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News Analysis

Social Justice

Social Security Code 2020

  • 20 May 2021
  • 5 min read

Why in News

The effectiveness of the Social Security Code (SS Code) 2020 in helping the informal workforce is questioned by many.

  • With SS Code 2020, two other codes were passed which are Code on Occupational Safety, Health & Working Conditions Code, 2020 and Industrial Relations Code, 2020.
  • The SS Code 2020 subsumes nine regulations relating to social security, retirement and employee benefits.

Key Points

  • Major Provisions of SS Code 2020:
    • Enhanced Coverage:
      • The Code has widened coverage by including the unorganised sector, fixed term employees and gig workers, platform workers, inter-state migrant workers etc.
    • National Database and Registration:
      • With the aim of making a national database for unorganised sector workers, registration of all these workers would be done on an online portal and this registration would be done on the basis of Self certification through a simple procedure.
        • All records and returns have to be maintained electronically.
    • Social Security Fund:
      • It will be created on the financial side in order to implement social security schemes.
    • Uniform Definitions:
      • There is uniformity in determining wages for the purpose of social security benefits.
        • It has provided a wide definition for wage.
      • Specific exclusions with ceilings have been provided for discouraging inappropriate structuring of salaries to minimise social security benefits.
    • Consultative Approach:
      • It has brought in a facilitating approach by the authorities. Unlike the existing role of inspectors, the Code provides for an enhanced role of inspector-cum-facilitator whereby employers can look for support and advice to enhance compliances.
    • Career Centre:
      • To enable that demand for human resources is met and to monitor employment information, career centres will be established.
    • Stringent Penalties:
      • Any failure to deposit employees’ contributions not only attracts a penalty of Rs. 1,00,000, but also imprisonment of one to three years. In case of repeat offence, the penalties and prosecution is severe, and no compounding is permitted for repeated offences.
  • Concerns:
    • Online Registration Process:
      • The onus lies on informal workers registering as beneficiaries, further they do not have digital literacy and connectivity.
      • Also, there is a lack of awareness among informal workers regarding social security schemes.
    • Lack of Inter-State Arrangement and Cooperation:
      • Unorganised workers are spread across the length and breadth of India. Implications of this code would be too varied across States to be administered.
    • Complicated Processes & Overlapping Jurisdiction:
      • Providing holistic social security cover for the unorganised workforce in a simple and effective manner is lost in the Centre-State procedural complications and jurisdictional or institutional overlap.
    • Maternity Benefit:
      • Women engaged in the unorganised sector remain outside the purview of maternity benefit.
    • Employees Provident Fund:
      • For informal sector workers, access to employees’ provident fund remains unfulfilled too in the new code.
    • Payment of Gratuity:
      • Although payment of gratuity was expanded in the new Code, it still remains inaccessible for a vast majority of informal workers.

Way Forward

  • The SS Code 2020 merges existing social security laws and attempts to include informal workers within the ambit of social security administration. However, an examination of the code reveals that universalisation of social security remains an unfulfilled aspiration.
  • At a time when India chairs a BRICS meeting that is focused on issues of labour, especially informality, it fails to even recognise that India is ageing without social security, and the demographic dividend of the young workforce that could support the ageing ends in 15 years.
  • The provision of social security could be used to formalise the workforce to a certain extent.
  • Employers should be made to own up to the responsibility of providing social security to their workers.
    • As the state has a responsibility but the primary responsibility still lies with employers since they are taking advantage of workers’ productivity.


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