2026 | Vol 2(7) | July

The Code on Social Security, 2020 (Act No. 36 of 2020) consolidates and amends the laws relating to social security with the objective of extending comprehensive protection to employees and workers across both the organized and unorganized sectors. The Code seeks to simplify and rationalize India's social security framework by integrating several existing labour laws into a single legislation while promoting universal social security coverage. It establishes a legal framework for providing benefits relating to provident fund, employee insurance, gratuity, maternity benefits, employee compensation, social security for unorganized workers, gig workers, platform workers, and other welfare measures.

Objectives of the Code

The principal objective of the Code is to ensure that workers receive adequate social security throughout their employment and, where applicable, after retirement or in situations such as sickness, maternity, employment injury, disability, unemployment, or death. The Code also seeks to harmonize the administration of various social security schemes, improve compliance, and broaden coverage to include categories of workers that were previously outside the scope of traditional labour legislation.

Another important objective is to facilitate ease of compliance by consolidating numerous labour enactments into one comprehensive legal framework while maintaining protection for workers' rights and welfare.

The Code introduces several important definitions that determine eligibility under different social security schemes. It defines terms such as employee, employer, establishment, factory, contract labour, career centre, aggregator, gig worker, platform worker, home-based worker, building worker, and unorganized worker.

A significant feature of the Code is the statutory recognition of gig workers and platform workers. Gig workers are individuals engaged in work arrangements outside the traditional employer-employee relationship, while platform workers perform work through online platforms or digital applications. By formally recognizing these categories, the Code creates a legal basis for extending social security benefits to workers engaged in emerging forms of employment.

The Code also defines wages, which serve as the basis for calculating contributions and benefits under various social security schemes.

Social Security Organisations

The Code establishes and regulates several social security organizations responsible for implementing different schemes. The Central Board of Trustees administers the Employees' Provident Fund and related schemes. It is responsible for managing contributions, maintaining accounts, investing funds, and ensuring efficient administration of provident fund benefits.

The Employees' State Insurance Corporation (ESIC) administers the Employees' State Insurance Scheme, providing medical care and cash benefits for sickness, maternity, disablement, and employment injuries.

The Code also provides for the constitution of National Social Security Boards and State Social Security Boards to recommend and monitor welfare schemes for unorganized workers, gig workers, and platform workers. These Boards advise governments on policy formulation, implementation, and expansion of social security programmes.

Employees' Provident Fund

The Code continues the statutory provident fund system for eligible establishments. Employers and employees are required to make prescribed contributions to the provident fund. The accumulated amount provides financial security after retirement or under other specified circumstances. The Code also provides for pension schemes and deposit-linked insurance schemes for eligible employees. These schemes offer retirement income, financial assistance to dependents, and insurance protection linked to employment. Employers are required to maintain records, submit returns, and comply with contribution requirements. Failure to comply may result in penalties under the Code.

Employees' State Insurance

The Employees' State Insurance provisions provide medical and financial benefits to insured employees and their dependents. Benefits available under the scheme include: Medical treatment, Sickness benefit, Maternity benefit, Disablement benefit, Dependants' benefit, Funeral expenses, & Other benefits prescribed under the scheme.

The Code empowers the appropriate government to extend ESI coverage to additional establishments, classes of employees, or geographical areas through notification. The Employees' State Insurance Corporation administers hospitals, dispensaries, and other healthcare facilities necessary for implementing the scheme.

Gratuity

The Code consolidates provisions relating to payment of gratuity. Gratuity is payable to eligible employees upon termination of employment after completing the prescribed period of continuous service due to retirement, resignation, death, disablement, or superannuation. An important feature of the Code is the extension of gratuity benefits to fixed-term employees, who become eligible for gratuity on a proportionate basis without the requirement of completing five years of continuous service, provided they satisfy the conditions specified under the Code. The Code also prescribes circumstances in which gratuity may be wholly or partially forfeited, particularly in cases involving misconduct resulting in financial loss or specified offences committed during employment.

Maternity Benefits

The Code incorporates provisions relating to maternity benefits for women employees. Eligible women are entitled to maternity benefits, maternity leave, nursing breaks, medical bonus where applicable, and protection against dismissal during maternity leave. The Code also includes provisions relating to miscarriage, medical termination of pregnancy, tubectomy operations, and illnesses arising from pregnancy or childbirth. The legislation permits women to work from home after availing maternity benefits if the nature of work permits and if mutually agreed between the employer and employee.

Employee Compensation

The Code contains provisions relating to compensation payable when employees suffer employment injuries, occupational diseases, permanent disablement, temporary disablement, or death arising out of and in the course of employment. Employers are liable to pay compensation according to the schedules and formulas prescribed under the Code. Compensation varies depending on factors such as wages, age of the employee, nature of injury, and degree of disability. The Code also provides procedures for determining compensation, resolving disputes, and making payments to eligible dependents.

