Labour Laws

The Social Security Code, 2020

Submitted to: Prof. NS Iyer

Group 4
Roll No Name
HRA026 Ayush Dev
HRA028 Rashi Dhariwal
HRA033 Shruti Garg
HRA039 Sahil Sehrawat
HRA055 Aarshi Singh
HRA059 Esika Singh
HRA062 Tirthankar Das

Page | 1
INTRODUCTION
As per the central government, there are over 40 central and 100 state laws that regulate the
field of labour relations be it wages, safety, industrial disputes etc. Back in 2002 the Second
National Commission on Labour recommended that all these different laws be consolidated
into broad categories like a) wages, b) industrial relations c) safety, d) working conditions
and e) social security.
Fast forward to 2019, the central government into 4 labour codes that consolidate 29 previous
legislations. The 4 labour codes are:
● The Code on Wages
● The Code on Social Security
● The Industrial Relations Code
● Occupational Safety, Health and Working Conditions
The Code on Wages was passed in 2019 while the other three, after being referred to the
Standing Committee, were replaced by new bills and passed in 2020.

The employment scenario in India has changed to a large extent in comparison to when most
of the previous laws were drafted. New sectors have come up in which millions of people
have found gainful employement and which are not adequately covered by existing
legislations. A lot of the existing laws have different definitions for the same thing, for
example wages has different definitions in different legislation which creates confusion and
hinders the ease of compliance. Due to the rigidity, multiplicity and overlapping nature of the
said laws compliance becomes difficult which gives rise to practices like corruption and
exploitation of workers thereby affecting India as a country.

Page | 2
India has a huge informal sector contributing to nearly 90% which is not covered under the
umbrella of these labour laws, the female population is largely employed within this sector
and specifically in low income jobs. At the moment, the law favours small businesses which
is why companies avoid stricter regulations. And when we focus on the laws from the
perspective of the labour we see that the collective bargaining is weak and the idea of
contract employment which they are averse to brings up the need of fixed term employment.
As a result four codes were passed by the Parliament. Below image shows an overview of the
Labour Codes.

Page | 3
LITERATURE REVIEW

The Code on Social Security replaces nine previous laws regarding social security such as:
● Employees’ Provident Fund Act, 1952
● Employees’ State Insurance Act, 1948
● Maternity Benefit Act, 1961
● Employees Compensation Act, 1923
● Payment of Gratuity Act, 1972
● Employment Exchanges Act, 1959
● Unorganized Workers Social Security Act, 2008
● The Building & Other Construction Workers Welfare Cess Act, 1996
● Cine Workers Welfare Fund Act, 1981

Salient Features of the Code on Social Security:

● Definition of Wages - The Code lays down that wages includes i) basic pay, ii)
dearness allowance and iii) retaining allowance. All other allowances like housing
rent allowance, conveyance allowance or any bonus or any overtime do not count as
“wages”. The Code states that wages must be at least 50% of all the payments made
by the employer to the employee.
● Increased PF and Gratuity - PF and Gratuity are calculated on Basic plus DA, i.e.
on wages, and wages must be 50% of the total payments. A lot of companies keep
Basic plus DA component of the monthly salary at less than 50% (mostly between 30-
50%) and give the rest as allowances. This reduces the PF and Gratuity payment on
part of the employer. However, with wages set to be at least 50%, the PF and Gratuity
liability on part of the employer will increase.
● Higher Retirement Corpus - Due to the higher gratuity and PF payments, employees
will get a higher corpus when they retire, or when they switch firms. This will ensure
better financial stability and security for employees when they retire.
● Decreased take-home pay - For employees whose current Basic plus DA per month
is less than 50% of their total remuneration they will see a decrease in take-home pay
due to the increased PF deductions.
● Fixed-term employees - In the earlier act, gratuity was only payable to regular
employees and after they had completed five years of service. While the provisions
for regular employees remain the same, except for working journalists who are now
eligible for gratuity after only three years, the Code introduces gratuity payments for
fixed-term employees on a pro rata basis. Thus, now even employees on a fixed-term
contract are eligible for gratuity benefits.
The Code also states that fixed-term employees will enjoy the same working
conditions, wages, allowances and benefits as permanent employees.

