India’s labour law landscape underwent a significant transformation on November 21, 2025 with the Ministry of Labour and Employment bringing into force 4 new labour codes i.e., the Code on Wages, 2019, the Industrial Relations Code, 2020, the Occupational Safety, Health and Working Conditions Code, 2020 and the Code on Social Security, 2020 (collectively referred to as the “Labour Codes”). Together, the Labour Codes replace and repeal 29 older central labour laws (with only specific provisions of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (“EPF Act”), remaining in effect).

The Labour Codes require both the Central and State Governments to frame rules under each of the Labour Codes for their effective implementation. The Central Government released its draft rules for all Labour Codes on December 30, 2025, which are yet to be enforced. While the progress at the state level has been varied, with only Gujarat and Arunachal Pradesh having finalized and notified their rules under each of the Labour Codes, most other states have issued draft rules, which currently serve as mere guidance and are yet to be notified. In the absence of final rules and in terms of Section 24 of the General Clauses Act, 1897, read with corresponding ‘repeal and savings’ clauses within each Labour Code, the Central and State rules issued under the now-repealed 29 central legislations will continue to apply, as long as they are consistent with the new Labour Codes and until new rules replace them.

This article, the first in a series (Part I), will delve into the key changes and additions introduced by the Code on Social Security, 2020, which will be followed by other updates covering the remaining three Codes.

Code on Social Security, 2020¹

The Code on Social Security, 2020 (“SS Code”) empowers the Central Government to appoint different dates for the enforcement of different provisions. Exercising this power, the Ministry of Labour and Employment issued a notification dated November 21, 2025, bringing a substantial portion of the SS Code into force.²

1. Applicability Framework

The SS Code prescribes applicability thresholds through the First Schedule. For instance:

• Provident fund related provisions (chapter III of the SS Code) apply to establishments employing 20 or more employees,
• The employees’ state insurance (chapter IV of the SS Code) applies to establishments employing 10 or more employees, other than a seasonal factory, irrespective of wage levels.
• Establishments engaged in hazardous or life-threatening activities (as notified) may be covered even with 1 employee if so notified.
• Gratuity related provisions (chapter V of the SS Code) apply to every factory, mine, oilfield, plantation, port and railway company. In addition, it applies to every shop or establishment employing 10 or more employees.
• Maternity benefit related provisions (chapter VI of the SS Code) apply to factories, mines, or plantations, including any such establishment belonging to the Government. In addition, it applies to every shop or establishment employing 10 or more employees.
• The employee compensation related provisions (chapter VII of the SS Code) apply to such employers and employees to whom employee state insurance provisions do not apply.
• Separate applicability thresholds continue for building and construction establishments (chapter VIII of the SS Code).
• Importantly, the SS Code expands statutory coverage to unorganised workers, gig workers and platform workers (Chapter IX of the SS Code) and introduces an employee information and monitoring framework (Chapter XIII of the SS Code) applicable to career centres, employers and job-seekers.³

• 2. Registration and Administration

Every establishment to which the SS Code applies will need to be registered electronically or otherwise, within such time and in the manner prescribed by the Central Government. However, establishments already registered under the existing central labour laws, such as the EPF Act or the Employees’ State Insurance Act, 1948, are deemed to be registered under the SS Code. The SS Code establishes multiple social security organisations, including the Central Board of Trustees for employee provident fund administration, the Employees’ State Insurance Corporation for employee state insurance administration, the National Social Security Board for unorganised workers, the State Unorganised Workers’ Boards and the State Building Workers’ Welfare Boards.

3.Provident Fund, Pension and Employees’ Deposit Linked Insurance (“EDLI”): Transitional Continuity

While pension-related provisions under the EPF Act have been repealed, the SS Code provides for a 1-year transition period. Accordingly, the existing pension schemes shall remain in force to the extent they are not inconsistent with the provisions of the SS Code for a period of one year from the date of commencement of the SS Code i.e., from November 21, 2025, until November 20, 2026, during which the Central Government is expected to formulate a new pension framework.

4.Recognition of Fixed Term Employment

The SS Code expressly recognises fixed-term employment⁴ across all industries and the fixed-term employees are now entitled to parity in wages, working hours, allowances and other benefits with permanent employees performing the same or similar work. All statutory benefits are payable on a proportionate basis, according to the period of service rendered by such employee, even where the employee does not satisfy the required qualifying period of employment. A significant departure from earlier law is that the fixed-term employees become eligible for gratuity upon completion of 1 year of service and are also eligible for pro rata encashment. But cessation of employment on completion of the fixed-term contract is expressly excluded from the definition of retrenchment under the Industrial Relations Code, 2020, though premature termination may still attract retrenchment consequences.

5.Employees’ State Insurance

While the employee state insurance chapter is in force, key parameters such as the wage ceiling and contribution rates under the SS Code have not yet been notified. Until such notification, the existing framework continues to apply, including the current wage threshold of INR 21,000/- per month and contribution rates of 3.25% (employer) and 0.75% (employee).

