Social security
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This article is written by Radhika Ghosh, from Hidayatullah National Law University (HNLU). The article talks about the various social security schemes available to Indians and the need to revolutionise them to meet the crisis of the pandemic. It also analytically discusses the Code of Social Security, 2020 as a new approach for the vulnerable section of the society to benefit from.


India celebrating its 74th independence day and marking the milestone of the mass-based freedom struggle indeed paved the way for political freedom from a four-century-old British rule. The independence from foreign rule made way for a parliamentary democracy laid the foundation of a socialist country that India is today under which it pays more attention to social problems rather than the individual ones. India is under an obligation to fulfil the basic aim of socialism, that is, to provide a decent standard of living to all. 

Now considering the present pandemic situation, Justice Chandrachud observed that the lessons from the humanitarian crisis in addition to the present pandemic showed that that the people from the marginalised section of society must be assured of a minimum level of social security and effective expenditure of public entitlements must be catered now more than ever.

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In a discussion titled COVID-19 & The Future of Work, Junaid Ahmed, the country director of the World Bank said that it is high time for India to revolutionise its social security and provide portability to its gig- workers. Over this course of lockdown, many gig-workers and migrant workers died on roads and rail accidents while they were returning to their home state. As per a report published in Hindustan Times, the demand for work jumped by 181% in May 2020, with 36.1 million households wanting work.

The State must uphold social security through the Directive Principles of State Policy. This in a way acts as a natural right of the citizens. It is also recognised as a legal right that looks into certain fundamental human rights for economically vulnerable people of the state aiming at curbing their sufferings by firstly, recognising their issues and then giving them a sense of belongingness in the society. India needed to step up its already existing social security system to cope up with the new-age workforce and technology that will arise after the COVID-19 outbreak. The throwing of millions of people from the system of industrial operations in addition to integrating sweeping structural reforms across states and losing industries such as start-ups and MSMEs from compliance has had several other negative effects in the country.  

Country’s obligations as a welfare state 

Under International Laws

The International Labour Organization (ILO) is considered to be an adopted notion of social security. It covers kinds of social security measures like providing benefits, both in cash or in kind, and to secure protection from being a vulnerable member of the society. The two main pivotal corners of social security, that is, income security and availability of medical care, are recognised as essential elements of social security by the ILO Income Security Recommendation, 1994 and the Medical Care Recommendation, 1994.

Social security existing in India is diverse from the social arrangements because the perks that are provided do not have any reciprocal obligation on the citizens, for example, representing remuneration for work or any other services that are delivered. Moreover, it is not done based on an individual agreement between the protector and the provider, rather it applies to wider people and has a character on the whole.

Articles 9 and 12 of The International Covenant on Economic, Social and Cultural Rights (ICESCR) throws light on the right to social security for everyone and frames the required steps that are to be taken by the State actors to achieve the whole sense of realization of the right. India is a signatory to ICESCR convention on April 10, 1979, thus, making it obligatory on the part of India to foster respect to the said convention in its spirit and letter.

Under Constitutional design

The constitutional design along with the peremptory of democratic liability have brought in new ways and measures to formulate ways to upgrade the social security met towards the marginalised section of the country. The Constitution of India ensures the right to equality and equal treatment for people from all walks of life and regardless of their social and economic position of privilege. The preamble of the Constitution of India states the socialistic nature of the state. According to the Hon’ble Supreme Court of India, the principal aim of socialism is to discard inequality of status, income, the standard of living, and provide a decent life to secure economic, political and social justice to all its citizens. Social and economic justice shall be secured by the state at all means. Article 21 of the Constitution also guarantees the fundamental right to life with the right to be treated with basic dignity to all. The Directive Principles of State Policy in the Constitution as mentioned earlier also drafts down the state’s duty to provide a basic source of livelihood to the citizens of the country.

The administrative framework of the Indian state, that consists of both the Centre and the States, have a duty to roll out a social welfare policy system for uplifting the economically downtrodden population from the ills of poverty, deprivation and insecurity. Moreover, since the section of the have-nots constitutes the biggest section of the society, they are fundamental for the electoral mobilisation of the political elites of the society. Hence, a multi-dimensional social security measure played one of the major roles via which the democratic states of India could negotiate with its economic and social inequality from the very beginning. 

