Definitions
Section 1. Short title extent, commencement and application.
1(1).
This legislation is named the Code on Social Security, 2020.
1(2).
It applies to the entire territory of India.
(3).
It comes into effect on a date that the Central Government will notify in the Official Gazette.
The government may notify different commencement dates for different provisions of the Code.
Whenever a provision refers to the "commencement of this Code," it should be understood as referring to the date that specific provision comes into force.
(4).
The Chapters listed in columns (1) and (2) of the First Schedule shall apply as described in column (3) of that Schedule.
This is in addition to the applicability of the other provisions of the Code.
(5).
This sub-section applies despite what is stated in sub-section (4).
If the Central Provident Fund Commissioner is satisfied that the employer and the majority of employees of an establishment have agreed to apply Chapter III to that establishment, he may act on it.
This satisfaction may come from an application made by the employer or from any other source.
The Commissioner may issue a notification applying Chapter III to that establishment.
The Chapter will apply from the date of the agreement or from any later date mentioned in the agreement.
If an establishment has already been brought under Chapter III through this sub-section and the employer wants to discontinue that applicability, the employer may apply to the Central Provident Fund Commissioner.
The Commissioner must be satisfied that the employer and the majority of employees have agreed to withdraw the applicability of Chapter III.
If satisfied, the Commissioner will make Chapter III no longer applicable to that establishment.
This will be done in the manner and subject to the conditions prescribed by the Central Government.
(6).
The Central Government can decide to apply the provisions of this Code to any establishment.
Before doing so, it must give at least two months’ notice of its intention.
The application is made through a formal notification.
The notification will specify the minimum number of persons the establishment must employ for the Code to apply.
(7).
This provision applies despite what sub-section (4) states.
If the Director General of the Corporation finds that the employer and the majority of employees of an establishment have agreed to apply Chapter IV to that establishment, he may act on it.
This finding may be based on an application from the employer or from any other source.
The Director General may issue a notification applying Chapter IV to that establishment.
The Chapter will apply from the date of the agreement or from any later date mentioned in the agreement.
If an establishment has already been brought under Chapter IV through this sub-section and the employer wants to end that applicability, the employer may apply to the Director General of the Corporation.
The Director General must be satisfied that the employer and the majority of employees have agreed to discontinue the applicability of Chapter IV.
If satisfied, the Director General will make Chapter IV no longer applicable to that establishment.
This will be done in the manner and subject to the conditions prescribed by the Central Government.
(8).
This rule applies despite what is stated in sub-section (4).
Once a Chapter of this Code becomes applicable to an establishment for the first time, it will continue to apply thereafter.
This continued applicability remains even if the number of employees later falls below the threshold mentioned in the First Schedule for that Chapter.
Chapter III deals with the Provident Fund, which provides key social security benefits.
The law allows voluntary opting-in so smaller establishments can access these benefits even if they don’t meet the threshold.
It supports employee welfare and long-term financial security.
It gives flexibility where both employer and employees mutually agree.
It avoids delays in coverage that would otherwise depend on employee count.
Chapter IV relates to Employees’ State Insurance (ESI), which provides medical and disability benefits.
The law allows voluntary opting-in so establishments below the threshold can still access ESI coverage.
It ensures employees receive healthcare and insurance protection even in smaller units.
It gives flexibility when both employer and majority of employees want these benefits.
It expands social security coverage without waiting for workforce size to increase
Section 2: Definitions
2(1).
Agent
Agent means any person who acts on behalf of the owner of an establishment.
This includes someone even if not formally appointed.
The person must be involved in management, control, supervision, or direction of the establishment or any part of it.
2(2).
Aggregator
Aggregator means a digital intermediary or a marketplace that allows a buyer or user of a service to connect with the seller or service provider.
Digital intermediary means an online platform or app that acts as a link between two parties.
Marketplace means a digital space where different sellers or service providers offer their services.
2(3).
Appropriate Government
Appropriate Government means:
(a).
The Central Government is the appropriate government in the following cases:
When the establishment is run directly by the Central Government or under its authority.
When the establishment is part of a controlled industry notified by the Central Government.
Controlled industry means an industry placed under Central Government regulation through a notification.
When the establishment relates to railways, including metro railways, mines, oil fields, major ports, air transport services, telecommunications, banking, or insurance.
When the establishment is a corporation or authority created by a Central Act.
When it is a central public sector undertaking (CPSU), a subsidiary company of a CPSU, or a subsidiary of a principal undertaking.
When it is an autonomous body owned or controlled by the Central Government.
