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Section 110: Funding of schemes for unorganised workers

The Code on Social Security, 2020 (Act No. 36 of 2020) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter IX: Social Security for Unorganised, Gig & Platform Workers
Competent Labour Forum
Act No. 36 of 2020
Section 109 All 163 Sections of Code on Social Security, 2020 Section 111

Legal Commentary & Landmark Judgments: Section 110

Section 110 of the Code on Social Security, 2020 establishes the multi-source financial architecture for funding unorganised worker schemes, combining budgetary allocations from the Central and State Governments with corporate social responsibility funds and statutory beneficiary contributions.

  • Pluralistic Funding Framework: Enacts that any scheme notified by the Central Government under Section 109 may be: (a) wholly funded by the Central Government; (b) partly funded by the Central Government and partly by the State Government; (c) partly funded by the Central Government, State Government, and through contributions collected from beneficiaries or employers; or (d) funded through Corporate Social Responsibility (CSR) funds under Section 135 of the Companies Act, 2013.
  • State Government Funding Mechanisms: Provides that schemes notified by State Governments may be funded through state budgetary grants, local cess proceeds, employer contributions, or dedicated welfare levies collected under state enactments.
  • Integration of CSR Capital for Social Security: Section 110(1)(iv) represents a landmark legislative reform by explicitly recognizing corporate CSR expenditures as a statutory source for co-funding national unorganised worker social security schemes.
  • Establishment of Dedicated Social Security Funds: Requires the creation of dedicated unorganised worker social security funds at both Central and State levels into which all budgetary allocations, CSR grants, and beneficiary contributions must be deposited and ring-fenced.
Key Landmark Precedents:
  • Paschim Banga Khet Mazdoor Samity v. State of W.B. (1996) 4 SCC 37: The Supreme Court ruled that financial constraints cannot be pleaded by the State to avoid constitutional obligations under Article 21; the State must allocate adequate financial resources to provide basic health and welfare amenities to vulnerable citizens.
  • Consumer Education & Research Centre v. Union of India (1995) 3 SCC 42: Held that the financial viability of social security funds must be ensured through coordinated state contributions and employer obligations to protect the life and health of workmen.
  • State of Gujarat v. Utility Users' Welfare Association (2018) 6 SCC 21: Affirmed that where Parliament creates statutory funding mechanisms for social protection, the state is under an affirmative legal obligation to maintain transparent financial accounting and continuous fiscal flows.
Courtroom Practice & Strategic Litigation Guidance:

Companies planning their annual CSR spending should partner with the Ministry of Labour and Employment or State Social Security Boards to channel CSR funds directly into Section 110 social security schemes. This fulfills statutory CSR requirements under Section 135 of the Companies Act while conferring Section 80G tax deductions and enhancing the corporate ESG compliance score.

Section 109 All 163 Sections of Code on Social Security, 2020 Section 111