CODE ON SOCIAL SECURITY 2020

The Payment of Gratuity Act, 1972

The Employees' Provident Funds and

Miscellaneous The Code on Social
Provisions Act, 1952
Security, 2020
The Employees' State Insurance Act,
1948

The Employees' Compensation Act,

1923

The Employment Exchanges

(Compulsory Notification of
Vacancies) Act, 1959
The Maternity Benefit Act, 1961

The Cine Workers Welfare Fund Act,

1981
The Building and Other
Construction Workers’
Welfare Cess Act, 1996

The Unorganised Workers Social

Security Act, 2008

Brief Overview
 Subsumes nine central labour enactments relating to provident fund, empl
1

Comprises of 163 sections encased in 14 chapters besides six

2 schedules.
Effective date to be notified – multiple dates for different
provisions.

Definitions provided in Chapter I – applicable across all chapters

3 and provisions.
Chapter II details the constitution of various governing
organizations and their functions.

Chapters III to IX deal with provisions relating to Provident Fund,

4 ESI, Gratuity, Maternity Benefit, Compensation, Social Security for
Building and Construction Workers and Unorganized workers.

Specific provisions for finance and accounts, Payment of Dues,

5 Claim and Audit, Inspector cum Facilitator, Offences and Penalties,
Miscellaneous provisions etc.

Applies to all establishments, employees and employers as defined and to t

6

Key Definitions
(a) Aggregator: “Aggregator” has been defined as a digital
intermediary or a market place for a buyer or user of a service to
connect with the seller or the service provider.

(b) Employee: “Employee” has been defined as any person (other than
an apprentice engaged under the Apprentices Act, 1961) employed
on wages by an establishment, either directly or through a
contractor, to do any skilled, semi-skilled or unskilled, manual,
operational, supervisory, managerial, administrative, technical,
clerical or any other work, whether the terms of employment be
express or implied. The employee of definition may vary for different
chapters under the SS Code based on the quantum of wages such
an employee earns.

(c) Gig Worker: “Gig Worker” under the SS Code has been defined as
a person who performs work or participates in a work arrangement
and earns from such activities outside of traditional employer-
employee relationship.

(d) Platform Work: “Platform work” has been defined as a work

arrangement outside of a traditional employer employee relationship
in which organisations or individuals use an online platform to
access other organisations or individuals to solve specific problems
or to provide specific services or any such other activities which may
be notified by the Central Government, in exchange for payment
and a “platform worker” has been defined as a person engaged in or
undertaking Platform Work.
 (e) Social Security: “Social Security” under the SS Code means the
measures of protection afforded to employees, unorganised workers,
gig workers and platform workers to ensure access to health care
and to provide income security, particularly in cases of old age,
unemployment, sickness, invalidity, work injury, maternity or loss of
a breadwinner by means of rights conferred on them and schemes
framed, under the SS Code.

(f) Unorganised Sector: “Unorganised Sector” means an enterprise

owned by individuals or self-employed workers and engaged in the
production or sale of goods or providing service of any kind
whatsoever, and where the enterprise employs workers, the number
of such workers is less than ten (10).

(g) Unorganised Worker: “Unorganised Worker” means a home-based

worker, self-employed worker or a wage worker in the Unorganised
Sector.

Gig Workers and Platform Workers

The SS Code currently does not provide for any specific Social Security to be
provided to Gig Workers and Platform Workers, however it provides the right
to the Central Government and State Government to notify schemes for such
workers related to life and disability cover, health and maternity, provident
fund, employment injury benefit, housing etc.
The SS Code mandates that the schemes may be funded through a
combination of contributions from the central government, state
governments, and Aggregators. The Central and State Government along
with such schemes shall also prescribe the records that are required to be
maintained in relation to such Gig Workers and Platform Workers.

The SS Code also mandates that every Unorganised Worker, Gig Worker or
Platform Worker is required to be registered, subject to the fulfilment of the
following conditions:

(a)he has completed sixteen (16) years of age or any other prescribed
age; and
(b)he has submitted a self-declaration containing information prescribed
by the Central Government.

Every eligible Unorganised Worker, Gig Worker or Platform Worker is to

make an application for registration along with prescribed documents
including Aadhaar number and such worker shall be assigned a
distinguishable number to his application.

Social Security Schemes powered by the Central

government

Section 114(1)[4] of the code gives the power to the Central Government to

frame schemes and policies in regards to the social welfare of the gig
workers and platform workers. The areas which are to be covered as follows:

(a) Life and Disability cover

Schemes related to the protection of the Right to Life of the gig
workers or anything which renders them disable due to any event will
be protected under this section.
 (b)  Accident insurance

(c) Health and Maternity

Health policies and schemes are guaranteed to the gig workers.
Maternity Benefits is described under Chapter VI of the code which
specifies to what are the conditions which require a woman to take
maternity leave.

