Govt. Enforces PF | ESI | Gratuity | Unorganised Worker Provisions Under SS Code, 2020

Notification S.O. 5319(E); Dated: 21.11.2025

Social security primarily refers to social welfare service concerned with social protection, or protection against socially recognised conditions, including poverty, old age, disability, unemployment and others.

Social security “Social security” means the measures of protection afforded to employees, unorgan ised workers, gig workers and platform workers to ensure access to health care and to provide income security, particularly in cases of old age, unemployment, sickness, invalidity, work injury, maternity or loss of a breadwinner by means of rights conferred on them and schemes framed, under Code on Social Security, 2020-Section 2(78) of Code on Social Security, 2020.

1. Applicability

The Code shall apply to any establishment by notification of the Central Government subject to the threshold specified.

1.1 Consolidation of various labour laws in Code on Social Security

The Code on Social Security, 2020 consolidates following nine labour laws.

1. The Employee’s Compensation Act, 1923
2. The Employees’ State Insurance Act, 1948
3. The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
4. The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
5. The Maternity Benefit Act, 1961
6. The Payment of Gratuity Act, 1972
7. The Cine-Workers Welfare Fund Act, 1981
8. The Building and Other Construction Workers’ Welfare Cess Act, 1996
9. The Unorganised Workers’ Social Security Act, 2008

2. Key Highlights of Code on Social Security, 2020

The following are major highlights:

(a) The definition of wages has been elaborated. It has been provided that if allowances paid to an employee exceed 50% of basic pay plus DA plus retaining allowance, the excess will be treated as part of ‘wages’. This will discourage tendency of manipulating salary package to reduce liability of PF, ESIC, bonus, gratuity etc. However, the definition is faulty and will lead to litigation and harassment. [Section 2(88)]

(b) Remuneration in kind by his employer, the value of such remuneration in kind which does not exceed fifteen percent of the total wages payable to him, shall be deemed to form part of the wages of such employee. [Explanation to Section 2(89)]

(c) Definition of employees expanded to include more workers like inter-State migrant workers, platform workers, gig workers, film industry workers and construction workers. [Section 2(26)]

(d) The scope of ESIC increased. A provision has been made to extend its coverage to all 740 districts of the country. In addition, the option of ESIC will also be for plantation workers, unorganised sector workers, gig and platform workers, and institutions with less than 10 workers. If there is risky work in an institute, that institute will inevitably be brought under the purview of ESIC, even if it is a sole labourer. [Section 2(21), Section 3]

(e) The provisions of ESIC would be applicable to an establishment employing even one worker if the establishment is engaged in hazardous and life-threatening activities. [Section 2(21), Section 3]

(f) To increase the scope of EPFO, the schedule of the institutions has been removed all institutions which have 20 or more workers will come under the ambit of the EPF. The option of EPFO for institutions with less than 20 workers and self-employed workers is also given. [Section 3(1) read with First Schedule]

(g) The Central government may defer or reduce the employer’s or employee’s contributions (under PF and EST) for a period of up to three months in the case of a pandemic, endemic, or national disaster. Randomised selection of inspection of establishment to reduce inspector raj-no surprise inspection. [Section 144]

(h) In many offences, instead of imprisonment, provision of imposing fines has been made. Imprisonment is mostly provided for repeat offense. In some cases, imprisonment has been provided, but the period of imprisonment has been reduced. [Section 133 and Section 134]

(i) In most cases, the offense can be compounded. Thus, the offender can pay a compounding fee and get away, instead of facing trial in criminal court. Thus, now, cases will be filed in criminal court very rarely. The jurisdiction of the civil court is barred. [Section 138]

Click Here To Read The Full Notification