Code on Social Security 2020

The Code on Social Security 2020 (CSOS) is a sweeping piece of legislation that consolidates India’s fragmented social‑security regime into a single, modern framework. By merging the Employees’ State Insurance Act 1948, the Employees’ Provident Funds Act 1952, the Maternity Benefit Act 1961 and the Unorganised Workers’ Social Security Act 2008, the Code expands statutory protection to all categories of workers—including gig, platform and domestic workers—while introducing a national fund and a central board to coordinate benefits across the formal and informal sectors. ## Historical Background The idea of a unified social‑security code emerged from the 2015 “Labour Reform Committee” chaired by the Ministry of Labour and Employment, which recommended a single labour code to replace the myriad statutes inherited from the post‑independence era. After extensive consultations with trade unions, employer federations and state governments, the Union Cabinet approved the draft Code on Social Security on 15 August 2020. The Bill was introduced in the Lok Sabha on the same day, passed by both houses on 28 September 2020, and received the President’s assent the following day. The Code was notified for implementation on 1 April 2021, with certain provisions—such as the establishment of the National Social Security Fund—deferred to 1 April 2022. ## Key Provisions Section 2 of the Code defines a “worker” as any person employed in any capacity, covering employees, apprentices, trainees, and workers in the unorganised sector. Section 3 outlines “social security” as a set of benefits that include provident fund, pension, health insurance, maternity allowance, and, prospectively, unemployment allowance. The Code extends compulsory coverage of the Employees’ Provident Fund (EPF) and Employees’ State Insurance (ESI) to establishments with ten or more workers, lowering the previous threshold of twenty. It also mandates that employers contribute 12 % of wages to the EPF, split equally between the employee and employer, and 4.75 % of wages to the ESI scheme. A novel feature is the creation of a National Social Security Board (NSSB) under Section 71, chaired by the Union Labour Minister and comprising representatives of central and state governments, employers and workers. The NSSB is tasked with overseeing the National Social Security Fund (NSSF), a corpus of up to ₹2 lakh crore earmarked for universal pension, health‑insurance and unemployment schemes. Parallel State Social Security Boards are to be constituted in each state to manage local funds and coordinate with the NSSB. ## Mechanism and Institutional Architecture The Code establishes a three‑tiered architecture: (1) the central NSSF, (2) State Social Security Funds (SSSFs) administered by State Boards, and (3) employer‑specific trusts for sectoral schemes. Contributions to the NSSF are to be levied on a sliding scale based on the employer’s payroll size, with a ceiling of ₹500 crore per annum for large enterprises. The Fund is to be invested in government securities and approved infrastructure projects, generating returns that finance pension and health‑insurance payouts. Beneficiaries register through a digital portal managed by the Ministry of Labour, which links their unique Aadhaar‑based identity to employment records. Once registered, workers can claim benefits online, with the system automatically calculating entitlements based on contribution history, age and wage brackets. The Code also empowers the Central Board of Indirect Taxes and Customs (CBIC) to enforce compliance through electronic filing and penalties of up to ₹10 lakh for non‑payment of contributions. ## Implementation and Current Status As of 2023, the NSSB has been constituted, and the Centre has issued the “National Social Security Fund Rules, 2022” outlining contribution rates and investment guidelines. Ten states—including Maharashtra, Karnataka and Tamil Nadu—have operationalised their State Social Security Boards and begun enrolling unorganised workers through the “Pradhan Mantri Shram Yogi Maan‑Dhan” pilot. However, the unemployment allowance, envisaged under Section 45, remains pending the issuance of detailed rules. The EPF and ESI portals have been integrated into the new digital architecture, resulting in a 27 % increase in employer compliance between 2021 and 2023, according to the Ministry’s annual report. Challenges persist in extending coverage to informal gig workers, many of whom lack formal contracts; the Ministry has launched a “Platform Worker Registration” drive that, by June 2024, had enrolled over 5 million workers across ride‑sharing and food‑delivery platforms. ## Significance By unifying disparate statutes, the Code on