INTRODUCTION

The purpose of Code on Social Security, 2020 (‘SS Code’) is to amend and consolidate the laws relating to social security with the goal to extend social security to all employees and workers either in the organized or unorganized or any other sectors and for matters connected therewith or incidental thereto.

SS Code was passed by the Lok Sabha on September 22, 2020 and subsequently, by the Rajya Sabha on September 23, 2020 with a view to amalgamate, simplify and rationalize the relevant provisions of the nine central labour enactments relating to social security.

The SS Code is yet to receive assent of the President of India.

The SS Code shall come into force on such date as the Central Government may, by notification appoint and different dates may be appointed for different provisions of the SS Code.

LAWS SUBSUMED

SS Code has subsumed the following enactments:

1. The Employees’ Compensation Act, 1923;
2. The Employees’ State Insurance Act, 1948;
3. The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952;
4. The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959;
5. The Maternity Benefit Act, 1961;
6. The Payment of Gratuity Act, 1972;
7. The Cine- Workers Welfare Fund Act, 1981;
8. The Building and Other Construction Workers Welfare Cess Act, 1996; and
9. The Unorganised Workers’ Social Security Act, 2008.

SALIENT FEATURES

1. GENERAL FEATURES

• SS Code is applicable to every establishment subject to the minimum threshold of employees employed therein
• Every establishment to which SS Code applies shall be required to be registered within such time and in such manner as may be prescribed by the Central Government
• Maintenance of Records and Registers: The employer of an establishment shall:
  • Maintain records and registers containing particulars such as (a) number of hours of work performed by employees, (b) wages paid, (c) leave, leave wages, wages for overtime work, attendance etc.
  • Issue wage slips to the employees, in electronic form or otherwise;
  • File return electronically or otherwise before the authorized officer.

2. EMPLOYEES’ PROVIDENT FUND (‘EPF’)

1. Applicability: The provisions relating to EPF are applicable to every establishment in which 20 or more employees are employed.
2. Contribution to Provident Fund:
   • Employer: Liable to contribute 10% of the wages payable to each employee to the provident fund.
   • Employee: Liable to contribute equal to the contribution payable by the employer i.e. 10% of the wages in respect of each employee to the provident fund.
   • The employee may contribute more than 10% of the wages to the provident fund subject to the condition that the employer is not obligated to pay any amount over and above 10% of the wages payable by employer.
   • The Central Government can apply the rate of 12% of the wages payable to each employee as contribution towards the provident fund for any establishment or class of establishment.
3. Authorising employers to maintain provident fund account:
   The Central Government may authorize the employer to maintain a SALIENT FEATURES provident fund account in the manner prescribed on receipt of the application from the employer and the majority of employees in relation to an establishment employing one hundred or more persons.
4. Transfer of accounts: The accumulated amount in provident fund account or pension fund account of an employee relinquishing his employment shall be transferred or dealt with in the manner specified in the Provident Fund Scheme or the Pension Scheme, as the case may be.
5. Self-employed Workers: Scheme may be framed by the Central Government for providing social security benefits to self-employed workers or any other classes of persons.

3. EMPLOYEES’ STATE INSURANCE CORPORATION (‘ESIC’)

1. Applicability: The provisions relating to ESIC are applicable to:
   • Every establishment in which 10 or more persons are employed other than a seasonal factory.
   • Establishment which carries on hazardous or life-threatening occupation as notified by the Central Government, in which even a single employee is employed.
   • Employer of plantation who has opted for application of ESIC.
2. Employees State Insurance Fund:
   • Contributions, user charges and other moneys shall be paid into a fund.
   • Grants, donations, Corporate Social Responsibility Fund and gifts from the Central Government, State Government, local authority or any individual or body whether incorporated or not.
3. Purpose of Fund: Fund shall be used for the following purposes:
   • Payment of benefits and provision of medical treatment and attendance;
   • Payment of fees and allowances to members of Corporation and Committees;
   • Payment of salaries, leave and joining time allowances, travelling and compensatory allowances, gratuities etc.
4. Insured Persons: Every employee in an establishment shall be insured, whether electronically or otherwise, as may be prescribed by the Central Government.
5. Contribution:
   • The contribution payable in respect of an employee shall comprise contribution payable by the employer and employee.
   • The contribution shall be paid to the Corporation by the employer.
   • Employer shall recover the employee’s contribution from the employee by reduction from wages.
6. Failure to pay contribution by employer:
   • Corporation may pay the benefit to the employee and recover the capitalised value of the benefit paid to the employee from the employer.

