Gig workers social security under the Code: an employer guide

The Code on Social Security, 2020, in force since 21 November 2025, is the first Indian law to define gig workers and platform workers and to provide social security schemes for them. Gig and platform workers register on the e-Shram portal, and aggregators listed in the Code contribute between 1% and 2% of annual turnover, capped at 5% of what they pay these workers, to a social security fund. A company that engages freelancers is not an aggregator, but it carries a real risk if those "freelancers" are employees in substance.

This guide explains the definitions, the aggregator contribution, registration, what an ordinary employer engaging gig talent should do, and how to avoid misclassification. For the wider set of changes, see our summary of the four labour codes. For staff supplied through an agency, see our contract labour checklist.

Who is a gig worker, a platform worker and an unorganised worker?

The Code uses three related terms. The definitions below are paraphrased; read the Code itself before relying on one.

Term	Meaning in the Code (paraphrased)	Typical examples
Gig worker	A person who performs work or participates in a work arrangement and earns from it outside a traditional employer-employee relationship	Freelance designers, event staff paid per assignment, independent trainers
Platform work and platform worker	Work arranged through an online platform, outside a traditional employer-employee relationship, where organisations or individuals use the platform to access others to provide specific services for payment; a platform worker does such work	Ride-hailing drivers, food and grocery delivery partners, app-based home services
Aggregator	A digital intermediary or marketplace that connects a buyer or user of a service with the seller or service provider	The platform businesses listed in a schedule to the Code
Unorganised worker	Broadly, a home-based, self-employed or wage worker in the unorganised sector, and certain workers in the organised sector not covered by the specified labour laws	Domestic workers, street vendors, agricultural labour

Two points matter for HR. First, the definitions turn on the absence of a traditional employer-employee relationship. A person who is your employee in substance is not a gig worker, whatever the contract calls them. Second, all platform workers are gig workers in the broad sense, but not all gig workers work through a platform.

What social security does the Code provide for gig and platform workers?

The Code empowers the Central Government to frame schemes for gig and platform workers on matters such as life and disability cover, accident insurance, health and maternity benefits, old age protection and creche facilities. State governments can also frame schemes. A national board advises on these schemes, and a social security fund collects the aggregator contributions and other money to pay for them.

The schemes are the government's to design and run. Unlike PF or ESI for employees, a gig worker does not have an employer who deducts and deposits a monthly contribution. The financing comes from the aggregators, government and, where a scheme provides, the workers.

Separately, the Union Budget for 2025-26 announced identity cards and e-Shram registration for platform workers, and healthcare under PM Jan Arogya Yojana. How far these have been rolled out, and on what terms, is best checked on the official portals.

How much do aggregators contribute?

The Code sets a band rather than a single rate:

• A contribution of 1% to 2% of the aggregator's annual turnover, at the rate the Central Government notifies.
• Capped at 5% of the amount paid or payable by the aggregator to gig and platform workers.

The actual rate and the mechanics of collection depend on the scheme notified under the Code. Check the current notification before budgeting, since figures in commentary often run ahead of what has been notified.

Worked example: the 5% cap

A food delivery aggregator has annual turnover of ₹6,00,00,00,000 (₹600 crore) and paid ₹80,00,00,000 (₹80 crore) to delivery partners in the year. Assume a notified rate of 1%.

1. Turnover-based contribution: 1% × ₹6,00,00,00,000 = ₹6,00,00,000.
2. Cap: 5% × ₹80,00,00,000 = ₹4,00,00,000.
3. Contribution payable: the lower of the two, ₹4,00,00,000.

The cap bites when payouts to workers are small relative to turnover. The 1% rate here is an assumption for illustration only.

Which businesses count as aggregators?

The Code lists aggregator categories in a schedule, covering areas such as ride sharing, food and grocery delivery, logistics, e-marketplaces, professional services, healthcare, travel and hospitality, and content and media services. The Central Government can amend the list. A manufacturer or IT services company that hires freelancers directly is not an aggregator merely by doing so. A company that runs its own app to match independent service providers with customers may be, and should take advice.

How does e-Shram registration work?

e-Shram is the Ministry of Labour's national database of unorganised workers, launched in 2021. Workers register themselves using Aadhaar and receive a Universal Account Number for unorganised workers. The Code requires gig, platform and unorganised workers to register, with registration linked to their eligibility for schemes.

For aggregators, the expected duty is to share details of the gig and platform workers on their platform so they can be registered and their contributions tracked. The format and frequency of that data sharing depend on the rules and the portal's process.

