Code on Social Security, 2019

15-05-2021

Significant Changes

5/17/2021 LABOUR CODES 1

What the Government aims at ? How is it proposed ?
Amalgamation 29 laws turning into 4 codes
Simplification Reducing the volume per se;
Process simplification – using technology
Rationalisation Weeding out multiplicity / duplication
Leveraging on technology Transparency / Accountability
Widening the scope Unorganised sector and Transgender
‘Inclusiveness’ towards ‘Equity’
Ushering in ‘Compliance Culture’ Inspector-cum-Facilitator, Enhanced Penalty &
Compounding of Offences and Expert Panel
Broader Goal Ease of Doing Business and to
Promote in setting up of more enterprises thus
catalyzing the creation of employment opportunities

LABOUR CODES 2
 Code ensures
transparency
and Promote in
accountability setting up of
more
Easy Code enterprises thus
implementation facilitates catalyzing the
/ Ease of use of creation of
compliance technology employment
opportunities
Amalgamation,
Simplification
and
Rationalization
Remove the
multiplicity
of Widened
definitions scope
and Equity
authorities

3
 LABOUR
REFORMS

Parent Legislations Parent Legislations

in Central sphere in State sphere

Sub-ordinate Sub-ordinate Sub-ordinate

Legislations in Legislations in State Legislations in State
Central sphere sphere sphere

Could potentially lead to :

NO
Legal positional change CHANGE

Policy change
Systems & Process change 4
 Code on Social Security
Heads
Current As per Code

Legislations 9 1
Sections 256 164

Rules 494 64

Definition 115 91
Returns 5 1

Registers 7 1

Abstracts 3 1
Notices 9 2
Registration/Certifi
3 1
cation
License - -
Remittance 4 4
5
 CoSS - Arrangement of Chapters / Sections
Chapter Provisions Section(s)
I Preliminary 1 to 3
II Social Security Organisation 4 to 13
III Employees’ Provident Fund 14 to 23
IV Employees’ State Insurance Corporation 24 to 52
V Gratuity 53 to 58
VI Maternity Benefit 59 to 72
VII Employee’s Compensation 73 to 99
VIII Social Security and Cess in respect of Building and Other Construction Workers 100 to 108
IX Social Security for Unorganized Workers 109 to 114
X Finance and Accounts 115 to 121
XI Authorities, Assessment, Compliance and Recovery 122 to 132
XII Offences and Penalties 133 to 138
XIII Employment Information and Monitoring 139 to 140
XIV Miscellaneous 141 to 164
- Schedules 7

17-May-21 LABOUR CODES 6

 Provident Funds
What is changed ? Remarks
50% of total remuneration to be considered as ‘PF Wages’ ? Change in definition of ‘wages’
PF – Chapter III - shall apply to establishments employing 20 or Sec. 1 (4)
more employees – industry-specific application removed
No wage ceiling could be prescribed for provident fund Sec. 2 (26)
employee coverage??? ( Wages ceiling is only for EPS & EDLI
Schemes )
Employees, whose wages are more than the notified wage Sec. 2 (26) 2nd Proviso
ceiling by the Central Government shall also be taken into
account for determining the number of employees
The term „employee‟ specifically excludes only apprentices Inference
engaged under the Apprentices Act. Will other types of
apprentices be considered as employees ?

7
 Provident Funds
What is changed ? Remarks
The code provides for specifying differential rates of employees’ Sec. 16 (1) 2nd Proviso
contribution
Condition for authorization to employers for maintaining PF
accounts – 100 or more persons (Exempted Establishments)

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 ESI
What is changed ? Remarks
50% of total remuneration can be considered to be wages for ESI Change in definition of ‘wages’
Employees, whose wages are more than the notified wage Sec. 2 (26) 2nd Proviso
ceiling by the Central Government shall also be taken into
account for determining the number of employees
Chapter IV – ESI - Voluntary coverage possible [ if covered Sec 1(7)
voluntarily, withdrawal subsequently is possible ]
Applicability to Plantations on voluntary basis Sec. 1 (4) 1st Schedule
Hazardous or life threatening establishments – Central Sec. 1 (4) 1st Schedule
Government can make ESI applicable through notification even if
there is single employee
Presumption as to the accident while commutation between Sec 34
residence and place of employment

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 ESI
What is changed ? Remarks
ESIC’s rights when the employer fails to register an employee or Sec 42
fails to pay the contributions
Mines also to be covered under the ESI provided if the required Sec. 2 (29)
number of employees are employed therein