When contractors are engaged for work relating to such Central Government establishments or bodies.
When the company has at least 51 percent of its paid-up share capital held by the Central Government.
When the establishment has departments or branches operating in more than one State.
(b)
For any establishment that does not fall under the categories listed in clause (a), the State Government is the appropriate government.
This applies to ordinary private establishments, local businesses, shops, factories, and institutions operating within a single State.
Metro railway has the same meaning as given in sub-clause (i) of clause (1) of section 2 of the Metro Railways (Operation and Maintenance) Act, 2002.
Metro railway is a rail-based urban transport system built for rapid transit within a city.
Even if the Central Government’s equity falls below 50 percent after this Code comes into force, the CPSU will still be governed by the Central Government for the purposes of this Code.
So the reduction in shareholding does not change who the Appropriate Government is.
The Central Government remains the authority for that undertaking regardless of its lower equity stake.
2(4).
Audio-Visual Production
Audio-visual production means any audio-visual content produced fully or partly in India. It includes:
(i).
Animation, cartoon depiction, and audio-visual advertisements.
Animation and cartoons refer to computer-generated or hand-drawn moving visuals.
Audio-visual advertisement means promotional content combining sound and visuals.
(ii).
Digital production or any activities involved in making digital content.
This includes filming, editing, sound work, graphics, or any step in creating digital media.
(iii).
Feature films, non-feature films, television shows, web-based serials, talk shows, reality shows, and sports shows.
Feature films are full-length movies.
Non-feature films include documentaries, short films.
Web-based serials are series released on online platforms.
2(5).
Authorised Officer
Authorised Officer means an officer of the Central Board or an officer of the Corporation who is notified by the Central Government.
Central Board refers to the body that administers the Provident Fund provisions.
Corporation refers to the Employees’ State Insurance Corporation (ESIC).
The officer becomes “authorised” only when the Central Government officially notifies their designation for this purpose.
2(6).
Building or Construction Work
Building or other construction work refers to activities such as construction, alteration, repairs, maintenance, or demolition connected to a wide range of structures and infrastructure.
It includes work related to:
Buildings, streets, roads, railways, tramways, and airfields.
Irrigation, drainage, embankment, navigation works, and flood control (including storm-water drainage).
Power generation, transmission, and distribution.
Water works, including channels used for distributing water.
Oil and gas installations.
Electric lines, internet towers, wireless, radio, television, telephone, telegraph, and overseas communication systems.
Dams, canals, reservoirs, watercourses, tunnels, bridges, viaducts, aqueducts.
Pipelines, towers, cooling towers, and transmission towers.
Any other similar construction work that the Central Government may notify
But it does not include the following:
Construction related to any factory or mine.
Construction work where fewer than ten workers were employed in the past twelve months.
Work done for the personal residential use of an individual or group of individuals, provided:
The total cost does not exceed fifty lakh rupees (or a higher amount notified by the Government).
The work employs no more than the number of workers fixed by the appropriate Government
2(7).
Building Worker
Building worker means a person who:
Is employed to perform skilled, semi-skilled, or unskilled work.
May also perform manual, technical, or clerical tasks.
Works for hire or reward, meaning they are paid for their work.
May have express employment terms (written or spoken) or implied terms (understood through conduct).
Works in connection with any building or other construction work.
But it does not include:
A person mainly employed in managerial, supervisory, or administrative roles.
2(8).
Building Workers Welfare Board
The Board set up by the State Government for the welfare of building and construction workers.
It is established under sub-section (1) of section 7 of this Code.
This Board administers welfare schemes, benefits, and funds for registered building workers.
2(9).
Career Centre
Career centre means an office or platform set up and maintained as per rules made by the Central Government.
It may include an employment exchange, a physical office, an online portal, or any digital or virtual system.
The career centre provides career services such as registration, collecting information, and giving information.
These services may be done manually, digitally, virtually, or through any other mode.
The Central Government will prescribe the exact functions and manner of operation.
The centre may deal with the following:
(i). Persons who want to hire employees.
(ii). Persons who are seeking employment.
(iii). Information about vacancies that occur.
(iv). Persons seeking vocational guidance, career counselling, or guidance for starting self-employment.
2(10).
Central Board
The Board of Trustees of the Employees Provident Fund.
This Board is established under section 4 of the Code.
It is responsible for administering and managing the Employees' Provident Fund and related schemes.
2(11).
Central Provident Fund Commissioner
The head official of the Central Board who oversees the administration of the Employees’ Provident Fund.
This Commissioner is appointed under sub-section (1) of section 14.