Article 23 of the Indian Constitution prohibits trafficking and similar forms of forced labour and Article 24 of the Indian Constitution prohibits child labour in factories. The Preamble of the Constitution of India establishes India as a Socialist state. The said objectives of socialism can be upheld by the Directive Principles of State Policy under Part IV of the Constitution, that is, under Articles 38, 39, 41, 42, 43 and 43-A. Alongside these, Entries 21, 22, 23, 24 and 26 of Concurrent List, that is, Schedule VII allows the Government to take all required steps to control and regulate the commercial monopolies, trade unions, labour disputes, welfare and employment of labour. It also shall ensure the protection of interest of all citizens of the country at all times. Thereby, the Constitution ensures the citizens a political and civil right which is easily differentiable from the generic human rights.

Under other Municipal Laws

In Orissa, Dadan Labour was in a trend that provided for extremely bad working conditions for the labourers. In the 28th Session of the Labour Minister’s conference, the issue of protection and welfare schemes of those in Dadan Labour was considered. This led to the suggestion of setting up a strong committee to delve into the whole issue and to suggest preventive measures within the system. Then a compact committee was made in 1977 that recommended that a separate Central Legislation must be framed as the clauses of the Contract Labour (Regulation and Abolition) Act, 1970 was not adequate to cater to the ills of malpractices that had already crept in. 

The Migrant Workmen (Regulation of Employment and Conditions of Service) Bill, 1979 was then introduced in the Parliament and the same was passed as an Act in 1979. The Act as a measure to bring transparency in the system required licensing of all the migrant labours at the time of commencing in the workforce and prohibited any sort of engagement of migrant workers in the operations without registration. The act also ensured minimum wages to be paid to these migrants along with certain other amenities.

The Unorganised Workers’ Social Security Act, 2008 was enacted to provide welfare and social security to the unorganised workers. It also defines “unorganised sector” under section 2(m) for the first time. This Act was considered as one of the biggest welfare legislations in India. Rashtriya Swasthya Bima Yojna is a scheme under the said Act showcasing as an alteration to universal healthcare. The scheme had faced various major criticisms due to fraudulent allocation of funds and its lack of objectivity.

With time many state governments such as Uttar Pradesh and Madhya Pradesh have proposed the idea of registration of migrant workers in new ways as this provision already existed in the law. The Central Government is planning to modernize the regulation by a new code from 2019 itself. The High Courts of Allahabad, Bombay, Karnataka, Gujarat, Madras and Andhra Pradesh have taken up suo moto cognizance to the migrant workers and other gig-workers during this time.

The Hon’ble Bombay High Court, while hearing a PIL after the death of 16 tired migrant labourers on a railway track, ordered the collector from Marathwada to file a report within a period of two weeks and devise steps that could be taken for the migrant labourers. The court also asked the state to consider whether these migrant labourers could move from their home states. The High Court of Karnataka asked the Government to pay allowances and transportation cost of the migrant labourers. The Hon’ble Madras High Court raised issues to the Central Government questioning about the measures that could be taken for the safety of the gig-workers.

However, COVID-19 has once again questioned the dreadful system of deprivation and deep-rooted social insecurities that decided the fate of a substantial part of the population in India. This massive health crisis has pointed out the abysmal loopholes in the social security system of the country whose objective was to reduce the sufferings of these marginalised sections of society.

Pre-existing social security schemes

In 2011, based on an affidavit to the Supreme Court of India on the official poverty line, the Planning Commission based on the Tendulkar Committee reported that 30% of the population has been living below the official poverty line. There have been a lot of debates raising the question as to how the poverty line should be defined. But silence prevailed from both public discourse and laws on a more crucial question, that is, how do these 35 crore people who are defined to be under the official poverty line survive on Rs. 32 per person per day in urban areas and Rs. 26 per person per day in rural areas. The absence of social security when contingencies of illness, old age, and death come along and how would they protect themselves from becoming more poverty-stricken.