10
 Gratuity
What is changed ? Remarks
50% of remuneration shall be considered for gratuity Change in definition of ‘wages’
calculations too because of the common cap on the excluded
components
The term „employee‟ specifically excludes only apprentices Change in definition of
engaged under the Apprentices Act. Will other apprentices be ‘employee’
treated as employees ?
Chapter V - Gratuity for Fixed Term Workers and other [Sec. 2 (34)].
provisions on par with regular employees
The qualifying service for the Working journalists is 3 years of [Sec. 53 (1) Proviso]
continuous service instead of 5 years for gratuity entitlement

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 Maternity Benefits
What is changed ? Remarks
50% of remuneration shall be considered for calculating
maternity benefits
The crèche shall be provided if 50 or more employees are Sec. 67(1)
employed ( irrespective of whether such establishment is
covered under ESI or not )
Maternity benefits or medical bonus or both can be deprived, if a Sec. 68 (1) Proviso
woman is dismissed or discharged for any gross misconduct as
prescribed by the Central Govt.

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 Employees’ Compensation
What is changed ? Remarks
50% of remuneration shall be considered for working out Change in definition of ‘wages’
compensation, subject to ceiling if any
Presumption as to the accident while commutation between [ Sec 34 ]
residence and place of employment
Chapter VII – employees‟ compensation - Appropriate
Government definition now available for EC purpose

13
 Plantations
What is changed ? Remarks
If death or injury is caused to any worker or a member of his [ Sec. 75 ]
family as a result of the collapse of a house provided by the
employer in a plantation, and the collapse is not solely and
directly attributable to a fault on the part of any occupant of the
house or to a natural calamity, the employer shall be liable to
pay compensation under section 76 and the Sixth Schedule, so
far as may be

14
Building and Other Construction Work
What is changed ? Remarks
Chapter VIII - The building and construction work shall not Sec 2 (6)
include the construction work carried out in the factory or mine
in which less than 10 workers are employed
Building and Other Construction Work‟ does not include the
residential construction, if the cost of such construction is less
than Rs 50 lakh [ Currently, its Rs 10 lakh ]

15
 Employment information
What is changed ? Remarks
Chapter XIII – Employment Information - Applies to First Schedule read with
establishment employing 20 or more employees S.140(f)

16
 Common Points
What is Changed ? Remarks
The Central Govt. would be the appropriate Govt. in relation to There will be an impact under
an establishment having departments or branches in more than Gratuity, Maternity Benefit
one State and Employment Exchange
chapters
Chapter VI – maternity benefits - “Any law for the time being in CA firms could go out of the
force apply” removed purview of these chapters
Establishments which are already notified ( by Central/State Ex. Educational institutions
Govt.) shall continue to be covered under this chapter
The Central Govt. would be the appropriate Govt. for Obligation could arise to send
Telecommunication, Insurance and Banking companies notification of vacancies and
submission of returns
Registration – either electronically or otherwise Sec 3
Plantation – 10 or more workers; 5 hectares or more Sec 2 (59)

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 Administering Bodies [ Sec 2(79) ]
Social Security Organisations Remarks
Central Board of Trustees of Employees Provident Fund Sec 4
Employees' State Insurance Corporation Sec 5
National Social Security Board for Unorganised Workers Sec 6
State Unorganised Workers' Social Security Board Sec 6
State Building and other Construction Workers' Welfare Boards Sec 7
Any other organisation or special purpose vehicle declared to be
the social security organisation by the Central Government;
Transitional Provisions under Section 153 (Existing Sec 153
Board/committees will continue to operate its functions)

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Chapter IX – Social Security for Unorganised Workers

Power to Central Government Remarks

Central Govt to frame schemes for providing social Sec 114 (1)
security to gig workers and platform workers
Central Govt to constitute a social security fund/s for Sec 109 (1)
unorganized / gig / platform workers or such class of
persons
Gig workers (Sec. 2 (35))
Home-based workers (Sec. 2 (36))
Platform workers (Sec. 2 (61)
Self-employed workers (Sec. 2 (75))
Wage workers (Sec. 2 (90))

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 Chapter XI – Assessment

Limitation of 5 years for institution of ESI and PF proceedings [Sec. 125 (1) Proviso]

The role of Inspector is changed to Inspector-cum-Facilitator

To provide penalty for different types of violations
commensurate with gravity
There is an increase in Penalty in case of violation
Provision for compounding of offence introduced
Prior to prosecution, opportunity to be provided to employer for
corrective action
Application of Aadhaar Number: Establishment of identity of Sec 142
employees and his/her family members to avail benefits under
the Code through Aadhaar Number

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