(d) Old age Protection

Gig workers will be provided with the schemes of the old age-related
circumstances and issues and benefits

(e) Creche
The gig workers under the Code are protected with the schemes of
education, even for the children and toddlers, provided by the
government, gig workers will be able to avail themselves the benefit
under this clause.

(f) Any other benefits provided by the government

The above section also provides for the implementation and the
manner in which the schemes maybe implemented, sources of the
funds, and any initiative or scheme by the Central Government.

The highlight of this Section is the role of the aggregators and their role and
contribution towards funds for the gig workers. For this purpose, a wide list
of aggregators has been given under the Seventh Schedule of the Act. The
schemes can be wholly funded by the aggregators besides the Central
Government and the State Governments. It gave an altogether new
representation to the aggregators to further the cause.  It is notified that
their contribution shall not be more than 2%, but not be less than 1% of
their annual turnover.
The Aggregators can be categorized as follows:

1.     Ridesharing services

2.     Food/ grocery delivery

3.     Logistics services

4.     Content and media

5.     Travel and hospitality and healthcare

6.     Professional services

7.     Healthcare

8.     E-market places (which includes a wide network of business

mediums like B2B-business to business, or B2C- Business to
Commerce) Or any such services which may be provided by similar
platforms/aggregators.

For better implementation of policies, Aggregators are also included in the

National Social Security Board as provided by Section 114(6) of the Act.

Social Security Organisations

For administration of social security schemes, Code provides for the
establishment of several bodies called Social Security Organization inter-alia
provides for

(a) Central Board of Trustees of Employees' Provident Fund –

 The Central Board is for the administration of funds, constituting one
or more committees of same composition in order to assist it in the
discharge of its functions

(b) Employees' State Insurance Corporation –

The Corporation has two committees. Standing Committee to

administer the affairs of the Corporation and exercise any of the
powers and perform any of the functions of the Corporation, to submit
for the consideration and decision of the Corporation all cases and
matters as specified in the regulations made in this behalf and submit
any other case or matter for the decision of the Corporation. Medical
benefit committee is to assist the Corporation and the Standing
Committee in performance of its functions relating to administration of
medical benefits.

(c) National Social Security Board for Unorganised Workers –

The Board performs functions like: recommend to the Central

Government for framing suitable schemes for different sections of
unorganized workers, gig workers and platform workers, advise the
Central Government on matters arising out of the administration of
this Code, monitor social welfare schemes for unorganized workers,
gig workers and platform workers as are administered by the Central
Government, review the record keeping functions performed at the
State level and review the expenditure from the fund and account.
The term of Board is three years, and meet thrice in a year to observe
 rules of procedure relating to the transaction of business at its
meetings.

(d) State Unorganised Workers' Social Security Board –

The Board performs functions like: recommend the State Government

for framing suitable schemes for different sections of the unorganized
sector workers, advise the State Government on such matters arising
out of the administration of this Code, monitor social welfare schemes
for unorganized workers as are administered by the State
Government, review the record keeping functions performed at the
district level. review the progress of registration and issue of cards to
unorganized sector workers and review the expenditure from funds
under various schemes

The term of Board is three years, and meet once in a quarter to rules
of procedure relating to the transaction of business at its meetings.

(e) State Building and other Construction Workers' Welfare Boards.

The Board perform functions like to provide death and disability
benefits to a beneficiary or his dependents, to make payment of
pension to beneficiaries who have completed the age of 60 years, to
pay amount in connection with premium for Group Insurance Scheme
of the beneficiaries, frame educational schemes for the benefit of
children of the beneficiaries), meet medical expenses for treatment of
major ailments of a beneficiary or, such dependent, make payment of
maternity benefit to the beneficiaries, frame skill development and
 awareness schemes for the beneficiaries, provide transit
accommodation or hostel facility to the beneficiaries, formulation of
any other welfare scheme for the building worker beneficiaries by
State Govt in concurrence with the Central Government, make
provision and improvement of such other welfare measures and
facilities as may be prescribed by the Central Government.

(f) Gratuity

The SS Code has fixed different thresholds with respect to eligibility for
gratuity of permanent and fixed term employees. Gratuity shall be
payable to eligible employees by every shop or establishment in which
ten (10) or more employees are employed, or were employed, on any
day of the preceding twelve (12) months.

Gratuity shall be payable to an employee on the termination of his

employment after he has rendered continuous service for not less than
five (5) years, on his superannuation; on his retirement or resignation;
on his death or disablement due to accident or disease; on termination of
his contract period under fixed term employment.