The government had flagged the first pensions programme for the poor, that is, the National Social Assistance Programme in 1995, starting with a pension of Rs. 75 per month. Under the Indira Gandhi Old Age Pension Scheme and Widow Pension Scheme, the Central government contributed Rs. 200 and Rs. 300 per month respectively. Other states like Himachal Pradesh, Rajasthan, and Bihar provided between Rs. 400-300 per month, while Tamil Nadu provided Rs. 1000 per month alongside this umbrella scheme. 

In a nutshell

The Employees’ Pension Scheme (ESP)

  1. Pension for life to the member, on retirement or disablement during employment.
  2. Pensions to members of the family upon the death of the member:
    1. to widow/widower for life or until he/she remarries,
    2. to children/orphans, up to 2 children younger than 25 years of age along with widow/widower pension,
    3. to children/orphans with total and permanent disability irrespective of age and number of children in the family,
    4. to a nominee in the event of a member who is unmarried or without any eligible family member available to receive a pension, and
    5. to a dependent father/mother in the event, the member dies leaving behind no eligible family members and no named survivor.
  3. The Employees’ Provident Fund provides an individual account-based lump sum (accumulations plus interest) on retirement at 58 years of age, permanent disablement or death. Partial withdrawals/advances are available in certain contingencies. (Full withdrawal at 55 years of age is possible if the member is retired.)

Old Age (retirement) pension


Old Age pension is paid when the member has a minimum of 10 years eligible service and has reached 58 years of age (no pension is payable for lesser periods).  And twenty years of contributions are required for a full pension.

Disability pension and survivors’ benefits


Membership with at least one month of contributions is the requirement to qualify for disability or survivor benefits.

Need to revolutionise the pre-existing social security schemes

The thing that was released during this onset of the pandemic is that the social security schemes fail to include a major section of the society that is in dire need of social security and acceptance. The lockdown began in March and within that time span, a lot of people lost their job, especially in the unorganised section. The sense of security within people started deteriorating and even though the food security tried to expand its branches, it was not enough to cater to this large unemployed population. So, the Food Security Act, 2013 could provide for the most vulnerable section of the society highlighting the loopholes in this crisis. Now keeping in mind that people are entitled to these basic social securities, the system genuinely failed them in providing so.

The lack of transparency in the  Public Distribution System (PDS) along with corruption creeping in the results are not desirable. With the lack of food security among the economically vulnerable community during this lockdown, the lack of housing and security of providing shelter could about be highlighted. Many migrant workers could not find a proper shed over their heads in the metro cities they have been working in. Even though the Central Government has tried to implement universal ration and Social Housing welfare for better utilization of the Public Distribution System, it looks like the schemes were mostly reactive and need a long period of time before actually implementing it.

The lack of awareness and futuristic thinking of the policymakers led to this exclusionary, delayed and insufficient welfare schemes. The hasty decision of locking down due to the pandemic by both the centre and state governments portray their lack of concern and preparedness of the situation that might follow. This also clearly shows that the priority of looking after the migrant workers and other vulnerable classes does not nearly exist in the government ecosystem.

Moreover, when the crisis of these gig-workers was observed all across the country the lack of credibility from the part of the government also came to limelight. These migrant workers who were stuck in different conglomerate cities wanted to come back to their home. The government could have stopped this mass transportation and provided food and shelter to these people for the time being. Rather, they found subsisting motives of these migrant workers to defend their liability towards them. Many people due to the lack of social security died on their way home painting a picture of the gruesome reality faced by a major part of the population.  

Secondly, the government had directed social distancing measures to curb the spread of the Coronavirus. They, however, did not count the fact that a major section of the economically vulnerable people stay in congested parts of metropolitan cities, hence maintaining a social distance at homes or with the coronavirus infected patient at home is not achievable. Even though the disease is equally susceptible to all people, the preventive measures do not boil down equally to all parts of the country. Special attention should have been provided to make sure they are safe at homes with proper amenities of survival.

