The Code on Social Security, 2020 – Review of Critical Changes

With a view to simplify and streamline labour laws, the Government of India has, in November of last year, implemented four (4) new labour codes in place of the older twenty-nine (29) statutes. The new labour codes boost employment and workforce welfare, aiming to make strong industries, and facilitating ease of doing business in the country.

We review the key features of each code in our 4-part series.

Part I – Code on Wages, 2019: Review of critical changes (click here)

Part II – Code on Industrial Relations, 2020: Review of critical changes (click here)

Part III – The Code on Social Security, 2020 – Review of Critical Changes

Introduction

The Code on Social Security, 2020[i] (the “Code”) represents a structural consolidation of India’s social security framework by integrating multiple welfare-oriented labour legislations into a single comprehensive statute. It subsumes nine central labour laws that previously operated through separate schemes, authorities, and compliance mechanisms. These include the following:

• Employees’ 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.

Critical Changes

1. Unified Single Registration Mechanism

This reduces the compliance burden of establishments substantially. Previously, establishments registered separately with the Employees’ Provident Fund (EPF) and Employees’ State Insurance (ESI) authorities, were required to maintain parallel compliance regimes. The Code eliminates this duplication by establishing a single registration mechanism applicable across all social security schemes.

Operational Impact:

1. Single electronic registration satisfies obligations under multiple schemes;
2. Establishments already registered under other central labour laws need not obtain separate registration;
3. Significant reduction in administrative burden, duplicative filings and fragmentation of obligations.

2. Reduced Appeal Deposit:

Section 23 of the Code reduces the mandatory pre-deposit required for filing appeals before tribunals in Employee’s Provident Fund (EPF) disputes from 75% to 25% of the amount determined by the assessing authorities.

This materially improves access to appellate remedies in EPF disputes. Appeals must be concluded within one year (previously 6 months), extending deliberation timelines.

3. Five-year limitation period for PF Assessments

The Code introduces a 5-year limitation period for initiating EPF assessments to determine applicability or recover dues. Previously, no statutory limitation existed, allowing EPFO to initiate recovery proceedings indefinitely. Proceedings must conclude within a period of 1 year, extendable by a year.

4. Definitions:

The Code defines certain classes of workers to include these classes into the ambit of the Social Security regime:

1. Gig worker: Person performing work outside traditional employer-employee relationship.
2. Platform worker: Person engaged in platform work facilitated by online platforms connecting service providers with buyers.

The Code also specifically defines Aggregator as ‘Digital intermediary or platform connecting sellers/service providers with buyers/users’ – explicitly liable for social security contributions, including mandatory contributions of 1-2% of annual turnover to social security fund (capped at 5% of total payments made to gig/platform workers).

Aggregators and platforms are now statutory “employers” with contribution and registration obligations. The other primary responsibilities of Aggregators under the Code include:

• must facilitate worker registration on nation e-SHRAM portal;
• maintain workforce databases and reporting to authorities;
• provide for social security funding benefits like health, accident, and maternity coverages;
• maintain records and submit regular compliance reports;
• provide grievance redressal mechanisms.

Failure to facilitate worker registration and contribute to social security fund attracts penalties up to INR 2 Lakhs and imprisonment.

5. Extended Gratuity Eligibility for Fixed-Term Employees

The Code extends gratuity eligibility to fixed-term employees on a pro-rata basis without requiring five (5) years of continuous service, a significant expansion from earlier rules where fixed-term workers received no gratuity entitlement.

6. Contractor Contribution Allocation

The Code clarifies that the principal employers remain liable for employer-side social security contributions, whilst contractors may deduct only employee-share contributions from wages. The Code expressly prohibits deduction of employer contributions from worker wages. For establishments deploying contract workers, it is to ensure that contractual agreements allocate contribution responsibilities correctly. Principal employers cannot delegate employer contribution obligations to contractors.

7. Aadhaar linked Portability

The Social Security Code provides for portability of benefits through a unique Aadhaar-linked Universal Account Number (UAN) issued via the e-Shram portal, enabling registered unorganised workers, gig workers, and platform workers to retain access to social security entitlements even while switching jobs, platforms, or states. As of 27.11.2025, the e-Shram portal had registered over 31.38 crore unorganised workers linked with Aadhaar.[ii]

8. Electronic Record Keeping

The Code authorises electronic maintenance of records, digital filing of registrations, and online submission of returns, which will help in promoting transparency and compliance, reducing administrative delays, and will enhance delivery of benefits laid out under the Code.

9. National Social Security Board and Fund Establishment

The Code mandates constitution of a National Social Security Board (and corresponding State Boards) to recommend, monitor, and oversee social security schemes for unorganised, gig, and platform workers. A central Social Security Fund finances these schemes, supported by aggregator contributions, government allocations, and prescribed sources.

Concluding Remarks

The reforms through the Code mark a giant step towards addressing the needs of workers in modern Indian establishments, especially in the e-commerce sector, which were completely overlooked until date. The steps towards organizing a dedicated for the unorganized sector is a welcome initiative by the Government and it certainly shows a well-reasoned addressal of the interests of workers, including in the unorganized sector, in the country.

While the Code increases the financial burden for establishments by expanding coverage, it also ensures operational flexibility, simplified compliance and reduced industrial litigation, with the Government’s “ease of doing business” initiatives. 

Contributed by Akash Sajan (Associate, Corporate Commercial)

[guidance from Aditi Verma Thakur (Managing Partner)]

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[i] Ministry of Labour and Employment, Government of India. (2020). Code on Social Security, 2020. Government of India Act.

[ii] Ministry of Labour and Employment, Government of India. (2025). Social Security Coverage for Unorganised and Migrant Workers. Press Information Bureau.