This submission is drafted by Joyjayanti Chatterjee and Shohini Sengupta, in response to the draft Code on Social Security, 2019 (hereinafter “Draft Code”) prepared by the Government of India’s Ministry of Labour and Employment.

Joyjayanti is a lawyer and public policy consultant based out of New Delhi, with a keen interest in financial regulation and competition law. She has a degree in law from the Symbiosis Law School, Pune, and a Masters in Law from the Columbia Law School. Shohini is a lawyer and public policy consultant based out of New Delhi, with a keen interest in financial and technology regulation. She has a degree in law from the National Law Institute University, Bhopal and a MSc in Law and Finance from the University of Oxford.

The views of the author are personal, and do not reflect any institutional opinion.

The comments are presented in the prescribed format below:

Section/Sub-section/Clause/Proviso of the Code	Issue/Problem Identified in the Section/Sub-section/Clause/Proviso of the Code	Proposed Change that should be made	Reasons for the proposed change
Chapter I – Preliminary
Clause 2(i) – Definition of Agent	Definition is not comprehensive	We recommend an examination  of the possible uses of the term “agent”, and re-wording the definition so as to include other instances of agent as well.	The term “agent” has been used in other contexts than merely “establishment”. “Agent” is also a commonly used term in the realm of pensions, and other social security measures. These “agents” are often in a fiduciary position with respect to financial consumers. This narrow definition may unintentionally leave out “agents” in other contexts.
Clause 2(ia) – Definition of Aggregator	Definition is unclear	We recommend providing clearer definitions of terms like platform, intermediary, and aggregator, and cross referencing to other specific laws like the IT Act, 2000, which are the parent legislation for defining certain technical terms. Given the technical and evolving nature of these terms, we also recommend supplementing these with suitable examples and explanations.	The definition of aggregator is insufficient and leaves the scope for confusion between terms like aggregator, platform, and intermediary.
Clause 2(xx) – Definition of Employee	Definition is restrictive	We recommend including all workers, including those in the unorganised sector in the definition of employees, and by extension, in the formal social security net.	The term “employee” is very restrictively defined in the Code. The Statement of Objects and Reasons to the 2018 Draft provided that the Social Security Code was intended to “cover all kinds of employment including part-time workers, casual workers, fixed term workers, piece rate, commission rated workers, home-based workers, domestic workers, own account workers etc.” The legislative intent is to clearly recognise all conventional and non-conventional forms of employment. However, the present draft leaves the position of some categories of employees, especially those in the unorganised sector unclear.   While the draft includes another definition of “wage workers”, this distinction between the organised and unorganised sector is problematic. An overwhelming majority of the workforce is engaged in the informal sector.  While the output of the unorganised sector is not formally included in GDP calculations, estimates indicate that, this sector contributes close to 50% to the national GDP. Additionally, a vast majority of this cohort lives below the poverty line. Combined with the rapidly growing elder population, this is a sector which is in need of comprehensive social security measures.
Clause 2(xxvii) – Definition of Gig Workers	Definition is unclear	We recommend using explanations and examples to better illustrate and capture all possible models of work that may be brought under the ambit of this definition.	The definition of gig workers is unclear. It refers to “traditional employer-employee” relationship, which itself has not been explained in the Code, and given the structural discrimination that has been noticed around the world when it comes to gig workers, a more empathetic and wider connotation of the term may be beneficial.
Clause 2 (xxxxiii), and 2 (xxxxxvii) – Definition of Enterprise	Definition is unclear	We recommend providing a clearer explanation of “enterprise”	The meaning of “enterprise” is unclear, especially the difference between “enterprise” and “establishment”. This is especially important as the very important definitions of organised and unorganised sector hinge on the term “enterprise”. The term “enterprise” has not been defined anywhere in the Code.
Clause 2 (xxxviii) – Definition of Miscarriage	Definition is not comprehensive	We recommend providing a more modern and sensitive definition in line with international best practices, and a possible use of another term.	The definition of miscarriage in the Code is paternalistic and places the women as a subject, secondary to her uterus.
Clause 2(xxxxiii) and Clause 2(xxxxxviii) – Definition of organised and unorganised sector	Definition is not comprehensive	We recommend a more comprehensive definition, such that all kinds of employment, especially in light of the fact that a vast majority of workers in India are in the unorganised sector.	The definitions of these two terms, in their present form, may unintentionally leave out a number of people from the social security blanket.