Therefore, looking from an optimistic approach, this pandemic brought out the reasons for making social welfare schemes from adequate and humane more than ever. The whole social security system needs a dynamic shift in its approach to make it more inclusive and benefit more sections of the society, especially to the vulnerable class in order to mitigate their sufferings. This also sets the reminder that if social and economic inequalities are not bridged, more and more people will face the dark side of the vulnerability like a domino effect, and the less they can enjoy political democracy.

Code on Social Security, 2020


The Indian Labour Ministry has been working towards consolidating its 44 labour laws majorly into four codes, that is, on wages, industrial relations, social security and safety, and health and working conditions so that the ease of doing business improves alongside securing social security of the gig-workers.

The Social Security Code shall replace nine social security laws in India itself, which is inclusive of the Employees’ Provident Fund Act, 1952, the Maternity Benefit Act, 1961, and the Unorganised Workers’ Social Security Act, 2008. Under this Social Security Bill, a social security fund is planned to be set up with an aim to provide welfare benefit schemes such as a pension, medical cover, and death and disablement benefits to all workers, including gig workers, platform workers, and unorganised workers.

Highlights of the Code

Associations and establishments that are above a certain specified size are required to provide benefits (such as provident fund and insurance) to its employees. These benefits are mandatory for employees above a certain wage level which shall be notified.  And for other gig-workers, the government shall step up and implement some social security schemes.  The Bill provides for the organisations of several bodies to administer these social security schemes which include a Central Board to look after the provident fund schemes and national and state-level Social Security Boards to administer schemes for unorganised sectors.

All these eligible foundations are needed to register under the code.  All the workers from this kind of establishments and other unorganised sectors are required to provide their Aadhaar number for receiving social security benefits. These shall bring transparency into the system. Employers are also required to report vacancies to career centres in some cases. The Bill also specifies penalties for various offences, such as failure to pay contributions and falsification of reports. Offences which are not punishable with imprisonment could be settled or compounded by liquidated damages of up to 50% of the maximum fine applicable.

The National Commission on Labour (2002) had recommended universal and comprehensive social security coverage to all workers in addition to a decentralized administration to fetch the social benefits of the gig-workers.  However, the Bill continues to congress the schemes with varied coverage and applicability thresholds and a multi-channelized delivery system. The government may frame schemes for gig workers, platform workers and unorganised workers. Now the issue remains as to how to segregate these social securities in case of overlap of applicability of the schemes.

The Bill mandatorily requires a worker or an employee to link his/her Aadhaar number to receive social security benefits mentioned under the Code. There is a chance that this might violate the Supreme Court’s judgment on the usage of Aadhaar in the context of the right to privacy secured to all citizens. There is a possibility of the government to change the requirements for applicability of social security schemes. The main question that lies in hand is whether the power to decide the threshold should be given to the legislature or the government. With this, the Standing Committee on Labour has made some recommendations that include creating a unified registration and compliance system, ensuring portability of benefits to migrant workers, and reducing the term for eligibility for gratuity to one year.

Key analysis of the Code on Social Security, 2020

Funding and benefits of social security schemes

This Bill of 2019 notes down various social security benefits that can be availed by anyone meeting out the requirements.  These include an Employees’ Provident Fund (EPF) Scheme, an Employees’ Pension Scheme (EPS), and an Employees’ Deposit Linked Insurance (EDLI) Scheme.  These provide for a provident fund, a pension fund, and an insurance scheme, respectively.   

The government may also notify: (i) an Employees’ State Insurance (ESI) Scheme to provide benefits in times of sickness, maternity, and in other difficult situations, (ii) gratuity to workers on completion of five years of employment (or it could be lesser than five years in some situations such as termination of fixed-term contract), (iii) maternity benefits to female employees, (iv) cess for the welfare of construction workers, even in unorganised sectors and (v) compensation to employees and their dependents in case of any injury or disease during work.  

