India’s new labour codes: code on social security

For decades, India’s labor laws were a complex web- 29 different central statues, many dating back to colonial times. they were sector specific, often contradictory, and prone to ambiguous interpretation and cumbersome compliance. Recognizing that outdated regulations, after years of deliberation, stakeholder engagement, and political negotiation, the four new labor codes- on wages, code on industrial relations, codes on social security and codes on occupational safety- came into force in November 2025. These codes promise modernization of the labor landscape for over 500 million Indian workers.

Historical Context and Need for Reform

India’s old labor laws were designed for a different era. Many acts contained antiquated definitions of “workman,” “wages,” and “factory,” and fragmented administrative boundaries led to overlapping jurisdiction among central and state authorities. Key issues included:

• Ambiguity: Conflicting laws for similar subjects led to confusion and routine litigation.
• Exclusion: Millions of informal, casual, gig, contract, and self-employed workers fell outside the protection of these statutes.
• Compliance Burden: Small businesses struggled with complex licensing and filing requirements, hampering job creation.
• Economic Modernization: With the global economy demanding flexibility, skill mobility, and digital transformation, reform was overdue

Code on Social Security –

Introduction

social security is a system of protection that societies provide to ensure access to healthcare and guarantee income security in cases of old age, unemployment, sickness, disability, or maternity. it is recognized as a basic human right and includes social insurance programs funded by contributions, as well as social assistance programs financed by taxation. globally many people lack adequate or any social security protection particularly those in the informal economy. This dynamic concept has been given several meanings in different countries. the ILO has defined social security as “it is convenient to regard as social security services only as such schemes provide a citizen with benefit designed to prevent or cure disease, to support him when unable to earn and to restore him to gainful activity”.

In India, legislation have been enacted in order to provide for loss of earning that includes- industrial accidents and diseases, sickness, invalidity, maternity, retirement and unemployment benefits for certain section of industrial workers. It can broadly be classified into

1. The Employees Compensation Act,1923- It’s the act providing for quasi social insurance, where it provides for compensation to be paid to the dependents of the deceased employee on the occasion of death of the employee on or during the course of employment along with providing compensation for injuries caused within the scope of employment.
2. acts providing for unemployment benefits- the industrial disputes act, 1947 provides for payment of compensation in case of involuntary unemployment which includes cases of layoff retrenchment, closure and transfer of undertakings.
3. Acts providing for retrial benefits- several legislations such as bonus scheme act 1948, employees provident fund act and payment of gratuity act 1972 which are payable on retirement, resignation, termination of service and on rendering continuous services for more than 5 years in case of gratuity fall under this category
4. acts providing for social insurance- wherein employees state insurance act 1948 provides for sickness, disablement, medical and other benefits along with a provision to meet funeral expenses.

the code on social security,2020 has been enacted. it mainly aims to simplify 9 central legislations on social security that include:

• the employee’s compensation act 1923.
• the employees state insurance act 1948.
• the employees’ provident funds and miscellaneous provision act 1952.
• the employment exchange (compulsory notification of vacancies) act 1959.
• the maternity benefit act 1961.
• the payment of gratuity act,1972
• the cine- workers welfare fund act 1981.
• the building and other construction workers welfare cess act 1996.
• and the unorganized workers social security act 2008.

the SS code is the first legislation in the country that provided a definition for the terms “gigs workers” and “platform workers”.

Implementations and challenges of code of social security code and gig workers-

Due to the absence of regulations pertaining to this industry, gig workers in India have been facing ongoing difficulties. One of the primary causes is that, due to the aforementioned employment’s ambiguous nature, none of the labor laws apply to this kind of employer-employee relationship. The Industrial Relations Code is applicable to all workers in industrial units; but, in this instance, the Code is judged irrelevant because the employees are not given an employment site. The most important law that has to be put into effect on this is the Occupational Health, Safety, and Working Conditions Code, but it is likewise not relevant.

In view of this uncontrolled business, the introduction of the Social Security Code, 2020, which identified gig workers and enumerated certain welfare measures, was seen as a ray of hope. “A person performing a work or participating in a work arrangement and earning from such activities outside of traditional employer-employee relationships” is the definition of a gig worker under section 2(35) of the SS Code. The majority of the job is temporary, and it must be finished within the agreed-upon time frame. A platform worker is described as “a worker working for an organization which uses an online platform for providing specific services to individuals or organizations” under section 2(61) of the SS Code.

