📜 The Code on Social Security, 2020 — Educational Guide
Act No. 36 of 2020 | For LL.B Students & Legal Learners | Simple Human Language
📘 Chapter I – Preliminary (Sections 1–3)
This chapter is the foundation of the whole Code. It tells us what this law is called, where it applies, and who it covers. Think of it like the introduction page of a textbook.
🔖 Section 1: Short Title, Extent, Commencement and Application
- Name of the Act: "The Code on Social Security, 2020" (Act No. 36 of 2020, passed on 28 September 2020).
- Where it applies: All of India — every state, every union territory.
- When it starts: The Central Government decides the date(s) by publishing a notification in the Official Gazette. Different chapters can start on different dates.
- Who it covers: The First Schedule lists which chapters apply to which types of establishments (factories, shops, construction sites, etc.).
Suppose Ramesh runs a textile factory in Surat with 25 workers. Under Section 1(4), the First Schedule tells us that Chapter III (EPF) applies to his factory once notified. If Ramesh and most workers agree to join EPF voluntarily, Section 1(5) allows the PF Commissioner to extend it to him even before the usual threshold.
🔖 Section 2: Important Definitions
Section 2 defines over 90 terms. Let us understand the most important ones in simple language:
| Term | Simple Meaning | Example |
|---|---|---|
| Employee | Any person paid wages by an establishment, directly or through a contractor, for any type of work | Suresh working in a textile mill for ₹15,000/month is an employee |
| Employer | The person or company that hires employees and is responsible for paying contributions | The owner of the textile mill = employer |
| Wages | Basic pay + Dearness Allowance + Retaining Allowance. Does NOT include HRA, overtime, bonus, etc. | If basic = ₹10,000, DA = ₹3,000 → wages = ₹13,000 |
| Establishment | Any place where industry/trade/business is carried on; includes factories, mines, plantations | A call centre in Bengaluru = establishment |
| Gig Worker | Someone who earns money doing tasks outside the traditional employer-employee bond | A Swiggy delivery partner is a gig worker |
| Platform Worker | Someone who gets work through an online platform and is paid for specific tasks | An Uber driver using the app = platform worker |
| Unorganised Worker | A home-based/self-employed/wage worker in the unorganised sector (enterprise <10 workers) | A tailor working from home = unorganised worker |
| Social Security | Protection measures for health care and income security in old age, sickness, work injury, maternity, etc. | PF, ESI, Gratuity, Maternity Benefit = social security |
| Contribution | Money paid by employer (and sometimes employee) to the PF Board or ESIC | Employer deposits 12% of wages to EPF every month |
| Fixed Term Employment | A job with a fixed contract period but with same pay/benefits as permanent employees proportionately | IT firm hires a developer for 1-year project with same benefits as permanent staff |
| Factory | Premises with 10+ workers using power or 20+ workers without power for manufacturing | Garment factory in Tirupur with 50 workers = factory |
| Appropriate Government | Central Government for central/large establishments; State Government for all others | Tata Steel (Central) vs local shop (State) |
| Dependant | Family members who depended on a deceased employee — widow, minor children, parents, etc. | If a mine worker dies, his widow + minor children = dependants |
🔖 Section 3: Registration and Cancellation of an Establishment
- Every establishment covered by this Code must register electronically within the prescribed time.
- If already registered under any other Central Labour Law, no re-registration is needed.
- If a business is closing down (Chapter III or IV applies), the employer can apply for cancellation of registration.
🏛️ Chapter II – Social Security Organisations (Sections 4–13)
This chapter creates the institutional framework — the bodies that actually run social security schemes. Think of them as the management committees that handle workers' money and benefits.
🔖 Section 4: Board of Trustees of Employees' Provident Fund (Central Board)
- The Central Government creates the Central Board of Trustees (CBT) to manage EPF.
- Composition: Chairperson + Vice-Chairperson (appointed by CG), up to 5 CG officials, up to 15 State reps, 10 employer reps, 10 employee reps, PF Commissioner (ex officio).
- It is a body corporate — can sue and be sued in its own name.
- Can form an Executive Committee from its members for day-to-day work.
🔖 Section 5: Employees' State Insurance Corporation (ESIC)
- Central Government creates ESIC to manage health and cash benefits for workers.