The role includes supervision and implementation of provident fund schemes and related functions.
2(12).
Child
Child for the purposes of Chapter VI includes a stillborn child.
Stillborn child means a child born without signs of life after pregnancy.
Chapter IV deals with Maternity Benefit Act.
2(13).
Commissioning Mother
Commissioning mother means a biological mother who uses her own egg to create an embryo that is implanted in another woman (a surrogate).
She is genetically related to the child even though another woman carries the pregnancy.
2(14).
Company
Company means a company as defined in clause (20) of section 2 of the Companies Act, 2013.
This includes companies incorporated under the Act, such as private and public limited companies.
2(15).
Compensation
Compensation means the compensation provided under Chapter VII.
This relates to payments or monetary relief specified for injuries, accidents, or similar events covered by that Chapter VII.
2(16).
Competent Authority
An authority appointed under section 58 for matters under Chapter V.
An authority notified by the Government for matters under Chapter VI.
An authority appointed under section 91 for matters under Chapter VII.
The appointment or notification is done by the appropriate Government or the State Government, depending on the situation.
Chapter V deals with Gratuity.
Chapter VI deals with Maternity.
Chapter VII deals with Employee Compensation.
2(17).
Completed Year of Service
A period of continuous service lasting twelve months.
Continuous service means the worker has not had breaks in service except for accepted interruptions like leave, sickness, or other permitted absences.
2(18).
Confinement
Labour that results in the birth of a living child.
Labour occurring after twenty-six weeks of pregnancy that results in the birth of a child, whether the child is alive or dead.
The term covers both live births and stillbirths, as long as the pregnancy has crossed twenty-six weeks
2(19).
Contract Labour
A worker is treated as contract labour when he is hired in or in connection with the work of an establishment by or through a contractor.
This applies whether or not the principal employer knows about the hiring.
It includes inter-State migrant workers who are supplied through contractors.
But it does not include:
An employee (other than a part-time employee) who is regularly employed by the contractor for the contractor’s own establishment.
This exclusion applies only when:
The employee’s service conditions are governed by mutually accepted terms.
They may be engaged on a permanent basis.
They receive regular increments.
They have a social security coverage.
They receives all other lawful welfare benefits.
2(20).
Contractor
Contractor in relation to an establishment means a person who:
(i).
Undertakes to produce a specific result for the establishment using contract labour.
This does not include situations where the person only supplies goods or finished products.
It applies when the contractor uses workers to achieve the required result.
(ii)
Supplies contract labour to the establishment purely as human resource for its work.
This means providing workers rather than goods or products.
The term includes a sub-contractor, meaning someone hired by the main contractor to perform part of the work or supply workers.
2(21).
Contribution
The amount of money that an employer is required to pay under this Code.
This payment may be made to the Central Board (for provident fund matters) or to the Corporation (for ESI matters), depending on the chapter.
It also includes any amount that the employee must pay or that is paid on behalf of the employee.
2(22).
Corporation
Corporation” means the Employees' State Insurance Corporation (ESIC).
This is the statutory body established under section 5 to administer ESI benefits and schemes.
2(23).
Delivery
Delivery means the birth of a child.
This refers to childbirth, regardless of the method of delivery.
2(24).
Dependant
Dependant means the following relatives of a deceased employee:
(a).
The following are dependants automatically and there is no need to prove dependence:
Widow
Minor legitimate or adopted son
Unmarried legitimate or adopted daughter
Widowed mother'
For Chapter IV only (ESI), a legitimate adopted son is considered a dependant until he turns 25 years, not 18.
(b).
These persons are dependants only if they were wholly dependent on the employee’s earnings at the time of death:
A legitimate or adopted son who is 18 years or older and infirm (meaning unable to earn due to physical or mental condition).
A daughter (legitimate or adopted) who is 18 years or older and infirm.
Wherever “18 years” appears in this sub-clause, it will be read as 25 years for ESI purposes.
(c).
These relatives are dependants if they were wholly or partly dependent on the employee’s earnings at the time of death:
(i).
Widower
(ii).
A parent other than a widowed mother.
(iii).
Minor illegitimate son.
Unmarried illegitimate daughter.
Married daughter (legitimate, illegitimate, or adopted) If she is a minor.
Widowed daughter (legitimate, illegitimate, or adopted) If she is a minor.
(iv).
Minor brother.
Unmarried sister.
Widowed sister, if she is a minor.
(v).
Widowed daughter-in-law.
(vi).
Minor child of a pre-deceased son.
(vii).
