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S. Soundara Rajan

Chartered Accountant

Published on: Mar 27, 2026

Code on Social Security 2020: Detailed Section-wise Analysis, Key Provisions, Applicability & Impact

 

1. Introduction

The Code on Social Security, 2020 (SS Code, 2020) was enacted to consolidate and rationalise nine Central labour laws relating to social security. The Code introduces a unified legal architecture covering employees, workers, unorganised sector workers, gig workers, and platform workers.

2. Repeal of existing legislations (Section 164)

Section 164 repeals the following nine legislations:

    • Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
    • Employees’ State Insurance Act, 1948
    • Employees’ Compensation Act, 1923
    • Maternity Benefit Act, 1961
    • Payment of Gratuity Act, 1972
    • Cine Workers Welfare Fund Act, 1981
    • Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
    • Building and Other Construction Workers Welfare Cess Act, 1996
    • Unorganised Workers’ Social Security Act, 2008

3. Important Definitions

3.1 Employee – Section 2(26)

Any person employed on wages by an establishment, either directly or through a contractor, to do any skilled, semi-skilled or unskilled, manual, operational, supervisory, managerial, administrative, technical, clerical or any other work, whether the terms of employment be express or implied.

3.2 Wage Worker – Section 2(90)

A person employed for remuneration in the unorganised sector, directly by an employer or through any contractor, irrespective of place of work with a monthly wage of an amount as may be notified by the Central Government and the State Government, as the case may be.

3.3 Unorganised Worker – Section 2(86)

A home-based, self-employed, or wage worker in the unorganised sector.

3.4 Gig Worker – Section 2(35)

A person performing work outside the traditional employer-employee relationship.

3.5 Platform Worker – Section 2(61)

Individuals working through online platforms such as Uber, Zomato, Swiggy, Ola, etc.

4. Social Security Organisations

Section 4 — Constitution of Board of Trustees of Employees’ Provident Fund

The Code establishes the Board of Trustees of the Employees’ Provident Fund (the statutory “Central Board” for PF) under Section 4. This is established to administer provident-fund related matters under the Code.

Section 5 — Constitution of Employees’ State Insurance Corporation (ESIC)

The Code expressly constitutes the Employees’ State Insurance Corporation under Section 5. The Corporation (ESIC) is the statutory body that administers ESI schemes and associated benefits under the Code.

Section 6 — National Social Security Board 

The Code creates the National Social Security Board and provides for State-level unorganised workers’ boards. These boards advise, recommend and oversee social security schemes for unorganised, gig and platform workers and help coordinate Central/State implementation.

5. Provident Fund (PF)

5.1 Applicability (Schedule I)

Applicable to establishments with 20 or more employees.

5.2 Scheme for Provident Fund, Pension Fund and Insurance Fund – Section 16

The Central Government shall frame the Scheme for:

  • Provident fund
  • Pension fund
  • Insurance fund

5.3 Contributions (Section 16)

  • Employer and Employee contribution: 10% or 12% as notified by the Central government.

6. Employees’ State Insurance (ESI)

6.1 Applicability – (Schedule I)

Applicable to establishments with 10 or more employees.

6.2 Extension to Unorganised, Gig & Platform Sectors – Section 45

Central Government may frame scheme for unorganised workers, gig workers and platform workers and the members of their families for providing admissible benefits.

6.3 Benefits (Sections 32)

  • Sickness benefit
  • Maternity benefit
  • Disablement benefit
  • Dependant’s benefit
  • Medical Benefit
  • Funeral expenses

6.4 Contribution – Section 29

Employer and employee shall contribute at such rates as may be prescribed by the Central government.

7. Gratuity

7.1 Eligibility – Section 53 (1)

Gratuity is payable upon:

  • Superannuation
  • Retirement or resignation
  • Death or disablement due to accident or disease
  • Termination of his contract period under fixed term employment

7.2 Continuous Service Requirement – Section 53(1)

Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years. The completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement or expiration of fixed term employment.

7.3 Amount of Gratuity – Section 53 (2)

For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned.

In the case of a monthly rated employee, the fifteen days' wages shall be calculated by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen. Thus, Gratuity = Last drawn wages Ă— 15/26 Ă— completed years of service.

