Beyond the app: Why Telangana’s new law is a major step for gig worker dignity

Today’s fast-growing digital economy in India is the result of an unacknowledged regulatory imbalance. Platform-based workers, or “independent delivery partners,” have traditionally been in a precarious and informal labour position, while tech aggregators and quick-commerce platforms reach multi-billion-dollar valuations.

In this context, The Telangana Platform-Based Gig Workers (Registration, Social Security and Welfare) Act, 2026 marks a systematic shift from the bilateral employer-employee model of social security and establishes a tripartite governance model that is mandatory. The Act proposes to shift the paradigm in the digital economy, moving platform labour from the unprotected space of corporate extraction to a rights-based and regulated economic space. It introduces a transaction-based welfare levy on digital aggregators, provides for strong algorithmic transparency safeguards and creates a multi-layered dispute resolution system.

To understand the law's scope, it is important to recognise that the status of gig and platform workers in India was till now determined by exclusion. Gig workers were structurally excluded from the provincial funds and state insurance, which are welfare benefits, because they were classified as independent contractors by the aggregators.

The Code on Social Security, 2020, for the first time, explicitly included the term “gig workers” and “platform workers” at the Central level. However, the Code remains largely unimplemented, leaving the central welfare funds in administrative limbo. In order to overcome this federal deadlock, states have been increasingly using their concurrent legislative powers under Entry 23 and 24 of List III of the Seventh Schedule of the Constitution of India. In this context, Telangana's Act is a functional and state-level model of social security, which fills the gap between statutory protection and the operational reality of the unorganised digital workforce, as pioneered by the landmark legislation in Rajasthan.

The Telangana Act goes beyond symbolic recognition and establishes binding corporate obligations and institutional structures. Section 3 of the Act provides for the establishment of a Platform Based Gig Workers Social Security and Welfare Board, which is a tripartite body comprising the government, platform aggregators and gig workers, with a mandatory statutory reservation for women and persons with disabilities. This Board is charged with the responsibility of assigning a Unique ID to each registered worker covered by Section 10 and providing a direct digital link to the allocation of welfare benefits without the intermediary slippage.

The main challenge to formalising unorganized labour has always been the financing of this welfare net. Unlike conventional wage-deduction schemes, Section 19 creates a welfare fund, which is funded by a non-transferable welfare fee of 1% to 2% on the transaction value of all platform-based services or orders. Importantly, the Act clearly bars aggregators from withholding this fee from the base payment of the workers, or from imposing the compliance fee on the base payment of the workers. This is complemented by the government grants and allocation of Corporate Social Responsibility (CSR) to provide for insurance, accident, pensions and maternity benefits.

Further, the Act also directly addresses the technological architecture of platform capitalism. Section 14 mandates that aggregators publish the default settings for their algorithms for automated order allocation, pay calculations and rating metrics. Moreover, it addresses the widespread problem of sudden digital lockouts. Aggregators are obligated to follow the principles of natural justice before executing an account deactivation, meaning that there must be a valid written reason and a 7-day notice period, except in very limited cases where consumers are in imminent physical danger.

The Act introduces a multi-layered dispute resolution mechanism to address the imbalance of power in the corporate world, by appointing state grievance redressal officers with a mandate to resolve social security applications in 30 days. It also requires larger platforms with 100 or more employees to create internal dispute resolution committees that will be co-governed to resolve contractual disputes quickly, before they can be referred to the state authorities.

This approach is very similar to a growing global consensus against unrestricted regulation of the digital platforms. The International Labour Organisation's (ILO) Centenary Declaration for the Future of Work calls for a human-in-command strategy to technology and for social protections to be extended to the digital platform workers. Moreover, Telangana's focus on algorithmic transparency and fair termination procedures aligns with the European Union's Platform Work Directive, which provides a rebuttable presumption of employment and requires human oversight of algorithmic management.

Telangana's legislative move to formalise the gig economy reflects a more fundamental and systemic need: the need to move beyond formalistic contractual labels and provide fundamental economic protections for all new sectors where workers are structurally vulnerable due to deep power asymmetries.

Although the Act is a positive step, there are significant legal gaps and practical weaknesses that need to be addressed to ensure that the legislation is effective. The key objection to the Act is that it is based on a structural imbalance between the protection of workers' welfare and operational flexibility. In the process of drafting the legislation and later in its representation by platforms, groups such as the Forum for Progressive Gig Workers in India pointed out that the flexible working models that draw students and part-time workers to the platform economy would be compromised if such gigs were treated like traditional jobs.

Importantly, the final text of the Act is not so much about integration into the standard minimum wages framework, but rather on social security registration, algorithmic safeguards and welfare payouts. Implementing a minimum wage regime based on rigid and time-based structures, in a dynamic piece-rate digital economy, is challenging. The excessive regulation of this flexibility poses a genuine threat of corporate hiring freezes, which ultimately will have a negative impact on the unorganised youth who depend on these platforms for quick cash.

Another key enforcement issue is the accountability of principal employers who third party sub-contractors or logistics companies. Tracking compliance on such decentralised digital layers becomes difficult if an aggregator uses manpower suppliers as third parties for its delivery operations. The platforms can use sub-contracting loops to protect themselves from the penalties outlined in Section 26.

In addition, Section 26 provides for a tiered penalty system, with fines ranging from ₹50,000 for a first-time failure of an aggregator to comply to five times the amount due for repeated defaults, thus, making these unpaid amounts recoverable under the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS). This heavy enforcement system gives the leverage it needs, but it could also lead to an escalation of administrative litigation. Recovery warrants issued by the State-managed Board may be delayed further if the Board gets bogged down in issuing such recovery warrants against digital corporations. As a result, welfare payments to vulnerable gig workers may be delayed even further.

To sum up, the Act is a significant step in the development of Indian labour law. The absence of a formal employment agreement does not mean that the Constitution does not apply to gig workers. The effectiveness of this intervention will rely on the administrative capacity and capacity to police corporate algorithms without hampering digital innovation of the newly established Welfare Board. Telangana's hybrid, fund-based model is an interesting approach to safeguard the dignity of workers in the digital age, as other states grapple with the challenges of platform capitalism.

Jagrati Gupta is an LL.M. student at Hidayatullah National Law University, Raipur.