Table of Contents

1. Introduction

2. Scope and Objective of the Law

3. Key Definitions explained with real-life examples

4. Salient Features of the Code on Social Security, 2020

5. Applicability of the Law

6. Important Provisions of the Code on Social Security, 2020

7. Key Suggestions

8. Conclusion

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Introduction

The Code on Social Security, 2020 (SS Code) is a landmark law passed by the Indian Parliament on September 28, 2020, to simplify and modernize social security for workers. It merges nine older laws into one clear framework, making it easier for employers, employees, and even gig workers to understand their rights and duties. Key laws it replaces include the Employees’ Provident Fund Act, 1952, Employees’ State Insurance Act, 1948, Maternity Benefit Act, 1961, and Unorganised Workers’ Social Security Act, 2008. Most provisions came into force on November 21, 2025, as notified by the Central Government. This Code is a big step toward ensuring every worker—formal, informal, or gig—gets basic protections like healthcare, retirement savings, and maternity benefits.

Scope & Objective

Scope: The SS Code covers every worker in India, whether in factories, offices, shops, or even app-based platforms like food delivery. It applies to organized sectors (big companies, factories) and unorganized sectors (street vendors, domestic workers). For the first time, gig and platform workers are included, ensuring no one is left out.

Objectives (in simple words):

• Guarantee social security (healthcare, pensions, maternity support) for all workers.

• Simplify complex old laws into one easy-to-follow code.

• Extend benefits to unorganized, gig, and platform workers.

• Reduce paperwork and compliance burden for businesses.

• Use technology (Aadhaar, online portals) for faster registration and benefits.

• Ensure fairness and dignity for every worker, no matter their job type.

Key Definitions Explained with Real-Life Examples

1. Employee Any person employed for wages in any kind of work (manual, clerical, supervisory, managerial) in an establishment. Includes contract workers and apprentices. Example: A software developer in a Bengaluru IT firm, a cashier in a Mumbai supermarket, or a delivery rider for a food app—all are “employees” under this Code.

2. Gig Worker A person who does short-term, flexible jobs outside the traditional employer-employee relationship, often through online platforms. Example: A driver working for a ride-sharing app or a freelance graphic designer hired for a 3-month project is a gig worker.

3. Platform Worker A gig worker who uses an online platform (app or website) to find work or deliver services.Example: A food delivery person using an app to pick up orders or a tutor teaching via an online education platform.

4. Unorganised Worker A worker in the unorganized sector (not covered by formal laws like PF or gratuity) or self-employed workers, like home-based artisans or street vendors. Example: A carpenter in a small village or a vegetable seller in a local market is an unorganized worker.

5. Social Security Protection measures (healthcare, pension, maternity benefits, injury compensation) to ensure workers’ well-being during old age, sickness, or unemployment. Example: A factory worker gets free hospital treatment under ESI or a retired employee receives a monthly pension from PF.

6. Wages All payments (basic pay, dearness allowance, retaining allowance) but excludes bonuses, travel allowance, or gratuity. Example: A worker’s ₹20,000 monthly salary (basic + DA) counts as wages, but a ₹5,000 Diwali bonus does not.

7. Aggregator A digital platform (company) that connects gig/platform workers to customers. Example: Ride-sharing apps, food delivery apps, or freelance job portals are aggregators.

Salient Features of the Code on Social Security, 2020

The Code brings big changes. It makes rules easier for employers and better for workers. Here are the main features, explained simply with real examples.

1. Wider Coverage for All Types of Workers

The Code covers organized and unorganized sectors. It defines new terms like “gig worker” (someone doing short tasks via apps) and “platform worker” (like delivery riders on apps).

• What it means: All workers get access to social security schemes. Governments can create schemes for life cover, disability aid, health benefits, maternity help, old age pension, and crèche facilities.

• Real Example: A Uber driver in Mumbai (gig worker) can now join a government scheme for accident insurance. Before, only factory workers had this.

2. Consolidation of Nine Old Laws

It combines these laws:

• Employees’ Compensation Act, 1943

• Employees’ State Insurance Act, 1948

• Employees’ Provident Funds Act, 1952

• Maternity Benefit Act, 1961

• Payment of Gratuity Act, 1972

• And four more on cine-workers, construction cess, unorganized workers, and job exchanges.

• What it means: One law instead of nine. Easier to follow and less paperwork.

• Real Example: A small IT firm in Bengaluru no longer needs separate registrations for provident fund and insurance. One online portal handles all.

3. Social Security Organizations and Boards

• Key Bodies: Central Board for EPF (provident fund), ESI Corporation for health insurance, National and State Social Security Boards for unorganized workers, and welfare boards for construction and cine-workers.