Alongside this, the central or state government would notify some other schemes for unorganised workers, gig workers and platform workers (and or set up funds) to cater to various conveniences, for example, covering for life and disability. By definition, gig workers refer to employees who work outside of the traditional employer-employee relationship (for example, freelancers). And platform workforces include workers who approach other organisations or individuals using online platforms who provide them with specific workloads.  Unorganised workers are home-based or and self-employed workers and wage earners in foundation with less than 10 workers.  The central and the state government may seek and appoint facilitation centres to aware people about unorganised sector schemes and to accelerate enrolment in such social security schemes.

The EPF, EPS, EDLI, and ESI under Employees’ Deposit Linked Insurance Schemes will be monetarily backed up through a conglomeration of contributions from the set employer and employee. Contributions towards gratuity, maternity benefit, cess for building workers, and injury compensation will be taken care of by the employer. Social security schemes for gig workers, platform workers, and unorganised workers may be financially supported through contributions from the employer, employee, or the central or state government. 

Registration and coverage

The Bill states different kinds of requirements for availing different kinds of social security benefits. For example, the EPF Scheme will apply to establishments with 20 or more employees. The ESI Scheme will apply to certain establishments with 10 or more employees, and to all establishments which carry out hazardous or life-threatening work which shall be designated by the central government. These requirements may be amended by the central government. All eligible establishments are required to register under the Bill unless they have already been registered under any other labour law.  All workers who wish to avail the social benefits under the Bill need to provide their Aadhaar number to receive social security benefits. 

Social security establishments

The Bill provides for the organisations of several bodies to look after the social security schemes.  These include: (i) a Central Board of Trustees, headed by the Central Provident Fund Commissioner, to monitor the EPF, EPS and EDLI Schemes, (ii) an Employees State Insurance Corporation, which is headed by a Chairperson appointed by the central government, to look after the ESI Scheme, (iii) national and state-level Social Security Boards, headed by the central and state Ministers for Labour and Employment, respectively, to monitor schemes for unorganised workers, and (iv) state-level Building Workers’ Welfare Boards, headed by a Chairperson nominated by the state government, to manage schemes for building workers.

Appeals and scrutinization 

The administration or the government shall appoint an inspector to not only scrutinise the availability of benefit schemes but also accelerate the process on behalf of the workers. There would be schemes to complaint and appeal if such social security schemes are not made available. For instance, the appropriate government may set up an appellate authority to hear appeals against the order given by the inspector for non-payment of maternity benefits in the first place. The Code also mentions judicial bodies which may hear appeals from the orders of the administrative authorities set by the concerned government.  For example, any disputes arising out of employer-employee social benefits could be heard in industrial tribunals (constituted under the Industrial Disputes Act, 1947) under the EPF Scheme. 

Employment information and monitoring

The concerned government requires employers to account for vacancies to career centres that shall be notified by the central government eventually.  The employer will not have a duty to hire any person through these career centres.  However, these clauses will not apply to the vacancies in certain kinds of employment that are inclusive of agriculture and domestic services.  Further, it provided that these filling of vacancies will not be applicable for certain jobs that require the post by the promotion of recruitment happens through independent government agencies like the Union Public Service Commission. 

Offences and penalties

The Code also talks about penalties for various offences, such as for failure by an employer to pay contributions under the Code after subtracting the employee’s share, which can lead to imprisonment somewhere between one and three years, and or with a fine of one lakh rupees.  Offences that are not included in the above category can be settled or compounded in certain cases by payment of up to 50% of the maximum fine applicable to the offence.  The Bill also put a limitation period of five years for initiating any inquiries under the provident fund or ESI schemes. 

Purpose of the Code

The National Commission on Labour (2002) (NCL) had highlighted the need for universal and compact social security schemes to include all the vulnerable sections of the society. It also recommended simplified and comprehensive laws for proving social security. The Statement of Objects and Reasons of the Code states that it aims to amalgamate the existing laws simply and comprehensively to make it more inclusive in line with the NCL recommendations.

The NCL previously recommended that: (i) the social security schemes must apply to all foundations, (ii) the existing wage ceilings for covering the benefits must be removed, and (iii) there should be a plausible link in between the administrators and the benefit schemes under the laws.  Further, every employer and employee may contribute once for the clauses of all the benefit schemes, of course with a ceiling prescribed for such contributions even though the Bill largely keeps back the current set up and does associate with all these recommendations.

