DETAILED ANALYSIS OF THE CONCEPTUAL FRAMEWORK OF

SOCIAL SECURITY UNDER THE CODE ON SOCIAL SECURITY ,2019

Submitted by

Sivaganga.S.R

B.A. LL.B.(Hons.)(4TH Year VIII th Semester)

Submitted to

Mr. Ajeet Singh

Reg.No: 46017210013

10TH APRIL 2021

1
 Table Of Contents

SL.NO CONTENTS PAGES

1. DECLARATION 3
2 ACKNOWLEDGEMENT 4
3. INTRODUCTION 5-6
4. KEY ASPECTS OF THE CODE 6-10
5. Conclusion 10

2
 DECLARATION

I undersigned Sivaganga.S.R student of B..A. LLB (Hons.)(SEM- VII), hereby declare that the
project is my own work and has been carried out under the guidance and supervision of Mr.Ajeet
Singh of SRM University, Sonepat, Haryana,Delhi– NCR.

This work has not been previously submitted to any other university for any purpose.

Date:10/04/2021 Name & signature of candidate :Sivaganga.S.R

3
 ACKNOWLEDGEMENT

This project would not have been possible without the essential and gracious support of Mr.Ajeet
Singh (Assistant Professor of Labour and Industrial Laws-II) from SRM University, Sonepat,
Haryana, Delhi– NCR. His willingness to motivate me contributed tremendously to my project. I
also would like to thank his for showing me some examples related to topic of this project.

Besides I would like to thank the authorities of SRM University, Sonepat, Haryana,Delhi– NCR
and faculties of Law department for providing me good environment and facilities to complete
this project.

Last but not the least, I would like to thank my family and friends for their understandings and
supports towards me for completing this project.

4
 INTRODUCTION
“…We must begin now to make provision for the future and that is why our social security
program is an important part of the complete picture. It proposes, by means of old-age pensions,
to help those who have reached the age of retirement to give up their jobs and thus give to the
younger generation greater opportunities for work and to give to all, old and young alike, a
feeling of security as they look toward old age.”-Franklin. D. Roosevelt

From the cradle stage itself, India possessed distinct social security system which is composed of
a number of schemes and programs spread throughout a variety of laws and regulations.
However, that the government-controlled social security system in India only applies to a certain
sections of the population.Furthermore, the social security system in India includes not just an
insurance payment of premiums into government funds (like in China), but also lump sum
employer obligations. Generally, India’s social security schemes cover the following types of
social insurances:
Types of Social Insurances

Gratuity
Pension

Disability Benefit
Disability Benefit
Health Insurance and
Medical Benefit

Currently there are over 40 Labour Law Legislations that are in force in our country. The
Government of India has embarked on a herculean task to amalgamate all of these labour law
legislations into four Labour Codes. These Codes aims to simplify the labour law compliances
which will in turn help these businesses to target their resources toward the development of the
industry instead of complicated labour law compliances. This is being done in order to simplify
the labour law regulations as a facilitator to encourage the growth of industry in the country, in
purview of the ‘Make in India’ initiative of the Government of India and also to improvise the
ease of doing business in India. The latest code was placed in the Lok Sabha as a bill is the Code
on Social Security 2019 (‘the Social Security Bill’).
The Social Security Bill proposes to simplify, amalgamate, rationalize and replace the following
central labour legislations:
1.The Employees’ Compensation Act, 1923;
2.The Unorganised Workers’ Social Security Act, 2008.

5
3.The Payment of Gratuity Act, 1972;
4.The Employees’ State Insurance Act, 1948;
5.The Cine Workers Welfare Fund Act, 1981;
6.The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952;
7.The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959;
8.The Maternity Benefit Act, 1961;
9.The Building and Other Construction Workers Cess Act, 1996

It was introduced in the Lower House of the Indian Parliament by Mr. Santosh Kumar Gangwar,
the Labour Minister for India on 11.12.2019 as Bill No. 375 of 2019 and is currently pending
approval of both the Houses of the Parliament.