Page | 4
● Wide Definition of Employee - The code has a wide definition of employees and
workers and includes contract labour as well as employees in administrative,
supervisory and managerial roles.
● Inter-State Migrants - The Code includes inter-state migrants under the category of
contract labour, thus they come under the definition of employees and thus will get
the same benefits as normal employees. Thus, inter-state migrants too will get social
security benefits.
● Voluntary coverage for firms having less employees - The Code allows
establishments that have employees less than the threshold under the Act to also
provide social security benefits to its employees on a voluntary basis. The
establishment can also opt out of the scheme later on if they wish.
● Statutory recognition to Gig & Platform workers - The Social Security Code gives
statutory recognition to gig workers for the first time and thus gives formal
recognition to the gig economy. Gig workers are those that work beyond the
traditional employee-employer relationship and also include platform workers. The
latter includes workers who use the platform of online aggregators. The Code also
defines aggregators as digital intermediaries or marketplaces that connect buyers and
sellers / service providers. It includes retail, grocery, delivery and ride-sharing
services.
● Provisions for Social Security of Gig Workers - The Code envisages a social
security fund for gig workers, provides for their registration and formulation of
benefits like health, life insurance, maternity, provident fund etc. that are tailored as
per the needs of gig workers as well as covering them under the ESI framework.
● Aggregators to make Contributions to Social Security - Social Security Code
requires aggregators to make contributions to social security benefits of gig workers
to the tune of 1-2% of their annual turnover but not exceeding 5% of the annual
payment to workers. The Code provides for regulation of aggregators and thus
aggregators that till now have not provided any social security benefits to gig or
platform workers will have to make provision to do so.
● Limitation Period for proceedings for non-compliance - Under the EPF and ESI
Act, there is no time limit to how far back authorities can initiate proceedings to
recover dues for no-compliance. Under the new Code, there is a time limit of five
years, no proceedings older than that can be initiated. It safeguards employers from
unnecessary harassment.
● The new Code also provides for higher penalties as well as compounding offences
for non-compliance with the provisions of the Code. The maximum fines for violating
various provisions is Rs 1,00,000 which can go up to Rs 3,00,000 if there are multiple
subsequent violations. Imprisonment for the first offence is of two months, for
subsequent contraventions of the Code, the penalty can increase to three years.

Page | 5
As per the Code, Wages includes all remuneration that cn be expressed in term of salary or
kind or otherwise and includes i) basic pay, ii) dearness allowance and iii) retaining
allowance. However Wages will not include. a) House Rent Allowance, b) Coveyaance
allowance, c) bonuses, d) overtime, e) any reward or settlement, f) commission, g) gratuity,
h) special expenses, i) retrenchment compensation or any ex gratia payment on termination, j)
contributions by employer to pension and provident fund, k) value of any house
accommodation, or supply of light, water or other amenity or any service excluded from
calculating the wages by orders of the Government. The Code states the the exclusions can’t
exceed one-half of the total payments made by the employer to the employee. This essentially
means that Wages must be at least 50% of the total payment to the employee.

If one looks at the prevelant practices in the Indian corporate world, most pay structures have
the non-allowances part lower than 50%, this practice will need to change. The new codes
will result in PF contributions of both the employer and the employee going up whereas the
take home salary of the employee will decrease. On the plus side, the social security purse of
employees, i.e. Provident Fund and Gratuity will see an appreciable increase.

Page | 6
PRIMARY RESEARCH

Our primary research was done by talking to the management at MSIL. Following are the
main insights that we gained from our conversation:

There are two main aspects to consider here - Management and Workers
● Management - Usually 60% of the salary consists of allowances at MSIL. In some
cases at MSIL and in many other firms in the industry 70% of the salary consists of
allowances. In some smaller firms the basic pay is as low as 10-20%. On the other
hand some firms like ITC keep basic pay at 50%.
But can companies skirt this? If we look at the language of the Code, the definition of
wages says - ‘wages’ means “all remuneration, whether by way of salaries,
allowances or otherwise…………..and includes basic pay, dearness allowance and
retaining allowance.”
But it doesn’t say that we can’t add other components that are not on the exclusion
list. For example, MSIL has a ‘Balance Flexi Pay’ component that is around 30-40%
of the total pay. So, can they include this component? There needs to be more
clarification when the rules come in

● Workers - For workers, there are 12-13 levels in MSIL. In Associate Level 1, Basic
plus DA is ~33%. Overall, among all the levels the basic component varies from 33%
to 48% in the current salary structure. MSIL plans to increase the inclusion to 50% for
these workers.