Section 2(86) of the SS Code defines an “unorganized worker” as “a self-employed, home based, or wage worker in the unorganized sector,” which is another phrase that the SS Code has particularly addressed. The provisions of various welfare schemes that the Central Government may occasionally offer for the unorganized sector are addressed in detail in Chapter IX of the SS Code. These schemes include life and disability insurance; (ii) health and maternity benefits; (iii) old age protection; (iv) education; and (v) any other benefit that the Central Government may deem appropriate. In addition to mandating the State Government to supply specific benefits like housing, employment benefits, etc., the Indian Constitution’s Concurrent List contains a section on labor law. Furthermore, the SS Code specifies the structure and procedures by which the Federal and State Governments may create program for the advantage of gig workers.

Judicial activism and social security labor code

judicial activism plays a crucial role in advancing social justice and ensuring the effective implementation of labor codes and social security laws in India. it involves the judiciary interpreting laws and the constitution to support worker rights and protections, even if such interpretations go beyond the letter of the law.

This activism is evident in various cases where the court have challenged and upheld workers right, such as in the context of bonded labor, workplace health and safety, and the right to organize and bargain collectively. the supreme court’s decisions, including landmark cases like Vishaka v. state of Rajasthan and air India v. Nargesh Merza, have been instrumental in extending protection to marginalized and vulnerable sections of society. judicial activism is a vital tool for socio transformation and empowerment, helping to bridge the gap between the aspiration of law and the urgent needs of the society. Litigation has not been facilitated by the Indian scenario’s non-recognition of gig workers.

Nonetheless, there has always been conflict over how to give unorganized workers a job and social protection. And one of the earliest instances that can be found that establishes the link between an employer and employee is Dhrangadhara Chemical Works v. State of Saurashtra,1340 which established that the main standard to confirm an employer-employee relationship is that of supervision and control. In essence, it indicates that there is a relationship between an employer and employee if the employer oversees the employee’s work and has control over the nature and style of work the employee completes.

Judicial activism and gig workers-

Judicial activism can impact gig workers by compelling courts to go beyond existing laws to provide protection.

In the case Ms. X v. ANI technologies private limited and others

The court ordered that the definition of “employee” under the POSH act is broad and based on the significant control ola exercised over its drivers, the relationship qualified as an employer -employee one for the purpose of the act.

The court directed ola’s ICC to conduct a formal inquiry into the complaint and ordered ola to pay the petitioner a compensation of INR 5 lakhs along with INR 50,000 for litigation expenses.

• Classification as employees: in a notable instance the Karnataka HC in X v. ICC held that a driver on the ola platform was an employee for the purpose of the POSH act, mandating that the company take responsibility for the actions of its drivers.
• Stayed judgement: this landmark decision was later stayed by a division bench, highlighting the ongoing debate and uncertainty surrounding the legal status of a gig worker.
• Using constitutional rights: a petition by the Indian federation of app based transport workers in the supreme court argues that classifying gig workers as independent contractors violates their fundamental rights. It seeks recognition as “unorganised workers” to secure social security benefits claiming that the current situation is a breach of the right to equality (article14) and the right to livelihood (article 21)

Drawbacks of the Provisions Concerning the Gig Workers

Drawbacks of the social security code include retaining thresholds for mandatory benefits that leave some workers unprotected, difficulties for I formal workers to register due to digital literacy and awareness gaps and unclear provisions such as those regarding gratuity for fixed term employees. Additionally, the code has issues with the fragmented administration of benefits by multiple bodies and a large amount of discretion given to the government through rule making.

Key drawback of social security code–

• Exclusionary thresholds- the code still has thresholds for establishment size and employee wages, meaning benefits are not mandatory for all workers. Many employees in smaller establishments and those below certain salary levels are left out.
• Registration barriers for informal workers- informal workers face challenges registering on the government portal due to a lack of digital literacy, awareness, and necessary document, which hinders their ability to access benefits.
• Unclear and ambiguous provisions- these are ambiguities in the code such as unclear rules on gratuity for fixed term workers who have a contract of less than one year. The maximum gratuity limit also needs to be clearly defined.
• Fragmented administration- the delivery of social security benefits remains fragmented with multiple bodies still administering different programs. This can be confusing and difficult for workers to navigate.