- Composition: Chairperson + Vice-Chairperson, 5 CG officials, State reps (1 per State), 1 UT rep, 10 employer reps, 10 employee reps, 2 medical profession reps, 3 MPs, Director General (ex officio).
- Has a Standing Committee for day-to-day administration and a Medical Benefit Committee for health matters.
🔖 Section 6: National Social Security Board (NSSB) & State Boards
- NSSB — created by Central Government for unorganised workers. Chaired by Union Minister of Labour. 40 nominated members. Meets at least 3 times a year. Term: 3 years.
- State Unorganised Workers' Boards — every State must create one. Chaired by State Labour Minister. 31 nominated members. Meets at least once a quarter.
- Functions: recommend schemes, advise government, monitor welfare schemes, review records, review expenditure.
🔖 Section 7: State Building Workers' Welfare Boards
- Each State Government must create a Building Workers' Welfare Board.
- It provides: death/disability benefits, pension at 60, group insurance, education for children, medical expenses, maternity benefit, skill development, hostel facilities for construction workers.
🔖 Section 8: Disqualification of Members
A person cannot be a member of any Social Security Organisation if they are:
- Adjudicated insolvent (bankrupt)
- Found lunatic or of unsound mind
- Convicted of offence involving moral turpitude
- An employer who has defaulted in payment of dues
- A MP/MLA who becomes a Minister, Speaker, or Deputy Chairman of Rajya Sabha
| Organisation | Governs | Created By | Key Role |
|---|---|---|---|
| Central Board (CBT-EPF) | Provident Fund | Central Govt | Manages EPF, EPS, EDLI funds |
| ESIC | ESI | Central Govt | Provides medical + cash benefits |
| NSSB | Unorganised workers | Central Govt | Recommends schemes, monitors welfare |
| State Unorganised Workers' Board | Unorganised workers | State Govt | State-level welfare for unorganised workers |
| Building Workers' Welfare Board | Construction workers | State Govt | Cess-funded benefits for BOCW workers |
💰 Chapter III – Employees' Provident Fund (Sections 14–23)
EPF is a retirement savings scheme where both you and your employer put a fixed % of your salary every month into a fund. When you retire, change jobs, or face emergencies, you can withdraw this money.
🔖 Section 15: Three Main Schemes
| Scheme | Purpose | Who Contributes |
|---|---|---|
| EPF Scheme (PF) | Retirement savings fund | Employee 12% + Employer 3.67% of wages |
| EPS – Pension Scheme | Monthly pension after retirement at 58 | Employer 8.33% (from their 12%) |
| EDLI – Insurance Scheme | Life insurance cover for employee | Employer contributes separately |
🔖 Section 17: Contribution in Respect of Employees and Contractors
- Employer must pay their own share + deduct employee share from wages and deposit the total.
- If work is given to a contractor, the principal employer remains responsible if the contractor defaults.
- Contributions are priority debts — even in employer insolvency, PF dues are paid first (Section 19).
🔖 Section 16: Funds
Three separate funds are maintained:
- Provident Fund — accumulated savings (EPF)
- Pension Fund — for monthly pension (EPS)
- Insurance Fund — for life insurance (EDLI)
🔖 Section 20: Exemptions
Chapter III does NOT apply to: co-operative societies with <50 workers, establishments set up under other Acts giving equal or better PF benefits, and certain notified establishments.
🔖 Section 22: Transfer of Accounts
When an employee changes jobs, their PF account can be transferred to the new employer's account. This is done online through the EPFO portal using UAN (Universal Account Number).
🔖 Section 23: Appeal to Tribunal
Disputes about EPF can be appealed to the Industrial Tribunal.
| Aspect | Detail |
|---|---|
| Applies to | Establishments with 20 or more employees |
| Employee Contribution | 12% of wages (basic + DA) |
| Employer Contribution | 12% of wages (3.67% EPF + 8.33% EPS) |
| Interest on PF | Declared annually by Central Govt (typically 8.1–8.5% p.a.) |
| Withdrawal | On retirement (58 yrs), resignation, death, marriage, housing, illness etc. |
| Tax Benefit | Contribution deductible under Sec 80C of Income Tax Act |
| Recognised under | Section 18 – Fund recognised under Income Tax Act 1961 |
🏥 Chapter IV – Employees' State Insurance (Sections 24–52)
ESI is a self-financing social security and health insurance scheme for workers. Workers and employers both contribute a small % each month. In return, workers get free medical care and cash benefits during sickness, maternity, disability, etc.
