The Social Security Code, 2019 - Standing Committee Ninth Report
Standing Committee on Lanour
(2019-20)
(SEVENTEENTH LOK SABHA)
MINISTRY OF LABOUR AND EMPLOYMENT
THE CODE ON SOCIAL SECURITY, 2019
NINTH REPORT
LOK SABHA SECRETARIAT
NEW DELHI
July, July, 2020
2020/Sravana, 1942 (Saka)
ON LABOUR EMPLOYMENT URITY, 2019
42 (Saka)
NINTH REPORT
STANDING STANDING COMMITTEE C
ON LABOUR
(2019-20)
(SEVENTEENTH LOK SABHA)
MINISTRY MINISTRY OF OF LABOUR LA
AND EMPLOYMENT
THE THE CODE CODE ON ON
SOCIAL SECURITY, 2019
Presented Presented to to Hon'ble Hon
Speaker on 31.07.2020
LOK SABHA SECRETARIAT
NEW DELHI
July, July, 2020/Sravana, 2020
1942 (Saka)
ii
ON LABOUR
EMPLOYMENT
CURITY, 2019
on 31.07.2020
42 (Saka)
CONTENTS
PAGE No.
COMPOSITION OF THE COMMITTEE v
INTRODUCTION vi I. INTRODUCTORY 1
II. AMALGAMATION 5
III. PREAMBLE, SHORT TITLE, EXTENT, COMMENCEMENT AND
APPLICATION
12
IV. DEFINITION 15
i. Appropriate Government 15
ii. ‘Building or Other Construction Work’ and Building Worker’ 17
iii. Multiple Definitions of Various Types of Workers 19
iv. Contract Labour and Contractor 21
v. Contribution 23
vi. Employee 24
vii. Employment Injury 27
viii. Establishment 28
ix. Fixed Term Employment 29
x. Gig Workers; Platform Work; and Platform Workers 31
xi. Inspector-cum-Facilitator 34
xii. Social Security 35
xiii. Unorganised Sector 38
xiv. Unorganised Worker 40
xv. Wage Worker 42
V. REGISTRATION OF ESTABLISHMENT 43
VI. SOCIAL SECURITY ORGANISATION 45
VII. EMPLOYEES PROVIDENT FUND (EPF) 56
VIII. EMPLOYEES STATE INSURANCE CORPORATION (ESIC) 68
IX. GRATUITY 86
iii
X. MATERNITY BENEFIT 96
XI. EMPLOYEES COMPENSATION 105
XII. SOCIAL SECURITY AND CESS IN RESPECT OF BUILDING AND
OTHER CONSTRUCTION WORKERS (BOCW)
108
XIII. SOCIAL SECURITY FOR UNORGANISED WORKERS 123
XIV. AUTHORITIES, ASSESSMENT, COMPLIANCE AND RECOVERY 157
XV. OFFENCES AND PENALTIES
XVI. FINANCIAL MEMORANDUM
APPENDICES
APPENDIX I: Suggestions/Notes of dissent
APPENDIX II: Minutes of the Eighteenth Sitting of the Committee held on
9th January, 2020. 211
APPENDIX III: Minutes of the Twenty Ninth Sitting of the Committee held on 29th July, 2020.
COMPOSITION OF THE STANDING COMMITTEE ON LABOUR (2019-20)
1. Shri Bhartruhari Mahtab - Chairperson
MEMBERS LOK SABHA
2. Shri Subhash Chandra Baheria
3. Shri John Barla
\4. Shri Raju Bista
5. Shri Pallab Lochan Das
6. Shri Pasunoori Dayakar
7. Shri Feroze Varun Gandhi
8. Shri Satish Kumar Gautam
9. Shri B.N. Bache Gowda
10. Dr. Umesh G. Jadhav
11. Shri Dharmendra Kumar Kashyap
12. Dr. Virendra Kumar
13. Adv. Dean Kuriakose
14. Shri Sanjay Sadashivrao Mandlik
15. Shri K. Navaskani
16. Shri Khalilur Rahaman
17. Shri D. Ravikumar
18. Shri Nayab Singh Saini
19. Shri Ganesh Singh
20. Shri Bhola Singh
21. Shri K. Subbarayan
RAJYA SABHA
22. Shri Oscar Fernandes
23. Shri Elamaram Kareem
24. Dr. Raghunath Mohapatra
25. Dr. Banda Prakash
26. Shri Rajaram
27. Ms. Dola Sen
28. Shri M. Shanmugam
29. Shri Dushyant Gautam
\ 30. Shri Vivek Thakur
31. Shri Neeraj Dangi
SECRETARIAT
1. Shri T.G. Chandrasekhar - Joint Secretary
2. Shri P.C. Choulda - Director
3. Shri D.R. Mohanty - Additional Director
4. Ms. Miranda Ingudam - Deputy Secretary
INTRODUCTION
I, the Chairperson, Standing Committee on Labour (2019-20) having been authorized by the committee do present on their behalf this Ninth Report on 'The Code on Social Security, 2019' relating to the Ministry of Labour and Employment.
