SSCode-Presentation with impact on the exisiting framework.pptx

social security code presentation

1. Code on Social Security - Major Features & Key Changes Dr. Ruma Ghosh, Senior Fellow V.V. Giri National Labour Institute [email protected] 03.8.2023

2. RATIONALE FOR SOCIAL SECURITY REFORM India has well- established social security systems providing varying degrees of coverage in several of the nine branches of ILO Social Security (Minimum Standards) Convention, No. 102 (1952) Coverage is essentially still focused on formal workers in the organised sector – the NCEUS estimated that only 6% of informal workers received any kind of social security However, despite the work done by several Commissions , e.g. the National Commissions on Self-Employed Women and Women in the Informal Sector (Shramshakti Report, 1988) Rural Labour (1991) Labour (2002) (Second Commission) Enterprises in the Unorganized Sector (2008) (NCEUS),

3. Evolution of the SS Code 1 st draft versions of SS code put out in the public domain - March 2017 2nd draft versions of SS code put out in the public domain - March 2018 (Red book) 3rd draft versions of SS code put out in the public domain - March 2019 (100 page Code) 4 th draft versions of SS code put out in the public domain - September 2019 and now has been introduced as Bill No 375 of 2019 5 th draft Bill No. 121 of 2020 passed on September 22, 2020 The 1st two drafts reiterated the Government of India’s commitment towards a rights based universal social security system for all workers. The 3 rd as well as the 4th draft has withdrawn the commitment of the Government to provide a legal framework for universal and integrated rights based social security in India

4. Social Security 2020 The Preamble of t h C e C o o d d e e re a o d s n : “An Act to amend and consolidate the laws relating to social security with the goal to extend social security to all employees and workers either in the organised or unorganised or any other sectors (sic) and for matters connected therewith or incidental thereto.” The Code on Social Security, 2020 once in place will merge nine exiting labour laws – Employees' Compensation Act, 1923; Employees‘ State Insurance Act, 1948, Employees‘ Provident Funds and Miscellaneous Provisions Act, 1952; Maternity Benefit Act, 1961; Payment of Gratuity Act, 1972; Cine Workers Welfare Fund Act, 1981; Building and Other Construction Workers Cess Act, 1996; Unorganized Workers‘ Social Security Act, 2008; The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 The Code has 14 chapters, 164 sections, 7 schedules 19-09-2023 Hooghly Chamber of Commerce & Industry 4

5. CHAPTER I - KEY DEFINITIONS UNDER THE SS CODE Employer - A person who employs: directly or through any person or on behalf of any person one or more employees in his establishment. It includes a Contractor and legal representative of the deceased employer. Employee - Any person (other than an apprentice) employed on wages by the establishment to do any skilled, semi- skilled, unskilled, manual, operational, supervisory, managerial, administrative, technical or clerical work for hire or reward Unorganised worker - a home- based worker, self-employed worker or a wage worker in the unorganized sector, and includes a worker in the organized sector who is not covered by the Industrial Disputes Act, 1947 or Chapters relating to Provident fund, State Insurance, Gratuity, Maternity Benefit and Compensation under this Code

6. CHAPTER I - KEY DEFINITIONS UNDER THE SS CODE Fixed term employment - Engagement of an employee based on: a written contract of employment for a fixed period. Hours of work, wages, allowances and other benefits shall not be less than that of a permanent employee. Fixed- Term employees will be eligible for all benefits proportionate to the period of services rendered by them Gig worker - Means a person who: performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship. Platform worker - A form of employment in which organisations or individuals use an online platform to access other organizations or individuals to solve specific problems or to provide specific services in exchange for payment. Person engaged in/undertaking platform work will be known as Platform Worker Aggregator : means a digital intermediary or a market place for a buyer or user of a service to connect with the seller or the service provider.