🔖 Section 25: ESI Fund
- All contributions, penalties, grants, donations, etc. form the Employees' State Insurance Fund.
- The Fund is managed by ESIC.
🔖 Section 28: All Employees to be Insured
Every employee earning wages below the notified ceiling (currently ₹21,000/month) in covered establishments must be insured under ESI. They are called Insured Persons.
🔖 Section 29: Contributions
| Who Pays | Rate | On What |
|---|---|---|
| Employer | 3.25% of wages | Monthly wages of insured employees |
| Employee | 0.75% of wages | Their own monthly wages |
| State Government | 12.5% of benefit expenditure | Medical benefit costs (some States) |
🔖 Section 32: Benefits under ESI
| Benefit | What it Covers | Duration |
|---|---|---|
| Sickness Benefit | 70% of wages during medically certified sickness | 91 days per year |
| Maternity Benefit | Full wages during maternity leave | 26 weeks |
| Disablement Benefit | 90% of wages for work-related injuries/diseases | For life if permanent |
| Dependants' Benefit | Monthly payment to family after worker's death due to work injury | Lifetime (widow/infirm child) |
| Medical Benefit | Free OPD, IPD, specialist care, medicines, surgeries | As required |
| Unemployment Allowance | 50% of wages if employee loses job involuntarily | Up to 2 years |
| Funeral Expenses | Lump sum (₹15,000) on death of insured person | One-time |
🔖 Section 45: Scheme for Gig Workers and Platform Workers
- The Central Government CAN extend ESI benefits to gig workers and platform workers through special schemes.
- This is a landmark provision recognising the new digital economy workforce.
🔖 Section 48: Employees Insurance Court
Disputes about ESI — whether an employee is insurable, rate of contribution, benefits etc. — are decided by the Employees Insurance Court. Appeals from this court go to the High Court (Section 52).
🎁 Chapter V – Gratuity (Sections 53–58)
Gratuity is a reward/gift from the employer for your long service. It's a lump sum amount paid to an employee when they leave the job (after 5 years), retire, or die/become disabled.
🔖 Section 53: Payment of Gratuity
Gratuity is payable when an employee:
- Completes 5 years of continuous service (for resignation/termination)
- Retires on superannuation
- Dies or becomes disabled (5-year rule waived)
🔖 Section 54: Continuous Service
- Continuous service = uninterrupted service including periods of illness, accident, leave, layoff, strike (not illegal), lock-out.
- For seasonal workers: at least 75% of working days in a season counts as 1 year.
🔖 Section 56: Formula for Gratuity Calculation
Gratuity = (Last Drawn Wages × 15/26) × Number of Years of Service
Where 15 = 15 days salary per year | 26 = working days in a month
Gratuity = (30,000 × 15/26) × 20 = 17,307 × 20 = ₹3,46,154
Maximum gratuity payable = ₹20 Lakhs (capped under the Code).
🔖 Section 55: Nomination
- Every employee must nominate a person to receive gratuity in case of death.
- Nomination must be given within 30 days of completing 1 year of service.
- A married employee MUST nominate family members only.
🔖 Section 57: Compulsory Insurance
Every employer (except Central/State Govt, local authority, and those with approved gratuity fund) must obtain insurance for their gratuity liability from LIC or an approved insurer.
| Aspect | Rule |
|---|---|
| Minimum service required | 5 years (except death/disability) |
| Rate | 15 days wages per completed year |
| Maximum limit | ₹20,00,000 (₹20 Lakhs) |
| Time to pay | Within 30 days of becoming payable |
| Interest on delay | Simple interest @ prescribed rate after 30 days |
| Tax exemption | Up to ₹20 Lakhs exempt from income tax |
| Forfeiture | Possible if dismissed for disorderly conduct, moral turpitude |
🤱 Chapter VI – Maternity Benefit (Sections 59–72)
This chapter protects working women during pregnancy and after childbirth. It ensures they can take paid leave and are not discriminated against at work because of pregnancy.
