Code on Social Security, 2020 (One of Four Labour Codes): Extends Coverage to Gig Workers and Consolidates Laws
SDG 8: Decent Work and Economic Growth | SDG 10: Reduced Inequalities
Institutions: Ministry of Labour & Employment | Employees’ Provident Fund Organisation (EPFO)
The Code on Social Security, 2020, represents a fundamental structural reform consolidating nine existing social security laws into a single, streamlined framework aimed at ensuring comprehensive and inclusive social protection for India’s entire workforce. The reform aligns with the broader goal of modernizing labour laws recommended by the second National Commission on Labour.
Universal Social Protection and Digitalization
Inclusion of Gig and Platform Workers: For the first time in India, the Code formally defines and extends social security benefits to unorganized, gig, and platform workers. This is supported by the establishment of a Social Security Fund and the creation of a National Social Security Board to advise on and monitor suitable schemes for these sectors.
National Portable Registration: The government will build a National Database of Unorganized Workers linked to Aadhaar, with each worker receiving a Unique Identification Number valid across the entire country. This ensures that workers, especially migrant workers, can carry their benefits with them regardless of their location.
Universal Coverage: The Code expands the coverage of Employees’ Provident Fund (EPF) to all establishments with 20 or more employees, regardless of the industry type, and extends Employees’ State Insurance Corporation (ESIC) coverage Pan-India, removing prior geographical restrictions. ESIC coverage is now mandatory even for a single worker in hazardous occupations.
Pro-Worker and Pro-Women Provisions
Gratuity and Compensation: Eligibility for gratuity for Fixed-Term Employees (FTEs) has been reduced from five years to one year of continuous service. The definition of “employment injury” has been expanded to include accidents that occur while an employee is commuting between home and the workplace.
Women-Centric Benefits: The Code strengthens protections for women workers by mandating a maximum of 26 weeks of maternity leave. It allows women returning from maternity leave to opt for Work-from-Home based on mutual agreement and requires all establishments with 50 or more employees to provide crèche facilities (gender-neutral requirement). The definition of “family” has also been expanded for women employees to include dependent parents-in-law.
Uniform Wages: A standardized definition of “Wages“ is established, ensuring that if allowances exceed 50% of total remuneration, the excess amount is added back to wages for calculating social security benefits, resulting in higher final benefit value.
Ease of Business and Regulatory Reform
The Code streamlines compliance through Digitalisation, mandating all records and returns be maintained in electronic form. The old “Inspector Raj” system is replaced by the Inspector-cum-Facilitator role, emphasizing guidance and compliance over punitive action. Furthermore, the Code replaces imprisonment with monetary fines for several offenses and allows for the compounding of first-time offenses, making the legal framework less punitive and encouraging voluntary adherence.
Policy Relevance: This Code is pivotal for India’s transition towards a formal, modern welfare state. By legally recognizing and funding social protection for the vast and rapidly growing gig and platform workforce, and by creating a nationwide portable registration system, the government addresses deep-seated issues of mobility and security for the unorganized sector while simultaneously fostering compliance and ease of doing business for enterprises.
What is the Inspector-cum-Facilitator System?→ The Inspector-cum-Facilitator is a regulatory role introduced under the Code on Social Security, 2020, replacing the traditional punitive “Inspector.” This role emphasizes a dual function: combining enforcement with guidance, awareness, and advisory support to help employers voluntarily comply with laws and regulations. This technology-driven system uses randomized, web-based inspections to reduce bureaucratic harassment, promote transparency, and foster a cooperative work environment.
Follow the full update here: Code on Social Security, 2020