7. SOCIAL SECURITY PROVISIONS FOR THE WORKERS IN THE ORGANISED SECTOR

8. CHAPTER III - Employees' Provident Fund Provisions – No change As specified in the First Schedule, the provisions of Chapter III – Employees Provident Fund will be applicable to every establishment in which twenty or more employees are employed Section 16: ( 1 ) ( a ) …. contribution paid by the employer shall be ten per cent. of the wages payable to each of the employees (whether employed by him directly or by or through a contactor ), and the employee's contribution shall be equal to the contribution payable by the employer in respect of him. The Central Government, may, by notification, increase the contribution percentages to twelve percent (12%) for both employers and employees of certain establishments. For pension contribution will still be 8.33% (of the 10%) and remaining 1.67% will for PF Section 20: Chapter shall not apply to — establishment registered under the Co- operative Societies Act, 1912 to any other establishment belonging to or under the control of the Central Government or a State Government and whose employees are entitled to the benefit of contributory provident fund or old age pension Wage ceiling continues

9. CHAPTER IV – EMPLOYEES STATE INSURANCE CORPORATION Applicability: As specified in the First Schedule – Every establishment in which ten or more employees are employed other than a seasonal factory: shall also be applicable to an establishment, which carries out such hazardous or life threatening occupation The SS Code allows for voluntary registration under the ESIC if the employer and majority of the employees agree. The SS Code also provides for coverage of Gig Workers and Unorganised Sectors under the Employee State Insurance Scheme. Employer of a plantation, may opt ESIC benefits where the benefits available are better than what the employer is providing

10. CHAPTER IV – EMPLOYEES STATE INSURANCE CORPORATION contd. Section 31: Provisions as to payment of contributions by employer, etc. The employer shall pay in respect of every employee, whether directly employed by him or by or through a contractor, both the employer's contribution and the employee's contribution. Neither the employer nor the Contractor shall be entitled to deduct the employer's contribution from any wages payable to an employee or otherwise to recover it from him. Section 32: Benefits: The insured persons, their dependents are entitled to the the following benefits — ( a ) sickness benefit in case of his sickness certified by a duly appointed medical practitioner, ( b ) maternity benefit to an insured person being a woman in case of confinement or miscarriage or sickness arising out of pregnancy, confinement, premature birth of child or miscarriage, ( c ) disablement benefit to an insured person suffering from disablement as a result of an employment injury sustained by him as an employee), ( d ) dependants‘ benefit to the dependants of an insured person who dies as a result of an employment injury sustained by him as an employee, ( e ) medical benefit for and attendance on insured persons, ( f ) funeral expenses to the eldest surviving member of the family of an insured person who has died, towards the expenditure on the funeral of the deceased insured person

11. CHAPTER IV – EMPLOYEES STATE INSURANCE CORPORATION contd. Section 33: Corporation's power to promote measures for insured persons in terms of health and welfare such as rehabilitation and re- employment of insured persons who have been disabled or injured etc. Section 34: an accident arising in the course of an employee's employment shall be presumed, in the absence of evidence, to have arisen out of that employment. Section 35. An accident shall be deemed to arise out of and in the course of an employee's employment notwithstanding that he is at the time of the accident acting in contravention of the provisions of any law applicable to him , or of any orders given by or on behalf of his employer or that he is acting without instructions from his employer

12. CHAPTER IV – EMPLOYEES STATE INSURANCE CORPORATION contd. Section 42: Corporation's rights when an employer fails to register, etc , then, the Corporation may, on being satisfied in the manner prescribed by the Central Government that the benefit is payable to the employee, pay to the employee benefit at such rate to which he is entitled, and the Corporation recover the amount from the employer Section 45: Schemes for unorganized workers, gig workers and platform workers and the members of their families frame scheme for providing benefits admissible under this Chapter by the Corporation.