🔖 Section 59: Prohibition on Work
- No employer can allow a woman to work during the 6 weeks immediately following delivery or miscarriage.
- Women should not be given heavy or strenuous work during pregnancy if medically advised.
🔖 Section 60: Right to Maternity Benefit
- Normal delivery: 26 weeks paid leave (first 2 children); 12 weeks for 3rd child onwards.
- Adoption (child below 3 months): 12 weeks leave.
- Commissioning mother (surrogate): 12 weeks leave.
🔖 Section 64: Medical Bonus
If the employer does not provide free pre-natal and post-natal medical care, they must pay a medical bonus of ₹3,500 (or higher as notified) to the woman.
🔖 Section 65: Leave for Miscarriage
- In case of miscarriage or medical termination of pregnancy: 6 weeks paid leave from the day of miscarriage.
🔖 Section 66: Nursing Breaks
Women with children below 15 months are entitled to two nursing breaks per day (in addition to normal rest intervals) until the child reaches 15 months of age.
🔖 Section 67: Crèche Facility
- Establishments with 50 or more employees must provide crèche (daycare) facility either within the premises or at a prescribed distance.
- Mothers are permitted to visit the crèche 4 times a day (including nursing breaks).
🔖 Section 68: No Dismissal for Pregnancy
An employer CANNOT dismiss, discharge, or give notice of dismissal to a woman who is absent due to maternity. Any such dismissal is VOID.
| Benefit | Duration/Amount |
|---|---|
| Maternity Leave (1st & 2nd child) | 26 weeks (8 weeks pre-delivery) |
| Maternity Leave (3rd child onwards) | 12 weeks |
| Adoption leave | 12 weeks |
| Miscarriage leave | 6 weeks |
| Medical Bonus | ₹3,500 (if no free medical care) |
| Nursing Breaks | 2 breaks/day till child is 15 months |
| Crèche facility | Required for 50+ employee establishments |
| Work ban post-delivery | 6 weeks |
⚖️ Chapter VII – Employees' Compensation (Sections 73–99)
This chapter deals with compensation for workplace accidents and occupational diseases. If a worker is injured or dies at work, this chapter ensures the employer pays them or their family.
🔖 Section 73: Reports of Fatal Accidents
If a worker dies or suffers a serious body injury at work, the employer MUST send a report to the Competent Authority within the prescribed time.
🔖 Section 74: Employer's Liability for Compensation
An employer MUST pay compensation if an employee suffers:
- Death resulting from a work injury
- Permanent total disablement from a work injury
- Permanent partial disablement from a work injury
- Temporary disablement lasting more than 3 days
- Occupational disease specified in the Third Schedule
Employer is NOT liable if: the employee was under the influence of drugs/alcohol, the employee wilfully disobeyed safety rules, or the worker's own wilful act caused the injury.
🔖 Section 76: Amount of Compensation
| Type of Injury | Formula | Example (wages ₹10,000/month) |
|---|---|---|
| Death | 50% of monthly wages × Relevant Factor (age-based) | 50% × 10,000 × 213.57 (age 25) = ₹10,67,850 |
| Permanent Total Disablement | 60% of monthly wages × Relevant Factor | 60% × 10,000 × 213.57 = ₹12,81,420 |
| Permanent Partial Disablement | % of earning capacity lost × PTD amount | If 40% loss: 40% of ₹12,81,420 = ₹5,12,568 |
| Temporary Disablement | 25% of monthly wages per half-month | ₹2,500 per 15 days, max 5 years |
🔖 Section 77: Payment When Due
- Compensation must be paid within 30 days of it becoming due. Delay attracts interest up to 12% per annum + damages up to 50% of the compensation amount.
🔖 Section 36: Occupational Diseases
Workers contracting diseases listed in the Third Schedule (like silicosis for miners, lead poisoning for battery workers, byssinosis for textile workers) while in the relevant employment are entitled to compensation as if it were a work injury.
| Aspect | Rule |
|---|---|
| Who can claim | Employees in Second Schedule + occupational disease workers |
| Time to pay after order | 30 days (delay = interest + penalty) |
| Claim to be filed | Within 2 years of accident / 2 years of diagnosis |
| Forum | Competent Authority (Commissioner for Workmen's Comp) |
| Appeal | To High Court (Section 99) |
| Medical examination | Employer can require (Section 84) |
🏗️ Chapter VIII – Building & Other Construction Workers (Sections 100–108)
Construction workers are among India's most vulnerable workers. This chapter creates a cess (special tax) funded welfare system for them — from the very builders whose projects they build!
