Code on Social Security, 2020

Indian Economy glossary

Also called: Social Security Code, SS Code · Topic: Employment, Unemployment and Informalisation · NCERT: Beyond NCERT

Meaning

The Code on Social Security, 2020 is one of India's four labour codes. It brings the central laws on social security (protection for workers against old age, sickness, injury, maternity and job loss) together into one law. It is also the first Indian law to define gig workers, platform workers and aggregators.

It matters because about 90% of India's workers are in informal employment, with no PF, pension or health cover. The Code is the legal base for extending social security beyond the small organised sector to unorganised, gig and platform workers.

Explanation

What the Code brings together

  • Part of the labour code reform: 29 central labour laws were merged into four codes: Wages (2019), Industrial Relations (2020), Social Security (2020) and Occupational Safety, Health and Working Conditions (2020).
  • In force: all four codes came into force on 21 November 2025.
  • Laws it replaces: these include the Unorganised Workers' Social Security Act, 2008, which is now subsumed (absorbed) into the Code.
  • Benefits for organised-sector workers:
  • Provident fund: retirement savings. The employer and the employee both contribute.
  • Gratuity: a lump sum paid when a worker leaves. It is paid at 15 days' wages per completed year of service.
    • Permanent workers need 5 years of continuous service to get it.
    • Fixed-term employees (hired on a written contract for a set period) need only 1 year.

  • Pension, maternity benefit and medical benefits.

  • Benefits for unorganised, gig and platform workers: these are given under Sections 113 and 114. They come through schemes, not fixed legal entitlements like EPF.

New legal categories

Term Meaning in the Code
Gig worker Works and earns outside the traditional employer-employee relationship
Platform worker A gig worker who finds customers through an online platform, e.g. food delivery or ride-hailing
Aggregator A digital middleman or marketplace that connects buyers of a service with the people who provide it
  • Seventh Schedule: the Code lists aggregators in 9 categories there, such as ride-sharing, food and grocery delivery, content and media, and e-marketplaces.
  • Separate category: gig workers are a legal group of their own. They are neither "employees" nor "unorganised workers".

How it is funded: the aggregator levy

  • The levy: aggregators pay 1-2% of annual turnover into a Social Security Fund. Their payment is capped at 5% of the amount paid or payable to gig and platform workers.
  • The levy applies to aggregators to fund gig and platform workers. It is not a levy for all unorganised workers.

  • The Central government fixes the exact rate by notification.

  • Other funding: the Fund also gets contributions from the Central and State governments.

  • Worked example (hypothetical numbers):
  • An app has a yearly turnover of ₹1,000 crore. It pays its riders ₹50 crore.
  • At 1% of turnover, the levy would be ₹10 crore.
  • The cap is 5% of ₹50 crore, which is ₹2.5 crore.
  • The app pays ₹2.5 crore, because the cap is lower.
  • So the money collected grows with worker payouts, not with platform profits.

Who governs it: the National Social Security Boards

  • What the Boards are: statutory bodies (created by a law) that only advise and monitor. They recommend schemes, advise the Centre, monitor schemes, review State-level record-keeping and review spending from the fund. They do not run schemes.
  • Two Boards were notified on 30 October 2026:
  • one for Unorganised Workers, with 40 members;

  • one for Gig & Platform Workers, with 22 members.

  • The Code allowed one Board to do both jobs. The government chose to create two.

  • Leadership: the Union Labour Minister chairs both Boards and the Union Labour Secretary is vice-chair. The Boards meet at least three times a year.
  • Gig Board members: 5 aggregator representatives, 5 gig/platform worker representatives, 5 State government representatives and the DG of ESIC.

In India

  • Constitutional basis: labour is on the Concurrent List, so both the Centre and the States make laws on it.
  • Entry 23: social security and social insurance.
  • Entry 24: labour welfare, including provident funds, pensions and maternity benefit.

  • This is why States sit on the Boards.

  • Ministry in charge: the Ministry of Labour & Employment. The Social Security (Central) Rules, 2026 were notified on 08 May 2026. They:

  • make registration of gig workers on a Central portal mandatory;

  • require aggregators to share worker data through an API (a direct computer-to-computer data link).

