The Labour Code on Social Security, 2020 – The new age Employment Ecosystem

Social Security Code 2020
The Labour Code on Social Security, 2020 – The new age Employment Ecosystem

By – Shreya Dubey, Neha Das

The Labour Code on Social Security 2020 (“Social Security Code” or “Code“) is the fourth legislation in a 4-part series of the new labour reforms introduced by the Central Government. The Social Security Code 2020 is a landmark reform aimed at restructuring social welfare policies in India. The Code marks a watershed moment in labour law reforms in India, consolidating nine major social security laws under one unified framework which include:

The Social Security Code 2020 streamlines, changes, and combines parts of the above laws in order to provide full welfare coverage while making it easier for employers to follow the rules. It does this by giving social security benefits to all workers, including those in traditional, unorganized, and non-traditional sectors like gig workers and platform workers.

Aim & Scope

With the Code on Social Security 2020, more people will be covered by social security. This is a big step toward protecting gig workers and platform workers. The main goal of the Social Security Code 2020 is to create a unified and all-encompassing system for social security that protects employees, unorganized workers, gig workers, and platform workers. It makes sure that everyone has access to health care and a steady income, especially when someone is old, sick, disabled, on maternity leave, loses their job, or the family loses a worker. These defenses come from the rights that the Social Security Code 2020 gives people and the programs that were made to follow its rules. 

Salient features of the Social Security Code 

Recognition of various types of workers

The Social Security Code 2020 ensures an inclusive framework by recognizing gig and platform workers under its ambit.One of the standout features of the Social Security Code is its recognition of gig workers and platform workers for the first time in the history of labour legislation in India. A Gig Worker has been defined as a person who performs work outside a traditional employer-employee relationship, typically on a temporary or part-time basis. Such examples would include freelancers and independent contractors. The Code further defines Platform Worker as a worker engaged in activities through digital platforms, such as ride-hailing services or delivery systems. The Social Security Code 2020 also provides a comprehensive definition of unorganized workers, which includes home-based workers, self-employed individuals, and wage labourers in the unorganized sector. 

Benefits for Unorganized, Gig, and Platform Workers

The Social Security Code empowers the Central and State Governments to frame social security schemes for unorganized workers, gig workers, and platform workers towards:

  • life and disability cover, to provide financial support in cases of death or permanent disability. 
  • accident insurance to offer protection against work-related injuries, including financial assistance during recovery periods. 
  • access to healthcare and financial support during maternity through comprehensive health and maternity benefits.  
  • provisions for pensions or retirement benefits, safeguarding workers’ financial security post-retirement. 
  • establishment of childcare facilities, such as crèches, to support workers with young children. 

The Social Security Code 2020 sets new standards in social security compliance India, ensuring benefits extend to all categories of workers. These schemes can be funded through a combination of contributions from governments, aggregators, beneficiaries, or corporate social responsibility (CSR) funds. Additionally, the Social Security Code 2020 mandates the establishment of a National Social Security Board to oversee these schemes and recommend policies for the welfare of gig, platform, and unorganized workers. The Wage Code also provides for the creation of helplines and facilitation centres to address worker grievances and ensure that the targeted workforce can avail the benefits. The unorganized, gig, and platform workers must however compulsorily register to access the benefits provided under the relevant schemes. 

Benefits for Employees working in the Organized Sector

  • Employee Provident Fund (EPF)- Employers and employees are each required to contribute 10% of wages to the fund, with an option for employees to contribute more voluntarily. The Central Government may increase this contribution rate to 12% by way of amendments/ notification.
  • Employees’ State Insurance (ESI)– Gig and platform workers have been extended the benefit of ESI. Further if an employer fails to pay contributions, the Employees’ State Insurance Corporation (ESIC) can pay benefits to the employee and recover the amount from the employer, along with penalties. 
  • Gratuity – Gratuity which is payable to regular employees after five years of continuous service has now been extended to fixed-term employees on a pro-rata basis. Working journalists are eligible for gratuity after three years of continuous service, and in cases of death or disability, the 5-year requirement is waived.
  • Maternity Benefits –Women employees continue to be entitled to paid maternity leave for 26 weeks, including eight weeks before delivery and six weeks of paid leave in cases of miscarriage or medical termination of pregnancy. Women who have worked for at least 80 days in the preceding 12 months are entitled to maternity benefits, which include medical bonuses and paid leaves. 

Compliance and Administration Mechanisms

The Social Security Code 2020 integrates modern digital platforms for streamlined compliance and administration.

