Impact of The Social Security Code, 2020 on the Employers and Workers

Introduction

The Code on Social Security, 2020 was formed by the suggestions of the Second National Commission on Labour, which reported that the ongoing labor laws should be amended in order to support the subject matter. The Code was introduced in December 2019 and the Parliamentary committee submitted its report on 31st July 2020. Thereafter, a fresh Bill was introduced, namely the Code on Social Security, 2020 that aims to facilitate the implementation of labor laws, reduce the multiplicity of definitions, streamline the number of establishments below numerous laws and safeguard basic ideas of well-being and welfares to labors are well-looked-after. Another major objective of the Code is to plug technology for ensuring compliance and enforcement of the provisions thereunder are achieved with ease.

The Code on Social Security, 2020 amalgamates and rationalizes the provisions of the next nine Central labor laws:-

1. The Employees’ Compensation Act, 1923
2. The Employees’ State Insurance Act, 1948
3. The Workers’ Prudent Coffers and Various Provisions Act, 1952
4. The usage Connections (Required Announcement of Jobs) Act, 1959
5. The Maternity Benefit Act, 1961
6. The Payment of Gratuity Act, 1972
7. The Cine Workers Welfare Fund Act, 1961
8. The Structure and Additional Building Labours Well-being Cess Act, 1996
9. The Unorganized Workers’ Social Security Act, 2008.

The key changes and features of the Code are often summarized as follows:

• This Act adds the definition of “career center” which means an office including an employment place or portal created by the Central Government to provide career services. It aims to connect persons seeking employment with people who seek to use by providing information about vacancies and giving vocational guidance.
• This Performance supplements the meaning of “aggregator” which incomes a numerical intermediate or bazaar for the purchaser as well as user of any service to connect with the seller or the service provider. The outline of this meaning is related to the outline of two more footings viz.- stage employee and gig employee. the preceding mentions to persons engaged in stage work which is defined to mean a bit preparation outdoor of a characteristic employer-employee association throughout which governments/individuals use an internet stage for problem-solving or to deliver exact facilities. Whereas the last is clear as a secluded who does work or contributes throughout a piece preparation and makes from such doings outside of a characteristic employer-employee association.
• The Code allows for an establishment to voluntarily undergo the coverage of the Employees’ Provident Fund (EPF) under Chapter-III and thus the Employees’ State Insurance Corporation (ESIC) under Chapter-IV, albeit the number of employees in such an establishment is but the specified threshold.
• The Code empowers the Central Government to frame Social Security schemes for unorganized workers, gig workers, and platform workers also as members of their families about providing benefits under the ESIC. The Central Government is additionally empowered to frame schemes for providing Social Security benefits to self-employed workers and to the opposite class of persons it deems fit.
• To this end, the Code also provides for registration of every unorganized worker, gig worker, or platform worker supported a self-declaration provided either electronically or otherwise in conjunction with AADHAR number during a form and manner that shall be prescribed by the Central Government
• The Code provides that just in the case of fixed-term employees, the employer shall pay gratuity on a knowledgeable rata basis and not on the pre-existing requirement of continuous service of 5 years.
• There is greater clarity given regards to common crèche facilities under Chapter-VI of the Code on maternity benefits. The second proviso to Section-67 states that an establishment may avail a typical crèche facility of the Central Government, government, municipality, or private entity or provide by an NGO or the opposite organization.
• The provisions of the offenses and penalties are also amended. Section-137 allows employers an opportunity to correct non-compliance for any offense under the Act before the initiation of prosecution or proceedings. However, repeat offenders are given enhanced punishments under Section-134, and offenses by companies are given stricter penalties that reach beyond the corporate veil.

What next?

Employers are required to get through this development and assess the impact on their organizations. A change within the definition of wage not only features about the income of the corporate – enhanced contribution, revised provision for gratuity and other retrials – but also on internet pay of employees. Employees must check out the implications of keeping specific salary structures in mind and determine the impact. Implications also are triggered in respect of Fixed Term Employees, where gratuity liability is activated. Aggregators also will need to check out the impact on account of the proposed contribution to the Social Security fund, which might be between 1% to twenty of their turnover, limited to five of the pay-outs being made to gig workers/platform workers, etc.

Further, the present policy and process framework will need to be revisited in line with the new Code, and the technology interface should be appropriately built-in. As we speak, there are a couple of developments a day and more notifications and clarifications are awaited within the days to return.

The employer would need to keep tabs to make a sure smooth transition to the new Code, as in any case, well begun maybe a job half done.

Conclusion

The government’s move to initiate The Code on Social Security, 2020 was done to consolidate the laws related to Social Security and to make an improvement over the previous versions of these labor laws. The merging of the said laws will facilitate implementation also as remove the variability of definitions provided within the previous Acts. The merging was through with the concept of welfare and benefits of the workers.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts that have been made to ensure the accuracy and correctness of the information published, White Code Consulting & Govrenance shall not be responsible for any errors caused due to human error or otherwise.