New labour codes: Gig firm clients likely to bear higher costs

Gig platforms such as Swiggy and Eternal may transfer the increase in cost due to the implementation of new labour codes to its customers in the form of higher platform fee, according to a note from Kotak Institutional Research.

“Assuming companies such as Eternal and Swiggy have to shell out an incremental 5% of annual payments to workers, the food delivery businesses could see an impact to the tune of ₹3.2 an order, while QC businesses could see an impact of ₹2.4 an order. We believe companies would pass on the impact of these to consumers with time via higher platform fee or other charges,” according to the report. The authors added that the potential impact could be subject to implementation. 

Delivery companies such as Swiggy and Eternal already provide insurance with accident cover up to ₹10 lakh, health insurance cover up to ₹1 lakh and loss of pay coverage, and maternity benefits up to ₹40,000. “If the government mandates creation of a corpus to fund benefits, some of these benefits provided by platform companies may move to the corpus. We believe incremental impact to companies such as Eternal and Swiggy may not be very large,” KIE said in the report. 

Currently, the two food delivery and quick commerce companies pay about ₹63 and ₹47 per order to their delivery personal. The new code may increase cost by a marginal ₹1-₹2 an order after adjusting for the existing accident nd health cover among the others.