By Tejaswini Choudhary
Abstract
The Social Security Code, 2020 is a significant legislative overhaul aimed at regulating and
simplifying social security provisions in India for not only the organized sector but also the
unorganized sector. This article provides a comparative analysis between the previously
existing and longstanding legislation, the Employees’ Compensation Act, 1923, and the
Social Security Code, highlighting key amendments and improvements. Through this
comparison, the article demonstrates how the new legislation introduces broader coverage
and modernizes provisions to better suit contemporary employment scenarios. Ultimately, the
Social Security Code signifies a step forward in ensuring comprehensive social security
coverage for all Indian employees, potentially improving the lives and well-being of millions
across the country.
Introduction
Social Security Code, 2020
The Social Security Code of 2020 (hereinafter referred to as “the Code”) was passed by Lok Sabha and Rajya Sabha on September 22, 2020 and September 23, 2020, respectively. The Code, 2020 got the President’s assent on September 28, 2020, and was published in the official gazette on September 29, 2020.
Employees’ Compensation Act, 1923
The Employee’s Compensation Act, 1923 also known as the Workers’ Compensation Act, 1923 (hereinafter referred to as “the Act”) is a piece of law that establishes provisions for employees who sustain injuries or impairments as a result of and over the span of their occupation are qualified for compensation. The Act is one of the nine central labour laws which the Code is brought to replace.
The Act requires employers to provide compensation to employees injured or disabled during the course of their employment. It established procedures for calculating compensation in case of death, disablement, medical bills and lost wages. Overall, the Act aimed to ensure fair and timely compensation for employees affected by workplace injuries.
Comparative Analysis
- Definition of “competent authority”
“Competent Authority” is not defined or mentioned in the Act but under the Code, a “competent authority” is designated based on specific chapters, such as Chapters V, VI, or VII. Further in Chapter VII, Section 90 of the Code states that disputes related to compensation or disability issues, regardless of employment status, must be resolved by a competent authority and civil courts cannot intervene in matters assigned to competent authorities under Chapter VII.
- Definition of “Employee”
As per the provisions of the Code, an “employee” is any individual engaged in any kind of economic activity, irrespective of remuneration. This definition extends to the platform, workers, gig workers, and self-employed individuals, ensuring wide coverage across various employment arrangements.
- Amount of Compensation
A vital change has been made regarding the Amount of Compensation given to an employee in case of death and permanent total disablement. In the Code, in case of death, the amount of one lakh and twenty thousand, and in case of permanent total disablement, the amount of one lakh and forty thousand both have been replaced by “an amount as may be notified by the Central Government from time to time, whichever is more”
- Funeral Expenses:
Further, a key change has been made in regard to the funeral expenses. In the Code, the funeral expense has been increased from “Rs. 2,500” in case of demise to “not less than Rs. 15,000 or such amount prescribed by the state government.”
- Creation of a social security fund:
The Code establishes a dedicated fund for social security which is aimed to provide an array of benefits such as maternity support, disability assistance, and old age pensions. Contributions from businesses, workers, and the government will be pooled to support the fund.
The article further states the changes that have brought by the Code through the table below which provides a clear distinction between the Act and the Code.
| S. No. | Comparison Factor | Employers Compensation Act, 1923 | Social Security Code, 2020 |
| Definition of “competent authority” | N/A | Section 2 (16) “competent authority” means any authority appointed under section 58 for the purposes of Chapter V or notified for the purposes of Chapter VI or appointed under section 91 for the purposes of Chapter VII, as the case may be, as competent authority by the appropriate Government or the State Government, as the case may be | |
| Definition of “Employee” | Section 2 (dd) “employee” means a person, who is— (i) a railway servant as defined in clause (34) of section 2 of the Railways Act, 1989 (24 of 1989), not permanently employed in any administrative district or sub-divisional office of a railway and not employed in any such capacity as is specified in Schedule II; or (ii) (a) a master, seaman or other member of the crew of a ship,(b) a captain or other member of the crew of an aircraft, (c) a person recruited as driver, helper, mechanic, cleaner or in any other capacity in connection with a motor vehicle,(d) a person recruited for work abroad by a company, and who is employed outside India in any such capacity as is specified in Schedule II and the ship, aircraft or motor vehicle, or company, as the case may be, is registered in India; or (iii) employed in any such capacity as is specified in Schedule II, whether the contract of employment was made before or after the passing of this Act and whether such contract is expressed or implied, oral or in writing; but does not include any person working in the capacity of a member of the Armed Forces of the Union; and any reference to any employee who has been injured shall, where the employee is dead, include a reference to his dependants or any of them;] | Section 2 (26) “employee” means any person (other than an apprentice engaged under the Apprentices Act, 1961) employed on wages by an establishment, either directly or through a contractor, to do any skilled, semi-skilled or unskilled, manual, operational, supervisory, managerial, administrative, technical, clerical or any other work, whether the terms of employment be express or implied, and also includes a person declared to be an employee by the appropriate Government, but does not include any member of the Armed Forces of the Union: | |