13. EPF & ESIC - Changes There is a provision for voluntary coverage where the regular coverage is not applicable. There is a provision for exit also, but such exit cannot be done within 5 years. Responsibility of the Principle Employer towards employees is the same. But now greater responsibility of Contractors – contractor is included as an employer in the employer definition An employer, who has paid contribution in respect of an employee employed by or through a contractor, shall be entitled to recover the amount of the contribution so paid (that is to say the employer's contribution as well as the employee's contribution, if any,) from the contractor, either by deduction from any amount payable to him by the employer under any contract, or as a debt payable by the contractor

14. CHAPTER V - GRATUITY Applicability: no changes. every factory, mine, oilfield, plantation, port and railway company; and every shop or establishment in which ten or more employees are employed, or were employed, on any day of the preceding twelve months; and such shops or establishments as may be notified by the appropriate Government from time to time. Section 53. ( 1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,— ( a) on his superannuation; or ( b) on his retirement or resignation; or ( c) on his death or disablement due to accident or disease; or ( d) on termination of his contract period under fixed term employment ; or ( e) on happening of any such event as may be notified by the Central Government: Provided that in case of working journalist and other Newspaper Employees , expression "five years“ shall be deemed to be three years

15. CHAPTER V –GRATUITY contd. Section 53 (2) - For every completed year of service or part thereof in excess of six (6) months, the employer shall pay gratuity to an employee at the rate of fifteen (15) days’ wages or such number of days as may be notified by the Central Government, based on the rate of wages last drawn by the employee concerned Provided that in the case of a piece- rated employee , daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his employment, and, for this purpose, the wages paid for any overtime work shall not be taken into account: Provided further that in the case of an employee who is employed in a seasonal establishment and who is not so employed throughout the year, the employer shall pay the gratuity at the rate of seven days' wages for each season : Provided also that in the case of an employee employed on fixed term employment or a deceased employee, the employer shall pay gratuity on pro rata basis .

16. CHAPTER V –GRATUITY contd. 54. ( A) an employee shall be said to be in continuous service for a period if he has, for that period, been in uninterrupted service, including service which may be interrupted on account of sickness, accident, leave, absence from duty without leave (not being absence in respect of which an order treating the absence as break in service has been passed in accordance with the standing orders, rules or regulations governing the employees of the establishment), lay- off, strike or a lock- out or cessation of work not due to any fault of the employee- ( B) where an employee (not being an employee employed in a seasonal establishment) is not in continuous service within the meaning of clause ( A), he shall be deemed to be in continuous service — ( a) for the said period of one year, if the employee during the period of twelve calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than— ( i) one hundred and ninety days, in the case of any employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and ( ii) two hundred and forty days, in any other case ; ( b) for the said period of six months , if the employee during the period of six calendar months preceding the date with reference to which the calculation is to be made, has actually worked under the employer for not less than— ( i) ninety- five days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and ( ii) one hundred and twenty days, in any other case . ( C) where an employee, employed in a seasonal establishment, is not in continuous service within the meaning of clause ( A), for any period of one year or six months , he shall be deemed to be in continuous service under the employer for such period if he has actually worked for not less than seventy- five per cent. of the number of days on which the establishment was in operation during such period .

17. CHAPTER V –GRATUITY contd. - changes Currently, wages include basic salary and dearness allowance, but no other allowance. However, under the present Code, the definition of wages is vast with many inclusions and exclusions Once the Social Security Code becomes law, special allowances will have to be included to calculate gratuity. However, house rent allowance will still be excluded SS Code provides for gratuity to Fixed Term Employees even if they have not served for 5 years continuously.

18. CHAPTER V – Gratuity contd. The SS Code has fixed different thresholds with respect to eligibility for gratuity of permanent and fixed term employees. Applicabilty for Fixed term employees – on pro rata basis However, the Industrial Relations Bill, 2020 while defining fixed term workers, states that such workers will be eligible for gratuity only if they complete a one- year contract. Therefore, the two Bills contain different provisions on gratuity for fixed term workers and it is not clear whether a fixed term employee with a contract of lesser than one year will be entitled to gratuity under the Code on Social Security, 2020.

