The Code on Social Security, 2020: formula sheet

Key formulas

Extent of the Code (section 1)

Extends to the whole of India

Commencement is by notification, and different dates may be set for different provisions.

Opt-in to Chapter III or IV (section 1)

Employer + majority of employees agree → Commissioner / Director General may notify

Chapter III: Central Provident Fund Commissioner. Chapter IV: Director General of the Corporation.

Continued applicability (section 1)

Once a Chapter applies, it continues even if employees fall below the First Schedule threshold

Do not say coverage ends when headcount drops.

Registration conditions (section 113)

Completed 16 years of age, or such age as the Central Government prescribes + electronic or other self-declaration

Application is with documents including Aadhaar number. Self-registration is allowed.

Aggregator contribution (section 114(4))

1% to 2% of annual turnover, but not more than 5% of amount paid or payable to gig and platform workers

Rate is notified by the Central Government. Tax, levy and cess paid to the Central Government are excluded from turnover.

Schemes for gig and platform workers (section 114(1))

Life and disability cover; accident insurance; health and maternity; old age protection; creche; other benefits

Schemes are framed and notified by the Central Government.

Social Security Fund (section 141)

Central fund: separate accounts for three sources

Sources: section 109(3), section 114(3), and composition of offences and other central labour law funds. The State Government sets up its own fund for unorganised workers.

National Board: constitution and term

Constituted by Central Government notification; term 3 years; meets at least thrice a year

Section 6(1), (5), (6). Meetings are at least three times a year.

National Board: composition

Chairperson (Union Labour Minister) + Vice-Chairperson (Secretary, Labour) + 40 nominated members + Director General Labour Welfare as Member-Secretary, ex officio

The 40: 7 unorganised workers, 7 employers, 7 civil society, 3 from Parliament (2 Lok Sabha, 1 Rajya Sabha), 10 Central Ministries, 5 State Governments, 1 Union territories. Check: 7+7+7+3+10+5+1 = 40.

State Board: composition

Chairperson (State Labour Minister, ex officio) + Vice-Chairperson (Principal Secretary or Secretary, Labour) + 1 Central Government member + 31 nominated members + Member-Secretary notified by State

The 31: 7 unorganised workers, 7 employers, 2 Legislative Assembly, 5 civil society, 10 State departments. Check: 7+7+2+5+10 = 31.

State Board: term and meetings

Term 3 years; meets at least once in a quarter

Section 6(13), (14). Do not mix with the National Board's three meetings a year.

Eligibility and representation

All members except the Chairperson: persons of eminence in labour welfare, management, finance, law and administration; adequate representation for SC, ST, minorities and women

Section 6(3), (4), (11), (12). The proviso on representation is in the sub-section on nomination.

National Board functions

Recommend schemes; advise Centre; monitor Central schemes; review State-level record keeping; review expenditure from fund and account; other functions

Section 6(7). Covers unorganised, gig and platform workers.

State Board functions

Recommend schemes; advise State; monitor State schemes; review district-level record keeping; review registration and card issue; review expenditure; other functions

Section 6(15). The State Board alone reviews registration and issue of cards.

Supersession

Grounds: unable to perform, persistent delay, or exceeded or abused powers. Show-cause first. Report laid before Parliament or State Legislature within 3 months of the notification

Section 11. Alternate arrangements apply until reconstitution.

Additional functions

Central Government notification assigns extra functions to a Social Security Organisation; expenditure borne by Central Government after its prior approval

Section 13.

Constitution of the Central Board

Section 4(1): Central Government constitutes the Board by notification, from a date it specifies

The Board is for Chapter III and the provisions of the Code relating to that Chapter.

Composition of the Central Board

Chairperson + Vice-Chairperson + up to 5 Central Government officials + up to 15 State representatives + 10 employer representatives + 10 employee representatives + Central Provident Fund Commissioner (ex officio)

Note the words 'not more than' for officials and State representatives, and a fixed 'ten' for each of employers and employees.

Legal status of the Board

Section 4(2): body corporate, perpetual succession, common seal, can sue and be sued

Name: Board of Trustees of the Employees' Provident Fund.

Executive Committee and other committees

Section 4(3): Executive Committee constituted by Central Government from Board members. Section 4(4): Board may constitute committees by order

The Executive Committee comes from the Government by notification. Other committees come from the Board by order.

