Currently there are over 40 Labour Law Legislations that are in force in our country. The Government of India has embarked on a herculean task to amalgamate all of these labour law legislations into four Labour Codes. These Codes aims to simplify the labour law compliances which will in turn help these businesses to target their resources toward the development of the industry instead of complicated labour law compliances. This is being done in order to simplify the labour law regulations as a facilitator to encourage the growth of industry in the country, in purview of the ‘Make in India’ initiative of the Government of India and also to improvise the ease of doing business in India. The latest code to be placed in the Lok Sabha as a bill is the Code on Social Security 2019 (‘the Social Security Bill’).

The Social Security Bill proposes to simplify, amalgamate, rationalize and replace the following central labour legislations:

1.The Employees’ Compensation Act, 1923;

2.The Unorganised Workers’ Social Security Act, 2008.

3.The Payment of Gratuity Act, 1972;

4.The Employees’ State Insurance Act, 1948;

5.The Cine Workers Welfare Fund Act, 1981;

6.The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952;

7.The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959;

8.The Maternity Benefit Act, 1961;

9.The Building and Other Construction Workers Cess Act, 1996;

It was introduced in the Lower House of the Indian Parliament by Mr. Santosh Kumar Gangwar, the Labour Minister for India on 11.12.2019 as Bill No. 375 of 2019 and is currently pending approval of both the Houses of the Parliament. A copy of the Social Security Bill as introduced in the Lok Sabha can be accessed on


The Social Security Bill aims

The Social Security Bill has introduced several new aspects for the welfare of those working in the unorganized as well as the organized sectors of the Economy. It aims to introduce several new aspects that are currently missing in the labour legislations in force in India. The Social Security Bill has taken the concept of ‘labour legislations to be welfare legislations’ to another level and once implemented, it shall definitely improvise the social and economic standing of those impacted by this Bill. This section highlights the key aspects of the Social Security Bill, in brief.

Social Security Welfare Schemes

Under the Code, the Central Government may notify various Social Security Schemes for the benefit of workers.  These include an Employees’ Provident Fund Scheme, an Employees’ Pension Scheme and an Employees’ Deposit Linked Insurance Scheme which may provide for a provident fund, a pension fund, and an insurance scheme, respectively.

The government may also notify:

  • An Employees’ State Insurance (ESI) Scheme to provide sickness, maternity, and other benefits,
  • Gratuity to workers on completing five years of employment (or lesser than five years in certain cases such as death),
  • Maternity benefits to women employees,
  • Cess for welfare of building and construction workers, and
  • Compensation to employees and their dependants in the case of occupational injury or disease.  

Widened the scope of the definition of “Wages”

The Social Security Bill has elaborately and specifically defined the term “wages” to widen the scope of the term to a vast extent. The definition of wages has three parts to it –

Inclusive in the definition: All remuneration expressed in monetary terms are wages and includes basic pay, dearness allowance and retaining allowance.

Specific exclusions: Provided Fund, pension and gratuity, house rent and conveyance allowances etc. are not included in the term wages as long as it does not exceed the 50 per cent of the total remuneration being paid.

Benefits in kind: These will be included to the extent of 15 per cent of total wages. Overall this will ensure that wages for social security benefits will be at least 50 per cent of overall compensation.

Establishment of Social Security Organisations

The Code provides for the establishment of several bodies to administer the social security schemes.  These include:

  • A Central Board of Trustees, headed by the Central Provident Fund Commissioner, to administer the EPF, EPS and EDLI Schemes.
  • An Employees State Insurance Corporation, headed by a Chairperson appointed by the central government, to administer the ESI Scheme.
  • National and state-level Social Security Boards, headed by the central and state Ministers for Labour and Employment, respectively, to administer schemes for unorganised workers.
  • State-level Building Workers’ Welfare Boards, headed by a Chairperson nominated by the state government, to administer schemes for building workers.

Change in the amount of Contribution

All the Schemes under the Code shall be financed through a combination of contributions from the employer and employee.  For example, in the case of the Employees Provident Fund Scheme, the employer and employee will each make matching contributions of 10% of wages, or such other rate as notified by the government.  All contributions towards payment of gratuity, maternity benefit, cess for building workers, and employee compensation will be borne by the employer.  Schemes for gig workers, platform workers, and unorganised workers may be financed through a combination of contributions from the employer, employee, and the appropriate government.

Enhanced the ambit of workers covered under the Code

As per the Social Security Bill, the Central or State Government may notify specific schemes for gig workers, platform workers, and unorganised workers to provide various benefits, such as life and disability cover. Gig workers have been introduced in this legislation from the first time and refer to workers outside of the traditional employer-employee relationship such as freelancers. Platform workers too have been included in this legislation for the first time and referred to as workers who access other organisations or individuals using online platforms and earn money by providing them with specific services.  Additionally, unorganised workers including home-based and self-employed workers have also been recognised under the Social Security Bill.


The Social Security Bill not only simplifies the complex nature of the labour law legislations currently in force in India, it also aims to modernise the legislation by including and acknowledging several contemporary aspects of the work culture.

In the event that this proposed legislation gets the approval of both the houses of the Parliament and becomes an Act, it will beneficially impact both the modern day employer as well as the worker up to a large magnitude.

Taking into consideration the large amount of confusion and mishap that the current COVID-19 Pandemic has created with regard to the labour and employment laws currently in force in India, such an organised and modern legislation will surely be beneficial to the businesses and the industries from the point of view of labour law compliances in the event that the nation is ever to face such a major shift in the business cycle again.

Disclaimer: The information contained in this document is intended for informational purposes only and does not constitute legal opinion, advice or any advertisement. This document is not intended to address the circumstances of any particular individual or corporate body. Readers should not act on the information provided herein without appropriate professional advice after a thorough examination of the facts and circumstances of a particular situation. There can be no assurance that the judicial/quasi-judicial authorities may not take a position contrary to the views mentioned herein.

Author- AMLEGALS is a multi-specialised law firm. We would love to hear your views, queries, feedback and comments on [email protected] or [email protected]

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I am a litigation & arbitration advocate. I am founder of a leading full service law firm AMLEGALS. I handle litigation in indirect taxes, Insolvency & Bankruptcy Code, IPR, Arbitration, Contracts etc in High Courts, Tribunals-NCLT,CESTAT,NCLAT etc, Arbitral Tribunals and various Court of View Full Profile

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March 2021