Social Security for Unorganized Workers

A major objective of the Code is the extension of social security to the unorganized sector. The Central Government and State Governments are empowered to formulate and implement welfare schemes covering areas such as: Life and disability cover, Health and maternity benefits, Old-age protection, Education, Housing, Skill development, Funeral assistance, & any other welfare measures considered necessary. The Code also provides for registration of eligible unorganized workers in the prescribed manner to facilitate delivery of benefits.

Gig Workers and Platform Workers

One of the most significant innovations in the Code is the inclusion of gig workers and platform workers within the social security framework. The Central Government may formulate schemes providing benefits relating to: Life and disability cover, Accident insurance, Health and maternity benefits, Old-age protection, Crèche facilities, & other welfare measures. The Code also requires the creation and maintenance of databases and registration systems for gig workers and platform workers to ensure effective implementation of these schemes.

Funding of Social Security Schemes

The Code provides various mechanisms for financing social security programmes. Funding sources include: Employer contributions, Employee contributions where applicable, Government grants, Contributions by aggregators in respect of gig and platform workers, & other prescribed sources. The Code empowers the government to prescribe contribution rates and administrative procedures for collection, accounting, and utilization of funds.

Registration and Compliance

The Code requires establishments covered under its provisions to obtain registration in accordance with prescribed procedures. Employers must maintain records relating to employees, wages, contributions, and benefits. They are also required to submit periodic returns and cooperate with inspections and inquiries conducted by authorized officers. The Code promotes electronic maintenance of records and digital compliance mechanisms to improve administrative efficiency.

Inspection and Administration

The Code introduces the concept of Inspector-cum-Facilitator. Instead of focusing solely on enforcement, Inspector-cum-Facilitators perform dual functions by: Advising employers regarding legal compliance, Conducting inspections, Examining records, Investigating violations, Ensuring implementation of statutory provisions. Inspections may be conducted according to schemes framed by the appropriate government to promote transparency and risk-based enforcement.

Offences and Penalties

The Code prescribes penalties for violations such as: Failure to pay contributions, Non-registration of establishments, Failure to maintain required records, Submission of false information, Obstruction of inspectors, Misuse of social security funds.

Depending on the nature and seriousness of the offence, punishment may include fines, imprisonment, or both. The Code also contains provisions relating to compounding of certain offences and prosecution procedures.

Appeals and Dispute Resolution

The Code establishes mechanisms for resolving disputes arising under different social security schemes. It provides for determination of claims, appeals against administrative decisions, recovery of contributions, adjudication of disputes, and powers of competent authorities. Various officers and tribunals are empowered to hear appeals and resolve disputes in accordance with the provisions of the Code.

Conclusion

The Code on Social Security, 2020 represents a comprehensive reform of India's social security legislation by integrating multiple labour laws into a single code. It seeks to provide a unified framework covering provident fund, employee state insurance, gratuity, maternity benefits, employee compensation, and welfare measures for unorganized workers. A notable feature of the Code is its recognition of gig workers and platform workers, enabling the development of social security schemes for workers engaged in modern forms of employment. The legislation strengthens institutional mechanisms through organizations such as the Central Board of Trustees, Employees' State Insurance Corporation, and National and State Social Security Boards. It also emphasizes improved compliance, electronic administration, registration of workers, and effective enforcement through Inspector-cum-Facilitators. Overall, the Code aims to expand social security coverage, improve administrative efficiency, and promote the welfare and economic security of workers across diverse sectors of the Indian economy.

Reference:

The Code on Social Security, 2020 (Act No. 36 of 2020)

© 2025-2026 Law Justified Magazine, unless otherwise provided, all rights reserved.

The author(s) of each article published in the Law Justified Magazine is/are solely responsible for the content thereof; neither the Law Justified Magazine nor its editors or publisher nor anyone else involved in creating, producing, or distribution assumes any liability or responsibility for the accuracy, completeness, correctness or usefulness of any information provided in the Law Justified Magazine, nor shall they be liable for any direct, indirect, incidental, special, consequential or punitive damages arising out of the use of the Law Justified Magazine.

Disclaimer

Law Justified Magazine is fully open access, which means all its contents is freely available to its reader free of cost.

Publishes articles under CC BY-NC-ND 4.0 International Licence of creative commons licensing. That means, reusers can copy and distribute the material in any medium or format in unadapted form only, for noncommercial purposes only, and only so long as attribution is given to the creator.

Open Access Policy

About Law Justified Magazine

Law Justified Magazine is an open access, monthly, digital magazine, which publishes on legal issues majorly focusing on current legal developments for practitioners and professionals.

Frequency | Monthly

Mode | Online

Scope | Law

Language | English

Article Type | Short Article | Commentary

Starting Year of Publication | 2025

Terms & Conditions

Privacy Policy