Social Security Code Bill 2019

Social Security Code Bill 2019

OXFAM inequality report released in January 2019, states that India’s economy is broken and wealth inequality has been on a constant rise for almost three decades now. While the majority of the wealth is concentrated in the hands of the few, the masses are suffering from poverty, discrimination, unemployment, hunger, and many other social evils. The most exploited ones are the people working in unorganized sectors in India, they constitute more than 83% of India’s workforce. They have been deprived of basic amenities, maternity benefits, employment benefits, and most importantly social security. To protect the rights of employees working mainly in the unorganized sector, the Social Security Code Bill 2019 has been introduced in the Lok Sabha which proposes universalization of Social Security Benefits.

What is Social Security?

Social security is a generic term that holds a different meaning for different nations. In India, it is generally seen as security from social problems such as accidents, unemployment, old age, maternity, disability, and sickness. It means security to the members of the society against unforeseen incidents by the government. To protect the elements of society from risks of loss associated with these factors, the government issues frameworks, regulations or policies to provide social security to individuals.

Social security Code Bill 2019

The Union Government of India introduced Social Security Code Bill 2019 in the Lok Sabha. The bill seeks to amend and consolidate 44 labor laws in four codes, namely, wages, industrial relations, health and working conditions, and security and safety. The bill proposes to set up a social security fund that shall provide benefits such as a pension, life cover, medical insurance, and benefits on the disability of the employees including those working as informal employees.

In addition to this, the bill has also proposed the reduction of the monthly contribution to the Employee Provident Fund by workers of organized sectors. It seeks to establish universalization of social security benefits. Also, the bill aims at merging eight existing labor acts, namely, the Employees’ Compensation Act, 1923, Employees’ State Insurance Act, 1948, The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, Payment of Gratuity Act, 1972, Unorganized Workers’ Social security Act, 2008 Cine Workers Welfare Fund Act, 1981, Maternity Benefit Act, 1961, and Building and other Construction Worker Cess Act, 1996.


The bill has been formulated to provide social security to the working class. If passed, the bill authorizes the Central Government to formulate and notify different welfare schemes for the people working in the unorganized sector, from time to time. The main objective of the bill is to provide such workers health, medical, disability and pension benefits.

Main propositions of the Bill

  1. Reduced EPF Rates- Currently, an employee working in a corporate sector has to contribute 12% of his salary to the provident fund. The Social Security Code Bill 2019 will allow the government to lower the rate of contribution to be made to the EPF by the employees. This will let the workers take more salary at home. However, 12% of the employer’s contribution to the provident fund will remain unaltered. 

  2. Benefits to unorganized workers- The Social Security Code Bill mainly aims at providing benefits to the workers of the unorganized sector. It will allow the government to frame policies and schemes for the benefit of the workers while providing them compensation in case of accidents, pension benefits, health care, death and disability benefits. The bill also proposes the formation of social security funds. As per the bill, the government shall formulate welfare schemes to offer provident fund to the unorganized workers, benefits of injury during employment, educational and housing schemes, and old age homes For availing any benefits under the Social Security Schemes, Aadhar card is mandatory. 

  3. Gratuity payment- According to the Social Security Code Bill, the fixed-term employees will be offered gratuity on a pro-rata basis once they complete one year of their employment. Currently, the Payment of Gratuity Act,1972 makes an employee eligible for gratuity only after completing five years of continuous service in an organization.

A limited time period of five years has been proposed to initiate proceedings to assess and determine money dues from employers under social security schemes.


eStartIndia Team

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