SOCIAL SECURITY CODE, 2020 – COMPLETE RESTRUCTURED NOTES
(Based on Academic Article by Suresh Nadagoudar & Rajashree Patil)
1. INTRODUCTION
(Context, Background & Need for the Code)
Key Background Facts
• Around 90% of India’s workforce (2018–19) is engaged in the unorganised sector
• Such workers:
o Are inadequately covered or not covered under labour laws
o Work under exploitative and precarious conditions
• India ranked among the 10 worst countries for worker rights (2020) as per International Trade
Union Confederation
International Context
• UN Sustainable Development Goal 1 (SDG-1):
o Emphasises ending poverty
o Calls for national social protection floors
• ILO Recommendation No. 204 (2015):
o Advocates minimum social security guarantees
o Encourages transition from informal to formal economy
COVID-19 Context
• Pandemic exposed:
o Fragility of informal employment
o Absence of income security
• Social security is essential to:
o Reduce economic shocks
o Provide resilience to poor and needy
Purpose of the Article
• To analyse the Code on Social Security, 2020
• To assess:
o Its scope
o Its coverage
o Its effectiveness
o Its shortcomings, especially regarding:
▪ Unorganised workers
▪ Gig workers
▪ Platform workers
2. CONCEPT OF SOCIAL SECURITY
Meaning and Evolution
• Social security is:
o A response to economic insecurity
o A modern mechanism to protect against:
Old age
▪
▪ Unemployment
▪ Sickness
▪ Invalidity
▪ Work injury
▪ Maternity
▪ Death of breadwinner
International Labour Organization (ILO) Definition
Social security means:
“Protection provided by society to ensure access to health care and income security.”
Nature of the Concept
• Universally accepted
• Central aim of:
o Social welfare
o Labour protection
• However:
o Term is used very broadly
o Often lacks precise meaning
3. EVOLUTION OF THE SOCIAL SECURITY CODE, 2020
Origin
• Based on recommendations of:
o Second National Commission on Labour, 2002
• Suggested:
o Consolidation of labour laws
o Subject-based codification
Legislative History
• Draft Code introduced: 2017
• Comprehensive draft placed before Parliament: 2018
• Diluted version introduced: December 2019
• Parliamentary Standing Committee Report: 31 July 2020
• Code notified: 29 September 2020
Objectives of the Code
• Consolidate social security laws
• Reduce multiplicity of authorities
• Ensure:
o Welfare
o Compliance
o Use of technology
• Extend social security to:
o Organised sector
o Unorganised sector
o Gig and platform workers
4. LEGISLATIONS CONSOLIDATED UNDER THE CODE
The Code merges 9 Central Labour Laws, including:
1. Employees’ Compensation Act, 1923
2. Employees’ State Insurance Act, 1948
3. Employees’ Provident Funds Act, 1952
4. Maternity Benefit Act, 1961
5. Payment of Gratuity Act, 1972
6. Employment Exchange Act, 1959
7. Cine Workers Welfare Fund Act, 1961
8. Building and Other Construction Workers Welfare Cess Act, 1996
9. Unorganised Workers’ Social Security Act, 2008
Structural Details
• 164 Sections
• 14 Chapters
• 7 Schedules
5. SALIENT FEATURES OF THE SOCIAL SECURITY CODE, 2020
5.1 Definitions Introduced / Expanded
(a) Career Centre
• Includes:
o Employment exchanges
o Online portals
o Government offices
• Purpose:
o Job matching
o Vocational guidance
(b) Aggregator
• Digital intermediary connecting:
o Buyer
o Service provider
• Crucial for:
o Gig economy regulation
(c) Gig Worker
• Works outside traditional employer-employee relationship
• Includes freelancers, part-time workers
(d) Platform Worker
• Performs work via online platforms:
o Amazon
o Flipkart
o Zomato
o Myntra
5.2 Coverage & Voluntary Registration
• EPF & ESI coverage can be voluntarily adopted
• Even if employee threshold is not met
5.3 Social Security Schemes
• Central Government empowered to frame schemes for:
o Unorganised workers
o Gig workers
o Platform workers
o Self-employed workers
5.4 Mandatory Registration
• Registration required for:
o Unorganised workers
o Gig workers
o Platform workers
• Based on:
o Self-declaration
o Aadhaar number
5.5 Gratuity for Fixed-Term Employees
• Gratuity payable:
o On pro-rata basis
o Without 5-year minimum service
5.6 Maternity Benefits
• Maximum: 26 weeks
• Prohibits work:
o 6 weeks post delivery / miscarriage
• Medical bonus:
o ₹3,500 if no free medical care
• Creche facility clarified
5.7 Limitation Period
• Recovery of dues limited to:
o 5 years
• Earlier:
o No limitation period
5.8 Offences & Penalties
• Opportunity to cure default before prosecution
• Failure to deposit contribution:
o Fine up to ₹1,00,000
o Imprisonment: 1–3 years
• Repeat offences:
o Severe punishment
o Corporate veil lifted
6. COMPARISON WITH EARLIER LABOUR LAWS
Major Improvements
• Social Security Organisations created
• Reduced appeal deposit:
o Earlier: 75%
o Now: 25%
• Introduction of:
o Excess sickness benefit
o Welfare schemes for gig/platform workers
• Toll-free helpline
• Digital registers
7. MERITS OF THE CODE
7.1 Employer Perspective
• Fixed limitation period
• Compounding of offences
• Reduced inspection harassment
• CSR funds usable
• Faceless inspections
7.2 Employee Perspective
• Wider definition of “employee”
• Increased PF & gratuity base
• Coverage of hazardous occupations
• Pro-rata gratuity for fixed-term employees
• Aadhaar-based portability
8. AADHAAR & RIGHT TO PRIVACY (PUTTASWAMY ANALYSIS)
Key Judgments Discussed
• Justice K S Puttaswamy
• M P Sharma
• Kharak Singh
• Govind
Legal Issue
• Aadhaar mandatory under Code
• Supreme Court held:
o Aadhaar compulsory only for benefits from Consolidated Fund of India
• PF & gratuity are contributory
• Mandatory Aadhaar may violate privacy judgment
9. IMPACT ON WORKFORCE
Statistical Reality
• Unemployment rose to 25% (May 2020)
• Informal sector remains ~90%
• India projected to become:
o Ageing society by 2040
Migrant Workers
• Highly vulnerable
• No inter-State coordination mechanism
• Pandemic exposed systemic failure
10. CRITICAL ANALYSIS & SHORTCOMINGS
Key Concerns
• Ambiguous definition of wages
• Increased employer & employee burden
• No clarity on:
o Domestic workers
o Agricultural workers
• Dual authority (Centre & State)
• No roadmap for existing State schemes
• ASHA & Anganwadi workers excluded
11. CONCLUSION
Final Assessment
• Code is a milestone, but:
o Inadequate for universal coverage
o Implementation unclear
• Needs:
o Clear rules
o Strong enforcement
o Seamless Centre-State coordination
• Without safeguards:
o Transition may harm workers