In the case of an employee employed on fixed term employment or a deceased employee, the employer shall pay gratuity on pro-rata basis.

7.4 Payment of Gratuity – Section 56 (3)

The employer shall arrange to pay the amount of gratuity within thirty days from the date it becomes payable to the person to whom the gratuity is payable.

8. Maternity Benefits

8.1  Leave – Section 60 (3)

Maximum period of maternity leave for a Woman is 26 weeks of which not more than eight weeks shall precede the expected date of her delivery.

For Woman having two or more surviving children, maximum period is 12 weeks of which not more than six weeks shall precede the expected date of her delivery.

8.2 Creche Facilities – Section 67

Mandatory for establishments with 50 or more employees.

9. Employees’ Compensation

9.1 Compensation

·If personal injury is caused to an employee by accident or an occupational disease listed in the Third Schedule arising out of and in the course of his employment, his employer shall be liable to pay compensation subject to certain conditions laid down in Sec 74.

The amount of compensation payable is to be computed as per Sec 76.

9.2 Medical Board – Section 77

Mandatory involvement in assessment of disablement.

10. Unorganised Sector Workers

10.1 Central Government Schemes – Section 109 (1)

Schemes may include:

  • Life and disability cover
  • Health and maternity benefits
  • Old age protection
  • Education

10.2 State Schemes – Section 109 (2)

Schemes may include:

  • Provident fund;
  • Employment injury benefit;
  • Housing;
  • Educational schemes for children;
  • Skill upgradation of workers;
  • Funeral assistance; and
  • Old age homes.

10.3 Registration – Section 113

Registration through Aadhaar-based system on a centralised portal.

11. Gig & Platform Workers

11.1 Framing of Social Security Schemes – Section 114

Government may frame schemes for:

·         Life and disability cover;

·         Accident insurance;

·         Health and maternity benefits;

·         Old age protection; and

·         Crèche;

11.2 Funding – Section 114(3)

Funds may consist of:

  • Contributions from Central/State Governments
  • Aggregator/platform contributions
  • Beneficiary contributions

11.3 Contribution by Aggregators – Section 114(4)

  • Between 1% to 2% of annual turnover (excluding taxes)
  • Capped at 5% of amounts payable to gig and platform workers

11.4 National Social Security Board – Section 6

Creation of a National Social Security Board for the welfare of Gig Workers and Platform Workers.

12. Building and Construction Workers

12.1 Welfare Cess – Section 100

Levy of cess at 1–2% of construction cost.

12.2 Registration of Workers – Section 106

Building Worker to get registered as beneficiary.

12.3 Welfare Schemes – Section 108

Welfare Scheme to be administered as per Sec 108.

13. Compliance, Reporting & Digitisation

13.1 Registration of Establishments – Section 3

One-time electronic registration.

13.2 Electronic Records and Returns – Section 123

Maintain records and registers in the form prescribed by the appropriate government, electronically or otherwise. File Return electronically or otherwise.

13.3 Web-Based Inspections – Section 122

Risk-based and randomised inspections.

14. Offences and Penalties

14.1 General Penalties – Section 133

Fine up to â‚ą50,000 for non-compliance.

14.2 PF/ESI Non-payment – Section 133

  • Imprisonment up to 3 years
  • Fine up to â‚ą1 lakh

14.3 Repeat Offences – Section 134

Enhanced penalties apply.

14.4 Compounding – Section 138

Most offences may be compounded.

15. Challenges Ahead

  • Implementation delays due to unfinished State rules
  • Registration challenges for unorganised and rural workers
  • Cost burden on aggregator-based businesses
  • Need for awareness and digital literacy

16. Conclusion

The Code on Social Security, 2020 is a landmark legal reform modernising India’s social protection system. With its expansive definitions, inclusion of gig and platform workers, integrated compliance mechanisms, and digital-first architecture, the Code promises a unified, inclusive, and future-ready social security ecosystem.

Once fully implemented, it will significantly strengthen India’s labour welfare framework, aligning it with global best practices and supporting sustainable economic growth.    

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