However, a continuous service of five (5) years shall not be necessary

where the termination of the employment of any employee is due to
death or disablement or expiration of fixed term employment. For every
completed year of service or part thereof in excess of six (6) months, the
employer shall pay gratuity to an employee at the rate of fifteen (15)
days' wages.

The amount of gratuity payable to an employee shall not exceed such

amount as may be notified by the Central Government.
Gratuity under the SS Code is payable to employees hired directly or
through a contractor.

(g) Employees State Insurance

The SS Code allows for voluntary registration under the Employee State
Insurance if the employer and majority of the employees agree. Further,
the Government has the power to extend the Employee State Insurance
Scheme to any hazardous occupation irrespective of the number of
employees employed.

The employer shall pay in respect of every employee, whether employed

by him directly or through a contractor, both the employer's contribution
and the employee's contribution. Neither the employer nor the contractor
shall be entitled to deduct the employer's contribution from any wages
payable to an employee or otherwise to recover it from him.

(h) Maternity Benefit

Maternity benefits shall be applicable to every shop or establishment in

which ten (10) or more employees are employed, or were employed, on
any day of the preceding twelve (12) months; and such other shops or
establishments notified by the appropriate Government.

No employer/ nor woman can knowingly employ a woman/work in any

establishment during the six (6) weeks immediately following the day of
her delivery, miscarriage or medical termination of pregnancy.

A woman shall be entitled to maternity benefit if she has actually worked

in an establishment of the employer from whom she claims maternity
benefit, for a period of not less than eighty (80) days in the twelve (12)
months immediately preceding the date of her expected delivery.
 The maximum period for which any woman shall be entitled to maternity
benefit shall be twenty-six weeks (26) of which not more than eight (8)
weeks shall precede the expected date of her delivery.

However, the maximum period entitled to maternity benefit by a woman

having two or more surviving children shall be twelve (12) weeks of
which not more than six (6) weeks shall precede the date of her expected
delivery.

Offences and Penalties:

(a) Where employer fails contribute after deducting the employee’s share
attracts imprisonment between one and three years, and fine of one
lakh rupees.

(b) Where the employer fails to pay any amount of gratuity to which an
employee is entitled attracts imprisonment for a term which may
extend to one year or with fine which may extend to fifty thousand
rupees, or with both.

(c) Where the employer commits an offence in contravention of the

provisions of Employees State Insurance Corporation or Maternity
Benefit rules, regulations or schemes made or framed under the Code
respectively, where he dismisses, discharges, reduces in rank or
otherwise penalizes a woman employee; or obstructs any Inspector-
cum-Facilitator or other Social Security Organization or a competent
authority in the discharge of his duties, or fails to provide any
maternity benefit to which a woman is entitled, or fails to produce on
 demand by the Inspector-cum-Facilitator any register or document in
his custody; or fails to pay the cess for building workers which he is
liable to pay; or dishonestly makes a false return, report, statement or
information to be submitted shall be imprisoned for a term which may
extend to six months or with a fine which may extend to INR 50,000,
or with both.

(d) Where the employer commits an offence under any of the clauses
deducts or attempts to deduct from the wages of an employee, the
whole or any part of employer's contribution; or reduces the wages or
any privilege or benefits admissible to an employee; or fails or refuses

to submit any return, report, statement or any other information

required under this Code or any rules, regulations or schemes; or fails
to pay any amount of compensation to which an employee is entitled;
or fails to send to a competent authority a statement which he is
required to send regarding Employees Compensation; or is guilty of
any contravention of or non-compliance with any of the requirements
of this Code or the rules or the regulations or schemes made or in
respect of which no special penalty is provided; or obstructs executive
officer in exercising his functions in respect of employment monitoring;
or fails to pay any administrative or inspection charges payable under
any of the scheme, shall be punishable with fine which may extend to
fifty thousand rupees.

Further, in respect of a subsequent offence of failure to pay contributions,

charges, cess, maternity benefit, gratuity or compensation committed by an
employer, the employer is punishable with a minimum imprisonment of two
(2) years which may extend to five (5) years and also a fine of INR
3,00,000/-.
Provision for Compounding of Offences
The SS Code provides for an option of compounding of any offence which is
punishable with fine only or with imprisonment for a term which is not more
than one (1) year, and also fine.

An application for compounding can be made before or after the initiation of

prosecution in relation to the offence committed.

However, an opportunity for compounding is not available to an employer for

a second  (2nd) time or thereafter within a period of three (3) years from the
date of either (i) commission of a similar offence which was earlier
compounded; or (ii) commission of a similar offence for which such person
was earlier convicted.