Social Security Code 2020


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    The ongoing second wave of the Covid-19 pandemic has highlighted the woes of the  informal workers and the loopholes in the Social Security (SS) Code, 2020.

    Social Security Code, 2020

    • It was passed by the Indian Parliament in September 2020 along with three other labour codes, namely
      • Code on Wages, 2019
      • Occupational Safety, Health and Working Conditions Code, 2020
      • Industrial Relations Code, 2020
        • These are based on recommendations of the Second National Commission on Labour (2002) and amalgamates 29 laws governing minimum wages, occupational safety, social security.
    • It amalgamates and rationalises the provisions of eight existing central labour laws and attempts to include informal workers within the ambit of social security administration.
      • Of these, Employees Provident Fund (EPF), Employees State Insurance (ESI), maternity benefit and gratuity are entirely for organised sector workers.
    • Key Features
      • The central government can apply the Code to any establishment (subject to size-threshold).
      • The definition ofemployees’ will include contractual labour, gig workers, platform workers, labour from construction sites and most importantly interstate migrant labour, especially amid Covid-19 crisis.
      • Mandatory registration of unorganized workers, gig workers and platform workers.
      • Both the central and the state govt will set up schemes and a Social Security Fund for unorganized workers.
        • The legal framework implies that the basic onus lies on informal workers registering as beneficiaries.
      • Registration is a prerequisite for universal coverage and to avail social security, an informal worker must register herself on the specified online portal to be developed by the central government.
        • Similar provisions are already there in existing social security schemes run by State governments under the Unorganized Workers’ Social Security Act, 2008
      • The code provides for the establishment of a national and various state-level boards for administering schemes for unorganised sector workers.
        • The National Social Security Board may also act as the Board for the purposes of welfare of gig workers and platform workers and can recommend and monitor schemes for gig workers and platform workers.
      • For the first time, provisions of social security will also be extended to agricultural workers also.
      • Schemes for gig workers and platform workers will be funded through contributions from the central government, state governments and aggregators.
        • Any contribution from aggregators may be at a rate between 1-2 per cent of the annual turnover of the aggregators.
        • However, such contributions cannot exceed 5 per cent of the amount paid or payable by an aggregator to gig workers and platform workers.


    • Lack of Awareness and Digital Literacy
      • There is a lack of awareness among informal workers regarding social security schemes.
      • Online registration places a further challenge as most informal workers lack digital literacy and connectivity.
    • Difficulty in Documentation
      • Informal workers find it difficult to furnish all documentary papers required as part of the registration process as most of them are footloose casual workers (26 per cent of all workers) and self-employed (46 per cent of all).
      • They move from one place to another in search of livelihoods and furnishing proof of livelihood and income details in the absence of tangible employer-employee relations is very difficult.
      • Such requirements deter informal workers from completing the registration and they continue to remain outside the social security ambit.
    • Inter-State Arrangement and Cooperation
      • Unorganised workers are spread across all over India so inter-State arrangement and cooperation becomes imperative.
      • The code does not provide for such eventualities.
      • In the absence of a basic plan by the central government, states will not be able to make necessary customisations and implications of this code would be too varied across States to be administered.
    • Overlapping Jurisdictions
      • Providing holistic social security cover for the unorganised workforce in a simple and effective manner is something lost in the Centre-State labyrinth and jurisdictional or institutional overlap.
    • Maternity Benefits
      • Under the SS Code, the provision of maternity benefit has not been made universal.
        • Maternity benefit is presently applicable for establishments employing 10 workers or more but the definition of ‘establishment’ in the proposed code did not include the unorganised sector.
      • Hence, women engaged in the unorganised sector would remain outside the purview of maternity benefit.
    • Employees Provident Fund
      • The SS Code maintains that the EPF Scheme will remain applicable, as before, to every establishment in which 20 or more employees are employed.
      • Thus, for informal sector workers, access to employees’ provident fund remains unfulfilled too in the new code.
    • Payment of Gratuity
      • Gratuity shall be payable to eligible employees by every shop or establishment in which 10 or more employees are employed, or were employed, on any day of the preceding 12 months.
      • Although payment of gratuity was expanded in the new Code, it still remains inaccessible for a vast majority of informal workers.
    • Other Issues
      • The SS Code does not cover the issue of free basic curative health care and the health Budget for 2021-22 is already very low for a year of a nation-wide pandemic.
      • A large number of informal workers are outside the ambit of any social security even after multiple years of social security schemes in various forms.
      • The absence of definite and unambiguous provisions in the present code would further complicate achievement of universal registration.


