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Code on Social Security 2020 to offer benefits to workers but reduce cash in hand

The Code on Social Security, 2020 has widened the coverage of social security benefits to the workers in the unorganised sector namely the contract workers, gig workers, platform workers and migrant workers.

November 18, 2020 / 12:37 PM IST
Swiggy | The online food aggregator raised $153 million in February 2020 from Samsung Ventures, Korea Investment Partners, Wellington Management, Naspers, Tencent and others. (Image Source: Swiggy)

Swiggy | The online food aggregator raised $153 million in February 2020 from Samsung Ventures, Korea Investment Partners, Wellington Management, Naspers, Tencent and others. (Image Source: Swiggy)

The contribution of gig economy workers during the COVID-19 pandemic has put forward a strong ground for the government and aggregator companies to recognise the importance of this fragmented and largely unorganised workforce.

The Code on Social Security Bill, 2020 passed by the Modi led NDA government in September 2020 has for the very first time extended the social security benefits like maternity leave, disability insurance, gratuity, health insurance. Old age protection to the workers in the country’s booming gig economy sector.

The Code proposes for the creation of a social security fund for extending these benefits to the workers in the unorganised sector. The scheme for the social security fund envisages that the platforms and aggregators like Swiggy, Zomato, Ola, Uber, Urbanclap and others will make contributions to the fund which would be either 1-2 percent of the turnover or 5 percent of the worker’s wages. The central and the state governments can also contribute to the social security fund.

However, this also means that such a fund will likely reduce the cash in hand that the workers get as wages and commissions.

The Ministry of Labour and Employment on Sunday published draft rules for the Code on Social Security. As per the draft rules, the workers will be able to register themselves through Aadhaar on a government portal in order to avail the benefits from the fund.

The probability of these benefits leading to lower wages has received criticism from workers. Moreover, the Code does little to set out the aforementioned categories of workers from the unorganised sector.


Citing the stand of the union on the social security scheme, a representative from the All India Gig Union Workers Union told Moneycontrol, “It is not a step forward in any way. It is in fact a step forward and two steps backward. Not all the benefits of a full time employee like working overtime etc, have been offered."

The representative, who did not wish to be named as he is employed with one of the aggregator platforms, said that benefits like maternity leave and insurance are not taken from the salaries of full-time employees in most companies. By contrast, these benefits will be taken from the salaries of gig and platform workers.

"It is not a secure benefit as it is only a scheme and not an established law which the government can change as per its will. The scheme only identifies the need of providing security to the platform and gig workers but it still does not treat them on par with the employees. The workers will still be regarded as independent contractors and not like the employees," the person said.

In an effort to simplify and combine the labour regulations in the country, the government instituted four labour codes combining the existing labour laws. Of the four, the Code on Social Security, 2020 integrates nine previous regulations relating to social security namely, The Employees Compensation Act, 1923; The Employees Provident Fund and Miscellaneous Provisions Act, 1952; The Employees State Insurance Act, 1948; The Maternity Benefit Act, 1961; The Unorganized Workers’ Social Security Act, 2008; The Payment of Gratuity Act, 1972; The Employees Exchange Act, 1959; The Building and Other Construction Workers Cess Act, 1996 and the The Cine Workers Welfare Fund Act, 1981.
Shreeja Singh

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