Reconsidering Social Security in a Changing Labour Landscape

Introduction

One of the pillars of a welfare state is social security. It can be defined as the insurance that is given to the population of a society to protect them in case of financial instability in their lives, due to old age, unemployment, maternity, occupational injuries or the death of a breadwinner. Social security is not a welfare measure, but in a country such as India, where most people in the labour force are in the informal sector, social security is an essential element of economic justice and social stability.

Table of Contents

The labour law system in India, until recently, was disjointed, a patchwork of various laws which were often convoluted, overlapping, and could not respond to modern labour conditions. The Government of India appreciates the necessity of reform and amalgamated nine principal labour laws into one unified structure, which is the Code on Social Security, 2020 (hereinafter “the Code” or “SS Code”). This groundbreaking legislation will seek to give workers in both the organised and unorganised sectors, such as gig and platform workers, a single system of social protection, and make compliance easier and wider.

Although the Code is a notable breakthrough in the Indian history of labour welfare, the way it is implemented and interpreted is subject to serious questions. This article examines the salient features of the Code, its relevance in the changing world of work, the inclusion of gig workers, the challenges it faces, and the way forward.

History and Reform

The development of the social security system in India was slow, starting with legislations like the Workmen Compensation Act, 1923 and extending to the Employees Provident Funds Act, 1952, the Employees State Insurance Act, 1948, and the Maternity Benefit Act, 1961. Nevertheless, the timing of the enactment of these laws, the groups of workers to which they applied, and their definitions and eligibility requirements varied. This created a patchy system that was hard to navigate, and it excluded the majority of informal workers.

The Second National Commission on Labour (2002) suggested that consolidation of these laws should be done to enhance coverage and compliance. This vision is reflected in the Social Security Code, 2020, which came into effect on 29 September 2020, and consolidates nine core labour laws into a single legal framework, simplifies definitions, minimises administrative overheads, and strives to deliver social security to all workers, regardless of whether they are involved in a traditional employment relationship or a more modern form of work.

Salient Features of the Code on Social Security, 2020

The Code contains several groundbreaking provisions:

Expanded Definitions: It expands the term “employee” to cover managerial, supervisory, and administrative workers and those hired by contractors.
Inter-State Migrant Workers: The definition now includes workers moving with new employment units within a destination state with a wage ceiling of ₹18,000 per month.
Voluntary Coverage: Employments which have less than the legal minimum number of employees can take out the schemes of the Employees Provident Fund (EPF) and Employees State Insurance (ESI).
Standardised Wage Definition: No less than half of total remuneration should be classified as wages so that contribution calculations cannot be manipulated.
Gratuity and Maternity Benefits: Gratuity shall be paid to working journalists after three years and to employees on fixed terms on a pro-rata basis. Medical bonuses are also given during maternity leave to 26 weeks.
Stricter Fines and Restrictions: Fines are applicable up to ₹3,00,000 in case of repeat offences, and a one-year limitation period is established for EPF and ESI proceedings.
Career Centres: These replace employment exchanges and provide vocational guidance, counselling, and job matching services.

Planning to Include Gig and Platform Workers: Extending the Frontiers of Social Security

Probably one of the most impressive and futuristic features of the Social Security Code is the status of gig workers and platform workers, a phenomenon that will demonstrate the nature of work in the 21st century. The gig economy describes a type of labour market where workers participate in short-term, freelance, or task-based work commonly supported by digital platforms. They can be food delivery agents, ride-hail drivers, freelance designers, and app-based service providers. India already has one of the largest gig workforces in the world, and it is expected to grow exponentially in the next decade.

Before the Code was enacted, this group of workers existed in a legal vacuum. Gig employees did not have job security, stable earnings, health insurance, maternity or savings at retirement, all of which are essential to long-term social and economic stability. Their employment is not normally governed by employer-employee relationships; thus, most of the existing labour laws did not apply to them. This produced a workers group that was extremely vulnerable to exploitation, income fluctuations, and inability to access safety nets when they fell sick, suffered accidents or had their jobs taken away.

Provisions for Gig and Platform Workers

The Social Security Code tries to overcome this loophole by granting statutory treatment to gig and platform workers. The term gig worker refers to a person who enters into work arrangements that are not the result of a standard employment relationship, whereas the term platform worker describes a person who uses online platforms to deliver services. As required by the Code, they must be registered (self-declared), and the central government has the authority to develop schemes for their benefit, such as:

Health and maternity benefits
Accident and life insurance
Skill development programs
Housing support
Provident fund and pension schemes

Challenges in Implementation

Nevertheless, while the inclusion is a positive move, a number of challenges remain:

The terms gig, platform, and unorganised workers are often used interchangeably, creating confusion about eligibility and benefits.
Lack of awareness among gig workers regarding registration procedures and entitlements.
Weak enforcement mechanisms and unclear funding models for social security schemes.
Ambiguity about contribution responsibilities between aggregators and the government.

In spite of these shortcomings, the Code forms the basis of a new era of social protection—one that appreciates and protects the workforce behind the Indian digital economy.