• What it means: These groups run schemes and collect funds. The government can add new duties to them, like skill training.

• Real Example: The National Social Security Board can launch a pension scheme for 50 crore unorganized workers, like farm hands in Punjab.

4. Provident Fund and Employer Flexibility

• Employers with 100+ workers can apply to manage their own provident fund accounts if most employees agree.

• What it means: More choice for big companies, but strict audits by government.

• Real Example: A call center in Hyderabad with 150 staff gets approval to handle PF internally. This cuts government delays but needs yearly checks.

5. Gratuity and Maternity Benefits

• Gratuity now for fixed-term employees too (after 5 years service). Maternity leave up to 26 weeks, with pay.

• What it means: Same rights for temporary workers as permanent ones.

• Real Example: A contract nurse in a Delhi hospital gets gratuity after her 5-year fixed contract ends.

6. Cess for Construction Workers

• A tax (1-2% of construction cost) funds welfare for building workers.

• What it means: More money for their health and safety schemes.

• Real Example: On a ₹100 crore metro project in Chennai, ₹1-2 crore goes to worker housing and medical funds.

7. Aadhaar Link for Benefits

• Workers must link Aadhaar to get benefits or job help from career centers.

• What it means: Faster digital payouts, but raises privacy worries.

• Real Example: A factory worker in Gujarat links Aadhaar to claim ESI medical cover online.

8. Other Key Points

• Annual audits by Comptroller and Auditor-General for all funds.

• Job exchanges must notify vacancies to help unemployed workers.

• Penalties for non-compliance, with options for compounding (settling fines).

These features aim to protect over 40 crore workers. Since full rollout in November 2025, registrations have gone digital for quick access.

Applicability of the Law

The SS Code applies across India to:

• All establishments (factories, shops, offices) based on specific thresholds for each benefit:

  • Employees’ Provident Fund (EPF): 20 or more employees.

  • Employees’ State Insurance (ESI): 10 or more employees (or even 1 in hazardous jobs).

  • Gratuity: 10 or more employees in factories, mines, shops, etc.

  • Maternity Benefit: 10 or more employees in specified sectors.

• Unorganized workers, gig workers, and platform workers (no minimum employee threshold).

• Special sectors like construction, mines, and plantations have tailored rules.

• Even if employee count falls below the threshold later, the Code still applies unless formally exempted.

• Small establishments (below thresholds) can voluntarily join PF or ESI schemes with employee consent.

Key Note: The First Schedule of the Code clearly lists which chapters (PF, ESI, etc.) apply to which establishments, ensuring no confusion.

Important Provisions of the Code on Social Security, 2020 (Explained Simply)

1. Employees’ Provident Fund (EPF) – Chapter III

• Applies to establishments with 20 or more employees.

• Employer and employee each contribute 10–12% of wages (Central Government sets rate).

• Employees can contribute more than 10%, but employer is not required to match extra.

• Funds go to Provident Fund, Pension Fund (up to 8.33%), and Insurance Fund (up to 1%).

• Example: A Chennai factory with 25 workers deducts ₹2,000 (10%) from a worker’s ₹20,000 salary and adds ₹2,000. This ₹4,000 goes to PF for retirement savings.

2. Employees’ State Insurance (ESI) – Chapter IV

• Covers establishments with 10 or more employees (or just 1 in hazardous jobs like chemical plants).

• Employer contributes 3.25% of wages; employee contributes 0.75%.

• Funds provide medical care, maternity benefits, disability support, and family treatment.

• Plantation owners can opt for ESI if benefits are better than their existing schemes.

• Example: A worker in a Delhi garment factory (12 employees) gets free hospital treatment for a broken leg under ESI, and her family gets check-ups too.

3. Gratuity – Chapter V

• Applies to factories, mines, plantations, ports, railways, or shops with 10 or more employees.

• Payable after 5 years of continuous service (3 years for journalists) on retirement, resignation, death, or disability.

• Fixed-term workers get gratuity proportional to their contract length (even less than 5 years).

• Formula: (Last drawn wages × 15/26) × years of service.

• Example: A shop assistant in Kolkata (shop with 15 employees) retires after 10 years with ₹20,000 last salary. Gratuity = (20,000 × 15/26) × 10 = ₹1,15,385.

4. Maternity Benefit – Chapter VI

• Covers factories, mines, plantations, or shops with 10 or more employees.

• Women get 26 weeks’ paid leave (8 weeks before, 18 weeks after delivery).

• Additional 6 weeks for miscarriage; 12 weeks for adoption or surrogacy.

• Employer must provide ₹3,500 medical bonus if no free prenatal/postnatal care is given.