🔖 Section 100: Levy and Collection of Cess
- Every person who carries out building/construction work must pay a Cess (welfare tax).
- Rate: Between 1% and 2% of the cost of construction (as notified by State Government).
- Collected by the State Government and paid to the Building Workers' Welfare Fund.
🔖 Section 103: Self-Assessment of Cess
The person carrying out construction work must self-assess and pay the cess before receiving occupancy certificate from local authority. This is a smart compliance mechanism.
🔖 Section 106: Registration of Building Workers as Beneficiaries
- Construction workers must register with the Building Workers' Welfare Board to access benefits.
- A worker who has completed 90 days of construction work in the last 12 months is eligible to register.
🔖 Section 108: Building Workers' Welfare Fund & Applications
The Fund is used for: pension, death benefit, disability, group insurance, children's education, medical treatment, maternity benefit, skill development, and transit/hostel accommodation.
| Item | Detail |
|---|---|
| Cess Rate | 1%–2% of construction cost |
| Exemption | <10 workers OR residential <₹50 lakhs personal use |
| Registration eligibility | 90 days work in last 12 months, age 18–60 |
| Benefits | Pension, death/disability, education, medical, maternity, housing, insurance |
| Interest on delayed cess | 2% per month (Section 101) |
| Cessation as beneficiary | On reaching 60 years OR not working in construction for 5 years |
👷 Chapter IX – Social Security for Unorganised, Gig & Platform Workers (Sections 109–114)
Over 90% of India's workforce is in the unorganised sector — domestic workers, construction workers, street vendors, farmers, auto drivers, home-based workers, etc. This chapter is a landmark step to extend social security to them.
🔖 Section 109: Framing Schemes for Unorganised Workers
- Central Government CAN frame schemes for: life and disability cover, health and maternity, old age protection, and education.
- State Governments CAN frame their own schemes for unorganised workers.
- Existing schemes can be continued or new ones can be created.
🔖 Section 111: Record Keeping
- The Central Government shall maintain a database of unorganised workers — their Aadhaar, employment details, skills, etc.
- State Governments must maintain and update such records.
🔖 Section 112: Helpline and Facilitation Centres
The Central/State Government must set up helplines and facilitation centres for unorganised workers, gig workers, and platform workers to help them register, access schemes, and resolve issues.
🔖 Section 113: Registration of Workers
- Every unorganised worker, gig worker, and platform worker CAN register on a digital portal using Aadhaar (or Aadhaar-based identity).
- A Unique Registration Number will be assigned for tracking benefits.
🔖 Section 114: Schemes for Gig Workers & Platform Workers
- The Central Government SHALL frame social security schemes specifically for gig workers and platform workers.
- Funding: from the aggregator company (like Swiggy, Zomato, Ola, Uber), the gig/platform worker, and/or the Central/State Government.
| Category | Definition | Example |
|---|---|---|
| Unorganised Worker | Worker in enterprise with <10 employees — home-based, self-employed, or wage worker | Domestic maid, street vendor, farm labourer |
| Gig Worker | Person earning from work outside traditional employment | Freelancer, delivery agent (contracted, not employed) |
| Platform Worker | Person providing services via an online platform for payment | Ola driver, Urban Company electrician, Swiggy delivery person |
💹 Chapter X – Finance and Accounts (Sections 115–121)
This chapter deals with financial management of all social security organisations — how they maintain accounts, get audited, prepare budgets, and write off losses.
🔖 Section 115: Accounts
Every Social Security Organisation must maintain proper accounts and financial statements in the prescribed manner. Separate accounts for each fund (EPF, EPS, EDLI, ESI Fund, Building Fund, etc.).
🔖 Section 116: Audit
- Accounts are audited by the Comptroller and Auditor General of India (CAG).
- The audit report is laid before Parliament/State Legislature.
🔖 Section 117: Budget Estimates
Every Social Security Organisation prepares an annual budget of income and expenditure in the prescribed form and gets it approved by the Central/State Government.