19. GRATUITY - Rules Rule 33 - Bank or other financial institution in which the gratuity shall be invested by the competent authority with the State Bank of India or Nationalised Bank in the case of nominee, or an heir, who is minor . Rule 35 - An employee who is eligible for payment of gratuity under the Code, or any person authorised, in writing, to act on his behalf, shall apply, ordinarily within thirty days from the date the gratuity became payable, in Form- IV to the employer Rule 35 - (2) Notice for payment of gratuity: (a) Within fifteen days of the receipt of an application under sub- rule (1) for payment of gratuity, the employer shall- (i) if the claim is found admissible on verification, issue a notice in Form- V to the applicant employee, nominee or legal heir, specifying the amount of gratuity payable and fixing a date, not being later than the thirtieth day after the date of receipt of the application , for payment thereof, or (ii) if the claim for gratuity is not found admissible , issue a notice in Form- V to the applicant employee, nominee or legal heir, specifying the reasons why the claim for gratuity is not considered admissible. Rule 35 – (3) Mode of payment of gratuity: The gratuity payable under the Code shall be paid through Demand Draft or by crediting in the bank account of the eligible employee, nominee or legal heir Rule 35(4) Application to competent authority for direction under clause (b) of sub-section (5) of section 56: (a) If an employer- (i) refuses to accept a nomination under rule 34 or to entertain an application, or (ii) an amount of gratuity which is considered by the applicant less than what is payable or rejecting eligibility to payment of gratuity, or (iii) fails to issue notice as required under sub- rule (2) within the time

20. CHAPTER VI - Maternity Benefit Applicabilty same - Maternity benefits shall be applicable to every shop or establishment in which ten (10) or more employees are employed, or were employed, on any day of the preceding twelve (12) months; and such other shops or establishments notified by the appropriate Government. A woman shall be entitled to maternity benefit if she has actually worked in an establishment of the employer from whom she claims maternity benefit, for a period of not less than eighty (80) days in the twelve (12) months immediately preceding the date of her expected delivery. The maximum period for which any woman shall be entitled to maternity benefit shall be twenty- six weeks (26) of which not more than eight (8) weeks shall precede the expected date of her delivery. However, the maximum period entitled to maternity benefit by a woman having two or more surviving children shall be twelve (12) weeks of which not more than six (6) weeks shall precede the date of her expected delivery.

21. CHAPTER VI - Maternity Benefit contd.. Section 66: Nursing breaks – in addition to the interval for rest, two breaks for nursing the child until the child attains the age of fifteen months. Section 67: Creche facility – every establishment in which fifty shall have the facility of crèche employer shall allow four visits a day to the crèche by the woman, which shall also include the intervals of rest allowed to her. Note: - From a practical point of view, there may be situations wherein only one or two employee intends avail these benefits. In such situation, the recurring cost of providing such facilities to the employer may be very high. Therefore, the Code provides for hiring of creche facilities or pooling together of a creche by more than one employee

22. Maternity Benefit - Rules Rule 38 - Duration of nursing breaks under section 66.- Each of the two breaks mentioned in section 66 shall be of 15 minutes’ duration. An extra sufficient period, depending upon the distance to be covered, shall be allowed for the purpose of journey to and from the creche or the place where the children are left by women while on duty, provided that such extra period shall not be of less than 5 minutes and more than 15 minutes’ duration. If any dispute arises regarding such extra period, the matter shall be referred to the Competent Authority for decision. Rule 39 - Number of employees and distance for crèche facility under sub- section (1) of section 67.- (1) in every establishment where fifty or more women employees are ordinarily employed, there shall be provided and maintained a creche for the use of children under the age of six years of such women. Rule 39 (2) Such creche shall provide adequate accommodation with lighting, ventilation and shall be maintained in a clean and sanitary condition. The crèche shall be under the charge of women trained in the care of children and infants.

