine how India understands “work” itself in the 21st century.