6.Gratuity

The gratuity provisions under the SS Code largely mirror the earlier Payment of Gratuity Act, 1972, including eligibility conditions, forfeiture provisions and the existing ceiling of INR 20 lakhs, which continues until revised (except that gratuity is calculated on the redefined ‘wages’). The SS Code requires compulsory gratuity insurance to be obtained by employers (other than government establishments) from a regulated insurance company.⁵ However, this obligation will take effect from a separately notified date. Employers maintaining approved gratuity trust funds⁶ in respect of their employees and who desire to continue such arrangement, may be exempted, subject to prescribed conditions.

7.Maternity Benefits and Medical Bonus

Chapter VI of the SS Code largely retains the substantive maternity benefits under the earlier Maternity Benefit Act, 1961. These include paid maternity leave, nursing breaks and protection against dismissal during pregnancy. The erstwhile Maternity Benefit Act, 1961 provided for payment of medical bonus of upto INR 3,500/- while further stipulating that the Central Government may increase the medical bonus to a maximum of INR 20,000/-. The SS Code has now removed such statutory upper limit and employers now have the discretion to prescribe a higher medical bonus payment. The SS Code also introduces flexibility and pooling of resources by permitting employers to utilise common crèche facilities, including those operated by government bodies, private entities, non-governmental organisations or jointly established by multiple establishments.

8.Social Security for Unorganised, Gig and Platform Workers

One of the most significant features of the SS Code is the formal inclusion of unorganised workers, gig workers and platform workers within the social security framework, marking a decisive departure from the traditional employer-employee model. Under the SS Code, every unorganised worker, gig worker or platform worker is required to be registered upon attaining 16 years of age, or such other age as may be prescribed, subject to the submission of a self-declaration. The SS Code envisages the creation of a dedicated Gig and Platform Workers’ Social Security Fund, to be administered by the Central Government. Aggregators may be required to contribute between 1% and 2% of annual turnover, subject to a cap of 5% of the amounts paid to gig and platform workers once such schemes are notified.

9.Enforcement and Penalties

The SS Code introduces inspector-cum-facilitators, mandates a prior opportunity before prosecution, allows compounding of specified offences and prescribes a 5 year limitation period for initiation of provident fund and employee state insurance proceedings. It also contains detailed transitional and repeal provisions pursuant to which several earlier labour enactments stand repealed to the extent notified, while allowing continuity where provisions have not yet been brought into force.

Conclusion

The SS Code represents a significant structural reform of India’s social security regime. With large parts of the SS Code now in force from November 21, 2025, employers and establishments must review internal employee polices and transition from legacy statutes to the consolidated framework, while also carefully tracking provisions that continue under earlier laws pending further notification. As additional rules and schemes are notified, the operational contours of the SS Code, particularly in relation to pension, gratuity insurance and gig worker welfare, are expected to evolve further.

After much delay, reservations and discussions of the last 5 years, the SS Code is being well received by the industry as well as by the trade unions and employees especially the gig workers who have now come within the social security net which was hitherto denied to millions of such workers serving the e-commerce and fast delivery service industry. The Government is expecting to implement all the 4 Labour Codes in entirety by April 2026 to ensure clarity and uniformity of approach across India.

Endnotes:

^[1] The SS Code has repealed the following central legislations: (1) The Employee’s Compensation Act, 1923; (2) The Employees’ State Insurance Act, 1948; (3) The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952; (4) The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959; (5) The Maternity Benefit Act, 1961; (6) The Payment of Gratuity Act, 1972; (7) The Cine-Workers Welfare Fund Act, 1981; (8) The Building and Other Construction Workers’ Welfare Cess Act, 1996; and (9) The Unorganised Workers’ Social Security Act, 2008.

^[2] As on date, Sections 1 to 14, Sections 17 to 141, Sections 144 to 163, and specified parts of Sections 15, 16, 143 and 164 stand enforced, subject to express exclusions referenced in earlier notifications issued in May 2023. Consequently, most operational chapters of the SS Code are now legally in force. The November 21, 2025, notification was subsequently clarified by a corrigendum dated December 19, 2025, which corrected the scope of certain provisions and exclusions.

^[3] Once a chapter becomes applicable to an establishment, it continues to apply even if employee strength subsequently falls below the prescribed threshold prescribed in the First Schedule of the SS Code.

^[4] Defined in the SS Code as “the engagement of an employee on the basis of a written contract of employment for a fixed period…..”.

^[5] States such as Andhra Pradesh, Telangana and Karnataka which have already notified compulsory gratuity insurance rules will continue to be governed by those rules until replaced by notifications issued under the SS Code.

^[6] “approved gratuity fund” means a gratuity fund which has been and continues to be approved by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in accordance with the rules contained in Part C of the Fourth Schedule of the Income-tax Act, 1961.

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