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

Definitio Legally registered Informal units, no formal

n enterprises contracts

Regulatio Covered under EPF, ESI,

Limited coverage
n etc.

Structured wage, PF,

Benefits Low job security, no pensions
insurance

Size ~10% workforce ~90% workforce

Applicable under labour

Laws Targeted schemes needed
codes

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,
Feature India
UK, Germany)

Limited to organized
Coverage Universal
sector

Mixed (contributory +
Funding Largely state-funded
state-funded)

Administratio
Fragmented Centralized, digitalized
n

Informal
90% unprotected <15% workforce
Sector

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

Code on Social Security, 2020

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)

S.N Yea
Repealed Law
o. r

1 192
Employees’ Compensation Act
3

2 194
Employees’ State Insurance Act
8

3 195
EPF and MP Act
2

4 196
Maternity Benefit Act
1

5 197
Payment of Gratuity Act
2

6 198
Cine Workers Welfare Fund Act
1

Building and Other Construction Workers’ 7 199

Cess Act 6

8 200
Unorganised Workers’ Social Security Act
8

Employment Exchanges Act 9 195

 S.N Yea
Repealed Law
o. r

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 Aadhaar-based registration and tracking

Registration

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
Match the following (Acts merged)
Laws

Gig/Platform/Unorganised Worker – Assertion-Reason

Definitions
or MCQ

Thresholds Minimum number of employees for PF/ESI

Gratuity Eligibility for fixed-term workers

Composition & Functions of National Social Security

Board
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

Manage retirement savings of employees in the organized

Provident Fund
sector.

Provide post-retirement monthly income to eligible

Pension Scheme
employees.

Insurance Offer life insurance cover to subscribers in case of death

Scheme during service.

Monitor and enforce the provisions of the EPF Act, ensure

Compliance
employer contributions.

Grievance
EPFiGMS (EPF grievance management system).
Redressal

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

Digital Services
nomination, etc.

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

Yea
Scheme Key Feature
r

195 Retirement savings fund – employer & employee

EPF Scheme
2 each contribute 12% of basic pay.

EPS (Pension 199 Lifelong monthly pension after age 58. Employer
Scheme) 5 diverts 8.33% from their 12% contribution.

EDLI (Insurance 197 Life insurance cover to nominee; max benefit ₹7 lakh
Scheme) 6 (no premium from employee).

4. Contribution Structure

Stakehold EDL
EPF EPS
er I

Employee 12% — —

8.33 0.5
Employer 3.67%
% %

12% (employee) + 12%

Total
(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

Establishmen ≥20
≥20 employees ≥20 employees
t Size employees
Criteria EPF EPS EDLI

Pension
Until
Age No minimum age starts at 58
superannuation
yrs

Up to ₹15,000/month for
Wage
mandatory coverage
Threshold
(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

>₹15,000/month voluntarily.

Excluded if appointed under Apprentice Act or

Apprentices/Interns
certified training scheme.

Unorganised Sector Not automatically covered (e.g., farmers, daily

Workers wage, gig workers).

Covered under separate GPF (General Provident

State Govt Employees
Fund).

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

Kashmir 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
Gratuity but 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

Feature comparison, contribution %,

EPF, EPS, EDLI
eligibility

Gratuity &
Years required for benefit
Pension

Coverage Exclusions/inclusions under EPF

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.