Delegation

Section 4(5): Board may delegate to Chairperson, Executive Committee or officers; State Board (section 12) to its Chairperson or officers

Delegation is subject to conditions and limitations in the order, for efficient administration of the schemes under section 15(1).

Tenure of members

Section 4(6): terms and conditions, including tenure, as prescribed; a Board member continues in office until a successor is appointed

The continuation proviso applies to Central Board members, even after tenure expires.

Rule-making power

Section 155(1): Central Government may make rules by notification, subject to previous publication, not inconsistent with the Code

Section 155(2)(d) covers manner of administration of funds, Executive Committee's assistance, tenure and other functions under section 4. Section 155(2)(j) covers maintenance of provident fund accounts under section 21(1).

Six benefits (Section 32(1))

Sickness + Maternity + Disablement + Dependants' + Medical + Funeral expenses

The first four are periodical payments. Medical benefit is treatment. Funeral expenses go to the eldest surviving family member, or to the person who actually incurs the cost.

Funeral expenses claim

Claim within 3 months of death, or within the extended period allowed

The amount cannot exceed what the Central Government prescribes. The Corporation or its authorised officer may extend the time.

No double benefit for the same period (Section 41(4))

Not both: sickness + maternity; sickness + temporary disablement; maternity + temporary disablement

If entitled to more than one, the person chooses which to receive (Section 41(5)).

No benefit on days of work, paid leave or strike (Section 41(2))

No sickness or temporary disablement benefit on a day of work, paid leave or holiday, or strike

Applies save as regulations provide. Paid leave or holiday means a day on which wages are received.

Bar on parallel claims (Section 41(7))

Eligible for dependants'/disablement benefit: no Employees' Compensation claim. Eligible for ESI maternity benefit: no employer maternity benefit claim

Employees' Compensation is under Chapter VII. Employer maternity benefit is under Chapter VI.

Employer's deposit before dispute (Section 49(2))

Deposit 50% of the amount claimed by the Corporation

For disputes about contributions or other dues. The Court may, for reasons recorded in writing, waive or reduce it.

Recovery of wrongly received benefit (Section 41(8))

Repay the value of the benefit or the payment

On death, the legal representative repays from the deceased's assets that devolved on him.

Gratuity eligibility (Section 53(1))

Continuous service ≥ 5 years, on superannuation, retirement or resignation, death or disablement, end of fixed term contract, or a notified event

Five years is not needed for death, disablement, expiry of fixed term employment or a notified event. For working journalists the period is three years.

Gratuity for a monthly rated employee (Section 53(2) and Explanation 3)

Gratuity = (Last drawn monthly wages ÷ 26) × 15 × number of years of service

Count each completed year, plus any part of a year exceeding six months as one more year. The 15 days may be changed by Central Government notification. The total cannot exceed the notified ceiling.

Fixed term employee (Section 53(2))

Gratuity is payable on a pro rata basis

There is no five-year minimum. The same pro rata rule applies to a deceased employee.

Piece-rated and seasonal employees (Section 53(2))

Piece-rated: daily wages = average of total wages for the 3 months before termination (overtime excluded). Seasonal establishment: 7 days' wages for each season

Use these in place of the 26-day divisor.

Forfeiture of gratuity (Section 53(6))

Damage or loss to employer's property: forfeited to the extent of the loss. Riotous or disorderly conduct, violence, or an offence involving moral turpitude in the course of employment: wholly or partly forfeited

Forfeiture applies where service was terminated for that reason. The moral turpitude offence must be committed in the course of employment.

Continuous service (Section 54)

Break in service is ignored for sickness, accident, leave, lay-off, strike, lock-out, or cessation of work not due to the employee's fault. Otherwise, in the 12 months before the date, actual work of at least 240 days (190 days if below ground in a mine or the establishment works less than six days a week) counts the year as continuous

For six months the figures are 120 days (95 days in the exceptional case). Seasonal establishments need at least 75% of the days of operation.

Maternity benefit

Woman who has worked at least 80 days in the 12 months before expected delivery: 26 weeks for first two children (not more than 8 weeks before expected delivery), 12 weeks for the third child onward

Adopting mothers and commissioning mothers get 12 weeks from the date the child is handed over. The child must be under three months old.

Employer's liability for compensation (Section 74(1))

Liable if injury or listed occupational disease arises out of and in the course of employment, and disablement lasts more than 3 days

Injury not causing disablement for more than three days is outside the liability.