    • Informal workers are also entitled to social security like free basic curative care in public clinics and hospitals, old age pensions, death/disability insurance or life insurance, hence they should be covered without any restrictions or conditions and in the easiest ways possible.
    • All unorganised workers should have basic social security coverage, irrespective of labour market classifications.
    • They should be provided with employment opportunities so they can earn a healthy living and stay away from falling into the trap of debt, which is currently exploding among the poor as their incomes collapse.
    • The provision of social security could be used to formalise the workforce to a certain extent. The state has a responsibility but the primary responsibility still lies with employers since they are taking advantage of workers’ productivity. So, the employers should be made to own up to the responsibility of providing social security to their workers.
    • The existing pieces of legislation for social security should be intertwined and interweaved in such a way that it meets the needs and expectations of the informal workers.

    Code on Wages, 2019

    • Amalgamates: Payment of Wages Act 1936, Minimum Wages Act 1948, Payment of Bonus Act 1965 and Equal Remuneration Act 1976.
    • Key Features
      • The Code will apply to all central sector employees.
      • The central government will make wage-related decisions for employment such as railways, mines, and oil fields, among others. State governments will make decisions for all other employment. 
      • Wages include salary, allowance, or any other component expressed in monetary terms. This does not include bonus payable to employees or any travelling allowance.
        • The central government will fix a floor wage, considering living standards of workers. The central government may obtain the advice of the Central Advisory Board and may consult with state governments.
      • The Code prohibits gender discrimination in matters in wages and recruitment of employees for the same work. The minimum wages decided by the central or state governments must be higher than the floor wage. 
      • The central and state governments will constitute advisory boards and one-third of the total members on both the Boards will be women.
        • The Central Advisory Board, which will consist of employers, employees (in equal numbers as employers), independent persons and five representatives of state governments.
        • State Advisory Boards, which will consist of employers, employees, and independent persons.
        • Functions: Advise the respective governments on various issues like fixation of minimum wages and increasing employment opportunities for women.

    Industrial Relations Code, 2020

    • Replaces: Trade Unions Act, 1926, Industrial Employment (Standing Orders) Act, 1946 and the Industrial Disputes Act, 1947.
    • Key Features
      • It aims to create greater labour market flexibility and discipline in labour and the Centre or State governments can exempt any new establishments from provisions of the code.
      • All industrial establishment with 300 workers or more must prepare standing orders on
        • Classification of workers.
        • Manner of informing workers about work hours, holidays, paydays, and wage rates.
        • Termination of employment.
        • Grievance redressal mechanisms for workers.
      • The code makes it easier for companies to hire or fire workers.
      • The code provides for a Reskilling Fund for training of retrenched employees.
      • Every industrial establishment employing 20 or more employees will have one or more Grievance Redressal Committee for dispute resolution from employees’ side.
      • It gives recognition to Fixed Term Employment for the first time. Under this such employees will get all the benefits similar to regular employees for a fixed period.
        • Fixed-term employment is a contract in which a company or an enterprise hires an employee for a specific period of time. There are no middlemen or contractors in between.
      • Workers in all establishments are required to give 14 days prior notice before going to strike. Earlier, it was limited to only public utility services.
      • The Trade Union having more than 51 per cent of workers’ membership will be recognized as the sole Negotiating Union.
        • In absence of any such trade union, a Negotiating Council will be formed having at least 20 per cent of workers’ membership. Earlier the threshold was only 10 per cent.

    Occupational Safety, Health and Working Conditions Code, 2020

    • Amalgamates: 13 labour laws regarding standards for working conditions, health and safety of workers.
    • Key Features
      • It will apply to factories where manufacturing activity is carried out and employs more than 20 workers.
      • The code will apply to hazardous factories too irrespective of the number of workers employed.
      • No worker will be allowed to work for more than 8 hours a day or 6 days in a week. For overtime, an employee would be paid twice the rate of his or her wage.
      • It ensures gender neutrality by allowing women to work in all establishments for all types of work, with consent to work before 6 am or after 7 pm.
      • It recognises the rights of contractual workers and for the first time, transgender rights are recognized.

    Source: TH