The Code on Social Security, 2020 consolidates nine existing social security legislations into a single comprehensive code. It covers provident fund, employee state insurance, gratuity, maternity benefit, employee compensation, building workers’ welfare, and unorganized workers’ social security. It notably extends social security coverage to gig workers and platform workers for the first time.

Detailed Explanation

The Code on Social Security represents India’s most ambitious attempt to universalize social security coverage. By merging nine separate Acts, it creates a unified framework for delivering retirement benefits, healthcare, maternity support, disability coverage, and welfare provisions to India’s diverse workforce.

The nine subsumed Acts include the EPF and Miscellaneous Provisions Act (1952), ESI Act (1948), Employees’ Compensation Act (1923), Employment Exchanges (Compulsory Notification of Vacancies) Act (1959), Maternity Benefit Act (1961), Payment of Gratuity Act (1972), Cine Workers Welfare Fund Act (1981), Building and Other Construction Workers’ Acts (1996), and the Unorganized Workers’ Social Security Act (2008).

For employers, key changes include alignment of the wages definition with the Code on Wages (basic at 50% minimum), potential expansion of EPF and ESIC coverage thresholds, simplified compliance through a single registration system, and new obligations related to gig and platform worker welfare. The Code introduces the concept of “aggregators” (platforms like ride-hailing and delivery apps) who must contribute a prescribed percentage of their annual turnover toward social security funds for gig workers.

The gratuity provisions under the Code align with the Payment of Gratuity Act but incorporate the new wages definition, potentially increasing gratuity liability for employers. Fixed-term employees are entitled to pro-rata gratuity regardless of tenure, a significant change from the current five-year requirement.

A Social Security Fund is proposed for unorganized workers, gig workers, and platform workers, funded through government contributions, aggregator contributions, and possibly worker contributions. The National Social Security Board and State Social Security Boards will administer these schemes.

Key Rules

Nine existing social security laws are consolidated into one Code
Gig workers and platform workers are included in social security coverage for the first time
Aggregators must contribute 1-2% of annual turnover toward gig worker social security
The wages definition aligns with the Code on Wages (50% basic wage threshold)
Fixed-term employees qualify for pro-rata gratuity regardless of service duration
A single registration system replaces multiple registrations under different Acts
Social Security Boards at national and state levels will administer schemes for unorganized workers

How TMS Helps

TMS is preparing clients for the Code on Social Security through impact analysis covering EPF, ESIC, gratuity, and maternity benefit obligations. We model the financial impact of the new wages definition on statutory contributions and help restructure compensation frameworks. For clients engaging gig and platform workers, we provide advisory on aggregator contribution requirements and compliance structures.

Related Terms

Labour Codes 2020
Provident Fund (EPF)
ESIC
Gratuity

The Code on Social Security is now in force: what changed on 21 November 2025

The most important update for employers is that the Code on Social Security, 2020 is no longer a proposal. It came into force on 21 November 2025 along with the other three Labour Codes, replacing the nine legacy Acts it consolidates. The operational question now is whether your payroll, gratuity provisioning and contribution structure are actually aligned with the new framework today.

Three consequences follow immediately. First, the unified wages definition now governs how provident fund, gratuity and other benefits are derived from salary structures, so CTC structures built around a low basic component need review. Second, fixed-term employees accrue gratuity on a pro-rata basis without the long qualifying service the Payment of Gratuity Act demanded, so every fixed-term contract now carries a gratuity provision from an early stage. Third, registrations and filings are being consolidated, and state rules are being notified on staggered timelines — track your locations rather than assuming uniform national dates. The TMS HR compliance calendar for 2026 tracks these deadlines month by month.

A practical transition checklist for employers

Most companies we audit have read the Code but not re-measured their exposure. A structured transition involves the following steps, in this order:

Re-map every salary structure against the new wages definition. Identify employees whose qualifying components fall below the mandated proportion of total remuneration, because their contribution base changes. Use the TMS PF calculator to model the revised employer outflow before finalising increment budgets.
Re-measure gratuity liability. The revised wage base and pro-rata entitlement for fixed-term staff both push the provision upward for most employers. The gratuity calculator shows the per-employee impact instantly.
Issue compliant appointment letters. Appointment letters are now mandatory for every employee — including legacy staff who never received one — and form the evidentiary basis for wage classification.
Review fixed-term and contract engagements. Fixed-term employees must receive parity in benefits with permanent staff doing the same work; this is now a statutory requirement, not a best practice.
Audit vendor compliance. Where staffing agencies or contractors supply workers, the principal employer's exposure under the new framework makes quarterly remittance verification essential.

Gig and platform workers: what aggregators must prepare for

The Code's most novel feature — statutory social security for gig and platform workers — moved from principle to machinery when the Central Government published draft rules in late December 2025. The framework links a gig worker's benefit eligibility to a minimum number of days of engagement with an aggregator during a financial year, with a higher combined requirement for workers operating across multiple platforms. Aggregators fund the schemes through the turnover-linked contribution the Code prescribes (the 1–2 per cent of annual turnover band), and registration of gig workers on the central database is the administrative backbone that makes claims possible.

For conventional employers the gig provisions matter in one scenario: businesses that engage delivery, field-service or platform-mediated workers through app-based models may qualify as aggregators without realising it — the definition turns on how work is intermediated, not on your industry. A classification review is the correct first step, and our statutory compliance team performs this as part of a Code impact assessment.

Benefit area	Legacy legislation (repealed)	What changes under the Code
Provident fund	EPF & MP Act, 1952	Contribution base recalculated on the unified wages definition; coverage framework retained
Health insurance (ESI)	ESI Act, 1948	Scheme continues; enabling provisions allow extension to more establishments and hazardous units
Gratuity	Payment of Gratuity Act, 1972	Pro-rata entitlement for fixed-term employees; wage base widened for calculation
Maternity benefit	Maternity Benefit Act, 1961	Entitlements preserved and carried into the consolidated Code
Gig and platform workers	No prior coverage	First-time statutory coverage, funded by aggregator contributions and administered through a central database

Frequently asked questions

Is the Code on Social Security 2020 in force now?

Yes. The Code came into force on 21 November 2025 together with the other three Labour Codes, replacing the nine social security enactments it consolidates. State-level rules are being notified progressively, so the practical compliance detail can differ by location. Employers should treat the Code — not the repealed Acts — as the operative law for payroll and benefits decisions.

Does the Code on Social Security apply to gig workers?

Yes, and this is its most significant innovation. Gig and platform workers are statutorily recognised and entitled to schemes covering life and disability cover, health and maternity benefits, and old-age protection. Draft central rules published in December 2025 set out the registration process, eligibility linked to days of engagement, and the aggregator funding mechanism.

How does the Code change gratuity for fixed-term employees?

Fixed-term employees now earn gratuity on a pro-rata basis without the long continuous service the earlier law required. Combined with the wider wage base, this materially increases the provision employers must carry for fixed-term contracts. Model the per-employee liability with the TMS gratuity calculator before signing renewal terms.

Will the new wages definition increase my PF cost?

For many employers, yes — wherever salary structures carry a low basic component and large allowances, the qualifying wage base rises and employer contributions rise with it. The exact impact depends on each employee's structure, so a line-by-line remapping beats any blanket estimate. All impact figures TMS provides are verified and date-stamped by the TMS compliance team.

Need a Code impact assessment for your organisation? Talk to the TMS compliance team — we will map your exposure and hand you a costed transition plan.

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