Impact of PF and Gratuity - We were told that the increase in gratuity will not have a
significant financial impact. However, firms are worried about the increase in PF
contributions envisaged under the new regime because it will have significant financial
impact. He didn’t remember the exact figures but there will be a good financial impact of this
on firms. We have run our own calculations on what the financial impact will be in the
Analysis segment of this report.

There is a lack of clarity on PF contributions. MSIL management has sat with notable
advocates and discussed the changes but they are not sure how exactly the PF part will be
implemented so can’t take a call on that right now. Need more clarification in the rules that
the government will release.

When it comes to Contract Workers there won’t be much change because MSIL already
provides the same social security benefits as that of permanent employees. The changes in
PF/Gratuity will be the same as other employees.

Page | 7
MSIL doesn’t have any inter-state migrant workers so there will be no impact on the firm
regarding the changes that the Code has made to inter-state migrants.

MSIL has some flexi manpower too, i.e. temporary workers, on 7 month contracts but since
the IR Code has a 1 year minimum limit for fixed-term employees, they are not covered
under social security benefits. MSIL has however recently hired 26 people on a 2 year
contract so they will get gratuity and other benefits same as the rest of the employees.

The new Codes put the daily working limit at 8 hours. MSIL currently has 8 hour shifts for its
workers so there won’t be any change regarding that. MSIL has multiple vendors that operate
on 9 hour shifts however, and they are hoping for some relaxation from their respective state
governments regarding this. The management however works for longer than 8 hours daily
but technically under the Factories Act they too come under the definition of workers.
Management level employees are expected to continue working as before regardless of the
changes.

There are also provisions for online/virtual meets and audits. The firm thinks that it will
decrease harassment. So, they don’t expect the new Inspetor-cum Facilitators to bring back
the Inspector Raj era.

MSIL is currently going through a new settlement with its Union so their primary focus has
been on that. So, the level of planning regarding the new Codes is not as high as it should be.
They also have doubts regarding whether to include provisions of the new Code in the
settlement or not.

We asked Mr. Niranjan his general views on the Social Security Code and this is what came
out of the discussion:
Pros
● The Code definitely enhances social security for organized employees so it is a good
move. In the organized sector some firms are very exploitative, basic pay is just for
namesake - 1000/2000 Rs, rest all is given in allowances so workers get very low
PF/Gratuity for workers.
● It is helpful for the unorganized sector too, where the overwhelming majority of
Indian workers work. The Code rings in provisions for them too so it is a start in that
direction.
● It simplifies the existing legal structure regarding Labour Laws. For example, the
definition of wages differs in different laws at the moment, the new Codes unify that
definition. So, it will help in Ease of Doing Business too.

Page | 8
Cons
● The increased PF and Gratuity contributions will be a big financial burden on smaller
firms. It may discourage them from scaling up and getting covered under the Code.
● The lack of clarity regarding different aspects is definitely a matter of concern.

Page | 9
ANALYSIS

Below are illustrations on how the change in the definition of wages will impact the
Provident Fund contributions of an employer and the impact of the employee’s take-home
salary.

With the first two illustrations we have attempted to show the impact on management level.