Bill firstly continues to retain the requirements based on the size of foundations for making certain benefits mandatory. Social security schemes, such as pension and medical insurance, continue to be mandatory only for establishments with a minimum number of employees (such as 10 or 20 employees). All other categories of workers (i.e., unorganised workers), such as those working in establishments with less than 10 employees and self-employed workers may be covered by discretionary schemes notified by the government. This is similar to the prevailing system where unorganised workers are governed by a different law (being subsumed by the Bill) under which voluntary schemes are notified for such workers. A large number of workers may continue to be excluded. 

Secondly, the Code continues to let the same social security benefits be availed by employees earning unequal wages. For instance, provident fund, pension and medical insurance benefits are only mandatory to employees earning above a certain amount (as may be notified by the government) under the eligible establishments.  

Thirdly, the Bill continues to keep the existing fragmented set up for the delivery of social security benefits. These include: (i) a Central Board of Trustees to administer the EPF, EPS and EDLI Schemes, (ii) an Employees State Insurance Corporation to administer the ESI Scheme, (iii) national and state-level Social Security Boards to administer schemes for unorganised workers, and (iv) cess-based labour welfare boards for construction workers. 

The Standing Committee on Labour (2020) analysed the Bill and recommended that the Code must provide a comprehensive framework for achieving universal social security within a definite time period. It also made other recommendations for expanding the coverage of establishments, employees, and types of benefits.  These include: (i) Rethinking on the establishment-size based requirements and also expanding the definition of “establishment” to make it inclusive of other enterprise categories such as agricultural and own-account enterprises, (ii) to also expand the definitions of “employees” to include Asha and Anganwadi workers, “inter-state migrant workers” and to include self-employed persons from another state, and “unorganised workers” to include agricultural workers, (iii) creating a separate fund for inter-state migrant workers, (iv) introducing unemployment insurance for unorganised workers and (v) and re-introducing labour welfare funds for workers in certain industries such as iron ore mines and beedi establishments.