Clause 2 (xxxxvia) and Clause 2 (xxxxvib) – Definition of platform work and platform worker	Definition is not comprehensive	Similar to the comment on “aggregator”, we recommend providing clearer explanations, supplemented by examples as required for technical terms like “platform”, and “platform worker”	The definitions for these terms are not comprehensive. It is also important to provide the distinction between aggregator and platform.
Clause 2 (xxxxxxi) – Definition of wage worker	Definition is not comprehensive	We recommend modifying the definition to include all forms of remuneration, and not just monthly.	The definition is restrictive as it only includes monthly remuneration. However, a number of workers get paid on a weekly or fortnightly basis, or other time intervals as well.
Clause 2 (xxxxxxii) – Definition of woman	Definition is not comprehensive	We recommend revising the definition to clarify the intent, and to ensure that no classes of women are inadvertently omitted from coverage under social security.	The purpose of using a definition of “woman” is unclear. Firstly, the Code uses the term “woman” in a number of contexts,  such as laying down that at least one member of a Building Workers’ Welfare Board shall be a woman.  Secondly , if the intention is to use the term “woman” for specific purpose of coverage under social security, the definition should be broader; in its current form, it only includes woman employed for “wages” in an “establishment”
Clause 2 (xxxxxviii) – Definition of self- employed worker	Definition is not comprehensive	We recommend removing the “monthly” from the definition and suitably modifying to include all other frequencies of remuneration.	The definition includes only the workers who receive monthly remuneration. However, a number of self-employed workers get paid at different frequencies, including weekly, or on a project-basis.
CHAPTER II – Social Security Organisations
General	The Code does not specify any qualifications and disqualifications for members of the various social security organisations. Given the technical nature of the responsibilities, the Code should specify areas of expertise, numbers of years of experience, etc. This is also the norm for other Indian laws, especially in the financial sector.
Clause 3(1) – Central Board of Trustees	Provision lacks specificity	We recommend adding more clarity in this provision	The functions of this board of trustees are unclear. Moreover, it does not give any indication of the “funds” which shall be administered by this Board, leaving this to the Central Government’s rule making powers, without any direction to that effect is arbitrary. It is also unclear whether the Board under this section is the same as the “Board” referred to in Clause 14.
Clause 4(5) – Composition of the Medical Benefit Committee	Provision lacks specificity	We recommend specifying the composition of the Medical Benefit Committee.	The Composition of the Medical Benefit Committee is not specified. This is at odds which other bodies under this chapter, for which the composition has been laid out in detail.
Clause 5 – National Social Security Board	Provision lacks specificity	We recommend providing at least the broad contours of the functions of the National Social Security Board, especially because it is a body for the unorganised sector, which is vulnerable and in most need of social security measures.	The purpose and the functions of the National Social Security Board have not been specified. Leaving such a critical aspect to the rule making power of the government is arbitrary.
Clause 9 – Advisory Committees	Provision lacks specificity	We recommend the different roles of the committee and Board are clearly specified in the provision.	The delineation of roles between the advisory committee and the National Social Security Board is unclear
CHAPTER VI – Maternity Benefit
Clause 61 – Employment of, or work by, women prohibited during certain period.		We recommend modifying the clause to vest the choice with the woman in question. If the woman is physically, emotionally, and mentally capable of working, there is no reason to exclude her from employment. This provision makes the employer a co-decision maker, and prioritising the medical risk of termination over other considerations, including the woman’s choice.	This clause has been taken from the Maternity Benefit Act, which is almost 60 years old. The clause reflects the paternalistic language of the Maternity Benefit Act, 1961, and also goes further to include “medical termination of pregnancy” within its ambit. This clause should respect the choice and autonomy of the woman, subject to medical fitness, for the purposes of engaging her as an employee in an establishment.
CHAPTER IX – Social Security for Unorganised Workers
Clause 106(1)	Power of the Central Government is relegated to that of a ‘notification’ instead of being specific and safeguarded by clear provisions in the law	This clause should detail responsibility of specific authorities (instead of using broad terms like the Central Government), with clearly identified scope, instead of relegating it to an executive action, formalised by a mere notification.  The scope of the scheme, authority to implement the scheme, beneficiaries of the scheme, resources of the scheme, agency or agencies that will implement the scheme, redressal of grievances; and any other relevant matter will be “notified” in the relevant scheme.	The identification of named authorities in the Code will lead to increased accountability, and ensure that trust in the system. Beneficiaries will also stand to gain more insight into the specific welfare schemes planned for them by the Government.