  • Social Security Fund –A Social Security Fund is required to be established by the Central Government, which will finance benefits for unorganized workers, gig workers, and platform workers. Contributions to this fund can come from multiple sources, including aggregators and CSR activities.
  • Single Registration and Reporting- Employers shall register their establishments under a single registration system, which simplifies compliance requirements. Similarly, consolidated reporting mechanisms have been brought into force to reduce administrative burdens while ensuring transparency.

Enhanced Enforcement Mechanisms

Under the Social Security Code 2020, stringent penal provisions enhance social security legislation for better enforcement.

  • Inspector-cum-Facilitators – The Social Security Code 2020 replaces traditional inspectors with Inspector-cum-Facilitators. These people will do two things: they will check things and help employers follow labor laws. The goal of this collaborative method is to make enforcement better without making the relationship hostile.
  • Digital Platforms for Compliance – The Social Security Code 2020 encourages the use of technology for compliance and monitoring. Online filing of returns, electronic record maintenance, and digital grievance redressal mechanisms ensure efficiency and transparency.
  • Penalties – As an effective deterrent, the quantum of fines levied on the employer has been increased in matters pertaining to (including but not limited) the following: (i) failure to pay contributions; (ii) failure to pay amount of gratuity; (iii) failure to provide maternity benefit; (iv) failure or refusal to submit any return, report, statement or any other information; (v) failure to pay any amount of compensation to which an employee is entitled; (vi) obstructing Inspector-cum-Facilitator to discharge his duties and failure to produce on demand any register or document in his custody; and (vii) dishonestly making a false return, report, statement or information to be submitted.

Conclusion

The consolidation of 9 major social security legislations into a single framework will reduce duplication and ensure uniformity across sectors. The Social Security Code 2020 adopts a holistic approach, extending coverage to gig, platform, and unorganized workers, which were previously unrecognised work sectors. By including gig and platform workers under its ambit, the Social Security Code addresses the challenges posed by changing employment patterns in the digital age. It simplifies compliance, reduces administrative complexities, and ensures that no worker is left behind in accessing basic healthcare. Stringent penal provisions coupled with significant rise in the amount of the fines prescribed would act as an impetus for the employers to comply with the provisions of the Code. By implementing the Code on Social Security 2020, India moves towards a more structured and transparent welfare system for its workforce.

IRC Gazette

Social Security Code 2020

FAQs

  1. What is the Industrial Relations Code, 2020?

    The Central Government made a big change to India’s social security system by introducing the Social Security Code 2020. This is a major reform. It takes nine important social security rules and combines them into one big law. The Code on Social Security 2020 wants to give benefits like health insurance, a provident fund, a gratuity, and maternal benefits to workers in all types of industries, such as the gig, platform, and organized workforce. The Social Security Code makes it easier for people to get benefits and makes things easier for employers and employees to do by combining several rules into one. Indian social security is getting more modern, and this labor code bill 2020 is a big step in the right direction.

  2. What are the key features of the Code on Social Security, 2020? 

    Several important new rules in the Code on Social Security 2020 are meant to make social security cover more people. For the first time in Indian labor law, it publicly recognizes gig and platform workers and makes sure they get benefits like health insurance, accident insurance, and pension plans. All employers are required by social security law to use a single registration and reporting method. This cuts down on waste and makes sure that India follows social security rules. The Code also adds Inspector-cum-Facilitators, who will help companies stay in compliance while also overseeing enforcement. It also sets up a National Social Security Board to look out for workers’ well-being and make sure policies are carried out correctly.

  3. How does the Social Security Code impact employees and employers in India?  

    The Social Security Code 2020 improves employee benefits code India, making it easier for more people to get aid programs like provident fund, gratuity, and maternity benefits. It makes sure that gig workers, platform workers, and people who work in the unorganized sector are covered by India’s social aid programs. On the other hand, employers gain from an easier way to comply because the Code gets rid of the need for multiple registrations and makes social security in labor law easier to understand. But it also makes the fines for not following the rules stricter, which makes sure that businesses do what the law says they have to do.

  4. What benefits are covered under the Code on Social Security? 

    There are many benefits in the Code on Social Security 2020, such as an employee provident fund (EPF), an employees’ state insurance (ESI), a bonus, maternity benefits, life and disability insurance, accident insurance, pension plans, and the creation of crèches for children. It sets up special support programs for workers in the unorganized, gig, and platform sectors. These programs are paid for by the government, employers, and aggregators. The Social Security Act India also makes sure that workers are taken care of in old age, sickness, unemployed, pregnancy, and accidents at work.