Comparison of the Code with the existing laws

  1. In the prevailing laws, the mandatory social security schemes available for workers in certain establishments are based on size or income of workers. Unorganised workers are covered: (i) under the Unorganised Workers’ Social Security Act (UWSSA) which prescribes voluntary social security schemes, and (ii) through cess-based labour welfare funds. Whereas, this Bill retains the existing setup and applicability requirements, with some changes. The applicability thresholds could also be amended by the central government through notification.
  2. Social security benefits were calculated on wages that typically include basic wages and exclude allowances, concessions and social security contributions. Under this Code even though we find a similar definition, however, it excluded components (other than retirement benefits like gratuity) that exceed 50% of remuneration, then the amount above 50% will be deemed as ‘wages’.
  3. Previously, provident fund and pension schemes only applied to certain scheduled establishments employing 20 or more workers and to any other class of establishments as may be notified by the government. The scheduled establishments included textile, cement, electrical, iron and steel, and heavy chemical industries. Whereas, this time the provident fund and pension scheme will apply to all establishments employing 20 or more employees, and to any other class of establishments that may be notified by the concerned government.
  4. Employees’ State Insurance (ESI) only applies to establishments hiring at least 10 employees.  Benefits available to those earning up to Rs 21,000 per month. Whereas, the Bill mentions that the ESI Scheme shall apply to establishments hiring 10 or more employees. However, if the employer and majority of employees agree, then ESI may apply to such an establishment by notification. Further, the central government can extend ESI to any hazardous occupation even if a single employee is engaged. If the employer fails to pay ESI contributions, the ESIC may pay the benefits to the employee and recover it from the employer to the extent of the ‘capitalised value of the benefit’ net of any payment of contribution amount, interest and damages payable by the employer.
  5. Gratuity was payable on continuous service of five or more years in an establishment. Whereas under this Bill a fixed-term employee (i.e., employed for a fixed duration) will be entitled to prorated gratuity based on the term of the contract.
  6. In addition to maternity benefit, every woman was entitled to a medical bonus of up to Rs 3,500 (if pre-natal confinement and post-natal care are not provided by the employer). The Central Government may amend this to up to Rs 20,000. This time the Bill shall remove the upper limit of Rs 20,000.
  7. Under the existing laws, if any state enacts a law providing more beneficial welfare schemes to unorganised workers, then the UWSSA will not apply. Whereas, the Bill allows schemes for unorganised workers to be additionally funded by the corporate social responsibility fund defined under the Companies Act, 2013. However, the Bill does not include a provision on the overriding effect of more beneficial welfare schemes passed by different states. The central government may also frame social security schemes for gig workers and online platform workers.
  8. Different laws have different registration requirements for establishments and employees. Now, every eligible establishment is required to register. Further, Aadhaar-based registration is mandated for all categories of workers. This is a little tricky as there might be a possibility of violation of the right to privacy of these workers.
  9. “Employment exchanges” were to be provided by career services to employers and persons who seek employment.  Private sector establishments which employ 25 or more persons required to notify vacancies. Whereas under this Bill, “Career centres” shall provide career services to employers, persons who seek employment, and for those seeking vocational guidance, career counselling or guidance to start self-employment. Bill requires notification of vacancies to career centres by every establishment. 
  10. In this present system, different laws specify different offences.  For example, failure by an employer to pay EPF or ESI contributions after deducting employee’s share attracts imprisonment of up to one year, and fine of Rs 10,000. A subsequent offence under ESI (for non-payment of contributions) and EPF attracts imprisonment of two to five years and fine of Rs 25,000. Similarly, non-payment of maternity benefits attracts imprisonment of three months to one year and a fine of Rs 2,000 to Rs 5,000. Whereas, the Bill brings uniformity in all these cases and adds a five-year limitation period for initiating inquiries for payment of dues under EPF and ESI schemes. Increases penalties. For example, failure by an employer to pay contributions after deducting employee’s share attracts imprisonment of one to three years, and fine of one lakh rupees. Subsequent failure to pay contributions attracts imprisonment of two to five years and a fine of three lakh rupees. Offences which are not punishable with imprisonment only may be compounded (settled) up to 50% of the maximum fine for the offence, subject to certain conditions. 


This pandemic situation has led policymakers to come at the edge of their seats and understand the urge to change and secure social security schemes to include a major part of the economically vulnerable class in society. The Social Security Code, 2020 talks about the gig-workers for the first time in addition to including the definitions for ‘gig worker’ and ‘platform worker’. The Bill also creates provisions for unorganised workers, even though the provisions are a bit unclear as there might be an overlap of applicability of the benefit schemes.

The Bill also mandatorily asks all the employees or workers (including an unorganised worker) to provide his Aadhaar number to receive the social security benefits. However, this may violate the Supreme Court’s Puttaswamy judgement. In this judgement, the Court had ruled that the Aadhaar card/number may only be made mandatory for expenditure on a subsidy, benefit or service incurred from the Consolidated Fund of India. However, as per the Bill, most of the entitled benefits are funded by the employers and the employee itself, and not from the Consolidated Fund of India. Therefore, mandatorily proving the Aadhar number to avail the social security benefits violates the judgment. The Bill also does not provide any social security in the context of the plantation workers working in small lands because unlike the OSH Code the definition of a “plantation” in the Bill retains the five-hectare threshold.

The Bill also allows the central government to amend the first schedule of the Code. Therefore, the requirements for applicability of these social security benefits could be changed by the government through notification. But, under the existing laws, this power of amending a Bill could only be exercised through changes passed by Parliament or state legislatures. Hence, the question remains as to whether the power to decide such requirements or thresholds must be retained by the legislature of whether the power is delegated to the concerned government.

It is suggested that the establishments, in advance, must be aware of the pivotal changes that shall be brought in after the passing of the Bill. They must understand that the funding of these social securities is to be done by employers and employees. The address system must also be clear with its functioning beforehand. Moreover, the establishments dealing with gig workers, platform workers, and unorganised workers should analyze and comprehend whether, and if so, how, the Social Security Bill will impact their businesses during and aftermath this deadly pandemic.


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