The Code on Social Security, 2020
Act No. 36 of 2020
1. Executive Overview
Consolidates EPF, ESI, and Gratuity. Extends benefits to Gig Workers and unorganized sectors.
2. Quick Comparison: Existing Acts vs. New Code
| Provision | Old Regime | New Code |
|---|---|---|
| Wages Definition | Varied | Unified (50% Rule) |
| Gig Workers | Undefined | Recognized |
| Limitation Period | Unlimited | 5 Years Cap |
| Gratuity (FTE) | 5 Years | 1 Year (Pro-rata) |
| Aadhaar | Partial | Mandatory (Sec 142) |
3. The Compliance Shield
Section 125 (Limitation): No inquiry can be initiated for dues older than 5 Years.
Section 137: Inspector must give “Prior Opportunity” before prosecution.
Section 137: Inspector must give “Prior Opportunity” before prosecution.
4. Gig Economy Contribution
Aggregators must contribute 1-2% of annual turnover to the Social Security Fund.
5. Gratuity & Benefits
| Category | Rule |
|---|---|
| Fixed Term (FTE) | 1 Year (Pro-rata) |
| Journalists | 3 Years |
| Maternity Benefit | 26 Weeks (Medical Bonus Cap Removed) |
6. Career Centre Notification
Establishments must electronically report vacancies to Career Centres before filling positions (Section 139).
7. Social Security Fund
New sources of funding for unorganized workers:
- CSR Funds: Companies can contribute via CSR.
- Aggregator Contribution: 1-2% of annual turnover.
- Penalties: Fines collected under the Code.
8. Future Benefits (Voluntary ESI)
The Code allows establishments with less than 10 employees to voluntarily opt for ESI coverage, ensuring safety for hazardous sectors.