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NASSCOM response to Social Security Code 2019

The Code on Social Security 2019 (hereinafter referred to as “Code”) was introduced in the Lok Sabha on 11.12.2019 by the Minister of Labour and Employment, Mr. Santosh Kumar Gangwar. The Code seeks to replace 9 Central laws relating to social security i.e. The Employees’ Compensation Act, 1923; The Employees’ State Insurance Act, 1948; The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952; The Employment Exchanges (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; The Unorganised Workers Social Security Act, 2008. Subsequently, on 23rd December 2019, the Code was referred to the Standing Committee on Labour, chaired by Shri Bhartruhari Mahtab, MP.

The committee later invited feedback from the stakeholders for their comments. Given the potential impact of the Code on the IT -BPM sector, NASSCOM based on the inputs received from members, submitted its comment on the provisions of the Code including some suggestions for change. Some of the key suggestions that were part of the submission are listed below.

  • Definition of Manufacturing: The current definition doesn’t accurately define or clarify certain words such as packing, transport, delivery; which may lead to certain commercial establishments (such as e-commerce companies and logistics / courier companies etc.) carrying out merely re-packing of other sellers’ products as being wrongly classified as a Factory.  We therefore suggested the definition should be amended to clarify that “e-commerce logistics operation” is not a manufacturing process.
  • Definition of Factory: We suggested the definition of Factory should clearly be articulated to reflect the modern-day emerging businesses such as ecommerce fulfilment and sortation centres are excluded from the definition of a ‘Factory’ as such entities merely involved in only packaging and selling it to the customers, working as intermediaries.
  • Definition of ‘Wages’: The draft bill contains various allowances that are excluded from the definition of ‘Wages’. In addition, we have suggested that any other allowance that is not universally paid to all employees should also not form part of Wages.
  • ESIC Contribution: The proposed definition of ‘Wages’ excludes statutory contributions paid by the employer towards provident fund and pension fund from the definition of ‘Wages’. We have suggested that any contribution towards ESI should also be excluded.
  • Schemes for Gig worker: Currently there is a lack of clarity on the schemes that would apply to gig workers and its implementation process. We recommend that the Code should clarify that the respective schemes shall be framed based on industry consultation and the nature of schemes should be voluntary.
  • Creche Facility: We have suggested law should provide flexibility to employers to seek an exemption where it might not be practical to create Creche facility due to logistical constraints or allow employers with an option of reimbursement to the employees who wished to avail creche facilities elsewhere.
  • International Workers: The code doesn’t define how social security contributions for the International Workers is required to be made. We have suggested that clarity should be given for the same.
  • Offences and Penalties: We have suggested that provisions related to imprisonment should be removed or it should be exercised only in case of wilful defaults.

Kindly write to deepak@nasscom.in if you have any feedback / need any further information.

 

 

 

 

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