L& S UPDATE

An e-update to clients from Lakshmikumaran & Sridharan

SE P T E MBE R 30, 2 0 2 0

COR PO R AT E

Overview of the
Code on Social
Security, 2020
UP DAT E N O. 1 0 OF 2020

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SINCE 1985
The purpose of the Code on Social Security,
2020 (”SS Code”) is to amend and consolidate
the laws relating to social security with the goal
to extend social security to all employees and
workers either in the organized or unorganized
or any other sectors and for matters connected
therewith or incidental thereto.

SS Code was passed by the Lok Sabha on

September 22, 2020 and subsequently, by the
Rajya Sabha on September 23, 2020 with a
view to amalgamate, simplify and rationalize the
relevant provisions of the nine central labour
enactments relating to social security.

The SS Code is yet to receive assent of the

President of India.

The SS Code shall come into force on such date

as the Central Government may, by notification
appoint and different dates may be appointed
for different provisions of the SS Code.
LAWS SUBSUMED
SS Code has subsumed the following enactments:

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;
9. The Unorganised Workers’ Social Security Act, 2008.
SALIENT FEATURES
(1) GENERAL FEATURES

• SS Code is applicable to every establishment subject to the minimum

threshold of employees employed therein.

• Every establishment to which SS Code applies shall be required to be

registered within such time and in such manner as may be prescribed
by the Central Government.

• Maintenance of Records and Registers: The employer of an

establishment shall:
• Maintain records and registers containing particulars such as (a)
number of hours of work performed by employees, (b) wages
paid, (c) leave, leave wages, wages for overtime work, attendance
etc.

• Issue wage slips to the employees, in electronic form or otherwise;

• File return electronically or otherwise before the authorized officer.

(2) EMPLOYEES’ PROVIDENT FUND (‘EPF’)

(i) Applicability: The provisions relating to EPF are applicable to every

establishment in which 20 or more employees are employed.

(ii) Contribution to Provident Fund:

• Employer: Liable to contribute 10% of the wages payable to
each employee to the provident fund.
• Employee: Liable to contribute equal to the contribution payable by
the employer i.e. 10% of the wages in respect of each employee to
the provident fund.
• The employee may contribute more than 10% of the wages to the
provident fund subject to the condition that the employer is not
obligated to pay any amount over and above 10% of the wages
payable by employer.
• The Central Government can apply the rate of 12% of the wages
payable to each employee as contribution towards the provident
fund for any establishment or class of establishment.

(iii) Authorising employers to maintain provident fund account:

The Central Government may authorize the employer to maintain a
 provident fund account in the manner prescribed on receipt of the
application from the employer and the majority of employees in
relation to an establishment employing one hundred or more persons.

(iv) Transfer of accounts: The accumulated amount in provident fund

account or pension fund account of an employee relinquishing his
employment shall be transferred or dealt with in the manner specified
in the Provident Fund Scheme or the Pension Scheme, as the case
may be.

(v) Self-employed Workers: Scheme may be framed by the Central

Government for providing social security benefits to self-employed
workers or any other classes of persons.

(3) EMPLOYEES’ STATE INSURANCE CORPORATION (‘ESIC’)

(i) Applicability: The provisions relating to ESIC are applicable to:

• Every establishment in which 10 or more persons are employed
other than a seasonal factory.

• Establishment which carries on hazardous or life-threatening

occupation as notified by the Central Government, in which even a
single employee is employed.

• Employer of plantation who has opted for application of ESIC.

(ii) Employees State Insurance Fund:

• Contributions, user charges and other moneys shall 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.

(iii) Purpose of Fund: Fund shall be used for the following 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.
 (iv) Insured Persons: Every employee in an establishment shall be insured,
whether electronically or otherwise, as may be prescribed by the
Central Government.

(v) Contribution:
• The contribution payable in respect of an employee shall comprise
contribution payable by the employer and employee.

• The contribution shall be paid to the Corporation by the employer.

• Employer shall recover the employee’s contribution from the

employee by reduction from wages.

(vi) Failure to pay contribution by employer:

• Corporation may pay the benefit to the employee and recover the
capitalised value of the benefit paid to the employee from the
employer.