• Example: A woman in a Hyderabad IT firm (30 employees) takes 26 weeks off for childbirth and gets her full ₹40,000 monthly salary during leave.

5. Employees’ Compensation – Chapter VII

• Applies where ESI does not (e.g., units with fewer than 10 employees).

• Employer pays compensation for work-related injuries or death (based on wages and injury type).

• Example: A worker in a small workshop (8 employees) loses a finger in a machine accident. Employer pays ₹5 lakh compensation as per the Code’s schedule.

6. Social Security for Unorganised, Gig, and Platform Workers – Chapter IX

• First-ever legal recognition for gig and platform workers.

• National Social Security Board designs schemes for health, pension, and maternity benefits.

• Aggregators (e.g., food delivery apps) contribute 1–2% of annual turnover to a Social Security Fund.

• Workers must register on a national portal with Aadhaar for a unique ID.

• Example: A delivery rider in Mumbai registers on the portal and gets life insurance and hospital coverage funded by the app company’s contribution.

7. Building and Other Construction Workers (BOCW) – Chapter VIII

• Employers pay 1–2% cess on construction costs to fund welfare (housing, education, health).

• Workers register with state welfare boards for benefits.

• Example: A construction worker in Ahmedabad gets free medical check-ups and school fees for kids, paid by the cess collected from a mall project.

8. Employment Information and Monitoring – Chapter XIII

• Employers must report job vacancies to career centres (except agriculture jobs).

• No obligation to hire through centres; employers can choose their recruitment method.

• Example: A Pune factory with 50 employees lists 10 operator vacancies on the career centre portal but hires through its own interviews.

9. Digital and Simplified Compliance

• Mandatory electronic registration for all establishments.

• Digital records for wages, hours, leave, and overtime.

• Self-assessment for construction cess and online inspections.

• Example: A small retailer in Jaipur registers online, files digital wage slips, and avoids paper-based audits.

10. Penalties and Compounding

• Non-payment of PF/ESI contributions: Up to ₹1 lakh fine + 7 years’ jail.

• First-time offences can be settled by paying 50–75% of the fine, avoiding court cases.

• Example: A factory in Surat misses PF deposits, pays 50% fine (₹25,000), and corrects the error without going to court.

Key Suggestions for Improvement

The Code is a good start, but experts point out gaps. It needs fixes for better reach and fairness. Here are simple suggestions, based on legal reviews and worker needs.

1. Fix Aadhaar Mandate Issues

• Problem: Making Aadhaar compulsory for PF or gratuity may break Supreme Court rules (Puttaswamy case). These benefits come from employer funds, not government money.

• Suggestion: Allow alternatives like voter ID for privacy. Update rules by 2026 to avoid court challenges.

• Why it helps: More workers can claim benefits without fear.

2. Add Stronger Rules for Gig and Platform Workers

• Problem: The Code names gig workers but leaves out minimum wages, job safety, and clear employer duties. Platforms like Swiggy may not contribute enough.

• Suggestion: Set a 1-2% contribution from platforms to a gig welfare fund. Define “employee” tests (like control over work) from global models (e.g., UK’s IR35 rules).

• Why it helps: A Zomato rider gets health cover and accident pay without court fights.

3. Speed Up Full Implementation and Funding

• Problem: Even in December 2025, some states lag on schemes for unorganized workers. Funding for pensions is low amid rising old age needs.

• Suggestion: Central government give ₹10,000 crore yearly boost. Mandate state action plans with deadlines. Train 1 lakh officers for outreach.

• Why it helps: A street vendor in Kolkata joins a pension scheme in 2026, not 2030.

4. Improve Dispute Resolution and Awareness

• Problem: No fast courts for benefit claims. Many workers don’t know about rights.

• Suggestion: Set up online grievance portals with 30-day fixes. Run TV and app campaigns in local languages. Link with apps like UMANG for easy claims.

• Why it helps: A migrant worker in Mumbai resolves ESI delay in weeks, not years.

5. Balance Employer Burden

• Problem: Small firms fear high costs from new cess and contributions.

• Suggestion: Give tax breaks for compliant small businesses (under 50 workers). Phase in rules over 2 years.

• Why it helps: A startup in Pune hires more without closing shop.

6. Address Ageing Without Security

• Problem: India ages fast, but Code misses full old-age plans for informal workers.

• Suggestion: Universal pension like ₹3,000/month for over-60s in unorganized sector, funded by 0.5% GDP tax.

• Why it helps: Elderly farm workers get steady income.

Summary in One Line

The Code on Social Security, 2020 extends vital protections to gig and unorganised workers through unified schemes and digital ease, but improvements in Aadhaar flexibility, gig regulations, and faster funding will make it truly inclusive for India’s 2025 workforce.