Code on Social Security, 2020

The Code on Social Security 2020 is one of the modern-age laws in India, which has significantly changed the country’s labour laws. The Indian Parliament enacted it as part of a broader effort. This effort involved integrating 44 labor laws into four codes to simplify the structure of Indian labor laws.

This blog will explain the Social Security Code, its provisions, its importance, its services offered to various categories of workers, and its challenges.

Central Labor Enactments Amalgamated Under the code on social security

The provision of social security in labor law consolidates Indian labor laws that deal with various aspects of social security. These include:

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

These laws were fragmented in the past, and they were often applied inconsequentially at best. The government has simplified them through the code on social security by categorizing them in one bundle, making it more straightforward for employers and employees to know what they are entitled to or supposed to do.

Expanded Coverage and Inclusivity

The code on social security has one of the most distinguishing characteristics, and this is in the coverage aspect. The Code extends the meaning of the word ‘employee’ to embrace other classes of workers who were formerly omitted from social security benefits. These include:

Interstate migrant workers

The newly presented Code on Social Security 2020 also covers seasoned workers who transfer from one state to another searching for a job. This is especially true since hundreds of thousands of migrant workers in India perform their duties in challenging situations without any social insurance.

Construction workers

The Social Security Code 2020 enumerates construction workers exposed to dangerous environments. Their inclusion ensures they are eligible for health and maternity benefits, life and disability insurance, and many other benefits.

Film industry workers

The code provisions cover film industry workers working under short-term contracts for the first time. This is a positive step toward ensuring that every worker in all fields gets protection from social security benefits.

Gig and platform workers

The provisions concerning gig and platform workers are the most important of the new provisions introduced into the Social Security Code in 2020. Most of these employees, categorized as workers with non-conventional employment relationships with their employers, are entitled to social security benefits. Independent workers engage in short-term and flexible engagements that are considered gig work, and platform workers use online interfaces to deliver transport-hailing services.

Creation of a Social Security Fund

A social security fund is in place to enhance the coverage of the social security code. This fund is intended to subsidize the various other benefits highlighted in the Code, namely, life and disability benefits, health and maternity benefits, and pension schemes.

The social security fund is collected from various sources, such as the central government, state governments, and corporate social responsibility (CSR). Furthermore, aggregators that use the services of gig workers have to pay at least 5% of their yearly turnover to this fund. This would ensure a constant source of revenue to cater to the social security that ought to be provided under the code.

Social Security Code Significance: The Emergence of a New Perspective

The code on social security is more than just a mere codification of the existing laws on social security. Still, it is much more than that, as it is a landmark change in India’s social security perception. The Code’s significance can be understood through several key points:

Enhanced Coverage

In this regard, the Code has broadened the area of social security measures in India to a vast extent. The Code also extends its coverage to gig workers, platform workers, and unorganized sector workers, considering the gigs of work today, and provides basic social security of their rights. This is especially applicable at a time when self-employment and work on a freelance basis are prevalent around the world.

Support for Fixed-Term Employees

The Social Security Code also covers fixed-term employees’ needs since they were locked out of benefits such as gratuity. This is a new mode in the new Code of fixed-term employees stripped of gratuity regardless of their employment period. This is much better than previous legislation that only necessitated gratuity benefits to permanent employees.

Penal Provisions for Non-Compliance

The Code also has severe penalties for non-compliance with prospective employers following the social security provisions of the law. It enhances the reinforcement of this law and affords certain workers’ rights. The penalties are also some of the best ways to ensure employers observe their obligation to pay social security.

Digitization and Modernization

The code requires that all records and returns be kept electronically. This digitization is anticipated to improve governance, facilitate information retrieval, and increase compliance. The move to the electronic register also corresponds with other reforms regarding the contemporary modernization of the Indian government’s labor laws.

Challenges and Criticisms of the Code on Social Security

Despite its many advantages, the code on social security has faced criticism from various quarters. Some of the key challenges and criticisms include:

Neglect of National Commission on Labour (NCL) Recommendations

Functional social security coverage is one of the essential objectives that the National Commission on Labour (NCL) has recommended. Such recommendations were to abolish wage ceilings for coverage, extend the social security system to all establishments, and integrate the administration of the existing schemes. However, the code on social security largely retains the existing setup, and these recommendations must be implemented fully. For instance, it is still segmented by the size of establishments, so some workers, for example, the small ones, will continue to lack mandatory benefits.

Overlap in Definitions

The code proposes new categories of workers, gig workers, and platform workers, but they are similar. This overlap can lead to confusion when applying specific schemes, as it is not always clear which category a worker falls into.

Unclear Provisions on Gratuity for Fixed-Term Workers

This led to various provisions for gratuity under fixed-term employment, resulting in more complications in the contract, especially those that last less than one year. This vagueness must be clarified so that all workers, irrespective of their probation period, deserve their entitlements.

Addressing the Challenges: The Transformation Process

Nevertheless, to harness the efficiency of the code perfectly on social security, it’s crucial to overcome the challenges and counterarguments made above. Here are some steps that could be taken to improve the implementation of the Code:

Revisiting the NCL Recommendations

The government should seriously contemplate the recommendations made by the National Commission on Labour on its offers that call for universal coverage and the eradication of wage ceilings. Thus, the Code could be expanded to pay more attention to the worker’s employment status and pay levels to make them eligible for social security benefits.

Clarifying Definitions

Therefore, it is necessary to define gig workers, platform workers, and other categories. The government must give definite direction on how these definitions could be used and ensure clarity in implementing social security schemes. This will assist in providing more precise direction to parties in the workers’ and employers’ relationships as contained under the Code.

Streamlining Gratuity Provisions

Some areas that should be amicable include the provisions regarding gratuity for fixed-term workers. It can be proposed that the Code on Social Security 2020 rules be adopted that are uniform across organizations and do not depend on the type of labor contract signed with the employee. This would ensure that all workers are paid their dues.

Conclusion

The code on social security is a welcome step in overhauling Indian labor laws to some extent. By codifying and verifying the existing social security laws in India and extending coverage to gig workers, platform workers, and unorganized sector workers, the Code proved to be understanding, coordinated, and efficient.

Nonetheless, the success of the Social Security Code will depend on how well the challenges and criticisms facing it are dealt with. If appropriately implemented, this Code will revolutionize the social security scenario in India and ensure that all working populations get the legal safeguards and conveniences they deserve.

FAQs on the code for Social Security

Q1: How does the Social Security Code benefit fixed-term employees?

The Social Security Code introduces fixed-term employees to the list of gratuities for employees, and they are entitled to gratuities no matter the length of the contract period. This is an excellent step from previous laws because gratuity benefits were only given to permanent employees.

Q2: What are the criticisms of the code on social security?

Critics point out that the code on social security needs to fully implement the recommendations of the National Commission on Labour, retain certain thresholds that exclude some workers, and have unclear provisions regarding gratuity for fixed-term workers. Additionally, the mandatory Aadhaar linking for social security benefits has raised concerns about potential legal conflicts.

Q3: How does the Social Security Code address digitization?

The Social Security Code mandates that all records and returns be maintained electronically. Digitization is expected to improve governance, facilitate compliance, and ensure better information exchange among stakeholders.

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