Section 2: Definitions

Overview

Section 2 of the Code on Social Security, 2020, doesn’t deal with a specific benefit like Provident Fund or ESI directly. Instead, it lays the foundational definitions for *all* the schemes covered under the Code. This includes provisions relating to Employees’ State Insurance (ESI), Provident Fund (PF), Maternity Benefits, Gratuity, Building and Other Construction Workers (BOCW) welfare, and benefits for gig and platform workers. The clarity provided by these definitions is crucial for determining who is eligible for which benefits and how the Code applies in various situations.

Who is Covered?

• Classes of employees and establishments covered: The definitions cover a broad range of workers, including traditional employees, fixed-term employees, contract labour, gig workers, and platform workers. Establishments covered include factories, shops, establishments employing a specified number of employees (the exact number may vary depending on the specific scheme), and construction sites.
• Any eligibility conditions such as length of service or wage limits: Eligibility conditions vary significantly depending on the specific scheme. For example, some schemes may require a minimum length of service (e.g., one year) or have wage ceilings (a maximum wage limit for eligibility). The Code itself doesn’t set these limits uniformly; they are often determined by the rules framed under each specific scheme. The definitions in Section 2 help clarify *who* these rules will apply to.

Benefits and Contributions

• What benefit the employee gets: The benefits vary widely depending on the scheme. They include medical benefits (ESI), retirement savings (PF), maternity leave and benefits, gratuity payments, and social security benefits for construction workers. For gig and platform workers, the Code aims to provide benefits like social security, health and accident insurance, and other welfare measures.
• Contribution responsibilities of employer, employee and government: Contribution responsibilities also vary by scheme. Typically, both the employer and employee contribute a percentage of the employee’s wages. The government may also contribute in some cases. The definitions in Section 2, particularly those relating to ‘wages’ and ‘employee’, are critical for calculating these contributions correctly.

Procedure and Compliance

Section 2 itself doesn’t detail procedures. However, understanding the definitions is the first step in ensuring compliance. Generally, employers are required to register under the relevant schemes, deduct contributions from employee wages, deposit these contributions with the designated authorities, and maintain accurate records. Employees may need to register for certain benefits and file claims as needed. The specific procedures are outlined in the rules and regulations for each scheme.

Practical Examples

• Example 1 showing an employee becoming eligible for benefit: Ramesh works as a permanent employee in a factory earning ₹18,000 per month. Because he meets the definition of an ‘employee’ and his wages are within the applicable limits for ESI, he becomes eligible for medical benefits under the Employees’ State Insurance scheme.
• Example 2 involving non-compliance by an employer: A construction company hires workers but incorrectly classifies them as ‘independent contractors’ to avoid contributing to the BOCW welfare fund. This is non-compliance because the workers meet the definition of ‘building workers’ under Section 2 and are therefore entitled to the benefits of the scheme.

Disclaimer

This article is for basic understanding of social security law and should not be treated as legal advice. The Code on Social Security, 2020, is a complex piece of legislation, and specific legal advice should be sought from a qualified professional.