The Code on Social Security, 2020 (“Code”) represents one of the most substantive labour law reforms in India in recent decades. At a structural level, the Code is marked by two significant and inter-related features. First, it consolidates multiple pre-existing social security legislations into a single comprehensive framework. Second, it formally recognises and brings within the statutory fold certain categories of workers, particularly unorganised, gig and platform workers, who were previously either inadequately regulated or altogether excluded from the mainstream social security regime.

As part of this consolidation exercise, the Code subsumes nine central statutes, including the  Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (“EPF Act”), the Employees’ State Insurance Act, 1948 (“ESI Act”), the Payment of Gratuity Act, 1972 (the “Gratuity Act”), the Maternity Benefit Act, 1961 (the “MB Act”) and the Employees’ Compensation Act, 1923 have been repealed, and their provisions stand consolidated into the Code.

Concurrently, the Code accords statutory recognition to new and evolving forms of work, including gig and platform-based engagement models, and contemplates the extension of specified social security benefits to such workers. This represents a shift from a predominantly employer–employee centric framework toward a broader and more inclusive conception of social security. This article examines key departures from the pre-existing regime, their operational implications for establishments, and the implementation challenges that continue to arise.

The Code seeks to expand social security coverage while simplifying compliance and supporting the broader “Ease of Doing Business” agenda. This policy direction is reflected in several structural and conceptual shifts, two of which are particularly significant.

Statutory recognition of gig and platform work 

One of the more significant transformations brought about by the Code is its explicit recognition of non-traditional work arrangements. The Unorganised Workers’ Social Security Act, 2008, was largely silent on digital and platform-based work models. The Code, while repealing this legislation, attempts to correct this gap by:

• introducing definitions for “aggregator”, “gig worker” and “platform worker”; and

• providing, in Chapter IX, for the framing of social security schemes for these categories of workers, in addition to unorganised workers generally.

The contemplated schemes include life and disability cover, accident insurance, health and maternity benefits and old-age protection. Funding is envisaged through a combination of government support and contributions, including a prescribed contribution from aggregators calculated as a percentage of turnover. The details of contribution rates and modalities are, however, to be prescribed in the rules and in the schemes themselves, and are therefore not yet operative.

The aforesaid provisions would have an impact on the financial responsibilities of aggregators and platform operators, who will need to provide for a statutory social security cost once the relevant provisions and rules are notified.

Introduction of limitation periods 

Under the erstwhile EPF regime, the absence of an express limitation period permitted inquiries into historical dues spanning extended periods. The Code introduces limitation periods for both initiation and completion of proceedings relating to the determination of dues under the provident fund and ESI frameworks. Although the precise timelines vary across provisions, the legislative intent is clear: to introduce temporal certainty and finality. This is particularly significant for large organisations with legacy operations, restructurings or historic workforce transitions, where retrieval of old records may pose practical challenges.

The following discussion highlights certain material changes of particular relevance to corporate employers:

Provident fund: Alignment with IBC and Wider Coverage 

While the Code substantially retains the structure of the EPF Act in relation to coverage and contributions, three developments merit attention:

Priority in insolvency: The Code aligns the treatment of social security dues with the Insolvency and Bankruptcy Code, 2016 (“IBC”). Workmen’s dues rank pari passu with secured creditors in liquidation, and Section 47 recognises ESI contributions as a statutory charge on the assets of the establishment. PF and allied dues are accorded high priority in the insolvency waterfall, strengthening recoverability and directly impacting resolution planning and due diligence in stressed scenarios.

Appellate rationalisation: Existing specialised tribunals are proposed to be consolidated into a Social Security Appellate Tribunal. Appeals against determinations of dues will require a statutory pre-deposit, reflecting a broader regulatory policy aimed at discouraging unmeritorious challenges.

Enabling coverage expansion: The Code empowers the appropriate government to frame schemes for self-employed and other notified categories. While enabling in nature, this signals a gradual shift from a strictly employer–employee PF model toward a broader contributory framework.

Employees’ State Insurance: Voluntary coverage and strengthened recovery 

The ESI framework is consolidated and strengthened under the Code, with key developments including:

Voluntary coverage: Establishments below the statutory threshold may opt into the ESI regime in prescribed cases, facilitating benefit harmonisation across smaller or group entities.

Recovery powers: The Code preserves and reinforces the ESI Corporation’s recovery mechanisms, including recovery of the capitalised value of benefits where contributions were not duly paid, underscoring the importance of timely compliance.

