The Code On Social Security

The Code on Social Security (“SS Code”) amalgamates 9 central labour laws aimed towards social security of employees. A brief synopsis of the main matters included under the SS Code are:

• Amalgamation - The SS Code amalgamates The Employee's Compensation Act, 1923, The Employees' State Insurance Act, 1948, The Employees' Provident Funds and Miscellaneous Provisions 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.
• Applicability - Schedule 1 of the SS Code has relevant thresholds for applicability.
• New definitions - Several new definitions have been included in the SS Code with a rationalization of other definitions. These include Aggregator, Gig worker, Platform work, Platform worker, Contract labour, , Confinement, Dependant, Employee (expanded to include workers employed through contractors), Employer, Employment injury, Exempted employee, Factory, Family, Fixed term employment, Inter-state migrant worker (expanded to include self-employed workers from another state), Self-employed worker, Social security, Social Security Organisation (EPF Board, ESIC, National Social Security Board for Unorganised Workers, State Unorganised Workers' Social Security Board, State Building and other Construction Workers' Welfare Boards, any other organization or SPV declared by Government), Unorganised sector, Unorganised worker and Wages.
• Unorganised sector coverage - The unorganised sector has obtained representation and coverage. New categories include Gig worker (workers outside the traditional employer-employee relationship), Home-based worker (person engaged in the production of goods or services for an employer in his home or other premises of his choice other than the workplace of the employer, for remuneration, irrespective of whether or not the employer provides the equipment, materials or other inputs) and Platform work / platform worker (Workers who access organisations or individuals through an online platform and provide services or solve specific problems engaged in additional categories of services or activities as may be notified by the government).
• Provident Fund - The eligibility is 20 or more employees. The contribution rate for employers and employees is now 10% with the Government empowered to increase to the rate to 12% by notification.
• ESI - The eligibility is 10 or more employees, subject to conditions. The contribution rate is 3.25% for the employer and 0.75% by the employee.
• Gratuity - This applies inter alia to a factory, mine, oilfield, plantation, port and railway company and every shop or establishment with 10 or more employees or establishments notified by the Government. The gratuity eligibility stands for most employees at 5 years, with reductions seen such as 3 years for working journalists, or in case of death/ disablement of an employee. Gratuity now also applies for fixed term employees on a pro-rata basis. The gratuity cap will be specified by the Government (as compared to the current cap of INR 20 lakhs under the Payment of Gratuity Act).
• Maternity benefit - The provisions are broadly similar to extant provisions, with changes to the meaning and scope of “woman”. The provisions will apply to a factory, mine or plantation including any such establishment belonging to the Government and every shop or establishment with 10 or more employees or establishments notified by the Government. Employers may pool their resources and set-up a common creche facility or inter alia use a private creche
• Employees compensation - The provisions are applicable to employers and employees to whom the ESI chapter of the SS Code does not apply. Other conditions are as per Schedule 2 and Schedule 3 to the SS Code. Employee compensation compliances will now extend to any injury/ accident during a commute to work by an employee with sufficient nexus.
• Building and other construction workers - An exemption has been granted to construction works from the ambit of “building or other construction work” if total cost of construction work is greater than INR 50 lakhs and if the establishment employs more than a certain notified number of workers.
• Unorganised sector - This is one of the key changes from existing law. The SS Code includes categories of Home-based and self-employed workers, gig workers and platform workers. The Central Government is to set up social security funds for life and disability cover; health and maternity benefits; old age protection; education; and any other benefit. The State Government is to set up social security schemes for PF; employment injury benefit; housing; educational schemes for children; skill upgradation of workers; funeral assistance; and old age homes.

Registration of workers required, which will require – completion of 16 years of age or such age as may be prescribed by the Central Government; submission of self-declaration electronically or otherwise in such form and in such manner containing such information as may be prescribed by the Central Government and submission of documents including Aadhaar number.

The National Social Security Board to recommend and monitor schemes for gig workers and platform workers.

Aggregators have 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. Schemes for gig workers and platform workers may be funded through a combination of contributions from the Central Government, State Governments and aggregators. Schedule 7 to the SS Code has a list of aggregators, including ride sharing services, food and grocery delivery services, content and media services and e-marketplaces. Any contribution from an aggregator may be at a rate notified by the government between 1-2% of the annual turnover of the aggregators. The contribution cannot exceed 5% of the amount paid or payable by an aggregator to gig workers and platform workers.

• Employment exchange - The provisions stand somewhat modified, with employment exchanges now replaced by career centers. Private employers employing more than 50 employees are required to report vacancies (as may be notified by the labour authorities) to career centers
• Inspection - This may now be web based for EPF and ESI matters.
• Electronic record keeping - This is now permitted.
• Offences and penalties - There is a substantial increased for fine amounts. Compounding is possible, subject to conditions.
• Aadhaar card - This is mostly compulsory for all employees and the unorganised sector claims and matters
• Powers during an epidemic - New powers have been provided to the Government. Eg., the Government may defer or reduce employer's or employee's contributions under PF and ESI for a period of up to three months in the case of a pandemic, endemic, or national disaster.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.