Minor child of a pre-deceased daughter if no parent of that child is alive.
(viii).
Grandparent if no parent of the employee is alive.
For sub-clause (b) and for items (vi) and (vii) of sub-clause (c), the terms son, daughter, and child also include an adopted son, daughter, or child.
So adopted children are treated the same as biological children for determining dependency under these specific parts.
2(25).
Dock Work
Dock work means any work done in or near a port that relates to loading, unloading, moving, or storing cargo into or from a ship, vessel, dock, storage area, or landing place.
It covers all work required for these activities or connected to them in any way.
Dock work includes:
(i). Work related to preparing ships or other vessels to receive cargo, discharge cargo, or leave the port.
(ii) All repair and maintenance work connected with any hold, tank, structure, lifting machinery, or any storage area on the ship or in the docks.
(iii). Chipping, painting, or cleaning of any hold, tank, structure, lifting machinery, or any other storage area on the ship or in the docks.
2(26).
Employee
• Any person employed on wages by an establishment.
• The employment may be direct (hired by the establishment) or through a contractor.
• The person may be doing skilled, semi-skilled, unskilled, manual, operational, supervisory, managerial, administrative, technical, clerical, or any other type of work.
• The terms of employment may be express (clearly stated) or implied (understood through conduct).
• It also includes any person whom the appropriate Government declares to be an employee.
But it does not include:
• An apprentice engaged under the Apprentices Act, 1961.
• Any member of the Armed Forces of the Union.
1. For Chapter III and Chapter IV:
• “Employee” means a person whose wages are less than or equal to the wage ceiling fixed by the Central Government.
• It also includes any other persons or class of persons that the Central Government may notify as employees for these Chapters.
• Wage ceiling means the maximum wage limit for eligibility under schemes like EPF (Chapter III) and ESI (Chapter IV).
2. Counting employees for coverage of an establishment:
• Even employees earning more than the wage ceiling must be counted to decide whether an establishment is covered under Chapter III or Chapter IV.
• This rule affects only coverage, not eligibility for benefits.
3. For Chapter VII:
• “Employee” includes only those persons listed in the Second Schedule.
• It also includes any additional persons or classes of persons that the Central Government or State Government (as applicable) may add to the Second Schedule through a notification.
• Chapter VII relates to compensation, so only the workers specified are treated as employees for that purpose.
2(27).
Employer
• A person who employs one or more employees in an establishment.
• The employment may be direct, through any person, on his behalf, or on behalf of another person.
• If the establishment is run by a department of the Central or State Government, the employer is:
– the authority specified by the head of the department, or
– if no authority is specified, the head of the department.
• If the establishment is run by a local authority, the employer is the chief executive of that authority.
The term “employer” also includes:
(a)
In the case of a factory, the occupier of the factory.
(b)
In the case of a mine, the owner, or the agent or manager with the required legal qualifications, appointed by the owner or agent.
(c)
For any other establishment, the person or authority with ultimate control over the establishment’s affairs.
• If the affairs are entrusted to a manager or managing director, then that manager or managing director is the employer.
(d)
A contractor.
(e)
The legal representative of a deceased employer.
2(28).
Employment Injury
A personal injury suffered by an employee.
• The injury must be caused by an accident or an occupational disease.
• The injury must arise out of (caused by work) and in the course of (during the period of work) the employee’s employment.
Employment injury applies differently for different Chapters:
(i) For Chapter IV (ESI)
• The employee must be an insured or insurable employee under section 28.
• The accident or disease may occur within or outside India.
• Insurable employee means someone eligible to be covered under ESI, even if not yet actually insured.
(ii) For Chapter VII (Compensation)
• The accident or occupational disease may occur within or outside India.
• There is no requirement that the employee be insurable under section 28, because Chapter VII is a separate compensation regime.
2(29).
Establishment
(a)
A place where any industry, trade, business, manufacturing activity, or occupation is carried on.
• This covers all commercial, industrial, and professional workplaces.
(b)
It also includes:
• A factory
• A motor transport undertaking
• A newspaper establishment
• An audiovisual production
• Building or other construction work
• A plantation
(c)
A mine, a port, or the vicinity of a port where dock work is carried out.
• For the purposes of Chapter III (Provident Fund), an establishment with different departments or branches is treated as one single establishment.
• This applies whether the departments or branches are located in the same place or in different places.
• All units will be considered parts of the same establishment when determining coverage, applicability, and obligations under Chapter III.
2(30).
Executive Officer
An executive officer is a government officer officially appointed or authorised to perform functions under Chapter XIII.
