Social Security Code- Key Features

Varun Hariharan

08 Oct, 2020

The Social Security Code was introduced in the lower house Lok Sabha on 19 September 2020. After it was introduced in the Lok Sabha, the upper house passed the bill on 22 September 2020.

This bill has repealed the Code on Social Security, 2019 which brought out provisions relating to social security. The new bill is called the Code on Social Security, 2020.

The Social Security Code seeks to amend and regulate the laws which relate to security provisions for employees in a work place. This code deals with workers not only in the organised sector, but also deals with workers in unorganised sector. One of the main provisions of this bill is to extend social security to both workers of the organised sector as well as the unorganised sector.

The main motto of the government was to bring about social security regulations for all workers.

What are the laws related to the Social Security Code?

There are many laws which were brought out by the government on social security.

The Social Security Code brings about various amendments which affects the following laws:

1. The Employees Compensation Act, 1948;
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 Worker’s Social Security Act, 2008.

The above nine amendments would come under the purview of social security. Hence the social security code 2020 will bring major amendments to the above legislations.

What are the main features brought out by the Social Security Code, 2020?

Some of the features brought out by the Social Security Code are:          

• First and foremost, the Social Security code repealed the previous 2019 code. This code was brought out in the month of December 2019 which had provisions dealing with the law of social security. Apart from this, the social security code 2020 consolidated nine major laws which dealt with social security of workers and employees.
• The code also brought about varied changes to the present law. Apart from this, the code provided a precise meaning to both organised workers and unorganised workers.  Both class of these workers belonged to specific sectors under the code.
• The code was predominantly issued to improve the access to health and other social security benefits for different workers.
• Bringing about Social Security Schemes- The Social Security Bill, 2020 brought about different social security schemes. These schemes would be regulated by the Central Government. Overall, these schemes are beneficial to workers in both the organised and unorganised sectors.

The following schemes are brought out under the Social Security Bill:

• Employees Pension Scheme (EPS)
• Employees Deposit Linked Insurance Scheme( EDLI)
• The above schemes were brought out by the Central Government at different levels. These schemes would relate to pension funds, insurance and other forms of deposits issued by the organisations.
• Apart from this, the government has provided the Employees State Insurance Scheme (ESI) for paying out for sickness, maternity and other forms of benefits. Gratuity under this scheme would be provided to workers who complete a minimum term of employment. The minimum term of employment must be in accordance to the regulations from time to time. For now, the minimum term of employment under one employer is five years. This minimum term can vary according to the employment and the class of workers employed. For example, the term which has to be served for journalists is lesser than the above period of 5 years. This term would also be applicable to fixed term workers.
• Under these schemes the Central Government has also extended various forms of maternity benefits to women employees.
• This bill has also provided benefits to construction and other form of workers. Cess for the welfare of construction and other workers is levied to benefit their livelihoods.
• Under these schemes the Central Government^[1] has brought out the requirement of offering compensation for dependants of employees in case of any form of occupational and other risks in the work place. This occupational risk will include and cover any form of injury or a disease that affects the workers.
• One of the major reforms brought about under the social security code, is by dividing the workers of different sectors. Under this code, workers have been divided into different classes and categories.

The following categories have been brought out due to the amendment in Social Security Code:

• Organised Workers
• Unorganised Workers
• Organised Workers will include individuals performing jobs which include IT professionals, consultants and advisors. Organised workers have specific rules relating to amount of salary and benefits provided under the code.  Under the 2019 code, organised workers also had a definite code for classification. Rules were made for organised workers.
• Un-organised Workers are a particular class of workers which are distinguished from organised workers.

These workers would include:

