Labour Code on Social Security & Welfare, 2020

Labour Code on Social Security & Welfare, 2020

The Code on Social Security, 2020 consists of new rules for contribution to social security and payment of employee benefits, including retirement benefits. The Code has been passed by the Parliament. The Government is considering implementing the Code by December 2020, along with other three labour codes, viz., The Industrial Relations Code, 2020, Code on wages, 2019 and The Occupational Safety, Health and Working Conditions Code, 2020.

Background of Labour Code on Social Security & Welfare, 2020

The bill was introduced by the Labour Minister Santosh Gangwar. The bill was passed by the Lok Sabha 22 September 2020 and the Rajya Sabha on 23 September 2020.[2] The bill was formulated according to the Report and Recommendations of the Second National Commission on Labour.

Key Features of Labour Code on Social Security & Welfare, 2020

1. Introduces the definition of career centre as any office including employment exchange, place or portal established by the Central Government for providing career services. It aims to connect persons seeking employment with those who seek to employ by providing information about vacancies and giving vocational guidance.
2. Introduces the definition of aggregator which denotes a digital intermediary or marketplace for a buyer or user of a service to connect with the seller or the service provider. The introduction of this definition is linked to the ushering in of two more terms namely- platform worker and gig worker.
3. The Code allows for an establishment to voluntarily submit to the coverage of the Employees’ Provident Fund (EPF) under Chapter-III and the Employees’ State Insurance Corporation (ESIC) under Chapter-IV, even if the number of employees in such an establishment are lower than the specified threshold.
4. The Code empowers the Central Government to frame social security schemes for unorganised workers, gig workers and platform workers as well as members of their families with respect to providing benefits under the ESIC.
5. To this end, the Code also provides for registration of every unorganised worker, gig worker or platform worker based on a self-declaration provided either electronically or otherwise along with AADHAR number in a form and manner that shall be prescribed by the Central Government.
6. The Code provides that in case of fixed term employees, the employer shall pay gratuity on a pro rata basis and not on the pre-existing requirement of continuous service of five years.
7. There is greater clarity provided with regards to common creche facilities under Chapter-VI of the Code on maternity benefits. The second proviso to Section-67 states that an establishment may avail a common creche facility of the Central Government, State Government, municipality or private entity or provided by an NGO or any other organisation.
8. The scheme of penalties and offences under the Code have also undergone certain changes. Section-137 allows employers an opportunity to correct non-compliance for any offence under the Act prior to the initiation of prosecution or proceedings.