🔖 Section 118: Annual Report
Every Social Security Organisation submits an Annual Report of its activities to the Central/State Government. The Government lays this report before Parliament/State Legislature.
🔖 Section 119: Valuation of Assets and Liabilities
An actuarial valuation (professional assessment) of the assets and liabilities of the Pension Fund and ESIC Fund must be done periodically to ensure long-term sustainability.
🔖 Section 121: Writing Off of Losses
The Central Board (EPF) and Corporation (ESIC) can, with government approval, write off unrecoverable losses or amounts — for example, contributions from employers who have closed down.
| Section | Subject | Key Requirement |
|---|---|---|
| 115 | Accounts | Prescribed format, separate fund accounts |
| 116 | Audit | CAG audit, report to Parliament |
| 117 | Budget | Annual budget, Govt approval |
| 118 | Annual Report | Tabled in Parliament/Legislature |
| 119 | Actuarial Valuation | Periodic assessment of fund sustainability |
| 120 | Property | SS Organisation can hold property in prescribed manner |
| 121 | Write-off | Unrecoverable amounts can be written off with Govt approval |
🔍 Chapter XI – Authorities, Assessment, Compliance & Recovery (Sections 122–132)
This chapter deals with the enforcement machinery — the officials who check whether employers are following the Code, and the powers to recover dues when employers default.
🔖 Section 122: Inspector-cum-Facilitator
- The government appoints Inspector-cum-Facilitators (IcF) to inspect establishments AND help/guide employers in compliance.
- Powers: Enter any establishment, inspect records/registers/notices, examine persons, take copies of documents, call for information, seize evidence.
- Must give a Web-based Inspection Schedule — inspections are randomised, computerised to reduce corruption.
🔖 Section 123: Maintenance of Records
Every employer must maintain prescribed registers, records, and send returns electronically. Workers must be given pay slips and employment letters.
🔖 Section 124: Employer Not to Reduce Wages
An employer CANNOT reduce wages or benefits already given to workers just because this Code now prescribes a standard. The Code sets a FLOOR, not a ceiling.
🔖 Section 125: Assessment of Dues
- If an employer hasn't paid contributions, the Authorised Officer can assess the amount due by looking at wages, the number of employees, and the relevant period.
- Employer gets a show cause notice first and a personal hearing opportunity.
🔖 Section 127: Interest on Dues
Interest is charged at 12% per annum on overdue contributions under Chapter III and Chapter IV.
🔖 Section 129: Recovery of Amount Due
Unpaid contributions can be recovered like tax arrears — by attaching and selling property, by attachment of bank accounts, by appointment of a receiver, etc. A Recovery Officer has sweeping powers.
| Section | Subject | Key Point |
|---|---|---|
| 122 | Inspector-cum-Facilitator | Dual role: inspect + help employers comply |
| 123 | Records & Returns | Digital records, e-returns required |
| 124 | No wage reduction | Cannot reduce existing benefits |
| 125 | Assessment of dues | SCN + hearing before assessment |
| 127 | Interest | 12% per annum on overdue contributions |
| 128 | Damages | Up to 100% of dues as penalty for default |
| 129 | Recovery | Like tax recovery — property attachment |
| 130 | Recovery Certificate | Issued by Authorised Officer, valid even after amendment |
| 131 | Other modes | Can recover through courts, district collectors |
⚠️ Chapter XII – Offences and Penalties (Sections 133–138)
This chapter specifies criminal punishments for employers who violate the Code — especially for not paying contributions, deducting money from workers but not depositing it, and other violations.
🔖 Section 133: Penalty for Failure to Pay Contributions
| Offence | Punishment |
|---|---|
| Deducting employee's contribution but NOT depositing it | Imprisonment 1–3 years + Fine |
| Failure to pay employer's contribution | Imprisonment up to 3 months + Fine up to ₹1 lakh (first time) |
| Other contraventions (obstruction, false statements, etc.) | Fine up to ₹1 lakh or imprisonment up to 6 months or both |
🔖 Section 134: Enhanced Punishment for Repeat Offenders
If an employer is convicted again for the same offence within 5 years, the punishment is doubled — minimum 2 years imprisonment in serious cases.
