All NotesCivil LawLabour Laws

Labour Laws

Code on Social Security 2020: Scheme, Coverage and Definitions

Social security protects workers against the contingencies of working life: old age, sickness, maternity, injury, death and unemployment. Before the Code, nine Acts dealt with these risks separately, each with its own coverage rules and agencies. The Code on Social Security, 2020 brings them into one statute of 164 sections and, for the first time, extends statutory recognition to gig and platform workers. This note sets out its scheme, coverage, definitions and institutions.

1. Structure and Constitutional Basis

Fourteen chapters, 164 sections

Figure 1: Fourteen chapters, 164 sections

  • Acts replaced. Employees' Compensation Act 1923, ESI Act 1948, EPF Act 1952, Employment Exchanges (CNV) Act 1959, Maternity Benefit Act 1961, Payment of Gratuity Act 1972, Cine-Workers Welfare Fund Act 1981, BOCW Cess Act 1996 and Unorganised Workers' Social Security Act 2008, repealed by s.164.
  • Constitutional basis. Entries 23 and 24 of List III, and Articles 41, 42 and 43. In D.S. Nakara v Union of India (1983) pension was described as a measure of social security; in CERC v Union of India (1995) the right to health of workers was read into Article 21.

2. Coverage

Application of each chapter under the First Schedule

Figure 2: Application of each chapter under the First Schedule

  • Continuing coverage, s.1(8). A chapter that applies to an establishment continues to apply even if the number of employees later falls below the threshold.
  • Voluntary coverage, s.1(5). Provident fund cover may be extended to smaller establishments if the employer and a majority of employees agree; ESI may also be extended voluntarily.

3. Key Definitions in Section 2

  • Employee, s.2(26). Any person, other than an apprentice, employed on wages by an establishment directly or through a contractor, for any kind of work, including managerial work.
  • Establishment, s.2(29). Broadly, any place where an industry, trade, business or occupation is carried on, including Government establishments.
  • Wages, s.2(88). The uniform definition with the 50% rule (Topic 3)
  • Aggregator, s.2(2). A digital intermediary or marketplace connecting buyers or users of a service with sellers or service providers.
  • Gig worker, s.2(35). A person who earns from work outside a traditional employer-employee relationship.
  • Platform worker, s.2(61). A person engaged in platform work, using online platforms to provide services or solve problems for payment.
  • Unorganised worker, s.2(86). A home-based, self-employed or wage worker in the unorganised sector, including workers in establishments not covered by the main chapters.

4. Institutions

Social Security Organisations and the Fund

Figure 3: Social Security Organisations and the Fund

5. Compliance Framework

  • Aadhaar, s.142. Identity of employees and unorganised workers is established through Aadhaar for registration and benefits.
  • Assessment and appeals. Dues are assessed by an officer after inquiry, with time limits on starting and completing inquiries. An employer's appeal to the Tribunal requires a pre-deposit of 25% of the amount determined.
  • Career centres, Chapter XIII. Employers report vacancies to career centres, replacing the old compulsory notification to employment exchanges.

⚠ Exam trap

Thresholds: provident fund 20 employees; ESI 10 employees, or even one in notified hazardous work; gratuity and maternity benefit 10 employees. Coverage continues even if numbers later fall. The Code replaces nine Acts and recognises gig and platform workers for the first time. Know the clause numbers: employee s.2(26), aggregator s.2(2), gig worker s.2(35), platform worker s.2(61), unorganised worker s.2(86), wages s.2(88).

6. Frequently Asked Questions

Which Acts are subsumed in the Code on Social Security?

Nine Acts: the Employees' Compensation Act 1923, the ESI Act 1948, the EPF 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 BOCW Welfare Cess Act 1996 and the Unorganised Workers' Social Security Act 2008.

Does provident fund coverage end if employees fall below twenty?

No. Under section 1(8), once a chapter applies to an establishment it continues to apply even if the number of employees later falls below the threshold.

How does a gig worker differ from a platform worker?

A gig worker under section 2(35) is anyone who earns from work outside a traditional employer-employee relationship. A platform worker under section 2(61) is a narrower category: a person engaged in platform work, where an online platform connects the worker with organisations or individuals for specific services in return for payment. A delivery rider working through an app is both.

What is the Social Security Fund?

Section 141 provides for a Social Security Fund for unorganised, gig and platform workers. It is financed by contributions from the Central and State Governments, aggregators, corporate social responsibility spending and the amounts received from compounding offences under the Labour Codes.

7. Related Topics

  • Topic 20: Provident Fund and Pension. Chapter III.
  • Topic 26: Gig, Platform and Unorganised Workers. Chapter IX.