- Code on Social Security
- January 16, 2021
Introduction to the Code
The Code on Social Security is an initiative of the Govt. to simplify and integrate prevailing labour laws in one framework. The code was originally introduced in the Parliament in December 2019 and referred to the Parliamentary Standing Committee which has submitted its report on 31st July 2020. Thereafter, a fresh Bill was introduced, namely The Code on Social Security, 2020. The Code on Social Security was enacted and Passed in both houses of Parliament in 2020. The Code has received the assent of the President on the 28th September, 2020 and published in the Official Gazzette on 29th September, 2020. The Code is an amalgamation of different Acts and Provisions. As the Whole Code has been notified, the Central Government has the option to make effective the provision of this Code in one go or appoint different dates for different provisions to become effective.
Amalgamation of various Laws
The Code on Social Security, 2020 is an important Social Security Legislation vide which nine existing Central Labour Laws have been amalgamated. The amalgamation of laws have been done to facilitate the implementation and remove the multiplicity of definitions and authorities without compromising the basic concepts of welfare and benefits to workers. This would also facilitate the use of technology ensuring transparency and accountability leading to effective enforcement of the provisions of the legislation.
The Code on Social Security, 2020 have subsumed the following nine Central Labour Acts after repealing the following Acts and simplifying and rationalising the relevant provisions contained therein:
(i) The Employees’ Compensation Act, 1923
(ii) The Employees’ State Insurance Act, 1948
(iii) The Employees Provident Fund and Miscellaneous Provisions Act, 1952
(iv) The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
(v) The Maternity Benefit Act, 1961
(vi) The Payment of Gratuity Act, 1972
(vii) The Cine Workers Welfare Fund Act, 1981
(viii) The Building and Other Construction Workers Welfare Cess Act, 1996
(ix) The Unorganised Workers’ Social Security Act, 2008
Salient Features
- As the Code on Social Security is amalgamation of different Act and Provisions., the whole Code is divided into 14 Chapters which specify different Provisions. For example, Chapter III contains the Employees Provident Fund, Chapter IV contains the Employees State Insurance.
- Regarding the applicability of various Chapters, a Schedule-1 is annexed to the end of the Code which specifies the various applicability provisions of various Chapters to the establishment. In the Schedule-1, Column 1 and 2 contains Chapter number and Chapter name respectively and in the 3rd column, the applicability provisions are mentioned.
- Unification of definition of Wages, which is to be used by all the Chapters of the Code. Earlier, different Acts and Laws have their own set of definitions. The definition of Basic Wages or Wages was according to their respective Laws and there was no interference of the definitions between two different isolated Acts. In the definition of wages in the new Code, there is an inclusion part, which specify the components of pay to be treated as part of the wages. In the exclusion part, some components are excluded from the term wages. Some provisions for the restriction on percentage has also been added so that the sum of those excluded components would not exceed the 50% or such percentage as notified by the Central Government of the total remuneration, otherwise, the amount thus exceeded would be treated as part of the Wages.
- Code also provides for the provisions of Voluntary Coverage of establishment, if the number of employees is lower than required threshold limit under Chapter III, Employees Provident Fund and Chapter IV, Employees State Insurance which were also present in the Previous Acts. But on the contrary, in this Code, the employer has the option of coming out of that Voluntary coverage which was not present in the earlier enactments. Once the employer in the earlier enactments opted for Voluntary Coverage, he had to be governed by the Act and there was no scope of opting out.
- Code has introduced the definitions of unorganised workers, gig workers and platform workers. The code on Social Security has the provision for the constitution of National Social Security Board for Unorganised Workers to recommend, advise and monitor social welfare schemes for unorganised workers, gig workers and platform workers and it also provides for registration based on a self-declaration provided either electronically or otherwise along with AADHAR number.
- The list of Industries as specified in Schedule 1 of the Employees’ Provident Funds & Misc. Provisions Act, 1952 has been done away with. Now, in the Code, all the establishments having the employment strength of 20 or more workers come under the purview of the Employees’ Provident Fund irrespective of any Schedule.
Unorganised workers, Gig workers and Platform workers.
The Code has introduced three new categories of workers, in addition to the traditional employment. These are Unorganised Workers, Gig Workers and Platform Workers.
Unorganised Worker means a home-based worker, self-employed worker or a wage worker in the unorganised sector and includes a worker in the organised sector who is not covered by the Industrial Disputes Act, 1947 or Employees Provident Fund or Employees’ State Insurance.
Gig worker means a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship.
Platform Worker means a person engaged in or undertaking Online platform work and Platform Work means 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.
With the recommendation of the National Social Security Board for Unorganised Workers, thus constituted under the Code, the Central Government will frame suitable schemes for different sections of Unorganised workers, Gig workers and Platform workers to being under the ambit of Social Security Benefits.
Social Security Organisations
Provisions have been framed to constitute various Social Security Organisation/Boards/Corporation under Chapter II of the Code on Social Security.
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