🔖 Section 135: Offences by Companies
- When a company commits an offence, the persons responsible — Directors, Managers, Company Secretary — are personally liable to punishment unless they prove the offence occurred without their knowledge or they took all due diligence to prevent it.
🔖 Section 136: Cognizance of Offences
Courts can take cognizance of offences under this Code only on a complaint filed by the authorised officer of the social security organisation (EPFO/ESIC). No police FIR is needed.
🔖 Section 137: Prior Opportunity before Prosecution
Before prosecuting an employer, the Social Security Organisation must give them a written notice and an opportunity to comply/pay. This prevents automatic criminalisation.
🔖 Section 138: Compounding of Offences
- Most offences can be compounded (settled by paying a sum) before or after trial.
- Compounding does not apply to repeat offenders or serious cases of deducting wages and not depositing contributions.
📋 Chapter XIII – Employment Information and Monitoring (Sections 139–140)
This brief but important chapter deals with vacancy reporting — requiring employers to report job openings to Career Centres (formerly Employment Exchanges) to help match job seekers with jobs.
🔖 Section 139: Reporting of Vacancies to Career Centres
- Every establishment must report vacancies to the nearest Career Centre (employment exchange or digital portal) in the prescribed manner before filling the vacancy.
- Career Centres can provide candidates matching the employer's requirements.
- However, employers are NOT obligated to hire from the Career Centre — they can hire from any source.
🔖 Section 140: Exclusions
This chapter does NOT apply to:
- Establishments employing less than the prescribed number of employees
- Establishments belonging to the Central or State Governments (which have their own recruitment systems like UPSC/SSC/State PSCs)
- Agriculture-based establishments
- Such other class of establishments as the Central Government may notify
| Aspect | Detail |
|---|---|
| Vacancy reporting | Mandatory before filling any vacancy |
| Platform | NCS Portal (National Career Service) or prescribed Career Centre |
| Obligation to hire | No — employer can hire from anywhere but must report |
| Exempted | Govt establishments, agricultural establishments, below-threshold |
| Purpose | Employment data collection + help unemployed workers find jobs |
📦 Chapter XIV – Miscellaneous (Sections 141–164)
This chapter contains various general provisions including the Social Security Fund, use of Aadhaar, power to exempt establishments, repeals, and transitional provisions.
🔖 Section 141: Social Security Fund
- The Central Government shall establish a Social Security Fund.
- This fund receives: unclaimed deposits from PF/ESI, fines, grants, etc.
- Used for social security of gig workers, platform workers, and unorganised workers.
🔖 Section 142: Application of Aadhaar
- Aadhaar number is used for identification and to determine eligibility for benefits.
- Social Security Organisations can use Aadhaar-based authentication.
- No person shall be denied benefits just because they lack Aadhaar — alternative authentication can be used.
🔖 Section 143: Power to Exempt Establishments
The Central/State Government can exempt certain establishments from the provisions of any Chapter if the establishment provides equal or better benefits to its workers through other arrangements.
🔖 Section 145: Liability on Transfer of Establishment
If an establishment is transferred (sold, leased, gifted), the new owner inherits all unpaid social security liabilities of the previous owner. Buyers beware!
🔖 Section 148: Misuse of Benefits
If anyone obtains benefits through false claims or misrepresentation, the Social Security Organisation can recover the amount plus impose penalties.
🔖 Section 151: Protection Against Attachment
Social security benefits (PF, ESI, gratuity) are protected from attachment by courts for recovery of debts — these are meant exclusively for the worker and cannot be seized by creditors.
🔖 Section 161: Effect of Laws and Agreements
No agreement or contract can reduce workers' rights below what this Code provides. Any such agreement is void to that extent.
🔖 Section 164: Repeal and Savings
This Code repeals 9 old laws and replaces them:
| Old Law Repealed | Replaced by Chapter in This Code |
|---|---|
| Employees' Provident Fund & MP Act, 1952 | Chapter III (EPF) |
| Employees' State Insurance Act, 1948 | Chapter IV (ESI) |
| Payment of Gratuity Act, 1972 | Chapter V (Gratuity) |
| Maternity Benefit Act, 1961 | Chapter VI (Maternity) |
| Employees' Compensation Act, 1923 | Chapter VII (EC) |
| Building & Other Construction Workers Act, 1996 | Chapter VIII (BOCW) |
| Unorganised Workers' Social Security Act, 2008 | Chapter IX |
| Employment Exchanges (CN) Act, 1959 | Chapter XIII |
| BOCW Cess Act, 1996 | Chapter VIII (Cess) |
📊 Flowchart – How Social Security Works Under the Code
This flowchart shows the complete lifecycle of social security — from an establishment starting, to workers getting benefits, to disputes being resolved.