23. CHAPTER VII - EMPLOYEE'S COMPENSATION Applicability: Subject to the provisions of the Second Schedule, it applies to the employers and employees to whom chapter IV (ESIC) does not apply. Section 73: Reports of fatal accidents and serious bodily injuries – Notice to competent authority, of any accident occurring on his premises which results in death or serious bodily injury, within seven days of the death or serious bodily injury, giving the circumstances attending the death or serious bodily injury Section 74: Employer's liability for compensation If personal injury is caused to an employee by accident or an occupational disease listed in the Third Schedule arising out of and in the course of his employment, his employer shall be liable to pay compensation Section 75: Compensation in case of death of or injury in plantation If death or injury is caused to any worker or a member of his family as a result of the collapse of a house provided by the employer in a plantation….. collapse is not attributable to a fault on the part of any occupant or to a natural calamity …the employer shall be liable to pay compensation under section 76

24. CHAPTER VII - EMPLOYEE'S COMPENSATION contd.. Section 76 - Amount of compensation - where death results from the injury, an amount equal to fifty per cent. of the monthly wages of the deceased employee multiplied by the relevant factor or an amount as may be notified by the Central Government from time to time, whichever is more; where permanent total disablement results from the injury, an amount equal to sixty per cent. of the monthly wages of the injured employee multiplied by the relevant factor or an amount as may be notified by the Central Government from time to time, whichever is more: Provided that the Central Government may, by notification, from time to time, enhance the amount of compensation specified in clauses ( a) and (b)

25. Benefits by – Employer or Contractor? Who is responsible for payment of Social security contribution to contract employees like PF, ESIC, Gratuity & maternity benefits? In case of PF and ESIC, the Code still mandates the Principal Employer to pay in the first instance However the definition of employer includes contractor as employer Even as per current law based on judicial pronouncements is that the Principal employer is not responsible if the contractor has independent code number. Same interpretation in the case of the new Code should hold good. Moreover the contractor is the employer as per the code as is equally liable. The current law holds contractor responsible for gratuity The principal employer is liable for payment of compensation for employment injury in the current law as well as the Code However as contractor is also employer, the PE can bind the contractor if appropriate terms are included in the contract In case of maternity benefit, both contractor and PE can be held liable if the terms between the PE and contractor not properly defined in the contract

26. Priority to Employee Dues SS Code aims to protect employee benefit in case of insolvency of the employer Section 19 - Notwithstanding anything contained in any other law for the time being in force, any amount due under this Chapter shall be the charge on the assets of the establishment to which it relates and shall be paid in priority in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016 This would mean that before any other dues are paid to any other creditor, the amount received under IBC will be used to pay the PF and other dues of the employee.

27. SOCIAL SECURITY PROVISIONS FOR THE WORKERS IN THE UNORGANISED SECTOR

28. CHAPTER VIII - SOCIAL SECURITY AND CESS IN RESPECT OF BUILDING AND OTHER CONSTRUCTION WORKERS The number of construction worker in the country is approximately 5.5 crore whereas only 3.5 crores workers or 63% are registered with the Board. Building and other Construction Workers’ (Regulation of Employment and Conditions of Service) Act, 1996 is subsumed in OSH & WORKING CONDITIONS CODE This code subsumes Building and Other Construction Workers Cess Act, 1996 Section 100: Levy and collection of cess There shall be levied and collected a cess for the purposes of social security and welfare of building workers at such rate not exceeding two per cent but not less than one per cent of the cost of construction incurred by an employer, as the Central Government may, by notification, from time to time specify. The cost of construction shall not include:— (a) the cost of land ; and (b) any compensation paid or payable to an employee or his kin under Chapter VII .

29. CHAPTER VIII - SOCIAL SECURITY AND CESS IN RESPECT OF BUILDING AND OTHER CONSTRUCTION WORKERS Section 106: Registration of building workers as beneficiaries Every building worker who has completed eighteen years of age , but has not completed sixty years of age , and who has been engaged in any building or other construction work for not less than ninety days during the preceding twelve months Section 108: Building and Other Construction Workers' Welfare Fund and its application Under Section 7 (1) of Chapter II , every State Government shall, with effect from such date as it may, by notification, appoint, constitute a Board to be known as the................(name of the State) Building and Other Construction Workers' Welfare Board. Functions of State Building Workers’ Welfare Board provide death and disability benefits to a beneficiary or his dependents; make payment of pension to the beneficiaries who have completed the age of sixty years; pay such amount in connection with premium for Group Insurance Scheme of the beneficiaries as may be prescribed by the appropriate Government; frame educational schemes for the benefit of children of the beneficiaries as may be prescribed by the appropriate Government; meet such medical expenses for treatment of major ailments of a beneficiary or, such dependent, as may be prescribed by the appropriate Government; make payment of maternity benefit to the beneficiaries; frame skill development and awareness schemes for the beneficiaries; provide transit accommodation or hostel facility to the beneficiaries;

