AI Policy Aspects of the Karnataka Gig Workers (Social Security and Welfare) Ordinance, 2025

The Governor of the State of Karnataka had promulgated an ordinance entitled the Karnataka Gig Workers (Social Security and Welfare) Ordinance, 2025. This ordinance by design addresses certain labour law and employment-related health and safety issues associated with the ever-growing demographic of gig workers in the State of Karnataka.

While the ordinance focuses on primordial labour law and policy issues since gig workers may not receive similar benefits as "employees", there are some AI policy aspects around the contents of the ordinance, which merits a reasonable analysis of this ordinance.

Since this ordinance seems to be in force (post-promulgation), this explainer addresses the core AI policy and industry aspects around this ordinance, which is perhaps the first ever AI policy measure done by any Indian Statement at a legislative level, for it being comprehensive, and unique.

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Application of the Ordinance

The applicability clause creates a comprehensive regulatory net with limited safe harbour protections, establishing three distinct categories of covered entities under the Karnataka Platform Based Gig Workers (Social Security and Welfare) Ordinance, 2025.

Territorial and Service-Based Safe Harbour Limitations

Clause (i) - Aggregator/Platform Coverage

• No Geographic Safe Harbour: Any aggregator or platform "operating or providing" services within Karnataka falls under the ordinance, regardless of where they are incorporated or headquartered

• Service-Specific Threshold: Only platforms providing services listed in the Schedule are covered, creating a limited safe harbour for platforms operating exclusively in unlisted sectors

• Dynamic Expansion Risk: The phrase "as amended by the Government from time to time" might create the propensity to eliminate future safe harbour protections, as the government can expand coverage through notifications

Schedule-Listed Services (No Safe Harbour)

1. Ride sharing services

2. Food and grocery delivery services

3. Logistics services

4. e-Market place (B2B/B2C)

5. Professional activity provider

6. Healthcare

7. Travel and hospitality

8. Content and media services

   
   

Definitional Safe Harbour Gaps

Clause (ii) - Platform Definition Under Section 2(g)

The definition creates broad liability exposure with minimal safe harbour:

• Covers any electronic system organizing work "at a particular location in return for payment"

• Includes both automated monitoring and decision-making systems and human decision-making arrangements

• No minimum transaction threshold or worker count exemption provides safe harbour protection

Registration-Based Safe Harbour Framework

Clause (iii) - Gig Worker Coverage

• Conditional Application: Only applies to gig workers "registered with the Board under section 10"

• Creates a perverse safe harbour where platforms might discourage worker registration to avoid obligations

• Section 10(2) Mandatory Registration: Workers must register within 30 days, eliminating worker-choice safe harbour

Specific Provisions and Provisos Creating Safe Harbours

Limited Interim Safe Harbour - Section 21(4) Proviso	General Understanding
"Provided that, until the operationalization of the Payment and Welfare Fee Verification System (PWFVS) by the Board, the Government may exempt such aggregator or platform who duly self report and submit details of the payouts made to their Gig workers in each of the transaction every quarterly."	Safe Harbour Conditions: Voluntary self-reporting of payout details Quarterly submission compliance Only valid until PWFVS operationalization (targeted for August 2025)
Administrative Cost Safe Harbour - Section 19(3)
"The Board shall not spend more than five percent of the fund to defray any administrative costs of the Board or employees of the Board."	This protects fund resources but doesn't create compliance safe harbour for platforms.
Section 24 Proviso - Reporting Frequency Safe Harbour
"Provided that, the Government shall based on the Ease of doing business requirement may make the provision for submission of returns half yearly or annually by a notification."	Creates potential compliance burden relief for smaller platforms through reduced reporting frequency.

No Safe Harbour Protections Seem to be Available For:

1. Welfare Fee Obligations (Section 20): 1-5% fee on all transactions with no minimum threshold exemption

2. Algorithmic Transparency (Section 13): Mandatory disclosure of automated decision-making systems affecting "prices, earnings, customer feedback"

3. Termination Procedures (Section 14): 14-day notice requirements with no emergency exception beyond "bodily harm" cases

4. Registration Deadlines: 45-day registration requirement for platforms with no extension provisions

   
   

Enforcement Safe Harbour Limitations

Section 23 - Penalties

• No First-Time Violator Protection: Immediate ₹5,000 fine for first contraventions

• Escalating Penalties: Up to ₹1 lakh for subsequent violations

• 12% Annual Interest: On delayed welfare fee payments with no grace period

The ordinance intentionally minimizes safe harbour protections, creating a strict liability framework that prioritizes gig worker protection over platform compliance flexibility. The only meaningful safe harbours are temporary (PWFVS exemption) or procedural (reporting frequency), rather than substantive liability protections.