  • Registration backbone: e-Shram (2021), a national database of unorganised workers. It gives each worker a UAN (Universal Account Number) on a self-declaration basis.

  • It had 31.38 crore registrations by Nov 2025, but only 5.09 lakh of them were gig/platform workers.

  • Size of the gig workforce (NITI Aayog, 2022): about 77 lakh gig workers in 2020-21, projected to reach about 2.35 crore by 2029-30.

  • First concrete benefit: Budget 2025-26 extended AB-PMJAY health cover of ₹5 lakh per family per year to platform workers registered on e-Shram.
  • Old Board under the 2008 Act: a Board for unorganised workers already existed. It was set up on 18 August 2009.
  • State laws: Rajasthan's 2023 Act charges aggregators a fee on each transaction. The Karnataka Bill, 2025 sets a fee of 1-5% of the payout to workers.

Don't confuse with

  • Unorganised Workers' Social Security Act, 2008: the older law that set up the 2009 Board. It is now subsumed in the Code. The current Boards come from the 2020 Code.
  • Code on Wages, 2019: covers the universal minimum wage and the floor wage. It does not cover PF, gratuity, pensions or gig-worker welfare.
  • Gig worker vs employee: gig workers get welfare schemes, not the rights of an employee. They have no minimum wage guarantee and no protection from being removed from an app. The UK Supreme Court's Uber ruling (2021) went the other way and treated drivers as "workers" with basic rights.
  • NSSB vs ESIC/EPFO: ESIC and EPFO run benefits for formal workers. The NSSB only recommends and monitors schemes.

Prelims Hooks

  • The Code is the first Indian law to define "gig worker" and "platform worker". Aggregators are listed in the Seventh Schedule in 9 categories.
  • Aggregator levy: 1-2% of annual turnover, capped at 5% of payouts to gig/platform workers. The levy is not a percentage of a worker's earnings.
  • Two NSSBs (notified 30 Oct 2026): Unorganised Workers Board with 40 members; Gig & Platform Workers Board with 22 members.
  • Chair: the Union Labour Minister. Vice-chair: the Labour Secretary, not the DG of ESIC or EPFO.

  • They meet at least thrice a year.

  • The NSSB is advisory/recommendatory and statutory. It does not implement schemes. "The NSSB administers welfare schemes for gig workers" is FALSE.

  • Gratuity under the Code: 1 year of service for fixed-term employees, against 5 years for others. It is paid at 15 days' wages per year.
  • Dates: Code enacted 2020 → all four codes in force 21 Nov 2025 → Central Rules 08 May 2026 → Boards notified 30 Oct 2026.

Mains Points

  • Welfare without employee status:
  • The Code gives gig workers schemes but not workplace rights.
  • The ILO Employment Relationship Recommendation, 2006 (No. 198) says a worker's status should be decided by the facts of the work, not by the contract label.

  • India's model is a floor first (insurance, health, old-age cover) while the employment question is left open. This is defensible as a first step, but a facts-based test is still missing.

  • Design and funding gaps:

  • Rate not fixed: the levy rate still has to be notified. The 5% cap ties the fund to worker payouts, not to platform profits.
  • Hard to link to individual workers: a levy on turnover does not track workers who use several apps. Rajasthan's per-transaction fee follows each ride or delivery instead.

  • Weak registration: only 5.09 lakh gig workers were on e-Shram (Nov 2025), against an estimated 77 lakh (2020-21). Mandatory API-based registration under the 2026 Rules is the key fix.

  • Federalism and governance:

  • Centralised Boards: the Union government chairs both Boards and nominates all members.
  • Weak worker voice: workers hold only 7 of 40 seats on the unorganised workers' Board and 5 of 22 on the gig Board.
  • Weak tripartism: this weakens tripartism (government, employers and workers deciding together) and cooperative federalism on a Concurrent subject.
  • Double levies: a platform may have to pay both the Central levy and a State fee for the same worker.
  • Ignored committee advice: the Standing Committee on Labour (2020) asked for gig workers to be included as "unorganised workers", for universal coverage within a fixed time frame, and for a more compact system of governance. Only its wider definition of "platform worker" was adopted.

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