(4) GRATUITY

(i) Applicability: The provisions relating to gratuity are applicable to:

a. every factory, mine, oilfield, plantation, port and railway company;
and

b. 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.
 (ii) Eligibility period for payment of gratuity:
• Gratuity is payable to an employee on termination of employment
after continuous service of 5 years.

• For working journalist, gratuity is payable on 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;

(5) MATERNITY BENEFIT

(i) Applicability: The provisions relating to maternity benefit are applicable

to:
a. to every establishment being a factory, mine or plantation including
any such establishment belonging to Government; and

b. to 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.

(ii) 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 wage for the period of her actual absence;

• Woman shall be entitled to maternity benefit of maximum 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
for 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.

(6) EMPLOYEE’S COMPENSATION

(i) 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.

(7) SOCIAL SECURITY AND CESS IN RESPECT OF BUILDING AND OTHER

CONSTRUCTION WORKERS

(i) Applicability: Every establishment which falls under the building and
other construction work. The term, ‘building or other construction
work’ has been defined in the SS Code.

(ii) 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 cess on the basis of his self-assessment,
on the cost of construction.

(8) UNORGANISED WORKERS, GIG WORKERS AND PLATFORM WORKERS

(i) The terms, ‘Unorganised Workers’, ‘Gig Workers’ and ‘Platform

Workers’ have been defined in the SS Code.

(ii) Schemes: The Central Government and State Government shall frame
welfare schemes for such workers.

(iii) 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.

(iv) ESIC: The Central Government may frame ESIC scheme for
unorganized workers.

(9) EMPLOYMENT INFORMATION AND MONITORING

(i) 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.

(ii) 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.
LO C AT I O NS

NEW DELHI HYDERABAD GURUGRAM

5 Link Road, Jangpura Extension, ‘Hastigiri’, 5-9-163, Chapel Road, OS2 & OS3, 5th Floor,
New Delhi 110 014 Opp. Methodist Church, Nampally, Corporate Office Tower,
PHONE: 011-4129 9800 Hyderabad 500 001 AMBIENCE Island, Sector 25-A,
--- PHONE: 040-2323 4924 Gurugram 122 001
B-6/10, Safdarjung Enclave, E-MAIL: [email protected] PHONE: 0124-477 1300
New Delhi 110 029 E-MAIL: [email protected]
PHONE: 011-4129 9900 A H M E DA BA D
E-MAIL: [email protected] B-334, SAKAR-VII, P R AYA G R A J ( A L L A H A B A D )
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MUMBAI Ahmedabad 380 009 Colvin Road, Lohia Marg,
2nd Floor, CNERGY IT Park, PHONE: 079-4001 4500 Prayagraj 211 001
Old Standard Mill, E-MAIL: [email protected] PHONE: 0532-242 1037/242 0359
Appa Saheb Marathe Marg, E-MAIL: [email protected]
Prabhadevi, PUNE
Mumbai 400 025 607-609, Nucleus, KOCHI
PHONE: 022-2439 2500 1 Church Road, Camp 1st Floor, PDR Bhavan,
E-MAIL: [email protected] Pune 411 001 Palliyil Lane, Foreshore Road,
PHONE: 020-6680 1900 Ernakulam,
CHENNAI E-MAIL: [email protected] Kochi 682016
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Chennai 600 006 K O L K ATA E-MAIL: [email protected]
PHONE: 044-2833 4700
2nd Floor, Kanak Building,
E-MAIL: [email protected] JAIPUR
41, Chowringhee Road,
Kolkata 700 071 2nd Floor (Front side),
BENGALURU Unique Destination, Tonk Road,
PHONE: 033-4005 5570
World Trade Center, E-MAIL: [email protected] Near Laxmi Mandir Cinema Crossing,
No. 404-406, 4th Floor, South Wing, Jaipur, Rajasthan 302 015
Brigade Gateway Campus, CHANDIGARH PHONE: 0141–456 1200
No. 26/1 Dr. Rajkumar Road, E-MAIL: [email protected]
SCO No. 59, 1st Floor,
Malleswaram West,
Sector 26, Madhya Marg,
Bengaluru 560 055
Chandigarh 160 026.
PHONE: 080-4933 1800
PHONE: 0172-492 1700
E-MAIL: [email protected]
E-MAIL: [email protected]

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