1. What is Social Security?

• Definition: Social security refers to a system of public provisions that offer

protection to individuals and families during life contingencies such as
unemployment, sickness, disability, old age, maternity, and death.

• ILO Definition: It is the protection society provides against the economic and social
distress caused by the absence or substantial reduction of income.

• Types:

o Social Insurance: Funded by contributions from employer, employee, and

government (e.g., EPF, ESI).

o Social Assistance: Non-contributory support financed by the state (e.g., Old-

age pension).

2. History of Social Security

• Origin: Concept evolved during the Industrial Revolution due to rising worker
exploitation and insecurity.

• Bismarckian Model: Introduced in Germany in the 1880s; later influenced ILO

conventions.

• India:

o 1923: Workmen’s Compensation Act – First SS law in colonial India.

o Post-Independence: Constitution of India integrated SS through DPSPs.

o 1948: ESI Act passed.

o 1952: EPF Act came into force.

o Recent development: Social Security Code, 2020 consolidates 9 labour

laws.

3. Social Security in India

• India adopts both contributory (EPF, ESI) and non-contributory (NSAP, PM-SYM)
mechanisms.

• Coverage:

o Organised Sector: Better coverage due to legal mandates.

 o Unorganised Sector: Largely excluded (~90% of workforce); schemes like
PM-SYM attempt coverage.

• Institutions: EPFO, ESIC, Labour Welfare Boards.

4. Constitutional Provisions

A. Concurrent List (List III)

• Entry 23: Social security and social insurance; employment and unemployment.

• Enables both Centre and State to legislate on social security matters.

B. Part IV – Directive Principles of State Policy

• Article 38: Promote welfare of people.

• Article 39(a), (e): Adequate livelihood; protection from economic exploitation.

• Article 41: Right to work, education, and public assistance.

• Article 42: Maternity relief and humane conditions of work.

5. Organized vs Unorganized Sector

Aspect Organized Sector Unorganized Sector

Definition Legally registered enterprises Informal units, no formal contracts

Regulation Covered under EPF, ESI, etc. Limited coverage

Benefits Structured wage, PF, insurance Low job security, no pensions

Size ~10% workforce ~90% workforce

Laws Applicable under labour codes Targeted schemes needed

6. Key Social Security Laws in India

Below are the major SS laws that must be studied deeply for the UPSC EPFO exam:

A. Employees’ State Insurance Act, 1948

• Objective: Provides medical, sickness, maternity, and disablement benefits to

employees.

• Coverage: Employees earning ≤ ₹21,000/month.

 • Key Features:

o Contribution: Employer (3.25%), Employee (0.75%)

o Administered by ESIC.

o Benefits: Medical care, Sickness (26 weeks), Maternity (26 weeks), Disability,
Funeral benefit.

• EPFO PYQ Link: Asked under “Statutory Bodies” and “Benefits of ESI”

B. Employees’ Provident Funds and Miscellaneous Provisions Act, 1952

• Objective: To ensure retirement savings through a contributory PF.

• Applies To: Establishments with ≥20 employees.

• Schemes under EPF Act:

o EPF Scheme (1952)

o Employees’ Pension Scheme (EPS, 1995)

o Employees’ Deposit-Linked Insurance Scheme (EDLI)

• Current Contribution: 12% of basic wage by employer & employee.

• Administered by: EPFO.

• Recent Update: Higher pension option under EPS post SC judgment (2022–23).

• PYQ Tag: Frequently asked in concept + application format.

C. Workmen’s Compensation Act, 1923 (Now: Employees Compensation Act)

• Objective: Ensures compensation to workers in case of injury, death, or

disablement during employment.

• Scope: Non-ESI-covered workers.

• Employer Liability: No-fault compensation principle.

• Calculation: Based on age and wages.

• Recent Amendment: Penalty enhancement for non-compliance.

• PYQ Coverage: Features of WC Act.

D. Maternity Benefit Act, 1961

• Objective: Regulates maternity benefits to female employees.

• Eligibility: 80 days work in last 12 months.