For an ordinary employer, there is no registration duty for freelancers it engages directly. Encouraging long-standing independent contractors to register is good practice and costs nothing.

Are there state laws for gig workers?

Yes, and the list is growing. Rajasthan passed a platform-based gig workers law in 2023, and Karnataka has since enacted its own, both built around a welfare board and a fee or cess on platforms. Other states have announced or drafted similar measures. If you operate a platform, check each state where your workers operate; state levies may sit on top of the central contribution.

We are not an aggregator: what should we do?

Most companies with 500 to 5,000 employees engage gig talent in smaller ways: freelance content writers, contract developers on a project, event promoters, part-time trainers, consultants. The Code's aggregator levy does not apply to you. Three things still do.

1. Classify correctly. Decide, for each engagement, whether the person is genuinely independent or is an employee in substance.
2. Contract correctly. Use a services agreement with deliverables, fees, invoices and the freelancer's own tools and time, not an appointment letter with a different title.
3. Pay correctly. Pay against invoices through accounts payable, with TDS under the provisions for contractor or professional payments, not through salary payroll. Section numbers changed under the Income-tax Act, 2025, so confirm the current provisions on the Income Tax Department website.

If a staffing agency supplies the people and controls them, the engagement is contract labour, not gig work.

What is the misclassification risk?

Calling someone a freelancer does not make them one. Courts and authorities look at the substance of the relationship. No single test decides it, but these indicators recur:

Indicator	Points to employment	Points to independent work
Control	You set hours, location and method	They decide how and when to deliver
Integration	Part of a team, on the org chart, with an email ID and manager	Delivers outputs from outside the organisation
Payment	Fixed monthly amount regardless of output	Fee per deliverable or milestone, against invoice
Exclusivity	Cannot work for others	Works for several clients
Tools and risk	Your laptop, your systems, no business risk	Own equipment, bears the cost of rework
Duration	Open-ended, renewed for years	Defined scope and end

Worked example: the cost of getting it wrong

A company engaged an operations coordinator as a "consultant" at ₹20,000 a month for 24 months. The person worked fixed hours, reported to a manager and used a company laptop. On review, the person is held to be an employee. Approximate statutory arrears before interest, damages and penalties:

1. Employer PF at 12%: ₹20,000 × 12% = ₹2,400 a month.
2. Employer ESI at 3.25% (wages within ₹21,000): ₹20,000 × 3.25% = ₹650 a month.
3. Employee PF and ESI the employer failed to deduct: ₹2,400 + ₹150 = ₹2,550 a month, which in practice the employer often ends up bearing.
4. Monthly total: ₹2,400 + ₹650 + ₹2,550 = ₹5,600.
5. Over 24 months: ₹5,600 × 24 = ₹1,34,400.

Add statutory bonus, leave and, with five years, gratuity, and the exposure for a team of 20 such roles runs well into lakhs. Our PF calculator and ESI calculator help size it for your own numbers.

Common mistakes

• Treating long-term, full-time staff as "consultants" to avoid PF and ESI.
• Paying freelancers through salary payroll with salary TDS, which undercuts the independent status.
• Assuming the aggregator levy applies to any company that uses freelancers.
• Quoting a fixed aggregator rate without checking what has actually been notified.
• Ignoring state gig worker laws when operating a platform in several states.
• Giving freelancers company email IDs, fixed shifts and appraisal ratings.

FAQs

Who is a gig worker under the Code on Social Security? A person who performs work or participates in a work arrangement and earns from it outside a traditional employer-employee relationship.

Do employers have to pay PF for gig workers? Not for genuine gig workers, who are outside the employer-employee relationship. If the person is an employee in substance, PF and ESI apply as for any employee.

What is the aggregator contribution under the Code? A rate of 1% to 2% of annual turnover, as notified, capped at 5% of the amount paid or payable to gig and platform workers. Confirm the notified rate before relying on it.

How do gig workers register? Through the e-Shram portal, using Aadhaar. Aggregators are expected to share worker details as the rules require.

Is a freelancer a gig worker? Often yes, if genuinely independent. The label matters less than the facts of control, integration, payment and exclusivity.

How NeevHR helps

NeevHR employee records let you set employment types and grades, so employees, fixed-term staff and other categories are reported separately, and payroll applies PF and ESI from the statutory configuration for every employee on the rolls. Engagement contracts sit in documents with expiry tracking. If you are reviewing how your workforce is classified, talk to our team.

This article provides general information for educational purposes. Statutory rules, thresholds, rates and filing requirements may change; verify with the relevant authority or a qualified professional. Last reviewed: 27 Oct 2026.