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Legislative Update – Social Security Code 2019

Posted by: The ADP Team on 17 December 2019 in Compliance, Security

Labour Minister Mr. Santosh Kumar Gangwar, on Wednesday, 11 December 2019, introduced the Social Security Code Bill, 2019  in Lower Parliament, paving way for universalization of social security for all workers in the Country. 

The Bill intends to amalgamate, simplify and rationalize the relevant provisions of the following nine central labour enactments relating to social security, namely:-

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

The Bill proposes setting up a social security fund using corpus available under corporate social responsibility. This fund will provide welfare benefits such as pension, medical cover, and death and disablement benefits to all workers, including gig workers.

Key Highlights

  • There will be option for individual employee to reduce the Employee’s Provident Fund contribution (Presently at 12% of PF Salary) and it gives opportunity to increase the net take home salary. However, employer contribution rate of 12% of PF salary remain unchanged.
  • Payment of gratuity in case of Fixed-Term Employment on pro-rata basis, even if the period for fixed term contract is less than five years. Under the existing Gratuity Act, an employee is entitled for gratuity only after completing five years of continuous service.
  • There is no option for individual employee to switch from Employee Provident Fund Organisation (EPFO) scheme to National Pension Scheme (NPS).
  • Employee Provident Fund Organisation (EPFO) and Employee State Insurance Corporation (ESIC) shall function autonomous body under Ministry of Labour and Employment, rejecting corporatisation.
  • Bill Proposes to establish Social Security Fund by utilising CSR Funds available with Government.
  • Employers employ less than 10 employees can voluntarily opt for ESI Scheme. Earlier there was no such applicability in the scheme. 
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TAGS: EPFO ESIC Gig Economy NPS Social Security

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