30. CHAPTER IX - SOCIAL SECURITY FOR UNORGANISED WORKERS The code subsumes the Unorganised Workers Social Security Act, 2008 However even after 12 years of the enactment of the act, only 6% of the unorganized workers are covered under one or other form of social security. The experience interalia shows that application of UWSSA 2008 over more than a decade clearly demonstrates that it did not provide an adequate framework for extending entitlements to social security for unorganized workers. The major issues associated with UWSSA, 2008 are: (a) no empowered implementing body; (b) boards are advisory and not established in several states; (c) funding for boards functions has been lacking, as well as for record- keeping and administration of the Act; (d) no new schemes notified, except for 10 schemes already in operation listed in Schedule 1 which are deemed to be schemes for unorganised workers; (e) several of these listed contributory and non- contributory social assistance schemes lack a legislative basis and meant for both workers and non-workers; (f) lack of mobility and portability; (g) no administration machinery for inspection and no penalties.

31. CHAPTER IX - SOCIAL SECURITY FOR UNORGANISED WORKERS Section 109 (1) - the Central government shall frame and notify, from time to time, suitable welfare schemes for unorganised workers on matters relating to: (i) life and disability cover; (ii)health and maternity benefits; (iii) old age protection; (iv) education; and (v) any other benefit as may be determined by the Central government Section 109 (2) - the state government shall frame and notify, from time to time, suitable welfare schemes for unorganised workers, including schemes relating to: (i) provident fund; (ii) employment injury benefit; (iii) housing; (iv) educational schemes for children; (v) skill upgradation of workers; (vi) funeral assistance; and (vii) old age homes. Similar kinds of provision and arrangements are also there for gig and platform workers too. The formulation of social security schemes for gig and platform workers rests with the Central government. Under Section 114 (1), the Central government may frame and notify, from time to time, suitable social security schemes for gig workers and platform workers on matters relating to— “(a) life and disability cover; (b) accident insurance; (c) health and maternity benefits; (d) old age protection; (e) crèche; and (f) any other benefit as may be determined by the Central Government”.

32. CHAPTER IX - SOCIAL SECURITY FOR UNORGANISED WORKERS Section 113: Registration of unorganised worker The SS Code mandates that every Unorganised Worker, Gig Worker or Platform Worker is required to be registered, subject to the fulfilment of the following conditions: ( a ) he has completed sixteen (16) years of age or any other prescribed age; and ( b ) he has submitted a self-declaration containing information prescribed by the Central Government. Rule 50(2) deals with registration of gig worker and platform worker and any other such worker and provides that – “(a) every eligible gig worker or platform worker, under Section 113 shall be required to be registered with Aadhaar, on self- declaration basis in the form on the portal, as specified by the Central Government”. E- shram Portal- 28,99,50,104 registered so far

33. CHAPTER IX - SOCIAL SECURITY FOR UNORGANISED WORKERS Section 114: Schemes for gig workers and platform workers (a) life and disability cover; (b) health and maternity benefits; (c) old age protection; and (d) any other benefit as may be determined by the Central Government. Under Section 6 of Chapter II , The Central Government shall, by notification, constitute a National Social Security Board for unorganised workers Under Section 6 (9) of Chapter II , every State Government shall, by notification, constitute a State Board to be known as (name of the State) Unorganised Workers' Social Security Board or State Unorganised Workers' Board

34. CHAPTER IX - SOCIAL SECURITY FOR UNORGANISED WORKERS Gig Workers and Platform Workers The Social Security Code 2020 provides legal recognition and social security benefits to gig workers - a significant step in recognising gig workers as a separate category outside the traditional employer- employee relationship. The Code provides for a Social Security Fund comprising contributions from gig companies and the Centre or State government, with gig companies expected to allot 1- 2% of their annual turnover. ( Seventh Schedule specifies the list of aggregators such as (1) Ride sharing services, (2) Food and grocery delivery services, (3) Logistic services, (4) e- Market place (both market place and inventory model) for wholesale/retail sale of goods and/or services, (5) Professional services provider, (6) Healthcare, (7) Travel and hospitality, (8) Content and media services, (9) Any other goods and service provider platform.