2. The Code on Social Security, 2019 was introduced in Lok Sabha on 11.12.2019 and referred to the Committee on 23.12.2019 for examination and report within three months i.e. by 22.03.2020. The Committee obtained extension of time from Hon’ble Speaker upto the first day of the Monsoon Session 2020 to present the Report.
3. In the process of examination of the Code, the Committee invited the views/ suggestions from Trade Unions/ Organizations/ Individuals/ Stakeholders through a Press Communiqué and received around 65 views/suggestions. The Committee had briefing by the representatives of the Ministry of Labour and Employment on 9th January, 2020. Further oral evidences on the Code could not be held due to the circumstances arising out of Covid-19 pandemic. The Report has thus been finalised based on the written testimony/clarifications/ comments/replies received from the Stakeholders/Trade Unions/Experts/State Governments as well as from the Ministry of Labour & Employment.
4. The Committee considered and adopted this Report during their Sitting held on 29th July, 2020.
5. The Committee wish to express their thanks to the representatives of the Ministry of Labour and Employment for briefing the Committee and placing before them all the requisite information sought for in connection with the examination of the Code. The Committee also express their thanks to all those who had submitted written memoranda containing suggestions on the various provisions of the Code.
6. The Committee would like to place on record their deep appreciation for the commitment, dedication and valuable assistance rendered including drafting of the Report by the officials of the Lok Sabha Secretariat attached to the Committee.
7. For ease of reference and convenience, the Observations/Recommendations
of the Committee have been printed in thick type in the body of the Report.
New Delhi; BHARTRUHARI MAHTAB 30th July, 2020 CHAIRPERSON, 8th Shravana, 1942 (Saka) STANDING COMMITTEE ON LABOUR
REPORT
I. INTRODUCTORY
1.1 India’s obligation to provide a comprehensive social security cover for the workers may be traced to several provisions enshrined in the Constitution of India which include inter-alia securing equal pay for equal work for both men and women; directions pertaining to the State’s responsibility for making effective provisions for securing the right to work, to education and to public assistance in cases of unemployment, old age, sickness and disablement; for securing just and humane conditions of work and for maternity relief; to secure by suitable legislation or economic organisation or in any other way, to all workers, agricultural , industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities etc.
1.2 Similar obligations have been cast by a number of international instruments in place pertaining to labour rights viz, The Universal Declaration of Human Rights, 1948; International Covenant on Economic, Social and Cultural Rights, 1976; International Labour Organisation (ILO) Conventions; and Sustainable Development Goals. In line with the recommendations of the
Second National Commission on Labour, the Ministry of Labour & Employment proposed four Labour Codes viz ‘The Code on Wages, 2019’; The Occupational Health, Safety and Working Conditions Code, 2019;The Industrial Relations Code, 2019; and The Code on Social Security, 2019. ‘The Code on Social Security, 2019’ intends to subsume the following nine Central Labour Acts after simplifying and rationalising the relevant provisions contained therein:
(i) The Employees’ Compensation Act, 1923;
(ii) The Employees’ State Insurance Act, 1948;
(iii) The Employees Provident Fund and Miscellaneous Provisions Act, 1952;
(iv) The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959;
(v) The Maternity Benefit Act, 1961;
(vi) The Payment of Gratuity Act, 1972;
(vii) The Cine Workers Welfare Fund Act, 1981;
(viii) The Building and Other Construction Workers Welfare Cess Act, 1996;
and
(ix) The Unorganised Workers’ Social Security Act, 2008.
