Worker Under the Code on Social Security: Contributions

 

Animay Singh
Simpliance COE

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Worker Under the Code on Social Security Contributions

Introduction

The definition of worker is one of the key aspects to be interpreted to understand the changes brought in by any of the four new labour Codes. Our earlier blog in this series examined the definition of worker under the Code on Wages. In this post we shall analyze the use of the term worker under the Code on Social Security, 2020. The above shall shed light on the reasons behind the use of the term and its impact on social security contributions.

Prima facie reading of the Code reveals that several terms are suffixed with worker. Terms such as building worker, gig-worker, home-based worker, inter-State migrant worker, platform worker, unorganized worker and wage worker all have individual definitions. However, one may observe that the term worker itself has not been defined under the Code.

This may seem puzzling in certain contexts, for example, the definition of contract labour is defined completely on the basis of the term worker. Thus, if questions were raised as to who may be considered a worker, there is no definition that can be referred to.

While the above is a general overview of the Code’s use of the term worker, the subsequent section shall delve into its impact on contributions. It shall also examine instances where the term employee is used instead of worker and the reasons for the same. This analysis shall provide readers with an understanding of the possible intent behind the use of employee and worker, respectively. This shall also provide an understanding as to why the term worker has not been defined.

Analysis of Code & Impact on Contributions

This analysis shall commence with an overview of the provisions of Chapter-III pertaining to Employees’ Provident Fund (EPF). Section-15 which establishes the scheme of contributions under the Code uses the term employee. The term worker is not used at all throughout the Chapter, with the language of the text using the employer-employee distinction to provide for all contribution related aspects. The reason for this may be due to the wide interpretation that the term employee carries. Unlike the definition of worker under other Codes, it is not limited by any salary caps or by the nature of a person’s employment i.e., supervisory/administrative/managerial.

The above is a pertinent observation from a general perspective as well, as it is the most fundamental difference between employee and worker.

In Chapter-IV pertaining to Employees’ State Insurance the terms insured person and employee are used throughout. The former is defined under Section-28(2) as an employee whether insured or insurable, in respect of whom contributions are or were payable. The applicability of the Chapter is explained in terms of employee as well, leading us to the same conclusion as the EPF portion of the Code. The language employed in this Chapter has intentionally used the term employee to ensure the maximum number of people are covered. Worker is only found in the context of the power vested in the Central Government to notify schemes under ESI for unorganized workers, gig workers and platform workers.

Chapters V to VII pertaining to gratuity, maternity benefit and employee compensation exhibit a similar trend.

It is only in the subsequent chapters that we see the term worker reappear in the form of a suffix to specific categories of workers. These Chapters mainly pertain to social security for such specific types of work. Chapter-VIII relates to cess aimed at providing social security for building workers. Whereas Chapter-IX relates to social security for unorganized workers, gig workers and platform workers based on a scheme of contributions to be fixed by the appropriate/Central Government.

Conclusion

From the above it is clear that the Central Government wants to create distinct categories of persons falling under the terms employee and worker, respectively. Based on our analysis of the use of the terms it is also evident that while all workers are employees, all employees are not workers. The reason behind the use of such language in the Code is to ensure targeted benefits reach specific categories of workers. While general benefits availed through provident fund contributions, ESI contributions, maternity benefit, gratuity etc. reach the widest number of working persons.

The above is the major reason as to why the definition of worker has not been defined as such a general definition is not necessary under a scheme where employee is used for benefits that accrue to the working population at large. Thus, the applicability of the Code on Social Security, 2020 and its scheme of contributions can be understood through the use of the above terms.

Do you have any questions relating to the application of a particular Chapter to your establishment?

Drop your thoughts in the comments below.

Disclaimer: This blog is meant for informational purposes and discussion only. It contains only general information about legal matters. The information provided is not legal advice and should not be acted upon without seeking proper legal advice from a practicing attorney.
Simpliance makes no representations or warranties in relation to the information on this article.

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