● Assuming that salary per month is 1 lakh and the old pay structure is 60/40

Before Now

Basic - 40,000 Basic - 50,000

Other Allowances - 60,000 Other Allowances - 50,000

PF Deduction = 12% of Basic - 4,800 PF Deduction = 12% of Basic - 6,000

Net Salary = 1,00,000 - 4,800 = 95,200 Net Salary = 1,00,000 - 6,000 = 94,000

Employer’s PF contribution - 4,800 Employer's PF contribution - 6,000

Change in Employee’s Net Salary - Decrease by 1.26%

Change in Employer’s PF Contribution - Increase by 25%

● Assuming that salary is 1 lakh per month and the old pay structure is 70/30

Before Now

Basic - 30,000 Basic - 50,000

Page | 10
 Other Allowances - 70,000 Other Allowances - 50,000

PF Deduction = 12% of Basic - 3,600 PF Deduction = 12% of Basic - 6,000

Net Salary = 1,00,000 - 3,600 = 96,400 Net Salary = 1,00,000 - 6,000 = 94,000

Employer’s PF contribution - 3,600 Employer's PF contribution - 6,000

Change in Employee’s Net Salary - Decrease by 2.48%

Change in Employer’s PF Contribution - Increase by 66.66%

In the below illustrations, we have attempted to show the impact at non-management levels.

● Assuming that monthly salary is 40,000 and old pay structure is 60/40

Before Now

Basic - 16,000 Basic - 20,000

Other Allowances - 24,000 Other Allowances - 20,000

PF Deduction = 12% of Basic - 1,920 PF Deduction = 12% of Basic - 2,400

Net Salary = 40,000 - 1,920 = 38,080 Net Salary = 40,000 - 2,400 = 37,600

Employer’s PF contribution - 1,920 Employer's PF contribution - 2,400

Change in Employee’s Net Salary - Decrease by 1.26%

Change in Employer’s PF Contribution - Increase by 25%

Page | 11
 ● Assuming that monthly salary is 40,000 and old pay structure is 70/30

Before Now

Basic - 12,000 Basic - 20,000

Other Allowances - 28,000 Other Allowances - 20,000

PF Deduction = 12% of Basic - 1,440 PF Deduction = 12% of Basic - 2,400

Net Salary = 40,000 - 1,440 = 38,560 Net Salary = 40,000 - 2,400 = 37,600

Employer’s PF contribution - 1,440 Employer's PF contribution - 2,400

Change in Employee’s Net Salary - Decrease by 2.48%

Change in Employer’s PF Contribution - Increase by 66.67%

These calculations have been done by us so they are basic in nature and by no means a proxy
for what the actual impact of the Code will be on the salary structure. This is just an attempt
by us to understand what sort of change will happen due to this. From this two things have
emerged to us - the increase in PF contributions on part of the employer will be substantial,
the change in employees net salary will not be as high as the former but still may leave an
impact on the employee. However, it has to be kept in mind that any decrease in take home
salary is ultimately only going to the employee’s retirement corpus.

Below is an illustration from Deloitte that provides their viewpoint on what the change in PF
contributions will be due to the new Code:

Page | 12
Here too we can see a significant increase in PF contributions, up from INR 57,600 to INR
1,04,375.

Page | 13
CONCLUSION

The key issues for Organized workers regarding Social Security are:
● PF and Gratuity - A lot of employers keep the basic component of the salary lower
than 50%, anywhere from 10% to 40%. This reduces the monthly contribution that
goes into the employee’s account and also reduces the gratuity when they leave or
retire from the firms because both of these components are calculated on basic pay
(and dearness wherever it is applicable).
● Contract Labour & Inter-State Migrants - In a lot of firms contract labour are treated
different from permanent employees. For example, in the recent Winstron case we
saw that the workers hired by contractors employed by Winstron were not paid salary
and overtime regularly and often didn’t get the entire quantum of it. This eventually
led to violence at the plant which is ultimately bad for both the employer and the
employee as well as the general business sentiment in the country. We all saw the
harrowing scenes of inter-state migrant workers walking hundreds of kilometres
during the first Covid lockdown.
● Fixed-term employees - To be eligible for gratuity employees need to have worked
regularly for at least five years. But many workers are often hired on contracts of
smaller duration - a few years or a few months and hence are not eligible for gratuity.