1.3 The Salient features of the Code on Social Security, 2019, inter alia, are:-
(i) to extend the coverage of Employees’ State Insurance to all establishments employing ten or more employees and to the employees working in establishments with less than ten employees on voluntary basis and also to plantations on option basis. It further seeks to empower the Central Government to notify the applicability of the said coverage to establishments which carries on the hazardous or life threatening occupation irrespective of the number of workers employed therein;
(ii) to extend the Employees’ Provident Fund, Employees’ Pension Scheme and Employees Deposit Linked Insurance Scheme to all industries or establishments employing twenty or more employees and thereby expands the existing coverage;
(iii) to make provision for specifying differential rates of employees’ contribution for class of employees for employees’ provident fund as the Central Government may notify for a specified period;
(iv) to provide that the money dues shall be the charge on the assets of the employer and shall be paid on priority basis in accordance with the Insolvency and Bankruptcy Code, 2016;
(v) to provide that in case of employer’s failure to register the employee with Employees’ State Insurance Corporation or failure to pay contribution and the Employees’ State Insurance Corporation releasing the benefits to the workers, then, such benefits shall be recovered from the employer;
(vi) to empower the Central Government to frame schemes for providing social security, to the gig workers and platform workers who do not fall under traditional employer-employee relation;
(vii) to empower the Central Government, by notification, to constitute a Social Security Fund or funds for provision of social security for the unorganised workers, platform workers or gig workers or any such class of workers;
(viii) to provide for payment of gratuity in case of Fixed Term Employment on pro-rata basis even if the period of fixed term contract is less than five years;
(ix) to provide for maternity benefit to the woman employee;
(x) to provide for compensation to the employees in case of the accidents while commuting from residence to place of work and vice versa;
(xi) to provide for levying and collecting the cess for the purposes of
social security and welfare of building workers;
(xii) to provide for limitation period of five years for institution of proceedings in respect of assessment and determination of money dues from employer;
(xiii) to expand the sources of the fund for schemes to include funds from corporate social responsibility or any other source as may be specified in the scheme and also contains enabling provision for constituting the special purpose vehicle for the purpose of implementation of schemes for unorganised workers;
(xiv) to provide for renaming the designation of Inspector as Inspector- cum Facilitator and to enhance his power to supply information and give advice to employers and workers concerning the most effective means of complying with the provisions of the proposed Code;
(xv) to provide for filing of a single return electronically or otherwise by the employer;
(xvi) to provide that the interests charged on delayed payments under the provisions of the proposed Code be specified in the rules;
(xvii) to provide penalty for the different types of violations commensurate with the gravity of the violations;
(xviii) to make Aadhaar mandatory for seeding at the time of registration of member or beneficiary or any other person to register or for receiving benefit;
(xix) to empower the appropriate Government to exempt certain establishments from all or any of the provisions of the proposed Code.
1.4 ‘The Code on Social Security, 2019’ was introduced in Lok Sabha on 11.12.2019 and referred to the Standing Committee on Labour on 24.12.2019 to complete the examination and present a Report thereon within three months i.e by 23rd March, 2020. In the process of examination of the Code, the Committee after obtaining Background Note, held an initial briefing meeting
with the Ministry of Labour & Employment on 9th January, 2020 to get themselves acquainted with various provisions contained in the Code. Subsequent to that, a press advertisement was issued in the prominent National Dailies inviting views/suggestions of various Stakeholders including the State Governments. In response to that, the Committee received around 50 Memoranda containing views/suggestions of Trade Unions/ Associations/ Organisations/Individuals/ as well as some State Governments. These Memoranda were forwarded to the Ministry seeking their comments which were duly received in tranches. As the examination of the Code could not be completed by the stipulated timeline, the Committee sought and obtained an extension of time upto the first day of the Monsoon Session 2020 to present the Report to the House.
1.5 In view of the unprecedented situation arising out of the COVID-19 Pandemic with the whole Country in total lockdown, the oral evidences of the Official/non-official witnesses could not be held and examination of the Code was done mainly through obtaining written clarifications/comments/repliesfrom the Stakeholders as well as the Ministry.
1.6 Thus, based on such written inputs, the Committee have examined theprovisions contained in the Code Clause by Clause and have given their considered opinion in the succeeding Chapters/Paragraphs.
II. AMALGAMATION
2.1 As mentioned earlier, nine Central Labour Laws are being amalgamated with the Social Security Code. According to the Ministry, the amalgamation of the said laws will facilitate the implementation and remove the multiplicity of definitions and authorities without compromising the basic concepts of welfare and benefits to workers. The proposed legislation would facilitate the use of technology ensuring transparency and accountability leading to effective enforcement of the provisions of the proposed legislation. The Ministry have clarified that widening the scope of the benefits to the fixed term employees and facilitating ease of compliance of labour laws would be a big step towards equity and promote setting up of more enterprises thus catalysing the creation of employment opportunities.
2.2 The Committee desired to know the rationale for including the Employment Exchange Act, 1959 in the Code when the Act is not in anyway connected with the theme of Social Security. In response, the Ministry submitted as under:
“All the Labour laws are being subsumed in one of the four Labour Codes. The Social Security Code seems to be the appropriate Code for subsuming the existing Employment Exchanges (Compulsory Notification of Vacancies) Act 1959.
1. The thrust of Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 is on providing suitable workers to the employers and suitable jobs/employment opportunities to the would be workers( fresh job-seekers) and to the workers(looking for better jobs). The Labour market information collected under the provisions of the said Act and Rules made there under helps to connect employers with workers and those looking for work. The information also helps to ascertain the requirements of skills in the Labour market.
