A Social Security Code of vagueness

A Social Security Code of vagueness

The Labour Ministry has released a draft of the Code on Social Security and Welfare which is an omnibus amalgamation of 15 existing labour laws related to social security, including the EPF, ESI, Maternity Benefit, Payment of Gratuity and Unorganised Workers’ Social Security (UWSS) Acts, and the various Welfare Cess/Fund Acts etc.

However, the biggest moot point plaguing the Code is whether Acts meant for the organised sector — such as the ESI and EPF Acts — can be applied without any modification to the unorganised sector, where workers, employers and workplaces keep changing.

Ostensibly, the Code applies to every single worker, whether in the organised or unorganised sector, wage worker (even a domestic worker) or a self-employed person. It exempts only employees of the government and its agencies. But the escape clause from this omnibus provision is in Section 1.5 which says that the Code shall not apply to “such class of workers as may be specified…”.

Say, an exemption for all enterprises which employ less than 100 or so employees is given, akin to the proposed amendments to the Factories Act etc, it will mean that no worker in the unorganised sector will be covered.

Similarly, there is much lack of clarity as specifics of several definitions are to be decided later, which can have grave consequences on the ultimate working of the Code.

For instance, the Code defines “unorganised sector” as including establishments where the number of workers employed “is less than the threshold.” But, the “threshold” itself is to be “notified by the central government” later. So one is none the wiser about what the unorganised sector constitutes, or will constitute.   
Experts point out that employers have no representation at all in the decision-making body, the National Social Security Council, and that the representation of employees on it has been so reduced that it makes a mockery of the tripartite body.

The representation of each should not be less than 15 each, they feel. Moreover, experts opine that the quantum of benefits have been drastically reduced in the Code, when compared to what is currently available under the ESI Act.

A promising feature is that it is mandatory for an employer to get all his workers registered with the Social Security Board within a time frame. This provision was excluded when the UWSS Act was passed under pressure from employers and it worked to the detriment of workers. No employer or contractor can also function without being registered.

Another positive aspect is that Facilitation Centres run by the local body in the area where the worker works are the registering bodies. The local bodies have a reach right down to the grassroots level and are most suitably positioned for registering workers.

The state boards will provide to each worker a unique portable social security account named ‘VIKAS’. Lack of portability under several existing Acts and schemes was a deterrent to workers registering themselves.

Social Security Fund
A Social Security Fund (SSF) and a Gratuity Fund are to be established in each state. The employer has to contribute 17.5% of monthly wages paid by him to each employee towards the SSF, unless a cess has been already imposed on him.

The existing cesses on building and other constructions, ores and minerals, bidis etc, are taken into account, with the rider that cesses on other employers may also be imposed. An option to make quarterly, half- yearly or annual payments of employers’ contributions has also been given in lieu of making monthly payments in each individual worker’s name.

Employees and the self-employed are also to contribute specified sums. But the state is not making any contribution towards the SSF, which is necessary for fulfilling the social secu­rity of unorganised workers.

Rather than creating a common minimum social floor of benefits to all workers as recommended by the International Labour Organisation (ILO), the Code allows the Centre to create separate schemes for different classes of workers, or for different establishments. This is a replication of the many schemes with different eligibility criteria, benefits and quantum of benefits that has been the bane of the current social security scene.

But the Code also allows the Centre to notify composite schemes covering many benefits prescribing a single contribution for the consolidated scheme. One wishes that this alone was allowed, covering all the nine benefits prescribed by ILO Convention No. 102 on social security, without giving scope for running the multiple, sector-based schemes for individual benefits. These are a pain for workers as they will need to apply for each scheme separately.

The Code also allows welfare funds and schemes to be run for different classes of workers, in addition to the existing ones for construction workers, for housing, skilling, education, family welfare, etc. The government may make an additional contribution from its own sources to these welfare funds.

In totality, the Code could have rationalised schemes in addition to amalgamating them. Also, because of the lack of clarity in definitions, one does not know what really awaits workers, especially the unorganised.

(The writer is Executive Trustee, CIVIC, Bengaluru)