Social Security Code, 2020

Social Security Code, 2020
By Simran Bhardwaj
The Social Security code, 2020 is brought with the objective to amend and
consolidate the laws concerning social security. The code aims to extend social
security to all employees and workers belonging from unorganised, organised or any
other sectors.
The code was passed by Rajya Sabha with a focus to amalgamate, simplify and
rationalise provisos of the nine central labour enactments relating to social security.

The laws that have been subsumed under the social security code are-
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

The essential features of the Code are as follows-
General Features-

• The Social Security Code applies to all the establishments subject to the minimum
threshold of employees employed therein
• Establishments are required to be registered within the stipulated time prescribed by
the central government
• The employer of an establishment shall:
– Maintain registers and records containing particulars such as the number of hours
work performed
– by employees, wages paid, leaves, leaves wages, wages for overtime work,
attendance etc. Issue wage slip to the employees, in electronic form or otherwise
– File return electronically or otherwise before the authorised officer
Employees’ Provident Fund-
• The provisions relating to EPF are applicable to every establishment in which
20 or more employees are employed
• Contribution:

– Employers is liable to contribute 10% of the wages payable to each employee’s
Provident Fund.
– Employee is liable to contribute the equal amount which the employer has paid.
– The employee can pay to contribute more than 10% of the wages to the provident
fund but the the condition here is that the employers are not obligated to pay any
amount over and above 10%.
– The Central Government has the liberty to set a 12% rate on the wages payable to
each employee as a contribution towards a provident fund for any establishment or
class of establishment.
• The Central Government may authorise the employers to maintain a provident
fund account or pension fund account in the manner prescribed on receipt of
the application from the employers and the majority of employees in relation to
an establishment employing one hundred or more persons.
• The accumulated amount in the provident fund account or pension fund
account of an employee at the time of relinquishment of his employment shall
be transferred or delayed within the inner specified I the Provident Fund
Scheme or the Pension, as the case may be.
• Central Government can devise schemes providing social security benefits to
self-employed workers or any other classes of persons.
Employees’ State Insurance Corporation
• Applicability-
– The provisions which fall under Employees’ State Insurance Corporation are
applicable to every establishment in which more than 10 or more people are
employed other than a seasonal factory.
– Every establishment carries on hazardous or life-threatening occupation as notified
by the Central Government, even if only one employee is employed.
– Employers of the plantation who has opted for the application of ESIC.
• Employees State Insurance Fund-
– Contributions, user charges and other money need to 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.
• Purpose of Fund- Funds needs to be used for the below-mentioned 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.
• Insured Persons- It is prescribed by the Central Government that every employee
has to be insured, whether electronically or otherwise.
• Contribution:
– The contribution payable to an employee shall consist contribution payable by the
employer and employee.
– The contribution shall be paid to the corporation by the employer
– The employer shall recover the employee’s contribution from the employee by
deduction from wages.
• Failure to pay to contribute by the employer- The corporation may pay the benefit
to the employee and recover the capitalised value of the benefit paid to the
employee from the employer.
Gratuity
• Applicability
– every factory, mine, oilfield, plantation, port and railway company; and
– 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 a working journalist, gratuity is payable on the 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;
Maternity Benefit

• Applicability-
– Every establishment being a factory, mine or plantation including any such
establishment belonging to Government; and
– 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.
• 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 the wage for the period of her actual absence;
– Woman shall be entitled to maternity benefit of a maximum of 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 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.
Employees’ Compensation
• 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
Social Security and Cess in respect of building and other construction workers
• Applicability: Every establishment falls under building and other construction
work. The term, ‘building or other construction work’ has been defined in the SS
Code.
• 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 less on the
basis of his self-assessment, on the cost of construction.
Unorganised Workers, Gig workers and platform workers
• The terms, ‘Unorganised Workers’, ‘Gig Workers’ and ‘Platform Workers’ have
been defined in the SS Code
• Schemes: The Central Government and State Government shall frame welfare
schemes for such workers.
• 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.
• ESIC: The Central Government may frame ESIC schemes for unorganised
workers.
Employment Information and Monitoring
• 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.

• 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