The Social Security Code attempts to rectify these issues by taking a number of measures
such as:

● The Code redefines Wages as including basic pay, dearness allowance and retaining
allowance while explicitly excluding a bunch of other allowances. The Code also says
that the exclusions can’t exceed one-half of the total payment to the employee thus
effectively meaning that wages have to be fifty percent of the total package. Since PF
and Gratuity are calculated on basic pay plus dearness allowance, i.e. wages under the
new definition, it ensures that employees will be getting higher PF contributions every
month and increased Gratuity payments once they leave the firms.
● The Code puts inter-state migrants under the definition of contract labour and the
latter are included under the definition of employees. Thus inter-state migrant workers
will also now be eligible for social security benefits. The increased focus on
registration of ‘establishments’ - which has a wide definition under the Code,
enhanced penalties and compounding of offences for non-compliances and the general
focus of the Code on enhancing social security, it is expected that contract labour will
also be treated the same as permanent workers.
● The Code introduces gratuity on a pro-rata basis for workers employed on fixed-term
contracts thus making them eligible for gratuity even if they serve for less than five
years. The Code also says the fixed-term employees will enjoy the same working
conditions and benefits as regular employees.

Page | 14
Apart from this the Code also enhances Employee State Insurance Corporation to recover
payments from principal employers in more circumstances. As per the current ESI Act, if the
main employer fails to pay contributions to workers/employees or disentitles them from
certain benefits, ESIC is empowered to pay those benefits to the said employees and
subsequently recover those dues from the principal employer.
The Social Security Code enhances this provision and adds the following additional
circumstances under which ESIC can act in favour of employees. Employer’s failure to insure
the employee
1. At the time of his joining the firm thus denying him certain benefits
2. On or after the date of his accident resulting in injury which again denies him of
certain benefits like dependent or disablement benefits.
In case the above happens, or the circumstances already existing under the ESI Act, ESIC is
empowered to give the necessary benefits to the aggrieved employee and recover them from
the concerned employers.

Moreover, the new Code also provides for higher penalties as well as compounding offences
for non-compliance with the provisions of the Code. The maximum fines for violating
various provisions range from Rs 1,00,000 - 3,00,000. Imprisonment for the first offence is of
two months, for subsequent contraventions of the Code, the penalty can increase to three
years.

As we can see the Code does make a genuine attempt to address the various issues that
employees in the unorganized sector have and attempts to enhance social security coverage
and at first glance it looks to have done a good job at it. However, as with all things a lot will
depend on the how the Codes are implemented on the ground once the central government
notifies the Codes and how the rules that the government will come up are framed and how
they address the various issues at hand and ensure that the spirit of the Code is adhered to.

When it comes to the key issues that Unorganized workers are facing:
● Lack of any meaningful legislation for Social Security - While the Unorganized
Workers Social Security Act was passed in 2008, it was a standalone act and sans any
proper mechanism for implementation ended up becoming just another act among the
already existing fifty or so legislations.
● New employment avenues emerging outside of the traditional employer-employee
relations. The rise of the gig and platform economy has meant that a lot of people are
employed in these areas but there are no laws that even acknowledge their existence,
much less provide them with the necessary social security benefits.

Page | 15
The Social Security Code attempts to rectify this by bringing in provisions for unorganized,
gig and platform workers.
● It gives statutory recognition to gig workers for the first time thereby giving formal
recognition to the gig economy. Gig workers are those that work beyond the
traditional employee-employer relationship and also include platform workers. The
latter includes workers who use the platform of online aggregators. The Code includes
retail, grocery, delivery and ride-sharing services under the definition of aggregators.
● The Social Security Code requires aggregators to make contributions to social
security benefits of gig workers to the tune of 1-2% of their annual turnover but not
exceeding 5% of the annual payment to workers.
● The Code envisages a social security fund for gig workers, provides for their
registration and formulation of benefits like health, life insurance, maternity,
provident fund etc. that are tailored as per the needs of gig workers as well as
covering them under the ESI framework.
● The Code envisages setting up a National Social Security Board that will recommend
to the Central government for framing suitable social security schemes for different
sections of unorganized, gig and platform workers. The Board will also monitor the
working of such social welfare schemes and look after the expenditure from the fund
set up for the same as well as review the records being kept for the implementation of
these scheme.
The Code also envisages setting up of State Unorganized Workers’ Boards who will
perform the same functions but at the State level.

