One Size Does Not Fit All: Analysis Of The Code On Social Security In Light Of Contemporary Developments

Authored by Ayush Raj, Student at National Law University, Nagpur


The Parliament passed the Code on Social Security, 2020 (hereinafter “the Code”) in September 2020. The Code replaced all the previous legislation on employee social security and consolidated and clarified the provisions under one umbrella. The prime objective of the Code is to reduce the multitude of codes on social security and implement it along with the Industrial Relations Code, 2020, Code on wages, 2019, and the Occupational Safety, Health and Working Conditions Code, 2020. It seeks to apprehend the concerns of employees, and hence rolling out such a Code amid the COVID-19 pandemic increases its significance.

In this research design, the Researcher critically analysed the provisions of the Code and interpret the interplay between labour laws and technology. Further, the article probes the debate of gig and platform workers viz-a-viz technological dominance. The Code essentially attempts to reflect the significance of modern technology and Artificial Intelligence but the author argues that this attempt is not refined and leads to more confusion than clarity.

Key Provisions and Their Analysis

The Code enumerates social security as a protective financial shield for the employees and workers, that grants them income security, health security, and other benefits to support their old age, illness, unemployment, parenting, and other allied causes. The most significant feature of the Code is its uniformity regarding the determination of wages, as the definition of wages has been broadened, which brought more clarity. The Code portrays consultative nature enabling employers to seek assistance from inspectors regarding compliance, concerns, and activities.

Furthermore, the Code envisages the unorganized sector, migrant, gig, and platform workers enabling the Code’s ambit even wider. Additionally, the Code appears to be stringent in its implementation. Non-compliance with the rules would attract hefty penalties and severe punishments. Along with that, the Code provides for the establishment of a National Social Security Board which shall work in an advisory capacity and suggest policies and schemes and monitor the implementation of the schemes. This autonomous regulation could aid in increasing compliance with the provisions, eventually benefitting the workers.

Scope for Improvements

The Code has endeavored uniformity and consolidation; however, some of the concerns yet remain unaddressed. The Code retains the condition of minimum thresholds for specific allowances to be mandatory, for instance; the criterion of having a minimum number of employees is a must for claiming pension benefits. This provision automatically excludes many workers in the unorganized and agricultural sector, leaving them completely dependent on the government’s discretion for any such benefits. There is a differential treatment concerning wages earned by the workers, i.e certain benefits such as provident funds and pensions are granted only to the workers who satisfy the minimum threshold limit. Additionally, the Code should reframe the working hour’s criteria and fix it to 8 hours/day following the ILO Convention.

Furthermore, the separate classification of inter-state migrant workers is a fresh inclusion that would enable such workers to claim monetary benefits like contractual employees, but a lot needs to be done to facilitate coordination between states and sharing databases for effective implementation of the plan. The concept of gig and platform workers isn’t clear and it may lead to conflicts of interests as it creates overlapping of definitions. Moreover, the technological aspect of the Code and the applicability of labour laws in technological industries need more refinement.

Impact of Technology on The Code

The impact of technology on the Code can be seen in some unique features of the Code. The Code has a prominent provision, which is influenced by the rise of e-commerce services (aggregators helping to connect buyers and sellers via the internet) and A.I.-based technologies. This provision defines the term “aggregator”, as an intermediary in a marketplace in the digital arena which helps to connect buyers and sellers on internet spaces for more efficient transactions. The term “aggregator” has been mentioned in consonance with two other important terms based around developments in digital commerce technologies. These terms are “platform-worker” and “gig worker.” The former is defined under the Code as an individual working in a way beyond the purview of what is conventionally defined as a workplace under the meaning of employer-employee relationship, i.e. a digital platform. This definition is included keeping in mind the large and ever-increasing number of individuals working for e-commerce firms and other firms utilizing novel technologies. Further, the gig worker refers to an individual who works in a setting that does not fit the common definition of a traditional employer-employee relationship, whereas the platform workers specifically refer to those employer-employee relationships which are based on online platform interactions. The Code has no exhaustive list of the types of work that may come under the gig work.

Several new kinds of technologies are emerging, and the lack of such a list would allow for including new kinds of jobs that may emerge concurrently with the rise of fields like A.I., Machine Learning software, Robotics, etc. This broad definition of gig workers is visible since it defines them, not in the conventional sense, as a worker who performs part-time, and usually gets paid by the hour, but simply as someone beyond the scope of a traditional employer-employee relationship.

Moreover, keeping up with the needs and requirements of the digital world, the Code mandates electronic retention of all the records and returns. Retention of laborer’s, workers’, and beneficiary’s data would ensure effective information sharing between the concerned stakeholders and maintain transparency in the services. It would also assist in minimizing the overlap of welfare schemes and reducing corruption in providing those services. With the use of A.I. and other technologies, all records and returns can be maintained electronically. The stored data can be used as and when required, so it will save time and effort and fasten the process related to social security. It will also help in the exchange of information among various stakeholders set up by the Government. Hence, digitalization will ensure compliance and facilitate governance.