  5. How does the Code on Social Security streamline existing labor laws? 

    The Social Security Code 2020 combines nine different social security laws into a single, unified framework. This cuts down on duplication and makes it easier for people to follow the rules. It sets up a single registration method so that businesses only have to register once instead of several times under different laws. The Code also digitizes ways to comply, requiring records to be kept electronically and tax returns to be filed online. It also sets up social security agreements that make it easier for government departments to work together. This makes sure that all workers, even those who don’t work in traditional jobs, are protected.

  6. Who is eligible for benefits under the Social Security Code, 2020?

    The Code on Social Security 2020 gives benefits to all types of workers, such as those who work in the organized sector, the unregulated sector, as gig workers, and as platform workers. It includes people who work on digital platforms, people who are self-employed, and people who work for a daily wage under the idea of social security in labor law. Some benefits are only available to people who have made certain contributions and meet certain employer responsibilities. But workers must sign up for the right social security programs in order to use government-funded aid programs.

  7. How does the Code on Social Security, 2020 integrate existing social security laws?

    The Employees’ Provident Funds and Miscellaneous Provisions Act of 1952, the Maternity Benefit Act of 1961, and the Payment of Gratuity Act of 1972 are just a few of the laws that the Social Security Code 2020 brings together. In this way, it makes sure that all social security laws in India 2020 are the same, getting rid of any problems that might arise from different rules. It makes sure that new types of work, like gig work and digital platform work, are recognized by the law by giving a consistent description of workers.

  8. What is the role of employers under the Social Security Code?

    The Social Security Code 2020 says that employers are very important in making sure that their workers get the benefits they are due to. Under the Code, employers must register, pay into social security funds like EPF and ESI, and keep correct records of the benefits they give to their workers. If these duties aren’t met, heavy penalties may be applied. The Code also says that companies must look out for the well-being of gig and platform workers and help pay for their safety.

  9. How does the Social Security Code ensure compliance by employers?

    Inspector-cum-Facilitators are new to the Code on Social Security 2020. They help companies meet compliance requirements and make sure that strict enforcement is carried out. Employers must register with a single system and pay their taxes electronically. This makes compliance easier and makes things more clear. India has also made it easier for people to follow the rules when it comes to social security. People who don’t follow the rules now face harsher punishments, such as fines and legal action for multiple violations.

  10. What changes have been made to gratuity rules under the Code on Social Security, 2020?

    The Social Security Code 2020 gives fixed-term workers the right to gratuity benefits. Instead of having to work for five years straight, they can get gratuity on a pro-rata basis. Working writers can now get a gratuity after three years of service. If they die or become disabled, they don’t have to work for five years before they can get the gratuity. These parts of the employee benefits code India make it much better and give more people financial security.

  11. How does the Code on Social Security, 2020 address gig and platform workers?

    A new law called the Social Security Code 2020 makes gig and platform workers legal in Indian labor law for the first time. It makes sure they can get life and disability insurance, accident insurance, maternity benefits, salary plans, and help with child care. The Code requires the creation of a National Social Security Board. This board will be in charge of welfare programs for these workers and make sure they are protected even though they don’t have a standard employer-employee relationship.

  12. What are the penalties for non-compliance under the Social Security Code?

    The Social Security Code 2020 has harsh punishments for people who don’t follow it. Employers who don’t pay into EPF, ESI, gratuity, or maternity payments can be fined up to ₹1,000,000 and could go to jail if they break the law more than once. There are more punishments for not turning in reports, blocking inspectors, or giving false information.

  13. How does the Code on Social Security, 2020 impact provident fund contributions?

    The Social Security Code 2020 says that 10% of wages must be put into the Employee Provident Fund (EPF) by both workers and employers. By giving notice, the government can raise this payment rate to 12%. Gig and platform workers are also covered by employees’ state insurance (ESI). This makes sure that a larger group of workers is protected by social security laws in the workplace.

  14. What government bodies are responsible for implementing the Code on Social Security?

    The Employees’ Provident Fund Organization (EPFO), the Employees’ State Insurance Corporation (ESIC), and the National Social Security Board are some of the government agencies that carry out the Social Security Code 2020. These groups are in charge of India’s social security laws and make sure that all workers who are qualified get the benefits that are set out in the Code.

References

Ministry of Labour and Employment – https://labour.gov.in/labour-codes

More from Neeti Niyaman Team –