• Gig Workers
• Platform Workers
• And other sectors of unorganised workers
• The term ‘Gig Workers’ is a millennial term for individuals who are involved in freelancing work. One of the major benefits brought about by the code is the inclusion of different forms of benefits under the social security code for workers classified under the unorganised sector. There is no proper meaning or definition for the term Gig worker. However, an individual who is performing any form of freelancing role, which does not have any proper contract or agreement with an employer is known as a gig worker. Here, the meaning of’ gig worker’ will include no proper relationship arising out of any contract or employee agreement. Hence to interpret the meaning of Gig worker, we must conclude that no form of agreement or employment contract exists between the employer and employee.
• The social security code has also brought about the meaning of platform workers. Platform workers are those individuals who work on different platforms for defined sums of money. Such platforms will include individuals who perform jobs which do not have a definite period of contract. For example, a platform worker can be related to a job of a free lance software engineer performing coding jobs for different forms of organisations. Another classic example to be included under the meaning of platform worker would include a freelance content writer working on different assignments for different forms of organisations.
• Hence the above code has brought out benefits for workers in the unorganised sector. This would include all the above category of workers who perform jobs.
• Modes of Registration under the Social Security Code- There are different procedures which apply to the Social Security Bill. Such procedures would be adopted by an organisation with specific number of employees. For the above schemes to be applicable, the code specifies different forms of thresholds. Such thresholds would be applicable for all forms of organisations.
• For example, an organisation which has to take the employees provident fund scheme should have minimum 20 employees working under them. This number can vary, however the amount of employees working in an organisation for the EPF has to be more than 20.
• Employees State Insurance (ESI) would be applicable to organisations which have more than 10 or more employees. This insurance is only for organisations that carry out hazardous and life threatening work. The types of work can be amended by the Central Government as per the requirement. All forms of industries and establishments are required to be registered under the social security code. This would be mandatory for all industries unless they have received another registration under a different specific code.
• Requirement for Contributions- Different schemes are included under the social security code.

The following schemes are included in the code:

• The Employees Provident Fund Scheme (EPF), The Employees Insurance Scheme (ESI), EDLI Scheme and the EPS scheme. For example an organisation which has to adopt the employees provident fund scheme (EPF) the employer and employee has to equally make specific contributions to the provident fund. The current rate of contribution to the provident fund is 10%. Hence both the employer and employee have to contribute the above amount. The percentage of wages contributed may change as per the circumstances mentioned by the Central government.
• Under different contributions, the entire gratuity, cess and other payments have to be taken care by the employer. It would be clear that the above amount can be handled by the employer when it comes to workers in the organised sector. What would be the situation for workers in the unorganised sector? When speaking of the unorganised sectors i.e. gig workers and platform workers, the contributions to the above funds must be made by the platform worker as well as the employer. Apart from this contributions would also be made by the platform aggregator or any other concerned party.
• The amount of contribution from the aggregator has to be made by the Central Government as per the rules which are prescribed. Usually the types of aggregators would include food delivery platforms and other forms of transport operator platforms. The aggregator has to make a payment or contribution to the platform which is 1% or 2% of their annual turnover. However, this would depend on their annual turnover. The percentage of contribution is capped at the rate of 5% of the amount which is paid to the gig and platform workers.
• Establishment of Different forms of Organisations- Under the social security code, different forms of organisations are established. Such organisations are known as social security organisations. These organisations are established to administer and look after the affairs of different forms of social security schemes under the Social security code.

The following organisations are included under the social security schemes:

• The Central Board of Trustees- This organisation is managed by the Central Commissioner of Provident Fund. The Commissioner of provident fund administers various forms of funds which include EPF, EPS and EDLI provident fund schemes.
• Employee State Insurance Corporation- The employee state insurance corporation is managed by the chairman. The chairman of this organisation is appointed to administer different forms of insurances under the scheme.
• National And Social Security Boards- The National and Social Security Boards are headed by different labour ministers. These labour ministers would include Central Labour Ministers and State Labour Ministers. Such ministers would be appointed to manage different forms of schemes for unorganised workers and working classes.
• Building Welfare Funds Board (State Run) – The Building Welfare funds board is run by the chairman who manages all the funds for the workers.
• Appointment of Inspectors under the Code- The social security code allows for the appointment of different inspectors. Inspectors and administrators under this code are appointed to provide training to different employers and employees on the operation of the code. Apart from this, administrative bodies and authorities are appointed to hear any form of appeals and dispute redressed under this system. Apart from this the bill also has a facility to consider judicial and other administrative bodies to hear appeals from any form of administrative tribunals.

Are there any forms of penalties for non-compliance of this code?

The social security code has some provisions that deal with offences. Some of the offences include the failure to pay gratuity under this act. Such failure to pay gratuity under this code attracts penalties. Apart from this, most of the offences under this code are capable of being compounded.

Conclusion

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