12 significant insights to Social Security Code-labour Law

12 significant insights to the Social Security Code,2020 under the Labour Codes

The Social Security Code, 2020 is part of India’s four labour codes, which aim to simplify and consolidate multiple existing labour laws. These codes, including the Social Security Code (SSC), were enacted to bring a uniform legal framework and ensure comprehensive social security coverage for all workers, including those in the unorganised sector. Below are the important points of the Social Security Code, 2020, which reflect its purpose and significant provisions:

1. Objective and Scope

The primary objective of the Social Security Code, 2020 is to provide a broad social security net to the working class, covering both the formal and informal sectors. The code seeks to amalgamate and rationalise the existing laws on social security and welfare schemes for employees, including the Employees’ Provident Fund (EPF), Employees’ State Insurance (ESI), gratuity, maternity benefits, and disability benefits. It is a step toward universal social security by aiming to include workers from gig platforms, unorganised sectors, and self-employed individuals under the ambit of social protection.

2. Consolidation of Social Security Laws

The SSC merges nine existing laws into a single code. These include:

The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
The Employees’ State Insurance Act, 1948
The Payment of Gratuity Act, 1972
The Maternity Benefit Act, 1961
The Building and Other Construction Workers Welfare Cess Act, 1996
The Unorganised Workers’ Social Security Act, 2008
The Employees’ Compensation Act, 1923
The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
The Cine Workers Welfare Fund Act, 1981

By consolidating these acts, the code simplifies compliance, reduces bureaucratic overlaps, and improves the implementation of social security schemes.

3. Coverage of Unorganised Sector and Gig Workers

One of the most notable features of the SSC, 2020, is its inclusion of workers from the unorganised sector and gig workers. In India, a large percentage of the workforce, over 90%, operates in the informal sector. Prior to the SSC, these workers had minimal access to social security benefits. The Code mandates that both the central and state governments extend welfare schemes, including provident fund, health insurance, and pension schemes, to gig and platform workers, ensuring they are not left out of the social security net.

Platform workers—those who find jobs via digital platforms such as ride-hailing services, food delivery, or freelance gigs—are covered under this code. This inclusion is a significant step forward, given the growth of the gig economy.

4. Employees’ Provident Fund (EPF)

Under the SSC, employees and employers continue to contribute to the EPF. It provides the Employees’ Provident Fund Organisation (EPFO) with the responsibility to manage these contributions. The key change is that the threshold for EPF applicability may be adjusted by the government to bring more workers under its purview. The SSC simplifies procedures for enrolment and contribution, making it easier for small enterprises to comply with EPF requirements.

5. Employees’ State Insurance (ESI)

The ESI scheme, a critical social security benefit providing health and medical benefits to workers, is extended under the SSC. The code permits the central government to expand the coverage of the Employees’ State Insurance Corporation (ESIC) to all districts in India and cover employees working in hazardous occupations regardless of the size of the establishment. This potentially extends medical benefits to millions of unorganised sector workers and labourers working in construction and other high-risk industries.

6. Gratuity

The SSC maintains gratuity benefits for employees who have rendered five or more years of continuous service. However, the Code introduces new provisions to include fixed-term employees, who are entitled to gratuity on a pro-rata basis, even if they have not completed five years. This is a progressive step, offering more security to workers engaged in short-term contracts, as this sector is expanding rapidly.

7. Maternity Benefits

The code retains the provisions of the Maternity Benefit Act, ensuring that women employees receive maternity benefits, including paid leave and job security. The SSC also mandates creche facilities for establishments employing a certain threshold of women workers, thereby supporting work-life balance for working mothers.

8. Social Security Fund

A Social Security Fund is to be created under the SSC to implement welfare schemes for unorganised workers, gig, and platform workers. This fund can be financed by contributions from aggregators employing gig workers, providing a new funding mechanism for the social security of these workers.

9. Inspector-cum-Facilitator

The SSC introduces the concept of Inspector-cum-Facilitators who will ensure compliance with the social security provisions and guide employers and employees regarding their obligations. This marks a shift from the previous inspector-based model to a more facilitative approach aimed at ensuring smoother implementation.

10. Vulnerability Assessment and Targeted Benefits

The government is empowered to assess the vulnerability of specific groups of workers and implement social security measures tailored to their needs. For instance, migrant workers and workers in hazardous jobs can be provided with targeted social security benefits, reflecting a more flexible and responsive approach to worker welfare.

11. Dispute Resolution and Penalties

The SSC introduces simplified dispute resolution mechanisms, allowing workers to resolve grievances more quickly. It also prescribes penalties for non-compliance, which can range from fines to imprisonment, depending on the nature and severity of the violation. These measures ensure that employers adhere to social security regulations.

12. Portability of Benefits

The SSC aims to ensure portability of benefits, especially for migrant workers, through the creation of a national database. This enables workers to access benefits across states and employers, which is crucial for India’s highly mobile workforce.

Conclusion

The Social Security Code, 2020 is a landmark piece of legislation aimed at overhauling India’s social security landscape. It attempts to provide a comprehensive safety net to both formal and informal workers, extends protection to gig and platform workers, and simplifies the existing framework of social security laws. While challenges in implementation remain, particularly in the unorganised sector, the Code is a significant step towards ensuring universal social security for all Indian workers.

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