Section 42: Aggregator Contributions and Welfare Fund

Overview

Section 42 of the Code on Social Security, 2020, establishes a welfare fund specifically designed to provide social security benefits to gig workers and platform workers. This fund is financed through contributions from the aggregators – the digital platforms that employ these workers. The benefits provided through this fund aim to offer a safety net covering areas like insurance, accident protection, and retirement support, addressing the precarity often faced by workers in the gig economy. This is *not* a traditional Provident Fund or ESI scheme, but a new framework tailored to the unique nature of platform work.

Who is Covered?

• Classes of employees and establishments covered: This section applies to all ‘aggregator’ companies. These are defined as digital intermediaries that connect workers to customers for services like ride-sharing, food delivery, e-commerce, and home services. The workers covered are ‘gig workers’ and ‘platform workers’ – individuals who perform work or services on demand through these digital platforms.
• Any eligibility conditions such as length of service or wage limits: The Code does not specify minimum length of service or wage limits for workers to be eligible for benefits from the fund. Eligibility criteria for specific schemes *within* the fund will be determined by the Central Government.

Benefits and Contributions

• What benefit the employee gets: The fund will finance various welfare schemes for gig and platform workers. These schemes are expected to include life and health insurance, accident benefits, disability benefits, old age protection (pension), and other social security measures as determined by the Central Government.
• Contribution responsibilities of employer, employee and government: The primary contribution responsibility falls on the ‘aggregator’. They are mandated to contribute a percentage of their annual turnover to the Social Security Fund. The exact percentage is to be notified by the Central Government. Currently, the Code does not mandate contributions from the workers themselves or the government, although the government may contribute to the fund.

Procedure and Compliance

The exact procedures for contribution, registration, and claims are still being developed through rules framed under the Code. However, the general process is expected to be as follows:

1. Registration of Aggregators: Aggregators will likely need to register with the appropriate government authority.
2. Contribution Calculation: Aggregators will calculate their contribution based on their annual turnover, using the percentage rate notified by the Central Government.
3. Contribution Payment: Aggregators will be required to deposit the calculated contribution into the Social Security Fund within a specified timeframe.
4. Worker Registration (Potential): A system for registering gig and platform workers may be established to facilitate benefit disbursement.
5. Claim Filing: Workers will be able to file claims for benefits under the various schemes administered by the fund, following procedures established by the government.

Practical Examples

• Example 1: A food delivery rider working for a platform is involved in a road accident resulting in serious injuries. The rider can claim accident benefits from the Social Security Fund, funded by contributions from the food delivery platform.
• Example 2: A ride-sharing company fails to deposit the required contributions to the Social Security Fund for its drivers. The company may face penalties and legal action for non-compliance, as stipulated in the Code.

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 its implementation is ongoing. Consult with a legal professional for advice specific to your situation.