| Amount of Compensation | Section 4 (1) Subject to the provisions of this Act, the amount of compensation shall be as follows, namely:(a) where death results from the injury an amount equal to [fifty per cent.] of the monthly wages of the deceased 1 [employee] multiplied by the relevant factor; or an amount of 4 [one lakh and twenty thousand rupees], whichever is more; (b)where permanent total disablement results from the injury an amount equal to [sixty per cent.] of the monthly wages of the injured 1 [employee] multiplied by the relevant factor; or an amount of 6 [one lakh and forty thousand rupees], whichever is more: | Section 76 (1) Subject to the provisions of this Chapter, the amount of compensation shall be, — (a) where death results from the injury, an amount equal to fifty per cent. of the monthly wages of the deceased employee multiplied by the relevant factor or an amount as may be notified by the Central Government from time to time, whichever is more; (b) where permanent total disablement results from the injury, an amount equal to sixty per cent. of the monthly wages of the injured employee multiplied by the relevant factor or an amount as may be notified by the Central Government from time to time, whichever is more: Provided that the Central Government may, by notification, from time to time, enhance the amount of compensation specified in clauses (a) and (b). | |
| Funeral expenses | Section 4 (4) If the injury of the 2 [employee] results his death, the employer shall, in addition to the compensation under sub-section (1), deposit with the Commissioner a sum of 3 [two thousand and five hundred rupees] for payment of the same to the eldest surviving dependant of the 2 [employee] towards the expenditure of the funeral of such 2 [employee] or where the2 [employee] did not have a dependant or was not living with his dependant at the time of his death to the person who actually incurred such expenditure.] | Section 76 (7) If the injury of the employee results in his death, the employer shall, in addition to the compensation under sub-section (1), deposit with the competent authority a sum of not less than fifteen thousand rupees or such amount as may be prescribed by the State Government, for payment of the same to the eldest surviving dependant of the employee towards the expenditure of the funeral of such employee or where the employee did not have a dependant or was not living with his dependant at the time of his death, to the person who actually incurred such expenditure: | |
| Interest and damages on compensation to be paid when due and penalty for default | N/A | Section 77 (4) The interest and the damages payable under sub-section (3) shall be paid to the employee or his dependant, as the case may be. | |
| Distribution of Compensation | Section 8(2) Any other sum amounting to not less than ten rupees which is payable as compensation may be deposited with the Commissioner on behalf of the person entitled thereto. | Section 81 (2) Any other sum amounting to not less than five thousand rupees which is payable as compensation may be deposited with the competent authority on behalf of the person entitled thereto. | |
| Formation of a Social Security Fund | N/A | Section 141 (1) There shall be established by the Central Government a Social Security Fund for social security and welfare of the unorganised workers, gig workers and platform workers and the sources of the fund shall comprise of funding received— (i) under sub-section (3) of section 109; (ii) under sub-section (3) of section 114; (iii) from the composition of the offences under this Code relating to Central Government and from any other Social Security Fund established under any other central labour law. (2) A separate account shall be established and maintained for the funding mentioned under each of the clauses (i), (ii) and (iii). (3) Social Security Fund referred to in sub-section (1) shall be expended for the purposes for which each separate account has been established and maintained under sub-section (2). (4) The Social Security Fund shall be established and administered in the manner prescribed by the Central Government. (5) There shall be established by the State Government a Social Security Fund for the welfare of the unorganised workers in which there shall be credited the amount received from— (i) the composition of offences under this Code relating to the State Government; and (ii) such other sources as may be prescribed by the State Government, and the fund shall be administered and expended for the welfare of the unorganised workers in such manner as may be prescribed by the State Government. |
Conclusion
On one hand, the Code is a comprehensive consolidation of various labour enactments, on another, the Act has served as a longstanding statute governing compensation for workplace injuries. While analysing several significant differences and improvements emerged. The Code, passed to regulate both organized and unorganized sectors, consolidates and simplifies provisions related to social security. It introduces a broader definition of “employee,” encompassing various employment arrangements such as platform workers and gig workers. Comparatively, the Act, altogether serving as a foundational piece of legislation, lacks the provision as per current situations and broader coverage that was found in the Code. Overall, the Code on Social Security is an important step toward ensuring that all Indian employees get complete social security coverage and has the potential to enhance millions of people’s lives and general well-being.
Author’s Bio
By Tejaswini Choudhary, 3rd-year student at Dr. B. R. Ambedkar National Law University, Sonipat
Image Source: https://www.shutterstock.com/image-photo/employee-rights-employment-equality-job-hands-258194081
NICKELED AND DIMED 