Company: QuickServe Logistics (fictitious), a last-mile delivery platform
Background
QuickServe Logistics has built a Rs 800 crore business on speed and convenience.
Order groceries at 9 p.m., get them by 10 p.m.
Need medicines urgently? Delivered in 20 minutes.
The company’s promise is frictionless, instant gratification.
That promise rests on 15,000 delivery workers — most of whom are not employees.
The situation
Those 15,000 workers are classified as “independent contractors”—gig workers rather than employees.
This classification allows QuickServe to avoid providing Provident Fund, ESI, paid leave or job security. Workers are paid per delivery. If there are no deliveries, there is no income. If they fall sick, there is no paid leave. If they are injured, there is no insurance. If they are dismissed, there is little recourse.
For QuickServe, this model is essential. Labour costs remain variable. Expenses rise and fall with demand. The company stays lean, agile and profitable.
But pressure is building.
A workers’ union has formed and is demanding reclassification as employees with full benefits. A case has been filed with the labour commissioner. Strike threats are emerging. Media coverage is intensifying, with phrases such as “exploitation economy” entering the public conversation.
Legal experts say the case could go either way. Courts in India have ruled inconsistently on gig worker status. Some argue that these workers are economically dependent on platforms and should be treated as employees. Others say the flexibility and autonomy they enjoy make them genuine contractors.
HR has run the numbers.
Reclassifying 15,000 workers as employees would add roughly Rs 150 crore annually in costs—PF contributions, insurance, paid leave and severance obligations. The business model, already operating on thin margins, could become unviable. Investors might withdraw. The company itself could struggle to survive.
But refusing to reclassify brings its own risks: strikes, legal battles, regulatory scrutiny and reputational damage in an era where brand perception can shift overnight.
HR now faces a difficult choice.
The dilemma
Should HR recommend reclassifying the workers as employees—protecting them but potentially undermining the business model?
Should the company fight the case legally—preserving profitability but risking accusations of exploitation?
Or is there a third path—a hybrid approach that offers some protections without fully converting gig workers into employees?
What’s really at stake
This is a test of whether companies built on gig labour can remain ethically sustainable—or whether the model itself relies on structural precarity.
If QuickServe reclassifies its workforce, it could set a precedent that reshapes the entire platform economy.
If it resists, critics may argue it confirms a deeper problem: that gig work is insecurity packaged as flexibility.
And the larger question remains: can a business model that depends on limiting worker protections truly be called sustainable?
We asked three HR leaders how they would handle this dilemma.
What HR leaders said
Ravi Mishra, Head–HR, BITS Pilani
“Gig workers should be reclassified and given full employment benefits. The fear that this will destroy the business model is often exaggerated. Yes, costs will increase, but that doesn’t necessarily mean the business becomes unviable. If customers see value, they may accept slightly higher prices.
Today, both consumers and businesses benefit from the gig economy. But gig workers—central to the entire ecosystem—bear the highest risk without protection. They spend long hours on the road, face pollution and traffic, and remain exposed to accidents.
Beyond economics, there’s a social dimension. Employment brings dignity and stability. I once met a delivery worker who was a diploma engineer who’d migrated due to personal challenges. These experiences remind us that gig workers are individuals trying to sustain their lives with dignity.
If businesses and governments work together, the transition can be managed. Governments could provide initial support through incentives or subsidies, as they’ve done for other industries.
Ultimately, every role deserves respect. Businesses can’t build long-term success on models that rely on exploiting vulnerable workers. Reclassifying may increase costs short-term, but it creates a more sustainable and humane ecosystem.”
Nihar Ghosh, Former CHRO, Emami
“The gig model exists precisely because it offers flexibility—for both companies and workers.
Delivery workers today aren’t tied to one platform. Like ride-hailing drivers, they often partner with multiple platforms simultaneously. Workers choose when to work, which platform to use, and how many deliveries to complete. If they don’t wish to work, they simply log off. This autonomy could disappear with full-time employment.
Once classified as employees, the relationship changes completely. Companies would expect commitment and exclusivity. Workers would need fixed hours and would be expected to accept assigned deliveries, and likely be restricted from competing platforms.
This raises a fundamental question: can someone enjoy gig flexibility whilst demanding full employee benefits? In most cases, both can’t coexist.
From a compliance perspective, if workers become employees, companies must comply fully with labour laws—PF, social security, all statutory obligations. There’s no middle ground legally.
Companies could offer a choice: transition to full-time employment with fixed hours and exclusivity, or continue as gig partners with flexibility but without full benefits.
Flexibility and full employment benefits rarely coexist. If workers seek complete protection, they must accept the structure that comes with formal employment.”
Chandrasekhar Mukherjee, Former CHRO, Bhilosa Industries
“From a legal perspective, this is relatively straightforward. Delivery work is directly connected to the core business of a logistics company. When a role is integral and continuous, labour laws generally expect it to be performed by employees, not contractors.
Even where contractors are engaged, the principal employer remains responsible for statutory obligations such as PF and social security. Ignoring these exposes the company to significant legal and reputational risks.
However, there’s a practical middle path: fixed-term employment contracts. Workers are hired for defined periods but receive statutory benefits and protections. This maintains some flexibility whilst ensuring compliance.
Companies must also consider the rising cost of non-compliance. With increased digital monitoring and regulatory scrutiny, the risks have grown significantly. Reputational damage, penalties and legal actions can severely affect a company’s future.
If providing benefits increases costs, companies must adjust their business models. Labour is a key component, like machines or raw materials. When fuel prices rise, companies pass costs to customers. Labour costs should be factored similarly.
Businesses can’t build sustainable models by bypassing labour laws. Compliance, even if costly, is ultimately safer and more sustainable.”
If you were the HR head at QuickServe
You have been asked to recommend a course of action to the leadership team.
Do you:
- Reclassify gig workers as employees and absorb the additional costs?
• Fight the case legally to protect the business model?
• Design a hybrid structure that offers partial protections whilst retaining flexibility?
Or is the deeper question this: can a business model built on gig labour remain ethically and legally sustainable over time?
Share your recommendation in the comments or on LinkedIn using #HRKathaCaseInPoint.