The Ministry of Labour and Employment issues a Draft Labour Code on Social Security and Welfare, 2017

The Ministry of Labour and Employment issues a Draft Labour Code on Social Security and Welfare, 2017

March 23, 2017 LAB 0
The Ministry of Labour and Employment (“Ministry”) has recently issued the Draft Labour Code on Social Security and Welfare, 2017 (“Draft Code”) thereby amalgamating the existing Labour Laws related to social security.

Pursuant to this, the Ministry has invited comments on the Draft Code, by 16th April, 2017. The comments / suggestions can be sent to S.K. Tripathi, Under Secretary (LRC), at Ministry of Labour and Employment, Room No. 17, Shram Shakti Bhavan, Rafi Marg, New Delhi – 110001 and can also be e-mailed

[Note: The format of sending suggestions is attached herewith and titled as “Format for Suggestions”].


The Draft Code has been framed pursuant to the recommendations of the 2nd National Commission on Labour. With a view to simplify, rationalize, consolidate, and amend the laws relating to social security of workforce and make them easier for comprehension, implementation and enforcement, the Draft Code is issued.

Currently there are total fifteen Labour Laws including Employees’ Provident Fund Act, Employees’ State Insurance Act, Maternity Benefit Act, Payment of Gratuity Act, Employees Compensation Act, Unorganised Social Security Act, and various Welfare Cess/ Fund Acts. Therefore, the Ministry had proposed to replace these Labour laws with the following four codes:

-Code on Wages,

-Code on Industrial Relations,

-Code on Social Security & Welfare, and

-Code on Occupational Safety, Health & Working Conditions.

Out of the four Codes, Code on Wages and Code on Industrial Relations were earlier drafted and put on the Ministry’s website.

By virtue of the present notification, the Ministry has now issued the Draft Code to amalgamate the existing labour laws on social security.

The key highlights of the Drafts are as follows:

1. Under the Draft Code, an Employer in its grammatical connotations used means the employer of any entity that employs an employee oremployees, either directly or through contractors.

[Please refer to the attached document named “Employer” for complete definition of Employer]

2. Under the Draft Code, an Employee means person who is employed for wages by the entity in accordance with the terms of contract of employment, whether written or oral and whether expressed or implied, in or in connection with the work of the entity.

[Please refer to the Document named “Employee” for complete definition of Employee].

3. The Draft Code is applicable to all the entities except for the entities specified in Part – I of the First Schedule. These entities include any establishment of the Central Government or State Government including departments of Central Government or State Government as the case may be. The Part-I of First Schedule is attached along with this mail.

4. The code applies to the following persons:

(a) Workers that are employed by any entity;

(b) Worker who may also be the owner or the proprietor of an entity or a self-employed unit;

(c) International workers; and

(d) Indian citizen, working outside the territory of India, who opts to become a member of social security schemes under this Code.

However, the Draft Code is not applicable to such class of workers that has been specified in Part – II of the First Schedule subject to the restrictions as mentioned in that schedule. The class of workers in Part -II of the First Schedule will be specified shortly.

5. The Draft code covers the workers from Organised as well as Unorganized Sectors of Employment.

[Note: The Organised sector contains the establishments where the number of such workers employed is equal to or more than the threshold].

6. The Draft Code proposes to constitute a National Social Security Council of India to for reviewing and monitoring the implementation of the Draft Code, advising the central and the State Governments in the matter of Social Security Administration etc.

7. The Draft Code proposes to invite claims and objections for the unclaimed amount of the preceding financial year within a period of minimum six months, following which the amount will be confiscated.

(Note: “Unclaimed Amount” means-

a) Any amount credited to State Social Security Fund under suspense account (or any other account) which can-not be associated with any contribution made by or on account of any particular worker in a period of three years from the date of its credit.

b) Any amount of claim due to any worker, but not claimed by him within a period of five years from the date it became due.)

8. The Draft Code proposes to provide a unique Aadhar-based registration service for registration of workers and provide a portable Social Security account, to be named as Vishwakarma Karmik Suraksha Khata (VIKAS), which will be linked to Aadhar Number of the worker.

9. The Draft Code proposes for the registration of the establishments and entities if the establishment or entity:

a) Has, at any point of time during the year preceding the commencement of this Code, employed number of workers more than or equal to threshold.

b) Has, at any point of time during the current year employed number of workers more than or equal to threshold.

c) Is required to deduct contribution at source.

d) Is a contractor or placement agency.

10. The Draft Code proposes allowing the benefits even when the Employer (including Principal Employer) fails or neglects to pay any contribution which under this Code he is liable to pay in respect of any employee.

11. The Draft code proposes that if an employer has entered into a contract with any insurers in respect of any liability to any employee, then, in the event of the employer becoming insolvent or making a composition or scheme of arrangement with his creditors or, if the employer is a company, in the event of the company having commenced to be wound up, the rights of the employer against the insurers as respects that liability shall, notwithstanding anything in any law for the time being in force relating to insolvency or the winding up of companies, be transferred to and vest in the employee and upon any such transfer the insurers shall have the same rights and remedies and be subject to the same liabilities as if they were the employer.

12. The Draft Code provides that unless an employer is registered under the Draft Code, once enforced, it cannot employ any workers, after the expiry of such period as may be stipulated from the date on which the entity was liable to be registered.

For a detailed read on the Draft Code, please click on the link below.

Source: Department of Labour and Employment, Government of India

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