While these provisions are a good first step, there is a lot of clarity that is needed on how
exactly they will be implemented and what the mechanism will be. The rules need to make it
clear regarding the implementation roadmap that will be followed to bring these provisions to
life. Moreover, these are only the first steps towards introducing social security for the
unorganized sector, there is a lot more that needs to be done in the future before the
unorganized workers can have access to social security at levels even remotely comparable to
the organized workers.

When we examine the legislation from an employer’s point of view the main concern for
them is the Capacity to Pay. As we saw in the Analysis section of this report the increase in
PF contributions will have a significant financial impact on the employers with in PF
contributions going up from anywhere between 20% to 100% depending on the pay structure
of the firms. From our primary research we found out that there are firms like ITC that
already keep the basic pay component at 50% or close to 50% of the total salary for a large
section of their employees. So we believe that larger firms in the industry will be able to cope
with the changes though they will see a good amount of financial outlay towards this. On the

Page | 16
other hands smaller firms may find it significantly more difficult to comply with the changes
and it will have a bigger impact on their bottom line. It may even discourage some micro
firms from scaling up and thus coming under the provision of the Code.

The other things of concern to employers is regarding the lack of clarity on certain aspects of
the Code. How exactly the mechanism regarding gig and platform workers will be enforced is
not yet clear. Similarly firms are not sure which components can be included or excluded
while calculating PF. These are concerns that need to be addressed at the earliest.

Overall, in our view the Social Security Code provides enhanced social security coverage to a
larger number of employees and workers, both in organized and unorganized sectors. By
unifying the definition of wages, the Code benefits both the employer and the employee. For
the employer it increases the ease of compliance and the ease of doing business. From an
employee’s perspective, it attempts to provide worthwhile social security coverage while also
stopping employers from reducing their social security liability and implementing creative
salary structures and accounting techniques. Also, by bringing in a five year limitation period
for initiating proceedings for non-compliance, the Code seeks to reduce harassment of
employers, decrease corruption and enhance the ease of compliance.

As we have mentioned in our report above there are teething issues that exist. To overcome
these we recommend that - The rules that the government will come up with in the near
future adequately address the concerns of the industry and make the provisions clear as well
as ensure that the intention behind the Code is adhered to. The implementation date of the
new Codes has been postponed a few times. It is expected that either they will be
implemented by Oct this year or April next year. Government should clarify when it intends
to implement the Code so that industry can appropriately prepare itself. The Code introduces
provisions for unorganized, gig and platform workers but we feel that it is just the first step
and there are larger strides that need to be taken in future regarding this.

Page | 17
References

 Bill Summary The Code on Social Security, 2020. (2020). PRSIndia.

https://prsindia.org/billtrack/prs-products/prs-bill-summary-3581

 The code on Social Security, 2020. (2020). PRS Legislative Research.

https://prsindia.org/billtrack/the-code-on-social-security-2020

 The code on Social Security, 2020: How it impacts wages and benefits of employees.

(2020, October 9). Moneycontrol.

https://www.moneycontrol.com/news/business/personal-finance/the-code-on-social-

security-2020-how-it-impacts-wages-and-benefits-of-employees-5941721.html

 Cover Note Overview of Labour Law Reforms. (2020). PRSIndia.

https://prsindia.org/billtrack/prs-products/cover-note-labour-reforms-pdf-3579

 Despite being a good start, the code on Social Security needs to cover more

ground….. - Employment and HR - India. (2021, June 8). Welcome to Mondaq.

https://www.mondaq.com/india/employee-benefits-compensation/1076892/despite-

being-a-good-start-the-code-on-social-security-needs-to-cover-more-ground-

 Evaluating the code on Social Security, 2020 - Employment and HR - India. (2020,

November 4). Welcome to Mondaq. https://www.mondaq.com/india/employee-

benefits-compensation/1001268/evaluating-the-code-on-social-security-2020

 FE Online. (2021, March 26). New Labour codes: How will they impact Social

Security, take-home salary. The Financial Express.

https://www.financialexpress.com/money/new-labour-codes-how-will-they-impact-

social-security-take-home-salary/2220976/

 Gig workers and platform workers: The code on Social Security 2020 - Employment

and HR - India. (2021, February 11). Welcome to Mondaq.