• Key Features:

o Paid maternity leave: 26 weeks (first 2 children), 12 weeks (after 2nd).

o Crèche facility (≥50 employees).

o No dismissal during maternity.

• Amendment: 2017 expanded leave and crèche provision.

• PYQ Link: Conceptual and rights-based questions.

E. Payment of Gratuity Act, 1972

• Objective: Monetary reward for long service.

• Eligibility: 5 years of continuous service.

• Formula: (15/26) × Last drawn salary × No. of years.

• Ceiling: ₹20 lakh (as of 2021).

• Tax Benefit: Exempt under Income Tax Act.

• Applies To: Establishments with ≥10 employees.

• PYQ Relevance: Statutory entitlement questions.

7. Social Security in India vs Developed Nations

Developed Nations (e.g., USA, UK,

Feature India
Germany)

Coverage Limited to organized sector Universal

Mixed (contributory + state-

Funding Largely state-funded
funded)

Administration Fragmented Centralized, digitalized

Informal
90% unprotected <15% workforce
Sector
 Developed Nations (e.g., USA, UK,
Feature India
Germany)

Comprehensive (unemployment,
Benefits Lower in scope & value
housing, etc.)

8. Provident Fund

• Definition: Savings scheme where both employee and employer contribute for
future security.

• Types:

o Statutory PF (under EPF Act)

o Public Provident Fund (PPF) – Voluntary, tax-saving, 15-year term

• Withdrawal Rules: Partial/Full based on conditions like retirement, illness,

education.

• Significance: Ensures post-retirement income; tax savings under Sec 80C.

PYQ Trends for UPSC EPFO

• Concept-based: Definitions, distinctions (EPF vs PPF, Gratuity vs Pension)

• Scheme-specific: Benefits, contribution structures

• Legal Provisions: Act-based provisions & eligibility

• Constitutional Provisions: DPSPs and labour rights

• Informal Sector: Questions on unorganised labour, social assistance schemes

1. Background & Purpose

• Part of Labour Code Reforms: One of the four labour codes enacted to consolidate
29 central labour laws.

• Objective: To amalgamate, simplify, and rationalize laws relating to social security

of workers, both in organized and unorganized sectors.
 • Enacted: 29th September 2020; yet to be fully implemented pending rules by
States.

2. Laws Subsumed (Total: 9)

Repealed Law S.No. Year

Employees’ Compensation Act 1 1923

Employees’ State Insurance Act 2 1948

EPF and MP Act 3 1952

Maternity Benefit Act 4 1961

Payment of Gratuity Act 5 1972

Cine Workers Welfare Fund Act 6 1981

Building and Other Construction Workers’ Cess Act 7 1996

Unorganised Workers’ Social Security Act 8 2008

Employment Exchanges Act 9 1959

3. Key Definitions

• Social Security: Measures to ensure access to health care and income security for
workers during contingencies.

• Gig Worker: A person working outside the traditional employer-employee

relationship (e.g., Swiggy, Zomato delivery partners).

• Platform Worker: Someone who accesses work via an online platform.

• Unorganised Worker: Home-based, self-employed, or wage worker not in the

formal sector.

4. Coverage and Scope

• Applies to:

o All establishments (with thresholds) for EPF, ESI, gratuity.

o Gig, platform, and unorganised workers (via welfare schemes).

 • Universal Applicability: Introduces social security for gig/platform economy
workers for the first time.

5. Key Provisions

A. Provident Fund (PF)

• Applies to establishments with ≥20 workers.

• EPFO continues to administer.

• Voluntary coverage option for smaller firms.

B. Employees' State Insurance (ESI)

• Mandatory for firms with ≥10 employees (or hazardous occupations).

• ESI Corporation (ESIC) coverage to be expanded universally in phases.

C. Gratuity

• Minimum 5 years’ service required.

• Pro-rata gratuity for fixed-term employees (even if <5 years).

D. Maternity Benefit

• 26 weeks paid leave (as per amended MB Act).

• Crèche facility if ≥50 employees.

E. Gig and Platform Workers

• Central Government to frame schemes for:

o Accident cover

o Health & maternity

o Life and disability insurance

o Old-age protection

• Aggregators may be required to contribute 1–2% of annual turnover (subject to ₹50

lakh cap).