Clause 106 (6)	Details on management and administration of the welfare schemes are non-specific	The proposed clause should be revised to provide details on the management and administration of the schemes – for eg., through a trust like the NPS, or through a Sovereign Wealth Fund as is done in New Zealand. Further, it might also be helpful for the Code to delineate the functions of operational day to day management of the schemes from the regulatory function. It would be helpful to have separate agencies with clearly specified functions to address these issues.	Providing clarity on the specific roles of agencies and specifics on the administration of welfare schemes will be critical in allocating due responsibility and ensuring the efficient working of the schemes.
Clause 110	Power of prescription is over-broad and lacks clarity; registration clause lacks safeguards and exceptions	The conditions for fulfillment of the registration criteria should be clearly laid out in law, and be as broad as possible, to encapsulate the widest category of unorganised workers. In particular, the power to prescribe socio-economic criteria is very wide and vague, and should be made more specific. Further, the process to determine such criteria in this clause should also be specified in the Code. Lastly, the provision should encapsulate suitable exceptions to registration – that is, cases in which registration may not have happened, to make sure that the beneficiaries are not denied access to welfare schemes on a procedural infraction. To this extent, clause 110 should be revised to specifically state that non-registration shall not lead to a denial of services under this Code.	Specifying more details in the process and substance of the conditions necessary for the registration of unorganised workers will add both specificity and accountability to the provision, benefitting the widest set of beneficiaries.   This is particularly important for unorganised workers, who depend considerably on welfare schemes, and may lose access to benefits on account of not being registered. For example, in the case of the Indira Gandhi National Old Age Pension Scheme and the Indira Gandhi National Widow Pension Scheme, some of the major problems identified have been- irregular pension payments, high collection costs, discontinuation of pensions due to Aadhaar-related issues and inadequate pension amounts.[1] For the huge costs of exclusion, the registration clause should contain safeguards and exceptions, and at the very least, make Aadhaar related registrations a non-mandated requirement.
Clause 110A	Provision is non-mandatory, non-specific, and does not engender particular responsibilities for authorities.	This provision specifically for gig economy workers in the Code, while being almost identical to the previous clauses in its scope, is unclear on the specific measures/schemes that the Government may float for such workers, keeping in mind the power structures inherent in the specific circumstances of their work. Further, it makes the provision non-mandatory in its application by using the word “may”, opposed to the word “shall” used in the previous clauses of this Chapter. Further, it would be helpful to delineate the specific roles of the aggregators and the Government in funding/scope of responsibility in the scheme, and also provide a timeline for the  formulation of the said measures under the provision.	Regulatory best practices from around the world must be studied to critically examine the specific circumstances and oppressive structures in which gig economy workers operate. In this context, it may also be useful to consider if gig economy workers can be classified as “employees”, with specified rights and benefits, as has been recently done in California, under the Assembly 5 Bill.[2]   Further, this clause does not prescribe any time frame for the formulation of social security measures for the gig workers. The clause also needs to recognize the peculiar features of gig-work such as working for multiple employees, seasonal work, etc.
CHAPTER XIII – Miscellaneous
Clause 138	Aadhaar linkage	The inconsistency between clause 110(2) and clause 138 of the Code must be removed, because the former makes Aadhaar a voluntary option for obtaining registration, whereas the later does not imply that Aadhar registration may be voluntary (nor does clause 138 refer to clause 110 in the provision itself.   Further, the provision of mandatorily applying Aadhaar to benefits (clause 138(b) and payments (clause 138 © may need to pass the muster of the Puttaswamy v. Union of India, 2019.	Due to the documented cases of both breach of privacy and exclusionary impact of Aadhaar, it may be prudent to use Aadhaar, if at all, with due regard to privacy concerns and use it only in a non-mandated manner.
GENERAL COMMENTS