• An officer of the appropriate Government who is notified by that Government for the purposes of Chapter XIII.
• It also includes an officer who is authorised in writing by such executive officer to carry out duties under Chapter XIII.
2(31).
Exempted Employee
An exempted employee is someone who would have been covered under PF or ESI but is excluded due to a government-approved exemption or because their wage category is treated differently under ESI notifications.
For Chapter III (Provident Fund):
• An employee who would normally be covered under the PF schemes mentioned in section 15,
• but is excluded because an exemption has been granted under this Code.
• This usually applies to employees of establishments that run their own approved PF scheme instead of the statutory one.
For Chapter IV (ESI):
• An employee whose wage is specified in a notification issued by the Central Government, and
• Who is not required to pay the employee’s contribution under ESI.
2(32).
Factory
Factory means any premises (including its surrounding area) where:
(a).
Ten or more employees are working, or were working on any day in the last twelve months &
A manufacturing process is being carried out with the aid of power, or is usually carried out with power.
(b).
Twenty or more employees are working, or were working on any day in the last twelve months &
A manufacturing process is being carried out without the aid of power, or is usually carried out without power.
Exclusions
A factory does not include:
A mine.
A mobile unit of the Armed Forces.
A railway running shed.
A hotel, restaurant, or eating place.
Explanation 1:
When counting the number of employees to decide if a place is a factory, you must count all employees working in different groups or shifts (relays) during the day.
So, you do not count only one shift but instead you need to count everyone who worked at any time during that day.
Explanation 2
If a premises has an Electronic Data Processing Unit or a Computer Unit, it will not be treated as a factory unless a manufacturing process is actually being carried out there.
Simply installing computers or data-processing equipment does not make a place a factory.
2(33).
Family
Family” means any of the following relatives of an employee or an unorganised worker:
(a)
• Spouse.
(b)
• A minor legitimate or adopted child who is dependent on the employee or unorganised worker.
(c)
A child who is wholly dependent on the employee or unorganised worker and who is:
(i) receiving education until the age of 21 years; and
(ii) an unmarried daughter.
• This covers dependent adult children still studying.
(d)
• A child who is infirm (due to physical or mental abnormality or injury) and is wholly dependent on the earnings of the employee or unorganised worker, for as long as the infirmity exists.
(e)
• Dependent parents, including the father-in-law and mother-in-law of a woman employee,
• Their income must not exceed the limit prescribed by the Central Government.
• Dependent parents means they financially rely on the employee.
(f)
• If the employee or unorganised worker is unmarried and both parents are not alive,
• A minor brother or sister who is wholly dependent on the earnings of the insured person is included as family.
2(34).
Fixed-Term Employment
Fixed term employment means:
Employment based on a written contract for a specific, fixed period of time.
The employee knows the start and end date of the engagement.
Provided that:
(a).
A fixed-term employee must receive the same hours of work, wages, allowances, and other benefits as a permanent employee.
A fixed-term employee is only entitled to the same if he is doing the same or similar work.
(b).
A fixed-term employee is entitled to all benefits available to a permanent employee, but proportionately, based on the time actually worked.
This applies even if the employee has not completed the usual qualifying period required for that benefit.
Example: If a law requires 1 year of service for a benefit, a fixed-term employee working 6 months gets the benefit proportionately for 6 months.
2(35).
Gig-Worker
A person who performs work or participates in a work arrangement outside the traditional employer-employee relationship.
Commonly applies to platform-based or freelance-style work.
Earnings come from tasks, assignments, or gigs, not from a regular employment contract.
2(36).
Home-Based Worker
A person who produces goods or services from home or any place of their choosing (not the employer’s workplace).
They do the work for an employer and receive remuneration.
It does not matter whether the employer provides the equipment or materials.
2(37).
Inspector-cum-Facilitator
An officer appointed under section 122.
This officer is responsible for inspection, compliance, and guidance under the Code.
The officer acts both as an inspector and as a facilitator to help establishments comply with the law.
2(38).
Insurance Fund
Refers to the Deposit-Linked Insurance Fund created under section 16(1)(c).
This fund finances benefits under the Deposit-Linked Insurance Scheme.
2(39).
Insured Person
A person insured under section 28.
Generally refers to someone covered under the ESI (Employees’ State Insurance) system.
2(40).
Refers to the Deposit-Linked Insurance Scheme created under section 15(1)(c).
This scheme provides insurance benefits linked to deposits made under the Provident Fund system.
Insurance Scheme
2(41)
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Section 2. Definitions.
Section 3. Registration and cancellation of an establishment