Liability for accidents and unsafe premises: Section 34 codifies presumptions for accidents arising out of and in the course of employment, including employer-authorised travel and certain commuting accidents where a sufficient nexus exists. Employers must therefore maintain rigorous safety protocols and documentation standards.

Gratuity: Fixed term employees and insurance mandate

The Code incorporates the Gratuity Act framework with important refinements.

Fixed term employees are expressly entitled to gratuity on a pro-rata basis without the five-year continuous service requirement. This has direct cost implications, particularly for sectors reliant on fixed term engagements, and must be integrated into CTC structuring and workforce planning.

Additionally, the Code revives compulsory insurance of gratuity liabilities through insurers regulated by the Insurance Regulatory and Development Authority of India or through approved gratuity funds. This introduces a more structured compliance obligation and formalises a requirement that was inconsistently implemented in practice.

Maternity benefits: Codification and clarifications

The Code carries forward the maternity benefit regime, including enhanced leave entitlements, crèche obligations and work-from-home provisions.

The requirement to provide crèche facilities for establishments employing fifty (50) or more employees is retained, with operational flexibility permitting shared or outsourced arrangements subject to prescribed standards. The medical bonus framework continues, with periodic revision by notification. The statutory recognition of work-from-home arrangements, where mutually agreed and operationally feasible, reflects evolving workplace practices.

Employees’ compensation and employment injuries

The compensation regime is consolidated with calibrated updates:

• monetary thresholds, including funeral expenses, are revised;

• judicial principles recognising commuting accidents with sufficient employment nexus are reflected in the statutory text; and

• appeals to the High Court are restricted to substantial questions of law.

With the Code now in force, employers must move from preparatory assessments to active compliance. Immediate focus areas include the following:

Re-calibration of CTC structures and wage definition

The Code introduces a uniform definition of “wages” across the four labour codes and caps excluded allowances at fifty per cent (50%) of total remuneration. Any excess must be added back to wages for the purpose of calculating statutory contributions and benefits. Salary structures that rely on a low basic component and high allowances will therefore require restructuring. Additionally, the recognition of pro-rata gratuity entitlement for fixed term employees will increase employment costs and must be factored into manpower planning and budgeting.

Digitisation, Aadhaar-linked compliance and data governance

The Code envisages a digitised compliance framework, including electronic registers, returns and Aadhaar-linked identification mechanisms under Section 142. This architecture operates alongside centralised platforms such as the Shram Suvidha Portal.

Employers must accordingly ensure that HR and payroll systems are capable of:

• capturing prescribed data fields;

• generating electronic statutory records and filings; and

• safeguarding Aadhaar and other personal data in compliance with applicable privacy and data protection requirements.

Given the convergence between social security compliance and data protection regulation, social security records should be integrated into broader organisational data governance and privacy frameworks.

With its implementation in November 2025, the Code now constitutes the principal framework governing social security in India. However, as labour falls within the Concurrent List, both the Central and State Governments are empowered to frame rules within their respective domains.

This gives rise to practical considerations such as:

Central and State rules: While the substantive provisions of the Code remain uniform, procedural requirements, including forms, timelines, authorities and scheme-specific details, may vary across States. Employers with multi-State operations must therefore monitor not only the Central rules but also State-specific notifications and amendments.

“Appropriate Government” determinations: The Code retains the concept of the “appropriate government,” under which either the Central or State government may exercise jurisdiction depending on the nature of the establishment or sector. Clear identification of the appropriate government is critical to ensure correct filings, exemption applications and scheme compliance, and to avoid regulatory overlap or gaps.

The Code on Social Security seeks to reconcile the historical welfare-oriented approach of Indian labour laws with the demands of a modern, formalising and increasingly digital economy. By consolidating multiple statutes, recognising gig and platform workers, moving towards uniform wage definitions and digitised compliance, and introducing clearer limitation and penalty frameworks, the Code promises a more predictable and transparent social security regime.

Employers would be well advised to:

• map current benefits and processes against the Code’s framework,

• re-examine CTC structures and fixed term employment usage,

• invest in HR and payroll system upgrades for digitised and Aadhaar-linked compliance; and

• institute regular internal social security compliance reviews.

About the authors: Anjali Menon is a Partner, Bilal Lateefi is a Principal Associate and Bharani Tadimalla is an Associate at Poovayya & Co.