F. National & State Social Security Boards

• For formulation and monitoring of schemes for unorganised workers.

• Tripartite body: Workers, Employers, Govt representatives.

6. Benefits of the Code

Advantage Explanation

Simplification Merges 9 complex laws into 1

Wider Coverage Includes gig, platform, unorganised workers

Portability Ensures inter-state portability of social benefits

Tech-based Registration Aadhaar-based registration and tracking

Flexibility Powers to Central Govt to notify schemes dynamically

7. Challenges & Criticisms

• Implementation: Delay due to pending state rules.

• Exclusion Risk: Gig workers still face ambiguous legal protections.

• Voluntary Nature: Many schemes are non-binding.

• Digital Divide: Aadhaar-based registration may exclude rural/unskilled workers.

• Funding Concerns: No clear roadmap for financing universal coverage.

8. UPSC EPFO Relevance

Area Type of Questions Expected

Consolidated Laws Match the following (Acts merged)

Definitions Gig/Platform/Unorganised Worker – Assertion-Reason or MCQ

Thresholds Minimum number of employees for PF/ESI

Gratuity Eligibility for fixed-term workers

Board Composition & Functions of National Social Security Board

Schemes Govt responsibilities toward gig workers

9. Recent Developments (2024–2025)

• e-SHRAM Portal:

o Launched in 2021, over 28 crore unorganised workers registered by mid-

2025.

o Integrates with Social Security Code to identify beneficiaries.

• SC Observations: Supreme Court noted in 2023 the need for speedy

implementation to protect gig workers' rights.

10. Conclusion

The Code on Social Security, 2020 marks a transformative shift in India’s labour welfare
landscape by extending benefits to previously excluded sections. However, timely
implementation, state coordination, and adequate funding are crucial for its success.

Employees' Provident Fund Organisation (EPFO)

1. What is EPFO?

• Statutory Body under the Ministry of Labour and Employment.

• Established under the Employees’ Provident Funds and Miscellaneous

Provisions Act, 1952.

• Headquartered in New Delhi.

• Mandate: Administer compulsory contributory provident fund, pension, and

insurance schemes for Indian workers.

2. Functions of EPFO

Function Description

Provident Fund Manage retirement savings of employees in the organized sector.

Pension Scheme Provide post-retirement monthly income to eligible employees.

Offer life insurance cover to subscribers in case of death during

Insurance Scheme
service.
Function Description

Monitor and enforce the provisions of the EPF Act, ensure employer
Compliance
contributions.

Grievance
EPFiGMS (EPF grievance management system).
Redressal

UAN (Universal Account Number), online withdrawals, e-nomination,

Digital Services
etc.

3. EPFO Schemes

EPFO administers three major schemes under the EPF Act, 1952:

Scheme Year Key Feature

Retirement savings fund – employer & employee each

EPF Scheme 1952
contribute 12% of basic pay.

EPS (Pension Lifelong monthly pension after age 58. Employer diverts 8.33%
1995
Scheme) from their 12% contribution.

EDLI (Insurance Life insurance cover to nominee; max benefit ₹7 lakh (no
1976
Scheme) premium from employee).

4. Contribution Structure

Stakeholder EPF EPS EDLI

Employee 12% — —

Employer 3.67% 8.33% 0.5%

Total 12% (employee) + 12% (employer) = 24%

Note: EPF is mandatory for salary ≤ ₹15,000/month (can be higher on mutual consent).
5. Eligibility Criteria

Criteria EPF EPS EDLI

Sector Organised Organised Organised

Establishment
≥20 employees ≥20 employees ≥20 employees
Size

Pension starts Until

Age No minimum age
at 58 yrs superannuation

Up to ₹15,000/month for mandatory

Wage Threshold
coverage (voluntary for higher)

6. Who Is Included?

• Employees in organized private sector establishments with 20 or more workers.

• Can also include contractual, temporary, daily-wage employees (if covered by

employer).

• Voluntary coverage for:

o Establishments with <20 employees (with notification).

o Employees earning >₹15,000/month (on mutual agreement).

