The Code on Social Security, 2020

The Code on Social Security, 2020 is one of the four major labour codes

introduced by the Government of India to consolidate and simplify existing labour laws. Passed by Parliament in September 2020, it seeks to provide a comprehensive social security framework for all categories of workers. A total of nine legislations have been merged under this code, which came into effect on November 21, 2025.

The consolidated laws include:

• The Employee's 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, 1961

• The Payment of Gratuity Act, 1972

• The Cine-Workers Welfare Fund Act, 1981

• The Building and Other Construction Workers' Welfare Cess Act, 1996

• The Unorganized Workers' Social Security Act, 2008

  
  

Major Highlights of the Code

1. Expanded ESIC Coverage

Earlier, ESIC applied only in notified areas and excluded the unorganized sector. Under the new code, coverage is extended Pan‑India on a district‑wise basis. It applies to establishments with 10 or more employees, even to those with fewer than 10 workers if both the employer and employees agree, and Hazardous workplaces are covered regardless of size.

• Income eligibility: up to ₹21,000 per month (₹25,000 for persons with disabilities).

• Contribution: 3.25% by employer + 0.75% by employee = 4% of gross pay.

• Benefits: Free medical treatment and medicines for employees and their family members.

  
  

2. Time‑Bound EPF Inquiries

The EPF Act, 1952, remains active but is now extended to gig and platform workers.

• Mandatory for establishments with 20+ employees.

• Voluntary for those with fewer than 20 employees.

• Wage ceiling: ₹15,000 per month.

• Contribution: 12% by employee + 12% by employer.

• Inquiries must be initiated within five years and completed within two years (extendable by one).

  
  

3. Gratuity for Fixed‑Term Employees

Fixed‑term employees are now eligible for gratuity after completing just one year of service, unlike earlier provisions requiring five years. This benefits contract workers in construction, IT, and temporary replacements.

4. Uniform Definition of Wages

The Code standardizes the definition of wages:

• Wages = Basic Pay + Dearness Allowance + Retaining Allowance.

• Exclusions (like bonuses, HRA, overtime) are capped at 50% of total remuneration. This ensures consistency in calculating gratuity, pension, and other benefits.

  
  

5. Enhanced Maternity Benefits

The Maternity Benefit Act, 1961, is strengthened:

• Paid leave extended from 12 weeks to 26 weeks.

• Eight weeks of leave allowed before delivery.

• Work‑from‑home flexibility introduced.

• Crèche facility mandatory for establishments with 50+ employees.

• Adoptive mothers of children under three months receive 12 weeks of leave.

• Condition of maternity leave is Woman must have worked at least 80 days in 12 months immediately before delivery

  
  

6. Social Security for Gig and Platform Workers

For the first time, gig and platform workers are recognized under labour law.

• Aggregators must contribute 1–2% of annual turnover (capped at 5% of payments to workers).

• Workers must be at least 16 years old and registered on the e‑Shram portal.

• Must have worked at least 90 days in the preceding 12 months.

• Contributions also come from Corporate Social Responsibility, and central/state governments.

  
  

7. Vacancy Reporting

Employers are required to report vacancies to career centres before recruitment, ensuring transparency in job opportunities.

8. EPF Withdrawal Rules

• Full withdrawal: Allowed at retirement (58+) or after five years of continuous service.

• Unemployment: 75% withdrawal after two months of job loss, remainder after 12 months.

• Partial withdrawal: Permitted for housing, education, marriage, medical emergencies, and renovation, subject to service conditions.

  
  

9. Commuting Accidents Covered

Accidents occurring while commuting between home and workplace are now deemed employment‑related, making employees eligible for compensation.

Conclusion

The Code on Social Security, 2020 represents a significant step toward universal social protection in India. By consolidating nine different laws, extending coverage to gig and platform workers, and modernizing compliance mechanisms, the Code balances worker welfare with ease of doing business. It reflects India’s commitment to adapting labour laws to the realities of a changing workforce and ensuring that social security benefits reach every segment of society.