4. GRATUITY

• Applicability: The provisions relating to gratuity are applicable to:
  1. every factory, mine, oilfield, plantation, port and railway company; and
  2. every shop or establishment in which 10 or more employees are employed, or were employed, on any day of the preceding twelve months; and such shops or establishments as may be notified by the appropriate Government from time to time.
• Eligibility period for payment of gratuity:
  • Gratuity is payable to an employee on termination of employment after continuous service of 5 years.
  • For working journalist, gratuity is payable on termination of employment after continuous service of 3 years.
  • Completion of continuous service of 5 years shall not be essential where the termination of employment of any employee is due to (a) death or (b) disablement or (c) expiration of fixed term employment or (d) happening of any such event as notified by the Central Government.
  • Gratuity at the rate of 15 days wages or such number of days as may be notified by the Central Government, based on the rate of wages last drawn by the employee shall be payable for every completed year of service or part thereof in excess of six months;

5. MATERNITY BENEFIT

1. Applicability: The provisions relating to maternity benefit are applicable to:
   1. a. to every establishment being a factory, mine or plantation including any such establishment belonging to Government; and
   2. b. to every shop or establishment in which 10 or more employees are employed, or were employed, on any day of the preceding twelve months; and such other shops or establishments notified by the appropriate Government.
2. Benefits:
   • Woman shall not work in any establishment during the six weeks immediately following the day of her delivery, miscarriage or medical termination of pregnancy;
   • Woman shall be entitled to the payment of maternity benefit at the rate of the average daily wage for the period of her actual absence;
   • Woman shall be entitled to maternity benefit of maximum 26 weeks of which not more than 8 weeks shall precede the expected day of delivery;
   • Woman shall be entitled to receive a medical bonus of Rs. 3,500/- or such amount as notified by the Central Government from the employer, if no pre-natal confinement or post-natal care is provided for by the employer free of charge.
   • Woman shall be allowed 2 breaks of such duration as may be prescribed by the Central Government, for nursing the child until the child attains the age of 15 months.
   • The establishment in which 50 employees or such number of employees as may be prescribed by the Central Government, are employed shall have the facility of crèche within such distance as may be prescribed by the Central Government, either separately or along with common facilities.

6. EMPLOYEE’S COMPENSATION

1. Applicability: The provisions relating to employee’s compensation are applicable to the employers and employees to whom Chapter IV (ESIC) does not apply. It is subject to the list of employees mentioned in the Second Schedule

7. SOCIAL SECURITY AND CESS IN RESPECT OF BUILDING AND OTHER CONSTRUCTION WORKERS

1. Applicability: Every establishment which falls under the building and other construction work. The term, ‘building or other construction work’ has been defined in the SS Code.
2. Cess:
   • Cess shall be levied and collected for social security and welfare of building workers at the rate not exceeding 2% but not less than 1% of the cost of construction incurred by the employer, as notified by the Central Government.
   • Cess shall be collected from every employer undertaking building or other construction work.
   • Employer shall be liable to pay interest on the amount of cess not paid by the employer, for the period from the date on which payment is due till the amount is actually paid, at the rate as prescribed by the Central Government.
   • The Government may, by notification, exempt any employer or class of employers in a State from the payment of cess, where such cess is already levied and payable under any corresponding law in force in that State.
   • The employer shall, within 60 days or such period as may be notified by the Central Government of the completion of building and construction work, pay cess on the basis of his self-assessment, on the cost of construction.

8. UNORGANISED WORKERS, GIG WORKERS AND PLATFORM WORKERS

1. The terms, ‘Unorganised Workers’, ‘Gig Workers’ and ‘Platform Workers’ have been defined in the SS Code.
2. Schemes: The Central Government and State Government shall frame welfare schemes for such workers.
3. Fund for Schemes: The schemes may be funded by the Central Government or State Government or beneficiaries of the Scheme or employers or from corporate social responsibility fund maintained under Companies Act, 2013 or the aggregators. The contribution by aggregators shall be at the rate not exceeding 2% but not less than 1% of the annual turnover of aggregator specified in the Seventh Schedule. The rate shall be notified by the Central Government.
4. ESIC: The Central Government may frame ESIC scheme for unorganized workers.

9. EMPLOYMENT INFORMATION AND MONITORING

1. The concept ‘Career Centres’ has been introduced in the SS Code. It means any office (including employment exchange, place or portal) established and maintained for providing career services (including registration, collection and furnishing of information, either by the keeping of registers or otherwise) as may be prescribed.
2. Vacancy: Mandatory for establishments to report the vacancy to career centre before filling up the vacancy. There is no obligation on the employer to recruit through the career centre.