What does the Code on Social Security, 2020 cover?

LiveRec EditorialUpdated

The Code on Social Security, 2020 merges nine laws, including the Employees' Provident Funds Act, the Employees' State Insurance Act, the Payment of Gratuity Act, the Maternity Benefit Act and the Employee's Compensation Act. It also covers unorganised, gig and platform workers. It has applied since 21 November 2025.

At a glance

  • Provident fund: applies to establishments with 20 or more employees.
  • ESI: applies to establishments with 10 or more persons, and to hazardous work even with one employee.
  • Gratuity: five years for regular staff; one year for fixed-term employees.
  • Maternity benefit: 26 weeks for eligible women employees.
  • Gig and platform workers: defined for the first time, with schemes to be notified.

Provident fund and ESI under the Code on Social Security, 2020

The earlier limit of "scheduled employments" for EPF was removed. ESIC coverage now applies across the country rather than only notified areas, and establishments with fewer than 10 employees may opt in voluntarily. Read PF and ESI coverage.

Gratuity

Payable after five years of continuous service, or on death, disablement or expiry of a fixed-term contract. Fixed-term staff qualify after one year. See gratuity changes.

Maternity benefit

See maternity benefit.

Employee compensation

Employers must pay compensation for injury or death arising out of and in the course of employment. An accident while travelling between home and workplace is treated as arising out of employment (section 74, as summarised by the Ministry).

Gig and platform workers

The Code defines "aggregator", "gig worker" and "platform worker". See gig and platform workers.

Building workers, vacancies and records

  • A cess of between 1% and 2% of construction cost funds building workers' welfare.
  • The government may require employers to report vacancies to a career centre before filling them; reporting does not oblige an employer to hire through the centre.
  • Records, registers and returns are to be maintained electronically.

One wage definition

The Code defines "wages" in section 2(88), and the same definition is used for gratuity, PF and other benefits. See the wage definition.

Gratuity in detail

  • Payable on termination after at least five years of continuous service, due to superannuation, retirement, resignation, death or disablement, or another event notified by the Central Government. Fixed-term employees become eligible after one year under the contract.
  • The rate is 15 days' wages for each completed year of service, based on the wages last drawn, subject to the maximum notified.
  • The employer must pay within 30 days from the date it becomes payable.
  • Employees with one year of service must make a nomination.
  • The Ministry's FAQ says the gratuity calculation under the revised wage definition applies from 21 November 2025. For contract labour, the contractor pays gratuity under section 53.

Provident fund and pension schemes

The handbook says the Central Government may frame three schemes: an Employees' Provident Fund Scheme, an Employees' Pension Scheme and an Employees' Deposit Linked Insurance Scheme. PF provisions apply to establishments with 20 or more employees.

ESI benefits

Sickness, maternity, disablement, dependants' benefit, medical benefit and funeral expenses are the benefits listed in the handbook. The Ministry's March 2026 FAQ says that until rules are final, the wage limit already notified for ESI coverage applies.

Gig and platform workers

The PIB backgrounder says aggregators contribute 1 to 2 percent of annual turnover, capped at 5 percent of payments to such workers, to a Social Security Fund for gig and platform workers. The Ministry's FAQ says the contribution is to be notified by the Central Government and credited to that fund.

Common mistakes

  • Using the old Payment of Gratuity Act wage definition for service after 21 November 2025.
  • Ignoring the one-year rule for fixed-term staff.
  • Treating gratuity as part of "wages" for the 50 percent calculation. The Ministry's FAQ says gratuity and ESI are not counted.
  • Assuming ESI applies only to factories.

More questions people ask

Who pays the ESI contribution?

The handbook says the employer must pay both the employer's and the employee's contributions in respect of every employee (section 31).

What about gratuity for a part year?

The Ministry's FAQ says every completed year of service or part thereof in excess of six months counts.

Sources

  • The Code on Social Security, 2020 (official text), https://www.labour.gov.in/static/uploads/2025/07/b0620548445580767b5c0d18c95c26f7.pdf, checked 2026-10-31
  • Ministry of Labour and Employment, Compliance Handbook for Employers under the Four Labour Codes (Central Government sphere), https://www.labour.gov.in/static/uploads/2026/02/83978455025732b99b0165def80ab171.pdf, checked 2026-10-31
  • PIB, India's Labour Reforms: Simplification, Security, and Sustainable Growth (21 Nov 2025), https://www.pib.gov.in/PressReleasePage.aspx?PRID=2192524&reg=3&lang=2, checked 2026-10-31
  • EPFO (official site), https://www.epfindia.gov.in, checked 2026-10-31
  • ESIC (official site, linked for readers), https://www.esic.gov.in, checked 2026-10-31
  • Ministry of Labour and Employment, Compliance Handbook for Employers under the Four Labour Codes (Central Government sphere): https://www.labour.gov.in/static/uploads/2026/02/83978455025732b99b0165def80ab171.pdf (accessed 31 October 2026)
  • Ministry of Labour and Employment, FAQs on Labour Codes (30 December 2025): https://www.labour.gov.in/static/uploads/2026/01/de4758d5bfeffc456d7de97a801891b0.pdf (accessed 31 October 2026)
  • Ministry of Labour and Employment, Additional FAQs on Labour Codes (as on 16 March 2026): https://www.labour.gov.in/static/uploads/2026/03/a4ccf4c6d97c4f1f36a6d83f8c64213d.pdf (accessed 31 October 2026)
  • Press Information Bureau, India's Labour Reforms backgrounder (21 November 2025): https://www.pib.gov.in/PressReleasePage.aspx?PRID=2192524&reg=3&lang=2 (accessed 31 October 2026)
This is general information, not legal, tax or immigration advice. Rules change and your situation may differ. Consult a licensed attorney or qualified adviser.