Labour union files complaint against IPO-bound Zepto over breach of promises

The Rajdhani App Workers' Union (RAWU) has lodged a complaint with the Delhi labour department against Zepto and its third-party vendor, Kilton Geo Engineering Pvt. Ltd, alleging exploitative practices under Zepto’s Rural Mobilization Programme (RMP). The union claims gig workers—referred to by Zepto as “delivery partners” and largely recruited from rural states—were misled about wages, accommodation, and working conditions.

The filing comes as quick commerce firms are grappling with a temporary shortage of delivery personnel amid surging demand.

The labour department has referred the matter to a labour inspector. Notices are expected to be sent to Zepto, the third-party vendor, and a group of affected workers as part of the inquiry process, according to RAWU.

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Zepto clarified that it provides the technology and clear guidelines, but “day-to-day operations and vendor oversight are handled locally by store management.” A Zepto spokesperson told Mint, there is no concept of ‘temporary IDs’ in our system…and no joining bonus to riders is offered under RMP.

“This appears to be a localised issue and does not reflect the broader intent or functioning of the RMP,” Zepto added. The company said they have launched an audit into the concerns regarding Kilton Geo Engineering.

Mint’s emailed queries to Kilton Geo Engineering Pvt. Ltd did not elicit a response.

“When they reached Delhi, they were crammed 10 to 12 in a single room in hostels. The food, when given at all, was conditional on completing 100 orders per week and was unfit for consumption,” said Sunand, president of the RAWU, which is affiliated with the Centre of Indian Trade Unions (CITU). 

The vendor allegedly pocketed referral bonuses of ₹7,000 to ₹10,000 per worker and in many cases, made them work using friends’ or relatives’ IDs to falsely claim additional bonuses. Even after the 42-day period, IDs were not transferred to the workers, said Sunand.

Regulatory grey areas 

Though Zepto classifies them as partners, experts note that the involvement of third-party vendors creates a complex situation where workers fall into a regulatory grey area—neither fully employees of the platform nor clearly protected under labour laws. Currently, vendors fall outside the legal definitions of “aggregators” or “employers.” 

“This effectively allows them to structure around labour laws,” notes Ajay Kumar, partner at Triumvir Law, a Bengaluru-based law firm. 

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In the gig economy, it’s fairly common for platforms to rely on third-party vendors for worker recruitment, said Prakash Gupta, lead, Centre for Inclusive Mobility at OMI Foundation, a Delhi-based policy research think tank.

"In most cases, workers are treated either as employees of the vendor or as per-transaction contract workers tied to them, rather than the platform directly,” he added.

No written contracts

“There are no written contracts between the vendor and the workers,” said Sunand. “This lack of documentation leaves workers with no legal recourse, no clarity on their terms of employment, and completely at the mercy of the vendor’s arbitrary decisions.”

There’s often no direct paper trail connecting the worker to the platform, giving platforms an arm’s-length distance from accountability, explained Centre for Inclusive Mobility’s Gupta. 

Kumar explained that the Contract Labour (Regulation and Abolition) Act, 1970 protects contract workers, often excluded from formal employment rights and prevents employers from outsourcing work to evade responsibility. “Even if the vendor is the immediate employer, the principal employer (in this case, the platform) can't completely wash its hands off responsibility,” Kumar added, provided the vendor qualifies as a contractor under the law.

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He also pointed to the Interstate Migrant Workmen Act, which applies when workers are recruited from one state to work in another, as is the case with many gig workers coming from Uttar Pradesh, Bihar, and Jharkhand to Delhi. This law requires contractors to obtain licenses and provide migrant workers with allowances. “Section 18 makes the principal employer liable if the contractor fails in these duties, meaning the platform could be held accountable despite distancing itself from direct recruitment,” Kumar added.

Delivery workforce 

This development comes amid a wider shortage of delivery personnel, driven by surging demand in the quick commerce sector.

In his letter to shareholders following the Q4FY25 results, Deepinder Goyal, founder and CEO of Eternal Ltd, noted: “Food delivery growth witnessed a slowdown, and it is due to three key reasons including the “shortage (temporary) of delivery partners due to high demand of delivery partners in quick commerce given the rapid expansion of the industry in the last few months.” Eternal is the parent company of Zomato, Blinkit, and Hyperpure.

In April, Zepto’s co-founder and CEO Aadit Palicha announced that the company is nearing $4 billion in annualised Gross Order Value (GOV), reflecting a 300% year-on-year growth.

As Zepto prepares for its upcoming initial public offering (IPO), it is in talks to sell $250 million in secondary shares to Indian investors, aiming to increase local ownership ahead of the public listing. Valued at $5 billion and operating in just 15 cities, Zepto is seeking avenues to expand both its revenue base and market presence.

According to CLSA’s 2024 App-racadabra report, Zepto commands approximately 28% of India’s quick commerce market—significant given its limited footprint—second only to Blinkit, which holds 39%.