Code on

Social
Security 2020

Dr. Ripal Gupta 1

 The Code on Social Security, 2020 aims to amend and consolidate laws related
to social security in order to extend social security benefits to all employees and
workers, regardless of whether they are in the organised or unorganised or any other
sectors.

•This act brings together nine central labour enactments related to

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

Dr. Ripal Gupta 2

 After pandemic shows its repercussions to the world the most severe
conditions were found in the labour sector. After 73 years of
Independence, approximately 90% of workers work in the unorganized
sector that do not have access to all the social securities. The total
number of workers, comprising of organized and unorganized sectors,
is more than 50 crores.
Reasoning
Behind New
Labour
There are more than 50 crore workers in the organized and
Reforms unorganized sector of the country. A majority of these workers i.e.
around 90 percent, are in the unorganized sector. Through these
four Labour Codes, it has been ensured that all these workers will
get the benefit of Labour Laws. Now all workers of the organized
and unorganized sector will get the minimum wages and a large
section of workers in unorganized sector would also get social
security.

Dr. Ripal Gupta 3

The Second National Commission of Labour had submitted its report in 2002
which said that there was multiplicity of Labour Laws in India and therefore,
recommended that at the Central level multiple Labour Laws should be codified
in 4 or 5 Labour Codes. While discussions were held on it, however, no serious
initiative was taken in this direction during the time period from 2004 to 2014.
Labour Reforms also remained untouched during the economic reforms carried
out in 1991.

Dr. Ripal Gupta 4

 ● Extensive discussions were held before initiation of Labour
Reforms by Ministry of Labour and Employment. Initially, as a part
History to look of Government's pre-legislative consultative policy, the Ministry
in to uploaded all the draft Labour Codes on its website for stakeholders
and public consultation. During 2015 to 2019, the Ministry
understand organized 9 tripartite discussions in which all the Central Trade
Unions, Employers’ Associations and representatives of State
fundamentals Governments were invited to give their opinions/suggestions on
Labour reforms. All the four Bills were also examined by the
on codes: Parliamentary Standing Committee which gave its
recommendations to the Government.

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 • Through a small contribution, benefit of free treatment is available
under hospitals and dispensaries of ESIC.
• The doors of ESIC will now be opened for the workers of all sectors
along with the workers of the unorganized sector.
Pre • Expansion of ESIC hospitals, dispensaries and branches upto district
administrative level. This facility to be increased from 566 districts to all the 740
districts of the country.
Steps visioned ● Even if a single worker is engaged in hazardous work, he would be
given ESIC benefit.
by the
• Opportunity to join ESIC for platform and gig workers engaged in
Government new technology.
• Plantation workers to get benefit of ESIC.
• Institutions working in hazardous area to be compulsorily registered
with ESIC.

Dr. Ripal Gupta 6

 ● Workers were given the benefit of portability through Universal
Account Number (UAN) so as to enable them to withdraw their
provident fund securely from anywhere. In addition, the system of
History with 'inspector raj' was removed by making the role of inspector to that
of advisor and facilitator for workers.
some
● In addition, through Shram Suvidha Portal, the industry was
important key provided ease in return filing. At that time itself the Government
made it clear that if attitude is respectful then workers become
points “Shram Yogi, Rashtra Yogi and Nation Builders”. The Prime
Minister made it clear even then that issues of the workers should
now be seen from the perspective of workers.

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 ● For providing social security to old age workers of unorganized
sector the Pradhan Mantri Shram Yogi Man Dhan Yojana was
started, in which provision was made for pension benefit of Rs
3,000 per month after reaching the age of 60.
● For transparency and accountability, the usage of IT-enabled system
for inspection has been made mandatory.
Continue.. • The ceiling limit of gratuity has been increased from Rs 10 Lakhs to
Rs 20 Lakhs on 29.03.2018.
• On 16.02.2017, Payment of Wages Act enabled payment of wages
to employees by cheque or crediting it to their bank account.
• Maternity Benefit Amendment Act, 2017, which came into effect on
01.04.2017, increased the paid maternity leave from 12 weeks to 26
weeks.

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 ● These Labour Reforms will enhance Ease of Doing Business in the
country. Employment creation and output of workers will also get
Vision of the enhanced.

government ● The benefits of these four Labour Codes will be available to

workers of both organized and unorganized sector. Now,
for these codes Employees’ Provident Fund (EPF), Employees’ Pension Scheme
(EPS) and coverage of all types of medical benefit under
Employees’ Insurance will be available to all workers.

