ABSTRACT
The decisive transformation of the Four Labour Codes in November 2025 is a breakthrough in the Indian labour law system as it consolidates the twenty-nine central legislations scattered across the nation into a unified and restructured regime. This paper analyses the “Code on Social Security, 2020”, and especially reforms brought about in the gratuity law under the ambit of the said code. It examines the expansion of social security coverage to fixed-term, gig, platform, and unorganized employees, the adoption of a unified definition of wages, mandatory government-imposed gratuity insurance, and the ease of requirements in the event of death or disability. The Code provides continuity and consistency of the law and improved protection of the employees and workers by holding on to the basic framework of the previous Act on the Payment of Gratuity, 1972 and making some progressive pragmatic reforms. Another crucial aspect which is emphasized in the article is the employer obligations and accountability, regulatory audits and oversight of compliance measures by concerned authorities to ensure that gratuity is paid timely and in a transparent manner. In general, the reforms aim at striking a balance between labour welfare and employer autonomy in a unified, streamlined, and contemporary labour legal framework.
Keywords: Social Security Code, Gratuity reforms, Fixed-term employment, Pro rata gratuity
BACKGROUND
On 21st November 2025, the Four Labour Codes have come into force by notifications issued by the Ministry of Labour and Employment,consolidating 29 fragmented central legislations which now stands repealed.[1] The respective 4 Codes are:
- The Code on Wages, 2019
- The Industrial Relations Code, 2020
- The Occupational Safety, Health and Working Conditions Code, 2020
- The Code on Social Security, 2020
This codification was done with the objective to make the labour legal ecosystem more contemporary and efficient with the necessary reforms for the effective reply to the longstanding challenges faced because of the outdated and multitudinous labour laws. It aims to ensure and promote transparency, inclusivity and growth in employment, safety, health, social and wage security. Moreover, it simplifies and harmonizes the compliance and enforcement legal procedure, thus reducing administrative burden and creating a balanced approach towards employer’s flexibility with the worker’s rights.
OVERVIEW OF THE CODE ON SOCIAL SECURITY, 2020
The Code on Social Security, 2020 is the law which primarily deals with the social security, gratuity, provident fund, and other employee’s benefits aspects. The Gratuity Law is a retirement benefit and is now covered under the ambit of “The Code on Social Security, 2020”. This Unified Code consolidates 9 existing complex labour laws i.e. (i) The Employee’s Compensation Act, 1923; (ii) The Employee’s Provident Funds and Miscellaneous Provisions Act, 1952; (iii) The Maternity Benefit Act, 1961; (iv) The Payment of Gratuity Act, 1972; (v) Employees’ State Insurance Act, 1948; (vi) Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959; (vii) Cine‑Workers Welfare Fund Act, 1981; (viii) Building and Other Construction Workers’ Welfare Cess Act, 1996; and (ix) Unorganised Workers’ Social Security Act, 2008. The code ensures simplified registrations and ease of compliance. With the contemporary digitized era, the code promotes ease of doing business through digital processes and records with a transparent and technology driven system such as Inspector cum facilitator under “Section 72 of the Code”.
The major key provisions and reforms introduced under this code are:.
- The scope of different sectors of workers has been broadened and recognized such as the code now includes the new definitions of Aggregator, Gig Worker, Platform worker, fixed term and unorganized workers [2]in order to extend the benefits and coverage of all the emerging categories of workers under “Sections 113 and 114 of the Code”.
2.Employee’s State Insurance is now applicable among the whole nation. Moreover, establishments with less than 10 employees may voluntarily opt for ESICmembership. But it is mandatory for every single worker involved in any hazardous occupations and plantations.[3]
- Employee’s Provident Fund (EPF) provisions now under this code are universally applicable to all establishments that have 20 or more employees [4]regardless of any specific industry or sector, and wherein the code removed the earlier provision of its categorical and industry specific listing in “Schedule 1 of the Employees Provident Fund & Miscellaneous Provisions Act, 1952.”
- Strengthens and promotes women centred provisions dealing with 26 weeks maternity leave, women safety, health, work from home facility and options, medical bonus, night shifts, nursing breaks and creche facility.
- A Social Security Fund is created in support for the unorganized, gig and platform workers financed partly through penalties.[5]
6.Accidents occurring during the period of commutation between home and workplace are now deemed employment related i.e. occurred in the course of employment and the affected employees or their families can receive compensation.
- Employee Provident Fund inquiries must be now initiated within 5 years and completed within 2 years (extendable by 1).
[1]Ministry of Labour & Employment, “Government Announces Implementation of Four Labour Codes to Simplify and Streamline Labour Laws” (21 Nov 2025)https://labour.gov.in/sites/default/files/pib2192463.pdf.
[2]Ibid.
[3]DattopantThengadi, “The Code on Social Security, 2020”, National Board for Workers Education & Development, https://dtnbwed.cbwe.gov.in/images/upload/The-Social-Security-Code_T1Z6.pdf.
[4] Ibid.
[5]PRS Legislative Research, “The Code on Social Security, 2020– PRS India”, https://prsindia.org/billtrack/the-code-on-social-security-2020.