Expanded EPF and ESI coverage
Employees’ Provident Fund (EPF) coverage, administered by EPFO, now extends to all establishments
with 20 or more employees, removing the older industry-specific restrictions under the Employees’
Provident Funds and Miscellaneous Provisions Act, 1952 that had limited EPF applicability to specified
industries only. Employees’ State Insurance (ESI) coverage, administered by ESIC, has similarly been
freed of its earlier area-by-area geographic notification system and now extends nationwide, with voluntary
ESIC coverage available for establishments with fewer than 10 employees by mutual consent, and mandatory
coverage down to a single employee in notified hazardous industries.
Gratuity changes
For fixed-term employees, gratuity eligibility now kicks in after just one year of continuous service,
paid on a proportionate basis -- a significant reduction from the five-year continuous-service threshold that
still applies to permanent employees under the framework carried forward from the earlier Payment of Gratuity
Act, 1972. A single, standardized definition of “wages” (basic pay plus dearness allowance) now
applies uniformly across EPF, ESI, gratuity, and bonus calculations, with an anti-avoidance rule adding back
into the wage base any allowances that exceed 50% of total remuneration -- a change employers should factor
into payroll structuring, since compensation packages built around a low basic-pay component to minimize
statutory contributions are now less effective at achieving that goal.
Social security for gig and platform workers
For the first time, the Code on Social Security formally recognizes gig and platform workers as a distinct
category and creates a Social Security Fund for them, covering life and disability insurance, health and
maternity benefits, and old-age protection -- funded through government support, worker/aggregator
contributions, and CSR funds. Unorganized, gig, and platform workers register on a national e-Shram-linked
portal to receive a unique Aadhaar-verified ID, enabling their benefits to move with them across employers and
states -- relevant, for example, to NRI families whose relatives back in India work informally or on gig
platforms.
Does a company with 15 employees now have to provide EPF coverage?
No -- the Code on Social Security’s expanded EPF coverage threshold is 20 or more employees, so a
company with 15 employees falls below the mandatory EPF coverage threshold, though it may still opt in
voluntarily.
How soon does a fixed-term employee become eligible for gratuity?
After just one year of continuous service, paid proportionately -- a significantly shorter period than the
five-year threshold that still applies to permanent employees under the framework carried forward from the
Payment of Gratuity Act, 1972.
Are gig workers like delivery or ride-hailing drivers entitled to any social security in India?
Yes, in principle -- the Code on Social Security, 2020 created a dedicated Social Security Fund for gig and
platform workers covering insurance, health/maternity benefits, and old-age protection, accessed through
registration on a national e-Shram-linked portal, though the practical rollout and benefit levels continue to
develop.