Page | 18
 https://www.mondaq.com/india/employee-benefits-compensation/1035552/gig-

workers-and-platform-workers-the-code-on-social-security-2020

 How the code on Social Security 2020 impacts your take-home salary but protects

your future. (2020, December 15). The Economic Times.

https://economictimes.indiatimes.com/jobs/how-the-code-on-social-security-2020-

impacts-your-take-home-salary-but-protects-your-future/financial-

implications/slideshow/79735472.cms

 India's new labour codes : Prepare for the challenges ahead. (2021, February 23).

https://www2.deloitte.com/content/dam/Deloitte/in/Documents/tax/in-tax-

presentation-23-feb-2021-noexp.pdf

 Issues for Consideration: Labour Codes – Three Bills on Occupational Safety and

Health; Industrial Relations; and Social Security, 2020. (2020). PRSIndia.

https://prsindia.org/billtrack/prs-products/issues-for-consideration-labour-codes-3580

 Part II - Labour laws: The code of Social Security, 2020 - Employment and HR -

India. (2020, October 22). Welcome to Mondaq.

https://www.mondaq.com/india/employee-benefits-compensation/996996/part-ii--

labour-laws-the-code-of-social-security-2020

 The Social Security code, 2020 - Employment and HR - India. (2020, October 28).

Welcome to Mondaq. https://www.mondaq.com/india/employee-benefits-

compensation/998964/the-social-security-code-2020

 Success of labour codes depend on how rules are framed, implemented, says expert.

(1970, January 1). https://www.outlookindia.com/.

https://www.outlookindia.com/newsscroll/success-of-labour-codes-depend-on-how-

rules-are-framed-implemented-says-expert/1957645

Page | 19
 THE CODE ON SOCIAL SECURITY, 2020. (2020). Ministry of Labour &

Employment | GoI. https://labour.gov.in/sites/default/files/SS_Code_Gazette.pdf

Page | 20
APPENDIX

Questionnaire for Primary Research

1. The Social Security Code includes contract workers under the definition of employees which
means they will be eligible for social security benefits. Are contract workers in your firm
already given those benefits or will it be a new change? In case of the latter, what is the
impact you see on your firm?
2. The Code also introduces gratuity payment for fixed-term employees on a pro-rata basis. So
they are eligible for gratuity even without working for five years. What impact do you feel it
will have on the firm? Will it lead to a substantial cost increase for the firm?
3. The bill also provides for certain benefits for inter-state migrant workers like insurance and
provident fund benefits available to other workers in the same establishment. Are there
such migrant workers in your plant? If so, do they receive any social security benefits? How
many such workers are there in the plant?
4. The bill fixes the maximum daily working limit at 8 hours/day. What are the existing shift
timings in your plant?
5. The Social Security Code states that the contribution of the employer to the Provident Fund
will be 10% which is a change from the current 12% contribution rate. What is the impact
you see of this on the employer and the employees?
6. The new Codes also state that for the purposes of calculating PF and Gratuity the wages shall
be at least 50% of the total remuneration of the employee. Many firms pay 60/70% of the
remuneration via allowances. What is the general practice at your firm and how much do
you think this will lead to an increase in PF and Gratuity payments on the part of the
employer?
7. The codes also introduce Inspector-cum Facilitators to check on the compliance levels. Do
you think this may bring back Inspector Raj or lead to increased bureaucratic interference or
red tapism?
8. What are your general views regarding the Social Security Code? Do you think it enhances
the social security net for employees?
9. Can you tell us whether your firm has already prepared to deal with the coming changes? Do
you have some system or mechanism in place to help your firm comply with the upcoming
changes due to the new labour codes?
10. Do you think that the new Codes simplify the existing legal structure of labour laws?
11. What are your views on the financial cost that the Social Security Code may bring to your
firm? Will it be an appreciable increase in cost? Will it impact the business side of your firm?

Page | 21
Plagiarism Report

Page | 22