Difficulties and Unresolved Problems of Implementation

Although the Code on Social Security is ambitious, it has several structural and practical challenges which, unless addressed immediately, would cripple its effectiveness^[3].

Lazy Definitions and Duplications

Gig worker, platform worker and unorganised worker are typically defined in a way that overlaps with each other, creating administrative confusion. One employee might be considered in more than one category, and it would be ambiguous which schemes would apply. It may lead to delays, duplication and/or even denial of benefits.

In addition, such vital segments of the population, like domestic workers, agricultural labourers and ASHA/Anganwadi workers, have remained implicit and are thus vulnerable despite their necessary contributions to the economy.

Broken Implementation and Institute Gaps

The Code does not offer a precise roadmap to coordinate between the central and state schemes. Social security programmes are managed on a state basis in many cases, and how they will be integrated with new central schemes is not clear. This is especially challenging to migrant workers, who often cross state borders and need benefits to be portable.

The absence of solid inter-state cooperation and institutional capacity will make the promise of universal coverage in the Code largely aspirational.

Limited Reach and Threshold-Based Coverage

The Code continues to establish wage limits and establishment-size limits and keeps out of the purview of compulsory benefits many workers, although its definition has been broadened. Smaller groups of fewer than ten workers, as well as self-employed people, continue to rely on discretionary schemes, reproducing the inequalities of the former system.

The Second National Commission on Labour recommendations on the abolition of wage ceilings and the extension of coverage to all workers were not enforced completely.

Aadhaar, Privacy, and Constitutional Issues

Perhaps one of the most important issues is the fact that the Code requires workers, even in the unorganised sector, to give their Aadhaar number to obtain and receive social security benefits. This need has significant constitutional consequences.

In the historic Justice K.S. Puttaswamy (Retd.) v. Union of India (2017), a nine-judge bench of the Supreme Court decided that privacy is a fundamental right, as stated in Article 21 of the Constitution. The Court passed a judgement stating that only benefits funded by the Consolidated Fund of India would be made mandatory by Aadhaar.

Social securities such as provident fund and gratuity are usually not paid using state finances but by employees and employers. The requirement of Aadhaar in such instances would then be unconstitutional. Moreover, the requirement carries the danger of exclusion, particularly because informal workers might not have adequate documentation, and poses data protection issues in the event of inefficient privacy controls.

The Code should maintain equilibrium between administrative expediency and constitutional rights, so that no employee could be refused access to it on procedural considerations.

Administrative Capacity and Awareness

It will take significant administrative resources, computer infrastructure, and awareness initiatives to execute the ambitious goals of the Code. The process of registering millions of informal, gig, and migrant workers is challenging, and without effective outreach, many of these eligible workers may never receive what they are entitled to.

Besides, there may be poor compliance and low accountability due to a lack of capacity in the enforcement agencies.

As much as the Social Security Code is a revolutionary document of legislation, its potential will take time to be realised once it has been implemented and revamped. Its effect can be reinforced by the following measures^[4]:

Definitions: Clarify and harmonise the definitions between gig, platform, unorganised, and self-employed workers to maintain clarity and target the benefits.
Improve Portability and Inter-State Coordination: Build a national structure and online platform that will add portability of benefits across state borders, particularly for migrant workers.
Make Registration Privacy-Compliant: Have alternative identification and robust data protection systems in place so that the Aadhaar requirement does not create discrimination or constitutionality problems.
Increase Compulsory Benefits: Gradually abolish wage ceilings and establishment size thresholds to achieve universal social security coverage.
Enhance Institutional Capacity: Invest in digital networks, streamline registration efforts, and introduce awareness campaigns to ensure workers know and can exercise their rights.
Inclusion of Marginalised Groups: Provide essential coverage to domestic workers, agricultural workers, and community health workers who remain outside the social security framework.

The Code on Social Security, 2020, is a watershed in the history of Indian labour laws. It recognises the changing realities of the workforce, broadens the opportunities of social protection, and pulls previously marginalised groups into the remit of legal protection, such as gig and platform workers. It makes compliance easier, enforcement more effective, and preconditions a more just and inclusive social protection regime.

But laws cannot ensure social justice. The real test of the success of the Code will be its implementation effectiveness — how well the Code reaches the unorganised, the migrant, the gig worker and the vulnerable. Developing a unified, encompassing, and constitutionally viable social security framework is not only a policy necessity but also an ethical one as India nears a demographic transition and gears up to the issues of an ageing society.

The Code on Social Security, 2020, is a crucial move in that direction, though the work toward a fair and all-encompassing welfare state is only beginning.

End Notes:

Tanvi Gupta, Social Security Code, 2020, 4 Int’l J.L. Mgmt. & Human. 3742 (2021)
Suresh Nadagoudar & Rajashree Patil, Social Security Code 2020: An Analysis, 10 Christ U. L.J. 19 (2021), https://doi.org/10.12728/culj.19.2
Anannya Gupta & Kajal Chandra, Concept of Social Security: An Analysis of Code on Social Security, 2020, 2 Indian J.L. & Legal Rsch. (2020)
Priyanka Puri, Relevance of New Social Security Codes in Indian Labour Scenario, 13 Int’l J. Creative Res. Thoughts (2025)

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