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 ● To ensure security for all workers, the Central Government has
amalgamated 9 Labour Laws into the Social Security Code in order
Government to secure the right of workers for insurance, pension, gratuity,
vision for maternity benefit etc. Through this Code, a comprehensive legal
framework for Social Security has to be created so that workers can
Social receive social security completely. Under this, in a step wise
manner, a system would be institutionalized for the contributions
Security Code received from employer and worker. The Government can fund the
contribution of workers from disadvantaged section.

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Key Changes ● The 2019 Bill mandated social security for certain establishments,
based on thresholds, such as the size of the establishment and
in Code Social income ceilings. The 2020 Bill states that the central government
may, by notification, apply the Code to any establishment (subject
Security 2020 to size-threshold as may be notified).

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 ● Social security funds for unorganised workers, gig workers and
platform workers: The 2019 Bill empowered the central
government to set up social security funds for unorganised workers,
gig workers and platform workers. The 2020 Bill states that the
Continue central government will set up such a fund. Further, state
governments will also set up and administer separate social security
funds for unorganised workers. The 2020 Bill also makes
provisions for registration of all three categories of workers -
unorganised workers, gig workers and platform workers.

Dr. Ripal Gupta 12

National Social Security for gig workers and platform workers: The 2019 Bill provided for
the establishment of a national and various state-level boards for administering schemes for
unorganised sector workers. The 2020 Bill states that in addition to unorganised workers, the
National Social Security Board may also act as the Board for the purposes of welfare of gig
workers and platform workers and can recommend and monitor schemes for gig workers and
platform workers. In such cases, the Board will comprise of a different set of members including:
(i) five representatives of aggregators, nominated by the central government, (ii) five
representatives of gig workers and platform workers, nominated by the central government, (iii)
Director General of the ESIC, and (iv) five representatives of state governments.

Role of aggregators: The 2020 Bill clarifies that schemes for gig workers and platform workers
may be funded through a combination of contributions from the central government, state
governments, and aggregators. For this purpose, the Bill specifies a list of aggregators in
Schedule 7. These mention nine categories including ride sharing services, food and grocery
delivery services, content and media services, and e-marketplaces.

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Changes in definitions: The 2020 Bill changes the definitions of certain terms in the Code. These
include: (i) expanding the definition of ‘employees’ to include workers employed through
contractors, (ii) expanding the definition of “inter-state migrant workers” to include self-employed
workers from another state, (iii) expanding the definition of “platform worker” to additional categories
of services or activities as may be notified by the government, (iv) expanding the definition of
audio-visual productions to include films, web-based serials, talk shows, reality shows and sports shows,
and (v), exempting construction works from the ambit of “building or other construction work” if the
total cost of construction work exceeds Rs 50 lakhs (and if they employ more than a certain notified
number of workers).

•Term of eligibility for gratuity: Under the 2019 Bill, gratuity was payable on the termination of
employment, if the employee has been in the organisation for at least five years. The 2020 Bill reduces
the gratuity period from five years to three years for working journalists.

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 •Appeals: Under the 2019 Bill, authorised officers were empowered to conduct inquiries
Reforms in and decide: (i) disputes regarding the applicability of the provisions of provident fund (PF)
and employee state insurance (ESI) to certain establishments, and (ii) determine amounts
Provisions due from employers under these heads. Any aggrieved party could file for a review of the
order. The 2020 Bill removes the provisions for such review.
on appeals,
•Determination of escaped amounts: Under the 2019 Bill, after passing orders, the
assessment authorized officer could, within five years of the order, reopen any case and pass further
orders to re-determine the amounts due from the employer if he had reason to believe that:
, and (i) certain amounts had escaped his notice because of failure of the employer to disclose
relevant documents/facts, or (ii) certain amounts had escaped his determination because of
offences information received consequently. The 2020 Bill removes this provision.

and •Offences and penalties: The 2020 Bill changes the penalties for certain offences. For
example, the maximum imprisonment for obstructing an inspector from performing his
penalties duty has been reduced from one year to six months. Similarly, the penalty for unlawfully
deducting the employer’s contribution from the employee’s wages has been changed from
imprisonment of one year or fine of Rs 50,000 to only fine of Rs 50,000.

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