Labour codes pinch: Swiggy, Zomato, Amazon, peers to keep aside up to 2% of turnover for gig worker welfare

Online food delivery, e-commerce and quick-commerce companies including Swiggy, Zomato, Amazon, Flipkart and peers will now have to allocate up to 2% of their annual turnover for the welfare of gig and platform workers as India unveiled new labour codes on 21 November.

The ministry of labour and employment announced that with the new reforms, all workers would get benefits such as retirement savings via provident fund, coverage under the Employees' State Insurance Corporation, other insurance and social security benefits.

They currently receive only limited social security coverage, if any.

On Friday, the Union government announced four labour codes that will come into effect immediately. They aim to rationalise India’s 29 existing labour laws — and, for the first time, officially define ‘gig workers’, ‘platform workers’, and ‘aggregators’.

India’s gig economy has ballooned over the past decade, thanks to the proliferation of online commerce and marketplaces such as Zomato, Swiggy, Uber, Amazon and Flipkart. These temporary workers are typically hired via third-party staffing firms. The country’s gig workforce is projected to grow from 10 million in 2024-25 to 23.5 million by 2029-30, according to a Press Information Bureau note on 30 August.

What will the companies do?

The government has increased the liability on aggregators, which will now be required to contribute 1-2% of their annual turnover, capped at 5% of the amount paid or payable to gig and platform workers, towards these benefits.

It added that an Aadhaar-linked Universal Account Number (UAN) will also be rolled out to help make welfare benefits, along with full portability, easily available to gig and platform workers across India, regardless of whether they migrate to another state.

“For employers, this is the moment to proactively reassess workforce structures, update employment documentation, and realign compliance systems to ensure a smooth, risk-free transition to the new regime,” said Pooja Ramchandani, partner at Shardul Amarchand Mangaldas & Co, a law firm.

Moreover, retail businesses with a nationwide presence, especially those employing gig workers for delivery and warehouse work, will need to keep track of state-level variations in salaries, benefits, and other statutory obligations, said Sonal Arora, country manager at HR services platform GI Group Holding.

“A practical approach is needed to maintain a dynamic, state-by-state compliance tracker and integrate geo-tagged employee data so that salaries, benefits and statutory obligations automatically align with the relevant state jurisdiction. In short, while the codes simplify the overall structure, implementation remains state-driven. Organisations will need adaptable systems and processes to stay fully compliant across locations,” Arora added.

Payouts and social security benefits for such workers are not streamlined and often depend on the nature of the jobs they pick. Gig workers also typically have long hours and no fixed timings. Payouts can differ depending on demand, time of day, and festive periods. Most gig workers also battle harsh weather and traffic, and often need to have their own vehicles, which adds overhead costs such as fuel.

A spokesperson for Uber said, “Uber welcomes the government’s move to implement the new labour codes, including the Code on Social Security. Uber looks forward to working closely with the government to ensure the speedy and effective implementation of these reforms.”

Rajneesh Kumar, chief corporate affairs officer, Flipkart Group, said, “The new labour codes provide a clearer and more predictable framework for businesses and workers. We are reviewing the notification and will remain fully compliant with all requirements.”

An Amazon spokesperson said that the Code on Social Security aligns with its priorities of providing safety, security, and welfare to its employees already. “While welcoming the govt’s intent of implementation of labour reforms , we are evaluating the impact on the industry and the changes which would have to be ushered in,” the spokesperson added.

In an official statement, Zomato and Blinkit's parent company Eternal said, “we are deeply committed to the well-being of gig workers and already provide a range of comprehensive insurance and welfare benefits, free of cost. We are committed to supporting measures that further improve outcomes for gig workers and hence welcome this announcement.”

Mint has also reached out to Swiggy, Zepto, Delhivery, Shiprocket, Porter, Urban Company, Myntra and Meesho, and will update the story if and when they respond.

The goal of the new Labour Codes

Through these codes, the government aims to modernize India’s labour regulations to improve workers’ welfare and align the rules with similar ones in other countries. The labour ministry said the 29 labour laws they have replaced operated under fragmented, complex and outdated provisions drafted between the 1930s and 1950s.

“The reforms will significantly impact sectors such as IT/ITES, manufacturing, MSMEs, gig and platform work, textiles, logistics and hazardous industries, each facing new obligations around wages, social security, safety standards and women’s night-shift participation,” Ramchandani said.

Balasubramanian A, senior vice president at TeamLease Services, a recruitment and human resources services company, said the move was a big win for the gig economy, including aggregators, because it gave them a framework to follow. "A lot of insurance companies are not willing or forthcoming in giving such insurance policies to gig workers, because the same workers may work across different platforms. That’s a big challenge, but if the government makes it a law then somehow it will have to be done.”

He added, “The code on social security clearly states that gig and platform workers also need to be brought under the purview of social security. They number over one crore in India—working primarily in e-commerce, quick-commerce, logistics, etc. These workers are at high risk of accidents, illness and so on, but do not get any benefits under ESI, PF, EDLI, etc.”

The four Labour Codes made effective from Friday, 21 November are the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020.