Overview
The Code on Social Security, 2020 represents a significant reform in India’s labour welfare framework. It aims to ensure comprehensive and inclusive social protection for all sections of the workforce. The code consolidates nine existing social security laws into a single, streamlined framework that extends coverage to organized, unorganized, gig, and platform workers alike.
By bringing diverse labour laws under one umbrella, the Code seeks to simplify compliance, enhance efficiency, and expand access to benefits such as life and disability insurance, health and maternity care, provident fund, and gratuity. It also introduces digital systems and transparent facilitation mechanisms to strengthen implementation and support both employers and employees.
Key Objectives
- Ensuring universal social protection for all workers.
- Simplifying compliance and enhancing efficiency.
- Expanding access to social security benefits.
- Strengthening implementation through digital systems.
Pro-Worker Provisions
Gratuity to Fixed-Term Employees
Under Section 53 of the code, the Government has reduced the eligibility requirement for gratuity for Fixed Term Employees (FTEs) from five years to one year. If an employee completes one year of continuous service, gratuity shall be applicable on a proportionate basis.
Inclusion of Gig and Platform Workers
For the first time in the country, social security benefits have been extended to unorganised, gig and platform workers under Sections 113 & 114 of the Code on Social Security, 2020. The code also includes a definition of aggregator (digital intermediary). This shall benefit such workers directly.
Key Measures for Gig and Platform Workers
- Establishment of a National Social Security Board to advise the Government on formulating and monitoring suitable schemes.
- Provision for State Unorganised workers Social Security Board to advise state governments about suitable schemes, covered under Section 6(9).
- Creation of a Social Security Fund based on contributions from the Central & State Governments, Corporate Social Responsibility, and fines. This fund will provide benefits such as life insurance, disability cover, health and maternity benefits, and provident fund schemes.
- Section 13 envisages entrustment of additional functions to social security organisations for future requirements.
Universal Coverage under EPFO
The Employees Provident Fund & Miscellaneous Provisions Act, 1952, valid for the establishments mentioned in Schedule 1 of the Act, has been removed under the code.
The Code on Social Security, 2020 extends the coverage of the Employees’ Provident Fund (EPF) with the provisions applying to all establishments that have 20 or more employees, regardless of the type of industry.
More workplaces and workers will be covered under the Provident Fund system, allowing a larger number of employees to receive social security benefits like retirement savings. Since applicability issue is resolved, it shall reduce litigation.
National Registration & Unique Identification
The Government will build a National Database of Unorganized Workers to make it easier to design and deliver social security benefits for specific worker groups. All unorganized, gig, and platform workers will have to register themselves on a National Portal, post which each worker will receive a Unique Identification Number. Verified through Aadhaar, it will be valid across the entire country.
This will ensure that workers, especially migrant workers, can carry their benefits with them even if they move to another place for work.
Uniform Definition of “Wages”
A standardized definition of “wages” across all labour laws for social security purposes is to be followed. As per the Code, the definition of “Wage” includes basic pay, dearness allowance, and retaining allowance, if any.
If other pay-outs such as bonus, house rent allowance, conveyance allowance, overtime allowance, or commission exceed 50% of the total remuneration (or such percentage as notified by the Government), the excess amount will be added back to wages.
This will increase the wage amount and, in turn, enhance the value of social security benefits such as gratuity, pension, and leave salary, which are linked to wages.
Expanded Definition of “Family”
The Code expands the definition of “family” to include the mother-in-law and father-in-law of a woman employee (subject to an income cap). It also includes a minor unmarried brother or sister who is wholly dependent on the insured person, if the parents are not alive.
This expansion increases the coverage of family members eligible for ESIC benefits.
Commuting Accidents Covered under Employee’s Compensation
Earlier, accidents that occurred while an employee was travelling between home and the workplace were not treated as work-related, and employees or their families were not eligible for compensation.
The Code on Social Security, 2020 has changed this. Now, any accident that happens while commuting to or from work will be covered.
Exam Relevance
The Code on Social Security, 2020 is highly relevant for the UPSC Civil Services Exam, particularly for GS Paper II (Social Justice) and GS Paper III (Economy). It addresses critical issues related to labour welfare, social security, and inclusive growth. Understanding the provisions and implications of this code is essential for aspirants.
Key Areas for Exam Preparation
- Provisions for unorganized, gig, and platform workers.
- Changes in gratuity eligibility.
- Expansion of EPFO and ESIC coverage.
- Standardization of wage definitions.
- Impact on migrant workers.