KEY ASPECTS OF THE CODE

The following are the key elements of the social security code 2019 :

 The Social Security Bill aims

The Social Security Bill has introduced several new aspects for the welfare of those working in
the unorganized as well as the organized sectors of the Economy. It aims to introduce several
new aspects that are currently missing in the labour legislations in force in India. The Social
Security Bill has taken the concept of ‘labour legislations to be welfare legislations’ to another
level and once implemented, it shall definitely improvise the social and economic standing of
those impacted by this Bill. This section highlights the key aspects of the Social Security Bill, in
brief.

 Social Security Welfare Schemes

Under the Code, the Central Government may notify various Social Security Schemes for the
benefit of workers. These include an Employees’ Provident Fund Scheme, an Employees’
Pension Scheme and an Employees’ Deposit Linked Insurance Scheme which may provide for a
provident fund, a pension fund, and an insurance scheme, respectively.

The government may also notify:

 An Employees’ State Insurance (ESI) Scheme to provide sickness, maternity, and other
benefits,
 Gratuity to workers on completing five years of employment (or lesser than five years in
certain cases such as death),
 Maternity benefits to women employees,
 Cess for welfare of building and construction workers, and
 Compensation to employees and their dependants in the case of occupational injury or
disease.

6
  Widened the scope of the definition of “Wages”

The Social Security Bill has elaborately and specifically defined the term “wages” to widen the
scope of the term to a vast extent. The definition of wages has three parts to it –

 Inclusive in the definition: All remuneration expressed in monetary terms are wages and
includes basic pay, dearness allowance and retaining allowance.
 Specific exclusions: Provided Fund, pension and gratuity, house rent and conveyance
allowances etc. are not included in the term wages as long as it does not exceed the 50
per cent of the total remuneration being paid.
 Benefits in kind: These will be included to the extent of 15 per cent of total wages.
Overall this will ensure that wages for social security benefits will be at least 50 per cent
of overall compensation.

 Establishment of Social Security Organisations

The Code provides for the establishment of several bodies to administer the social security
schemes. These include:

 A Central Board of Trustees, headed by the Central Provident Fund Commissioner, to

administer the EPF, EPS and EDLI Schemes.
 An Employees State Insurance Corporation, headed by a Chairperson appointed by the
central government, to administer the ESI Scheme.
 National and state-level Social Security Boards, headed by the central and state Ministers
for Labour and Employment, respectively, to administer schemes for unorganised
workers.
 State-level Building Workers’ Welfare Boards, headed by a Chairperson nominated by
the state government, to administer schemes for building workers.

 Change in the amount of Contribution

All the Schemes under the Code shall be financed through a combination of contributions from
the employer and employee. For example, in the case of the Employees Provident Fund Scheme,
the employer and employee will each make matching contributions of 10% of wages, or such
other rate as notified by the government. All contributions towards payment of gratuity,
maternity benefit, cess for building workers, and employee compensation will be borne by the
employer. Schemes for gig workers, platform workers, and unorganised workers may be
financed through a combination of contributions from the employer, employee, and the
appropriate government.

 Enhanced the ambit of workers covered under the Code

As per the Social Security Bill, the Central or State Government may notify specific schemes for
gig workers, platform workers, and unorganised workers to provide various benefits, such as life
and disability cover. Gig workers have been introduced in this legislation from the first time and
refer to workers outside of the traditional employer-employee relationship such as freelancers.

7
Platform workers too have been included in this legislation for the first time and referred to as
workers who access other organisations or individuals using online platforms and earn money by
providing them with specific services. Additionally, unorganised workers including home-based
and self-employed workers have also been recognised under the Social Security Bill.

To analyse the proposed code we should thorough comparison between the proposed code and
existing laws. So following are the distinctions :

Current laws Code on Social Security, 2019

 Mandatory social security for  Retains the existing set up and

workers in certain
establishments based on size
or income of workers.
Unorganised workers are
covered: (i) under the
Unorganised Workers’ Social
Security Act (UWSSA) which
prescribes voluntary social
security schemes, and (ii)
through cess-based labour
welfare funds.
 Wages: Benefits calculated
on wages which typically
include basic wages and
exclude allowances,
concessions and social
security contributions.
applicability thresholds, with some
changes. The applicability thresholds
may be amended by central government
through notification. Key changes
include:
 Wages: Similar definition. However, if
excluded components (other than
retirement benefits like gratuity) exceed
50% of remuneration, then the amount
in excess of 50% will be deemed as
‘wages’.
 EPF: The provident fund and pension
scheme will apply to all establishments
employing 20 or more employees, and
to any other class of establishments as
may be notified by the government.

