Replacing the all-important laws on provident fund, gratuity, employee state insurance, maternity benefit etc., the Code on Social Security, 2020 has been passed by both houses of the parliament. The 2020 Code is a departure from its 2019 iteration and indeed brings forth certain welcome changes. It is a lengthy law spanning across 14 chapters and 7 schedules and intends to cover not only the regular employees but also the gig workers, platform workers, contractual workers etc. Pertinently, the Code was drafted in consultation of Standing Commission, where 75% of its recommendations were taken into account. The key features of the Code are:
- Repeals: The Code on Social Security, 2020 (Code) repeals the following very important laws: 1. The Employee’s Compensation Act, 1923; 2. The Employees’ State Insurance Act, 1948; 3. The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952; 4. The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959; 5. The Maternity Benefit Act, 1961; 6. The Payment of Gratuity Act, 1972; 7. The Cine-Workers Welfare Fund Act, 1981; 8. The Building and Other Construction Workers’ Welfare Cess Act, 1996; 9. The Unorganised Workers Social Security Act, 2008.
- EPF Contribution: The Code reduces the rate of Employee Provident Fund (EPF) contribution to 10 percent from the existing 12 percent of the wages.
- Social Security: The Code now introduces the concept of Social Security. “Social security” is defined in the Code to mean the measures of protection afforded to employees, unorganised workers, gig workers and platform workers to ensure access to health care and to provide income security, particularly in cases of old age, unemployment, sickness, invalidity, work injury, maternity or loss of a breadwinner by means of rights conferred on them and schemes framed, under the Code.
- Maternity benefits: The Code provides for maternity benefits which include creche facility, maternity benefit claims, prohibition from work during certain periods, provision of nursing breaks etc. A point for Maharashtra based companies is that the extant Shops and Establishment law for Maharashtra already stipulates maintenance of a suitable room or rooms as crèche for the use of children in establishments employing more than fifty workers.
- Forfeiture of Maternity benefit if woman working elsewhere: The Code provides for forfeiture of maternity benefit to a woman who works for remuneration during the period she has been permitted by an employer to absent herself for availing the maternity benefit.
- Aadhaar based requirements: The Code provides that an employee or unorganised worker for the below mentioned purposes will require to establish his/her identity or, as the case may be, the identity of his/her family members or dependants through Aadhaar number: (a) registration as member or beneficiary; (b) seeking benefit whether in kind, cash or medical sickness benefit or pension, gratuity or maternity benefit or any other benefit or for withdrawal of fund; or (c) availing services of career centre; or (d) receiving any payment or medical attendance as Insured Person himself or for his dependants, under the Code or rules, regulations or schemes made or framed thereunder. Trigger of Aadhaar storage requirements: Given the employers regularly assist their employees with the above-mentioned tasks, this provision triggers the need to look into the Aadhaar storage requirements enshrined under the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016.
- Reports on fatal accidents and serious injuries: The Code requires reports of fatal accidents and serious bodily injuries to be submitted to the competent authority. It further requires the employer or its authorized officer to provide Notice upon occurrence of any accident in the premises which results in death or serious bodily injury, and also requires a report mentioning the circumstances attending the death or serious bodily injury.
- Employer to compensate for accidents and occupational diseases: The Code provides for employer’s liability for compensation in accordance with the provisions of the Code namely Chapter VII, if personal injury is caused to an employee by accident or an occupational disease listed in the Third Schedule, arising out of and in the course of his employment. A noteworthy point here is that an employee who has instituted a suit for Damages in respect of the accident or disease will be barred from any right to compensation under the said provision. The Code also provides that no suit for damages shall be maintainable by an employee in any Court of law in respect of such accident or disease.
- Gig workers: The Code now introduces concept of Gig workers. “gig worker” means a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship.
- Contributions: All the contribution regarding payment of gratuity, maternity benefit employee compensation and cess for building workers will be done by the employer whereas, the different schemes for gig workers, platform workers and unorganised workers will be financed by the contribution of employer, employee and the appropriate government.
- Registration of unorganized, gig and platform workers: The Code requires every unorganised worker, gig worker or platform worker to register themselves, subject to the fulfilment of the following conditions, namely:— (a) they have completed sixteen years of age or such age as may be prescribed by the Central Government; (b) they have submitted a self-declaration electronically or otherwise in such form and in such manner containing such information as may be prescribed by the Central Government. Notably, the application for registration need to include the Aadhaar number.
- Completed year of service: Lastly, the Code now provides a definition to “completed year of service” which means continuous service for twelve months.
Corrida Legal is consistently rated as the best corporate and employment law firm & lawyers in Gurgaon, Delhi and Mumbai. Reach out to us on LinkedIn or contact us at contact@corridalegal.com/+91-8826680614 in case you require any legal assistance. The author of this article is Pushkar Thakur, Managing Partner at Corrida Legal. Pushkar is an ex AVP, Legal, Nomura and has led the legal teams at corporates namely Emaar India and Drake & Scull India. He represents clients before all major courts of India and has worked with Kochhar & Co., law firm. Pushkar is an expert in corporate law, contracts, litigation, employment law and data protection. Reach out to him on LinkedIn at: https://www.linkedin.com/in/pushkarthakurcorridalegal/ or pushkar.thakur@corridalegal.com. In case of urgent issues, you may call him at +91-8826680614.