Need for harmonised regulation	One of the primary concerns in India has been the multiplicity of laws and regulators governing social security. If we take the example of pensions specifically, at a glance, these include the Employees’ Provident Fund Organisation (‘EPFO’), the Pension Fund Regulatory and Development Authority (‘PFRDA’), the Ministry of Finance and the Ministry of Labour and Employment, with wide variations in the way such pension schemes are managed, as well as the way they generate returns. This inhibits the development of an inclusive and equitable regulatory framework, which provides equal opportunities and rights to all citizens, regardless of their employment status. To this effect, this Code, in so far as it provides for welfare schemes for unorganised workers, makes no mention of other national schemes like the Atal Pension Yojana and how the various schemes will be harmonised, in both their scope and application. Further, there is wide disparity in the way most welfare schemes are managed, some being through the Central Government, some through regulators and trustees like the National Pension System. It must be noted here that barely 14% of India’s workforce is covered by a formal pension program.[3] At least for the workers in the informal sector, it is hoped that the Code will be revised to harmonise the disparate retiral security provisions.[4]
Need for consumer protection and grievance redressal	The Code lacks provisions on providing adequate consumer protection and a redressal grievance mechanism to all beneficiaries. By encoding these in the Code, consumer protection will become a regulatory obligation, leading to more efficacious adjudication of complaints. It is also essential to acknowledge that India does not have any uniform and specalised legislation governing consumers of financial products. This is particularly important in the context of the draft Code, because a number of schemes in the Code, including those on securing retiral security and pensions are in fact long term financial contracts which are often complicated and inaccessible to beneficiaries. Therefore, it is hoped that the Code will be revised to ensure that adequate consumer protection regulation is addressed, including provisions of inter-operability, portability and exit options in retirement financing plans, and mandating the provision of suitability analysis and advice, particularly to unorganised workers, who have to make contributions.
Need for greater protection for the unorganised sector	The protection provided to the unorgnised sector within the Code needs to be bolstered. Since an overwhelming majority of the Indian workforce is engaged in the unorganised sector, we recommend incorporating the following features in the Code:   1. Increasing awareness and enhancing consumer grievance mechanism- as mentioned above   2. Incorporating features that incentivize people to enroll and contribute for long periods. Unlike most other financial products, pension products may need to be actively ‘pushed’ or marketed to households, especially since the target audience includes low income households in the unorganised sector, who would most likely lack access to formal financial services, and be less likely to invest their money readily, for a faraway future.  This will also reduce the number of exclusion errors.   The Code should also provide a basic minimum social security, and standard of conduct when it comes to the unorganised sector.
Need for adequate education and customer awareness	Social Security, because of its very nature, mandates a heightened degree of scrutiny and adequate safeguarding of consumer interests, including both consumer protection as well as consumer education. Consumer protection is a critical part of any financial product, especially a pension product. A holistic consumer protection framework extends to stages before and after the mere transaction of buying a financial product. Be it adequate disclosures before the transaction, or continued consumer support after, it covers a gamut of responsibilities on part of the financial service provider. This is especially critical for the unorganised sector, considering the pervasive lack of both education and financial sophistication of this group. As has been pointed out by reports such as the Indian Financial Code and the Bose Committee Report, a fundamental shift from caveat emptor (buyer beware) to seller beware for financial services is required, because of the peculiar situation of vulnerability and dependence of financial consumers. Therefore, we recommend including similar education and customer awareness provisions in this Code as well.   As regards best practices within the Indian regulatory framework, reference can be made to SEBI’s Office of Investor Assistance and Education (OIAE), which is a single point interface for handling subscriber complaints as well as education outreach efforts.

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^[1] Sambhavna Biswas, ‘In Jharkhand, the elderly struggle for meagre pensions’, 18 April, 2017, The Wire, available at <https://thewire.in/government/jharkhand-pensions-aadhar&gt;

^[2] More information on the California Assembly 5 Bill, also known as the Gig Economy Rights Bill is available at <https://www.bbc.com/news/business-49659775>

^[3] Dr Shashank Saksena, ‘Towards Comprehensive Pension Coverage’ in India in Parul Seth Khanna, William Price and Gautam Bhardwaj (eds.), Saving the Next Billion from Old Age Poverty: Global Lessons for Local Action, (Pinbox Solutions, 2018) 31.        

^[4] A report published in 2019 details the various ways in which an exercise to harmonize the regulatory framework might be undertaken. It is available at <https://vidhilegalpolicy.in/wp-content/uploads/2019/05/PensionsReportFinal-29March2019-1.pdf&gt;