 EPF: Provident fund and  ESI: ESI Scheme will apply to

pension schemes only apply to
certain scheduled
establishments employing 20
or more workers and to any
other class of establishments
as may be notified by the
government. The scheduled
establishments include textile,
cement, electrical, iron and
steel, and heavy chemical
industries.
 Employees’ State Insurance
establishments hiring 10 or more
employees. However, if the employer
and majority of employees agree, then
ESI may apply to such establishment by
notification. Further, the central
government can extend ESI to any
hazardous occupation even if a single
employee is engaged.
 If the employer fails to pay ESI
contributions, the ESIC may pay the
benefits to the employee and recover it
from the employer to the extent of the

8
Current laws Code on Social Security, 2019

(ESI): Applies to ‘capitalised value of the benefit’ net of

establishments hiring at least any payment of contribution amount,
10 employees. Benefits interest and damages payable by the
available to those earning up employer.
to Rs 21,000 per month.
 Gratuity: Fixed-term employees (i.e.,
 Gratuity: Payable on employed for a fixed duration) will be
continuous service of five or entitled to pro-rated gratuity based on
more years in an term of the contract.
establishment.
 Maternity Benefit: Removes the upper
 Maternity Benefit: In limit of Rs 20,000.
addition to maternity benefit,
every woman is entitled to  Unorganised Workers: The Bill
medical bonus of up to Rs allows schemes for unorganised
3,500 (if pre- workers to be additionally funded by the
natal confinement and post- corporate social responsibility fund
natal care is not provided by defined under the Companies Act, 2013.
employer). Central However, the Bill does not include
Government may amend this provision on overriding effect of more
to up to Rs 20,000. beneficial welfare schemes passed by
different states.
 Unorganised Workers: If
any state enacts law providing  Central government may also frame
more beneficial welfare social security schemes for gig workers
schemes to unorganised and online platform workers.
workers, then the UWSSA
will not apply.

 Different laws have different  Every eligible establishment is required

registration requirements for to register. Further, Aadhaar-based
establishments and registration is mandated for all
employees. categories of workers.

 “Employment exchanges” to  “Career centres” to provide career

provide career services to
employers and persons who
seek employment. Private
sector establishments which
employ 25 or more persons
services to employers, persons who seek
employment, and for those seeking
vocational guidance, career counseling
or guidance to start self-employment.
Bill requires notification of vacancies to

9
Current laws Code on Social Security, 2019

required to notify vacancies. career centres by every establishment.

 Different laws specify  The Bill adds a five-year limitation

different offences. For
example, failure by an
employer to pay EPF or ESI
contributions after deducting
employee’s share attracts
imprisonment of up to one
year, and fine of Rs 10,000.
Subsequent offence under
ESI (for non-payment of
contributions) and under EPF
attracts imprisonment of two
to five years and fine of Rs
25,000. Similarly, non-
payment of maternity benefits
attracts an imprisonment of
three months to one year and
fine of Rs 2,000 to Rs 5,000.
period for initiating inquiries for
payment of dues under EPF and ESI
schemes.
 Increases penalties. For example,
failure by an employer to pay
contributions after deducting
employee’s share attracts imprisonment
of one to three years, and fine of one
lakh rupees. Subsequent failure to
pay contributions attracts imprisonment
of two to five years and fine of three
lakh rupees. Offences which are not
punishable with imprisonment only may
be compounded (settled) up to 50% of
the maximum fine for the offence,
subject to certain conditions.

CONCLUSION

The Social Security Bill not only simplifies the complex nature of the labour law legislations
currently in force in India, it also aims to modernise the legislation by including and
acknowledging several contemporary aspects of the work culture.

In the event that this proposed legislation gets the approval of both the houses of the Parliament
and becomes an Act, it will beneficially impact both the modern day employer as well as the
worker up to a large magnitude.

Taking into consideration the large amount of confusion and mishap that the current COVID-
19 Pandemic has created with regard to the labour and employment laws currently in force in
India, such an organised and modern legislation will surely be beneficial to the businesses and
the industries from the point of view of labour law compliances in the event that the nation is
ever to face such a major shift in the business cycle again.

10