• International Workers (from countries with Social Security Agreements).

7. Who Is Not Covered / Excluded?

Excluded From EPF Explanation

Employees earning
Not mandatorily covered, unless they opt-in voluntarily.
>₹15,000/month

Excluded if appointed under Apprentice Act or certified

Apprentices/Interns
training scheme.

Not automatically covered (e.g., farmers, daily wage, gig

Unorganised Sector Workers
workers).
 Excluded From EPF Explanation

State Govt Employees Covered under separate GPF (General Provident Fund).

Employees in Jammu & Kashmir Until 2019, had separate provisions; now integrated.

8. Withdrawal & Tenure Provisions

Condition Eligibility

Full Withdrawal After retirement or unemployment >2 months.

For marriage, education, house construction, medical

Partial Withdrawal
emergency, etc.

Minimum Service for

10 years of contributory service (EPS).
Pension

Minimum Service for 5 years (under Gratuity Act, not directly under EPFO but
Gratuity linked).

9. Recent Developments

• Higher Pension Option: Supreme Court ruling (2022–2023) allows opting for
pension based on actual salary (>₹15,000 cap).

• UAN: Universal Account Number – one account, lifelong portability across jobs.

• e-Nomination: Online facility to declare family nominee.

• EPF Interest Rate (2023–24): ~8.25%.

10. UPSC EPFO Exam Relevance

Area Likely Question Type

EPF, EPS, EDLI Feature comparison, contribution %, eligibility

Gratuity & Pension Years required for benefit

Coverage Exclusions/inclusions under EPF

Area Likely Question Type

Compliance Who monitors, penalties

Schemes Matching schemes with benefits

Recent Rulings SC decisions, UAN, digital reforms

EPFO Case Studies – Coverage, Compliance & Exceptions

Case Study 1: Apprentice vs Employee

Scenario:
An IT company recruits 25 fresh graduates as apprentices under the Apprentices Act, 1961,
and pays them a stipend of ₹9,000/month. The company has 50 regular employees.

Question: Are these apprentices eligible for EPF coverage?

Answer:
No. Apprentices appointed under the Apprentices Act, 1961 are excluded from EPFO
coverage as per EPF Scheme Rules. Only regular employees are counted for EPF eligibility.
→ Relevant for exclusion clause in EPF Act, 1952.

Case Study 2: Voluntary Coverage in Small Establishment

Scenario:
A manufacturing unit in a rural area employs 14 permanent workers, all earning
₹12,000/month. The employer wants to offer EPF benefits.

Question: Can EPFO coverage be extended?

Answer:
Yes. Establishments with fewer than 20 employees can voluntarily opt-in for EPF coverage
under Section 1(4) of the EPF Act, 1952 by mutual agreement with employees and
submitting a declaration to EPFO.

Case Study 3: Contractual Worker in a Large PSU

Scenario:
Bharat Manufacturing Ltd. (a PSU) hires 200 contract workers through an agency. Their
monthly wage is ₹11,000.

Question: Who is responsible for EPF contributions?

Answer:
The principal employer (Bharat Manufacturing) is responsible for ensuring EPF
contributions are deducted and deposited for contract workers.
→ EPF coverage extends to contractual and outsourced workers as long as they work in
eligible establishments.

Case Study 4: Higher Salary Employee and EPF

Scenario:
An employee earning ₹40,000/month joins an MNC with 500 employees. The HR
department informs him that EPF will not apply.

Question: Is this correct?

Answer:
Not entirely.
While employees earning >₹15,000/month are not mandatorily covered, if they were
already PF members in their previous job, they must be continued under EPF. If they are
new joinees, they can opt-in voluntarily.

Case Study 5: Fixed-Term Employment and Gratuity

Scenario:
A textile company employs 100 seasonal workers on 1-year contracts for the past 3 years.
One such worker requests gratuity upon contract completion.

Question: Is gratuity applicable?

Answer:
Yes, as per the Social Security Code, 2020, fixed-term employees are eligible for gratuity
on pro-rata basis, even if service is <5 years. This expands upon the original 5-year rule in
the 1972 Act.