Mumbai, 26 November 2025

 

The Government of India has undertaken a major labour reform by consolidating nine existing social security legislations into the Code on Social Security, 2020, aimed at expanding social protection to all categories of workers including those in the unorganised, gig, and platform sectors.

The Code merges a wide range of laws, including 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 and: The Unorganised Workers' Social Security Act, 2008. The unified framework is designed to modernise social security delivery through digital systems, uniform definitions, and simplified compliance for employers.

Key Features of the Social Security Code

1. Expanded ESIC Coverage

The Employees’ State Insurance Corporation (ESIC) will now operate across India without the earlier requirement of “notified areas.” Even establishments with fewer than 10 workers may opt in voluntarily with mutual consent. ESIC benefits will also be extended to workers employed in hazardous occupations and the plantation sector.

2. Inclusion of Gig and Platform Workers

For the first time, the Code defines ‘gig worker,’ ‘platform worker,’ and ‘aggregator,’ enabling millions of workers in app-based services to receive social security benefits. Aggregators will contribute between 1% and 2% of their annual turnover, capped at 5% of payments made to such workers.

3. Creation of a Social Security Fund

A dedicated fund will be established to finance life, health, disability, and old-age benefits for unorganised, gig, and platform workers. Money collected from compounding offences will also be transferred to this fund.

4. Wider Definition of Dependents

The Code broadens the eligibility of dependents for benefits to include maternal grandparents and, for female employees, dependent parents-in-law.

5. Uniform Definition of Wages

Wages will now uniformly include basic pay, dearness allowance, and retaining allowance. This change ensures consistent calculations for provident fund contributions, gratuity, and pension benefits.

 6. Coverage for Commuting Accidents

Accidents occurring during travel between home and workplace will now be treated as employment-related, making workers eligible for compensation.

 7. Gratuity for Fixed-Term Employees

Fixed-term employees will now qualify for gratuity after just one year of continuous service, compared to the earlier requirement of five years.

 8. Inspector-cum-Facilitator System

A new randomized, web-based inspection system will replace traditional inspection methods to enhance transparency. Inspectors will also act as facilitators to help establishments comply with the law.

9. Decriminalisation of Minor Offences

Certain offences previously punishable with imprisonment will now attract only monetary fines. Employers will be given a mandatory 30-day notice to rectify violations before any legal action.

10. Compounding of Offences

To reduce litigation, first-time offences can be compounded by paying 50% to 75% of the maximum applicable fine.

11. Digitisation for Efficiency

The Code mandates electronic record-keeping and filings, reducing paperwork and improving compliance efficiency for businesses.

 

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PIB Mumbai | Sriyanka Chatterjee/Nitin Fulluke/Darshana Rane

(रिलीज़ आईडी: 2194582) आगंतुक पटल : 752