Social Security Code and I.T. Industries

Primarily, the Code deals with the provisions that govern the allowances provided to the employees during employment and post-employment.  The Code is an attempt to consolidate the fundamental rights of the employees and hence, it is pertinent to examine the effect of labour laws on the information technology industries. While the Code enshrines the rules for the I.T. industries by the formal inclusion of gig and platform work in 2020, the Indian I.T. companies were made to comply with the laws since 2012. The I.T. companies were exempted from the obligations till 2012, but the government changed this status quo in 2012. The adopted changes made applicability a rule and exemption an exception. Likewise, the tech start-ups were made to comply with these rules in 2018.

The Code is brought amidst pandemic and the I.T. industry enjoyed the maximum immunity from the pandemic. The Code has strengthened the compliance necessities for all types of industries and therefore it is needless to mention that the I.T. sector also forms an integral part of the Code.

The concerns of digital workers and technological industries: Code’s Pre-Mature Attempt

The inclusion of the aforementioned terms in the latest Code is a step in the right direction. However, there is considerable scope for the inclusion of broader and novel definitions of workers in the technological sector. For instance, one may look at a referendum in the US state of California, where gig workers (mainly cab drivers) were designated as “independent contractors” which deprives them of certain benefits full-time employees have. In India, a clarification that considers gig workers, especially in tech companies, as full-time employees and not contractors would be beneficial to gig workers as it would grant universalized social security and secure the future of individuals who might have found work with novel technologies and other online businesses.

It is because the Code doesn’t effectively portray its objectives in this regard. These workers are not permanently associated with the company but they just use their facilities and provide their services through the help of the internet and A.I. The Code lacks the intent to provide them with the required social security. There are many recent conflicts and disputes between Ola/Uber drivers and Swiggy/Zomato riders with the third party i.e. the customers, the user of those services. There are several instances wherein delivery persons have been made to sacrifice their jobs. In these instances, generally, the workers are on the losing side and it not only affects their professional careers but makes them suffer financially as well. The Code is a failure in providing a justified remedy for these kinds of platform workers.

The Act doesn’t provide any solution for the loss of jobs in technological industries after the emergence and popularity of A.I. It doesn’t provide any roadmap for ensuring the social security of the persons adversely affected by this dark feature of A.I.

Furthermore, the ideas of gig workers and platform workers are introduced but they lack a clear applicational approach. The Code is unable to solve the conundrum related to machines and robots i.e., whether it acts as technological advancement or human replacement.

Critical Overview of The Code

The present code implies dual authority for a worker in the unorganized sector, but the issue of implementation of schemes proposed by the center and state remains unclear. As there is a lack of clarity about implementing authority at the state level and the central level; the fragmentation of the Security Code for unorganized workers will continue. As unorganized workers span across the country, inter-State arrangements and cooperation become imperative but the Code does not provide for this, and revisiting these concerns is of utmost necessity. Currently, there are different registration systems and authorities for workers and establishments, so unified approaches are absent for registration and compliance. Sometimes the definitions also overlap each other and hence, it is ambiguous that how schemes will apply to these overlapping gig-platform workers categories. Most unorganized workers fall within the State’s purview rather than the Centre’s and the majority of social security schemes are run by state governments and the code doesn’t explicitly mention the continuation of existing social security schemes, hence, it raises a dilemma, whether the unorganized workers need to make fresh registration on the Central portal or their data will be transferred from state to central portal. Further, the Code is silent over trade unions for disseminating information on the social security schemes and facilitating registration of the unorganized workers. The Code does not differentiate between self-employment and gig work. As gig and platforms workers are not associated with any employer-employee relationship, they can also claim themselves as self-employed which causes overlapping of regulations.

Despite some of its welcome features, the Code does not appear more than an edited and compiled form of laws, due to which the main objective of the Code remains unaddressed. Therefore, to ensure that the benefits of the Code reach uniformly to all its destinations, to clarify the concept of gig and platform workers, to maximize the technological benefits, and to nullify the adverse impacts of automation, there is a dire need to revisit the code and modify it. Even though the Code covers almost 90% of the total workforce of the country, there are some significant concerns that it misses out on. Firstly, even after being brought amid the COVID-19 pandemic, the Code lacks requisite benefits for the ASHA workers. Secondly, the major concern is the hurdle in its effective implementation as the terms overlap sometimes. Thirdly, despite increasing unemployment rates, unemployment allowance could have been included.

Moreover, acknowledging the technological influence and accommodating a new class of workers is a progressive step but a lot more emphasis and clarity are needed in this regard. While debates and discussions on the Code will continue, it is interesting how it responds to automation in IT industries and how it affects the ease of doing business.


Edited By: Amey Jadhav


*Disclaimer: The content of this article is intended to provide a piece of general information. The views are expressed by the author solely and BFTLR may or may not subscribe to the views of the author.

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