35. CHAPTER IX - SOCIAL SECURITY FOR UNORGANISED WORKERS Funding of the Schemes- These schemes may be wholly funded by the Central Government or partly by the Central Government and partly by the State Government or wholly funded by the contributions of the aggregators or partly by the Central Government and partly by the State Government and partly funded by the beneficiaries of the scheme or the aggregators or wholly funded by the contributions of the aggregators or funded from corporate social responsibility fund within the meaning of Companies Act, 2013 or through any other source. Aggregators or platform companies will have to contribute 1-2% of their annual turnover, or 5% of the payments made to workers on their respective platforms, whichever is lower, to a designated fund managed by the Centre to provide social security benefits to contract or gig workers.

36. Draft Rules for Unorganised Sector Workers The draft Rules require States to create policies to provide social security, both Central and State governments have the authority to frame and notify welfare schemes under the Code. Both are also authorised to set up funds requiring a contribution from gig companies. In situations where companies are required to contribute to multiple funds, jurisdictional issues are expected to arise. The Code lacks clarity on how these funds will be managed and processed and which body will be accountable. Moreover, a glaring omission in the form of provisions for judicial intervention raises questions on the limits of executive powers under the Code.

37. Gig Workers and Platform Workers contd.. Setup of Toll free call centre or helpline or such facilitation centers has also been contemplated to perform any or more of the following functions to disseminate information on available social security schemes for the unorganized workers, gig workers and platform workers to facilitate filing, processing and forwarding of application forms for registration of unorganized workers, gig workers and platform workers to assist unorganized workers, gig workers and platform workers to obtain registration; and to facilitate the enrolment of the registered unorganized workers, gig workers and platform workers in the social security schemes. to facilitate the enrolment of the registered unorganized workers, gig workers and platform workers in the social security schemes.

38. Challenges While the Code and the draft Rules are a significant step intended to guarantee social security for gig and platform workers, there are chances that the good intentions might just end up hurting their interests. The flexibility gig work affords these workers is a crucial reason they flocked to these platforms. Regulating this structure will result in platforms implementing rigid minimum working hour requirements, as well as entry and exit barriers to minimise their costs. A company made to pay for health benefits, maternity benefits, education, and housing etc. will rely on changing hiring practises and payout structures to remain profitable. According to a Report by ASSOCHAM, one way of resolving the issue of social security for gig workers is through “ portable benefits ”. In the US, Uber and Lyft have stepped up to provide perks and rewards. While Uber subsidizes car maintenance and offers phone plan discounts, Lyft provides discounts for fuel, roadside assistance and telemedicine. California’s landmark Assembly Bill 5 (AB 5) , providing for employee classification and benefits for gig workers, was quoted widely by Indian experts in support of the Social Security Code 2020. But during the recent US presidential election, 58% Californians voted in support of Proposition 22 , a ballot measure that allows gig companies to classify gig workers as “independent contractors” and not “employees”. The success of Proposition 22, which will bring some much needed regulatory stability to contract work in California, is indicative of workers preferring the flexibility of contract work over the stability of employee benefits.

39. Chapter XII - Offences and Penalty To ensure that employees get their dues, the Code intends to give penalty, severity of which will be based on the nature of the offence. For instance, employer’s failure to pay any contribution will attract a fine of Rs.50,000/- in the 1 st instance and a prison term that could extend to 6 months. The consequences are severe when the employees contribution which has been deducted from the employee wages is not remitted to the relevant authorities. Here the fine too is doubled to Rs. 1 lakh coupled with minimum imprisonment for a period of 1 year which can go up to 3 years. The Code also provides that where the employer fails to insure an eligible employee for ESIC benefit, the latter will be provided such benefits by the Corporation and these will be recovered from the employer.

