Code On Social Security, 2020

As a latest update, the Government of India has officially notified today the Code on Social Security ("SS Code") vide Notification bearing No. F. No. R.-11011/04/2021-SS.II, has been brought into force in a phased manner, introducing a unified framework for social security of workers, including gig workers, platform workers, and fixed-term employees. It consolidates nine (9) central laws, including the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, Payment of Gratuity Act, 1972, Maternity Benefit Act, 1961, Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959, Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959, Building and Other Construction Workers' Welfare Cess Act, 1996 and others.

Key Features at a Glance

• Aggregators, gig and platform workers, and fixed-term employees are now formally defined with entitlement to social security benefits.
• Aggregators are defined as digital intermediaries or marketplaces connecting service buyers/users with service providers, and includes ride-sharing services, food and grocery delivery services, logistics, among others and are obligated to pay a 1- 5% welfare cess towards social security.
• Gig-workers are defined as persons earning outside traditional employer-employee relationships, including independent contractors, whereas platform workers are defined as those performing platform work via online platforms.
• Fixed-term employees are defined as those employees engaged for a fixed period with wages, benefits, and statutory entitlements equivalent to permanent employees; gratuity payable pro-rata.
• As Limitation period is five (5) years for PF/ESI proceedings; pending inquiries must conclude within two (2) years from commencement of the SS Code.
• First-time offences with fines may be compounded at 50% and offences with ≤1- year imprisonment and fine at 75%; no further prosecution post compounding is permissible.
• Career centres now replace employment exchanges which will provide recruitment information, vocational guidance, and self-employment support.
• Establishments must register (or continue existing central labour law registrations) electronically.
• PF, gratuity, maternity benefit, and workplace accident compensation are now based on new wages definition (refer to Wage Code), subject to prescribed caps.
• Transferor and transferee jointly liable for pre-transfer dues of all social security obligations in case of transfer of establishments and transferee's liability will be capped at asset value received.
• Maximum penalty for non-payment of employee contributions will be imprisonment up to three (3) years and/or fine of INR 1,00,000; for repeat offences, it is up to three (3) years and/or fine up to INR 3,00,000; and other non-compliances attract monetary penalties and/or imprisonment.

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