Reference to Artificial Intelligence-enabled Automation Technologies

The best definition-level reference to AI is found in Section 2 of Ordinance, as provided in this excerpt below:

Figure 1: Section 2 (a) and (g) of the Ordinance, with excerpts.

Figure 2 explains the 2 kinds of AI-based references in a mind map, with examples.

Figure 2: Karnataka Gig Workers (Social Safety and Welfare) Ordinance 2025 - AI-related definition aspects

Section 7: Platform Based Gig Workers' Rights

AI Context: While Section 7 doesn't explicitly mention AI, it establishes fundamental rights that directly interact with "automated monitoring and decision-making systems" as defined in Section 2(a).

Safe Harbour Analysis

Rights-Based Safe Harbour Limitations

• No Platform Discretion Safe Harbour: Section 7(a) mandates universal registration "irrespective of duration of work on any platform" - this eliminates any algorithmic filtering safe harbour that platforms might claim for worker eligibility

• AI-Mediated Benefits Access: Section 7(b) creates conditional safe harbour based on "minimum number of transactions or gig work undertaken...in a quarter", but this threshold is determined by automated systems, creating potential AI bias vulnerabilities

Critical Gap: Section 7 provides no safe harbour protection against AI-driven rights violations. Workers have rights to registration and benefits, but no explicit protection when automated systems deny or manipulate these rights.

Section 13: Transparency in Automated Systems - The "AI Transparency" Framework

AI Definition Application: This section directly regulates "automated monitoring and decision-making systems" affecting "prices, earnings, customer feedback".

Safe Harbour Destruction Mechanisms

Figure 3: Section 13(1) of the ordinance.

Algorithmic Disclosure Obligations

• No Trade Secret Safe Harbour: Section 13(1) requires disclosure of "automated monitoring and decision-making criteria" with no proprietary algorithm exemption

• Language Accessibility Mandate: Information must be provided "in simple language and in Kannada, English or any other language listed in the Eighth Schedule".

Section 13(1) establishes a two-tier transparency obligation that fundamentally restructures the relationship between platforms and gig workers regarding AI decision-making systems.

Tier 1: Procedural Transparency

• Platforms must inform workers about "the procedure to seek information" regarding automated parameters

• This creates a mandatory disclosure pathway rather than voluntary platform discretion

• Workers gain procedural rights to access algorithmic information, not just outcomes

Tier 2: Substantive Parameter Disclosure

• Covers "automated monitoring and decision making parameters" affecting working conditions

• Explicitly includes "fares, earnings, customer feedback and allied information"

• Extends to any parameters that "have an impact on their working conditions"

Strategic Logic Behind This Approach

Accessibility Over Technical Complexity

The requirement for "simple language" in local languages (Kannada, English, or Eighth Schedule languages) ensures:

• Workers can actually understand algorithmic explanations

• No hiding behind technical jargon or English-only documentation

• Democratization of algorithmic knowledge

Procedural Rights Create Ongoing Accountability

Rather than one-time disclosure, the section creates an ongoing right to seek information, meaning:

• Workers can request explanations when algorithms change

• Platforms cannot claim "trade secrets" to avoid transparency

• Creates continuous monitoring pressure on algorithmic fairness

Comprehensive Coverage of AI Impact Areas

The inclusion of "fares, earnings, customer feedback" targets the most economically sensitive algorithmic decisions:

• Fares: How pricing algorithms affect worker income potential

• Earnings: How payment calculation systems operate

• Customer feedback: How rating/review systems impact worker opportunities

• Allied information: Catch-all for related algorithmic impacts

Anti-Discrimination Requirements

• Absolute Liability Standard: Section 13(2) requires platforms to "take measures to prevent discrimination through automated monitoring and decision-making systems based on religion, race, caste, gender, or disability"

• No Intent Safe Harbour: The provision creates strict liability - platforms cannot claim algorithmic discrimination was unintentional.

Critical Enforcement Gap: While Section 13 eliminates transparency safe harbours, it provides no specific enforcement mechanism or penalties for non-disclosure of algorithmic parameters.

Anyways, these are the most important and directly impacting AI policy aspects of the Karnataka Government's Ordinance promulgated recently. In case you have any confusion, please email us at vligta@indicpacific.com to discuss further.