40. Chapter XII - Offences and Penalty contd.. 50 % of the maximum fine provided for the offence in case of an offence punishable by fine only. 75% or 3/4 th of the maximum fine provided for the offence in case of an offence punishable with imprisonment for a term which is not more than one year and also with fine. Repeat offences within a period of 3 years cannot be compounded.

41. CHAPTER XIII - EMPLOYMENT INFORMATION AND MONITORING Concept of Employment Exchange undergone a change – new concept of Career Centres Section 139 - Reporting of vacancies to career centres with the scope of career counselling, vocational education or self- employment guidance in addition to employment assistance. Boosting the concept of Career Centers – mandatory notification of vacancies to career centre but no obligation to recruit through career centre Employers required to report certain vacancies to Career Centre (Regional) and certain vacancies to career centre (Central) at least 15 days and 40 days before the last day of receipt of applications from the prospective candidates. National Career Centre website already functional

42. Major Changes Mandatory for every establishment to register under the Code Shram Suvidha Portal will assume more importance as the registration related provisions gets handled through this portal having national application. The establishments that have already registered under existing central laws are also required to update their details in the Shram Suvidha Portal and the system may generate new certificate Moreover most of the compliance and benefit administration will happen through digital mode. Employers will have to maintain documentation in electronic mode Submission of returns through web portal Faceless inspections and web- based ispections

43. Key changes Coverage and registrations Universal coverage for all working individuals envisaged Voluntary coverage – for establishment below threshold Registrations under the Code for all establishments within definite time frame New category of workers to be covered through schemes Gig workers Platform workers Home based workers Self-employed Payment of gratuity Introduction of gratuity to ‘Fixed workers’ rendering services for term less than 5 years on pro rata basis Working period of 3 years for journalists introduced Aadhaar Pre-requisite Mandatory for registration, availing benefits and withdrawal of PF Aggregator will pay 1 to 2% of annual turnover

44. REFLECTIONS ON THE CODE ON SS 2020: Not meaningful integration of existing legislations Most of the laws – like the Maternity Benefit Act, Payment of Gratuity Act, Employee’s Compensation Act, Building and Construction Workers Cess Act – have their basic provisions intact; but each has been incorporated as Chapters in the Code. It is like clubbing provisions of existing acts into a code without any major tinkering. Hitherto Acts now become chapters. This is simplification to a certain extent. However, it seems an opportunity is lost, as elements of social security could have been interwoven into a holistic social security legislation. The Code in its current form appears like a collection of existing legislations without any thread of meaningful integration.

45. IMPLICATIONS OF THE CODE Highly restrictive in scope and coverage; reflects continuum of business as usual approach (since 1948) and bereft of any serious reform except mere consolidation of 8 existing social security Acts into a single code. Continuum of the segmented approach to social security provisions thereby dividing working class into social security compartments. The organized sector will be covered by legally binding life- cycle based social insurance provisions under EPF, ESI, Gratuity, Maternity Benefits and Employees compensation. Such coverage of organised sector workers will be partial depending on the basis of employment threshold of enterprise as given in the first schedule Chapter III and the income threshold for Chapter III and IV, which will be subsequently issued through notifications. This partial coverage will especially affect the unorganized workers in the organized sector. Poor and inadequate coverage of unorganised workers and construction workers through non-legally binding plethora of scheme (such as Atal Pension Yojana, Ayushman Bharat, and contributory pension scheme) that exists in a fragmented and un-coordinated framework without portability as was the case earlier. Failure of the vision towards achievement of an universal statutory minimum social security floor.

46. IMPLICATIONS OF THE CODE ON THE LABOUR MARKET Does the Code meet the objectives? Does not offer any significant value addition over the eight separate Acts, which it intends to subsume, simplify and rationalize. Failed to incorporate national governance structures, a system of registration, and a financial architecture, which could provide for portability and a rights based social security.

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