Employer's defences (Section 74(1) proviso)

No liability for an accident directly attributable to drink or drugs, wilful disobedience of an express safety order or rule, or wilful removal of a safety guard, unless the result is death or permanent total disablement

The defences do not apply when the result is death or permanent total disablement.

Occupational disease (Section 74(3))

Employment in the Second Schedule, disease in the Third Schedule, continuous service with the employer of at least 6 months

The disease is deemed an injury by accident and, unless the contrary is proved, deemed to arise out of and in the course of employment.

Aggregator contribution rate (Section 114(4))

Contribution = a rate notified by the Central Government, not less than 1% and not exceeding 2%, of the aggregator's annual turnover

Applies to aggregators in a category specified in the Seventh Schedule. Annual turnover excludes tax, levy and cess paid or payable to the Central Government.

Cap on contribution (proviso to Section 114(4))

Contribution ≤ 5% of the amount paid or payable by the aggregator to gig workers and platform workers

The payable contribution is therefore the lower of the turnover-based amount and this cap.

Sources of Central Social Security Fund (Section 141(1))

(i) Section 109(3) funding; (ii) Section 114(3) funding; (iii) composition of Central offences and other central labour law funds

A separate account for each source (Section 141(2)). Spend only for that account's purpose (Section 141(3)).

Matters for gig and platform schemes (Section 114(1))

Life and disability cover; accident insurance; health and maternity benefits; old age protection; creche; any other benefit

The Central Government 'may' frame and notify schemes. It is not a compulsion.

State fund (Section 141(5))

Credited with: composition of State offences + other sources prescribed by the State Government

Used for welfare of unorganised workers only, as prescribed by the State.

Appointment of Inspector-cum-Facilitators (s.122(1))

Central Government (Chapters III and IV) / appropriate Government (other provisions) appoints by notification

Chapter III and IV matters go to the Central Government. All other provisions are for the appropriate Government.

Inspection scheme features (s.122(2)-(4))

Web-based inspection + electronic calling of information + randomised selection + unique numbers + timely uploading of reports + special inspections

The unique number for an establishment is the same as its registration number. Say 'may be designed taking into account', as these are factors, not fixed mandates.

Role of Inspector-cum-Facilitator (s.122(5))

Advise employers and employees on compliance + inspect assigned establishments

Inspection is subject to instructions or guidelines of the appropriate Government.

Powers of Inspector-cum-Facilitator (s.122(6))

Examine persons + require documents or information + search, seize or copy registers, wage records, notices + report defects or abuses + other prescribed powers

Examination is of a person reasonably believed to be an employee. Document demand is from a person reasonably believed to be the employer.

Legal duty to produce documents (s.122(7)-(8))

Person required to produce documents or give information is deemed legally bound; search and seizure follow the Code of Criminal Procedure, 1973 so far as may be

The section text itself refers to the Indian Penal Code and the Code of Criminal Procedure, 1973. Quote this only when you are explaining the section as written.

Penalty for non-payment of contribution (s.133, clause (a))

Imprisonment up to 3 years; at least 1 year if the deducted employee's contribution is not paid, plus fine of ₹1,00,000; in any other case at least 2 months but up to 6 months, plus fine of ₹50,000

The court may impose a lesser term for adequate and special reasons recorded in the judgment.

Penalty for non-payment of gratuity (s.133, clause (g))

Imprisonment up to 1 year, or fine up to ₹50,000, or both

Applies where the employer fails to pay gratuity to which the employee is entitled.

Penalty for obstructing inspector, non-production of registers, false return (s.133, clauses (f), (k), (o))

Imprisonment up to 6 months, or fine up to ₹50,000, or both

Clauses (d), (i) and (l) are in the same band: penalising a woman employee, denying maternity benefit, and non-payment of building workers' cess.

Fine-only defaults (s.133)

Fine up to ₹50,000 for clauses (b), (c), (e), (h), (j), (m), (n), (p) or (q)

Includes failure to submit a return, deducting employer's contribution from wages, and non-payment of compensation. Clause (m) is the residual clause.

Rule-making power (s.154)

Appropriate Government makes rules by notification, subject to previous publication, not inconsistent with the Code

Use it to explain that forms, manner and time limits for registers, returns and notices come from rules.

Compounding amount: offence punishable with fine only

Amount = ½ × maximum fine provided for the offence

Section 138(1)(i). Applies to a first-time offence.

Compounding amount: imprisonment up to one year and also fine

Amount = ¾ × maximum fine provided for the offence

Section 138(1)(ii). Imprisonment must be not more than one year, and the offence must also carry fine.