🧠 Mind Map – The Code on Social Security, 2020
An interactive visual overview of all branches of the Code.
🗺️ Roadmap – The Code on Social Security, 2020
The complete journey of the Code — from the old laws to the new consolidated framework and future implementation milestones.
📜 Pre-2020: 9 Separate Laws
EPF Act 1952, ESI Act 1948, Gratuity Act 1972, Maternity Act 1961, EC Act 1923, BOCW Act 1996, Unorganised Workers SS Act 2008, Employment Exchanges Act 1959, BOCW Cess Act 1996 — all operating separately, causing confusion and compliance burden.
🏛️ 2nd Labour Commission Recommendations
The National Commission on Labour (2002) recommended consolidating all labour laws into 4 codes for simplicity and uniformity. This set the seed for the Code on Social Security.
📝 2019: Bill Introduced in Parliament
The Code on Social Security Bill, 2019 was introduced in Lok Sabha. Wide consultations with stakeholders — employers, trade unions, states — were conducted before finalising.
✅ September 28, 2020: Presidential Assent
The Code on Social Security, 2020 (Act No. 36 of 2020) received Presidential Assent on 28th September 2020. It consolidates 9 laws into ONE unified Code — the biggest social security reform in India's history.
🔧 May 3, 2021: Section 142 Notified
Section 142 (Aadhaar-based authentication for social security) came into force from 3rd May 2021 — the first provision to be operationalised under the new Code.
📋 Drafting of Rules (2021–2023)
Central government, state governments, and social security organisations began drafting implementation rules, regulations, and schemes — a massive exercise involving EPF, ESI, gratuity, maternity, and unorganised sector schemes.
🚀 November 21, 2025: Major Notification
Sections 1–141, 143–163 notified — the bulk of the Code formally came into force. This was the landmark step bringing the entire framework into operation (as updated in the document "as on 21st November 2025").
🌐 Gig/Platform Worker Schemes (Ongoing)
Section 114 requires the Central Government to frame specific social security schemes for gig workers and platform workers. These schemes are being developed in consultation with aggregator companies (Ola, Uber, Swiggy, Zomato, Urban Company, etc.).
📱 Universal Worker Registry
Section 113 mandates an Aadhaar-linked digital registry for all unorganised, gig, and platform workers. Building this comprehensive database is ongoing — NDUW (National Database of Unorganised Workers) is being developed and expanded.
🔮 Future: Full Implementation
Complete implementation goals: (1) All 9 old Acts fully replaced. (2) All 500 million+ workers in India — organised and unorganised — covered under some form of social security. (3) One portal for all social security claims and registrations. (4) International Social Security Agreements with other countries (Section 159).
Chapter I: Foundation
Preliminary provisions, definitions, registration — the building blocks of the entire Code.
Chapter II: Institutions
EPFO, ESIC, NSSB, State Boards, Building Workers' Boards — the bodies that run everything.
Chapters III–IV: Core Benefits (Organised Sector)
EPF for retirement savings + ESIC for health and cash benefits — covering workers in establishments with 10/20+ employees.
Chapters V–VII: Worker Protection
Gratuity for long service reward + Maternity Benefit for women workers + Workers' Compensation for injury/death at work.
Chapter VIII: Construction Workers
Cess-funded welfare for 50+ million construction workers — India's largest vulnerable workforce.
Chapter IX: Unorganised + Gig + Platform
The most forward-looking chapter — extends social security to 430+ million unorganised workers and the growing gig economy.
Chapters X–XII: Financial Backbone
Finance, accounts, audit, compliance machinery, recovery powers, and penalties — ensuring the system is funded and enforceable.
Chapters XIII–XIV: Completing the Picture
Employment information, Social Security Fund, Aadhaar integration, repeal of old laws, and saving provisions — completing India's new social security architecture.