Bar on repeat compounding

No compounding if the offence is committed a second time or thereafter within 3 years of (i) a similar offence earlier compounded, or (ii) a similar offence for which the person was earlier convicted

Section 138(2). The three years run from the date of commission of the earlier similar offence.

Prior opportunity before prosecution

Written direction with a compliance period; if complied, no prosecution. No opportunity if same-nature violation is repeated within 3 years from the date the first violation was committed

Section 137. Given by the Inspector-cum-Facilitator or other notified officer.

Effect of compounding

Before prosecution: no prosecution can be instituted. After prosecution: court is informed in writing and the person is discharged

Section 138(5) and (6).

Penalty for not complying with compounding order

Extra sum = 20% of the maximum fine for the offence, in addition to such fine

Section 138(7).

Central Government directions

Directions to (i) State Government or State Board under section 12, to execute provisions in that State; (ii) Social Security Organisations on implementation matters

Section 149.

Quick revision

• The Code on Social Security, 2020 is one of the four Labour Codes, in force from 21 November 2025.
• Section 6 provides for a National Social Security Board and a State Unorganised Workers' Board in every State.
• The term of both the National Board and each State Board is three years.
• The National Board meets at least thrice a year. A State Board meets at least once in a quarter.
• The National Board is chaired by the Union Minister for Labour and Employment. The Vice-Chairperson is the Secretary of that Ministry.
• The National Board has forty nominated members, including seven each for unorganised workers, employers and civil society.
• The National Board recommends schemes for unorganised, gig and platform workers. A State Board recommends schemes for unorganised workers.
• State Board functions include reviewing registration and issue of cards to unorganised workers.
• Adequate representation must be given to Scheduled Castes, Scheduled Tribes, minorities and women in board nominations.
• Section 141: the Central Government establishes a Social Security Fund for unorganised, gig and platform workers.
• The Central Fund keeps a separate account for each source and spends each account only for its purpose.
• A State Government also establishes its own Social Security Fund for unorganised workers, credited with composition amounts and other prescribed sources.

Common mistakes

• Saying the Code came into force on one date for all provisions. Fix: Write that commencement is by notification, with different dates possible, and that most provisions were brought into force on 21 November 2025.
• Saying an establishment leaves the Code when employees fall below the threshold. Fix: Remember section 1(8): once a Chapter applies at the first instance, it continues to apply.
• Mixing the meeting frequency of the two Boards. Fix: National: at least thrice a year. State: at least once in a quarter.
• Writing the wrong number of nominated members or categories. Fix: Remember 40 for National and 31 for State, and add up your split to check.
• Saying the Central Board has ten employer and ten employee representatives 'not more than', or says five State representatives. Fix: Remember: officials up to 5, States up to 15, employers exactly 10, employees exactly 10.
• Saying the Board itself constitutes the Executive Committee. Fix: The Central Government constitutes the Executive Committee by notification under section 4(3). The Board constitutes other committees by order under section 4(4).
• Saying a person can receive sickness and maternity benefit together for the same period. Fix: Remember Section 41(4): no two of sickness, maternity and temporary disablement for the same period. The person chooses one.
• Claiming both ESI disablement or dependants' benefit and Employees' Compensation. Fix: Under Section 41(7)(a), a person eligible for ESI dependants' or disablement benefit cannot claim Employees' Compensation from the employer.
• Rounding gratuity service up for any part of a year. Fix: Add one year only when the leftover period is more than six months. Exactly six months does not count. 12 years 6 months is 12 years. 12 years 7 months is 13 years.
• Dividing monthly wages by 30 or by the days in the month. Fix: For a monthly rated employee, the Code says divide the last drawn monthly wages by 26, then multiply by 15.

Exam tips

• Learn section 1 closely. Extent, commencement, opt-in and continued applicability are easy marks and are often tested as short cases.
• Keep a one-line list of the five benefit areas in section 114(1) for gig and platform workers.
• Write the aggregator contribution range and its cap together. Examiners like to see both limits.
• For definitions, quote the Code's words and add what is included or excluded. Never write only a general meaning.
• End every case answer with a clear one-line conclusion after the provision and the facts.
• Learn the National and State Boards side by side. Questions often ask you to compare them.
• Write Section 6 for composition, term and functions, Section 11 for supersession and Section 13 for additional functions.
• When listing composition, give the nominee split and the totals of 40 and 31.