2. Moreover many definitions in the existing Act and the Social Security Code are common, for example, Employer, establishment, employee, wages, etc. Due to these common factors, the existing Employment Exchanges (Compulsory Notification of Vacancies) Act 1959 has been included in the proposed Social Security Code. This also helps to achieve the objective of having a minimum number of Acts/Legislations also”.
2.3 The Committee asked for the justification of subsuming the Cine Workers Welfare Fund Act, 1981, the Building and other Construction Workers (BOCW) Cess Act, 1996 and the Unorganised Workers Social Security Act, 2008 in the Code, when a number of similar Labour Welfare Fund Laws like the Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines Labour Welfare Fund Act, 1976, the Beedi Workers Welfare Cess Act, 1976, the Limestone and Dolomite Mines Labour Welfare Fund Act, 1972 etc. have been left out of the Code. In reply, the Ministry stated as follows:
“At the time of introduction of Code on Social Security, 2019 the Cine Workers Welfare Fund Act, 1981, the BOCW welfare Cess Act, 1986 and the Unorganised Workers’ Social Security Act, 2008 were in force. As such these Acts have been subsumed in the Code on Social Security, 2019.”
2.4 Stakeholders and Experts have submitted that crucial details have been left to delegated legislation. The Code Bill appears to have significantly enlarged the scope of delegated legislation in favour of the Central government and/or appropriate Governments. Crucial matters left to delegated legislation which affect the core of the Code viz.
a) Powers and functions of all social security organisations listed in Chapter II of the Code, including the Central Board, the Insurance Corporation, the Unorganized Workers National Social Security Board, the State Unorganized Workers Social Security Boards, the State Building Workers’ Welfare Boards, all Subordinate Committees including the Executive Committees, advisory committees, and expert committees;
b) Powers to nominate members to all such committees;
c) Qualifications to receive benefits under various provisions of the Code;
d) Contributions to be made by government, employers and workers;
e) Registration of establishments under various provisions and manner of record keeping.
f) Powers to grant exemptions to (various classes) of establishments under different provisions of the Act.
2.5 The Stakeholders also pointed out that the Codification exercise is full of stipulations like “as may be specified” / “as may be prescribed”/ “may be framed" in respect of almost all substantive provisions of the Code for any change to be made in future in the provisions of entitlement, contributions and benefits and also on the aspects remaining undefined in the Bill. In response thereto, the Ministry stated that to make legislation dynamic and attuned to the emerging scenario it was necessary to provide for certain powers of modifications. However, there is no intention to give the powers of Parliament to lower authority.
2.6 Asked to state the specific reasons and compelling considerations under which so many substantive provisions have been intended to be made through executive decisions by-passing Parliament and when as many as nine extant and important Central Labour Acts are being subsumed with the Code, the Ministry submitted as under:
“It is a conscious decision of the Government as it provides for dynamism and flexibility to those provisions which are amenable to change as per needs of the time. For example, the word ‘specified’ has been used inter-alia in the context of following:
I. Items which are in Schedule which relate to modification of applicability.
II. In case of ESIC, the rate of contribution was part of the rule making only.
III. In case of EPFO, it is proposed that rates of contribution can be changed depending upon the availability of budget and the economic situation. (Sec. 16)
IV. Authority specified (sec 2(27))
V. Occupational diseases specified (sec 2 (48))
VI. Injuries to be specified under employees’ compensation (sec (2(52))
VII. Dates of operation specified
VIII. Composition of Committees specified
IX. Functions specified Further, as provided under section 159 of the Code; every rule, regulation, notification and scheme made or framed by the Central Government or the Corporation, under the Code shall be laid, as soon as may be after it is made or framed, before each House of Parliament, and if, both Houses agree in making any modification in the rule, regulation, notification or scheme or both Houses agree that the rule, regulation, notification or scheme should not be made, such rule, regulation, notification or scheme shall thereafter have effect only in such modified form or be of no effect.”
2.7 The Code provides that the threshold for applicability of social security schemes may be amended through a notification without having to amend the Code itself. Asked to state whether it would be prudent that the threshold limits be specifically provided for in the present Act [Clause 152, First Schedule], the Ministry stated as under:
“Various threshold for ESIC, EPF, maternity benefit, gratuity, employees compensation etc have been provided in the Schedule because of their ease of amendability. It will be possible in the Government, whether state or central Government, to extend the benefit depending upon the financial situation in the country which may not be possible to estimate at the time of the enactment of the Code. Even at present, the threshold of ten for coverage under ESI Act, 1948 is for factories only [Section 2(12)] whereas there is no such threshold for coverage of establishments [Section 1(5)] which can be notified with approval of the Central Government.”
2.8 The Committee find that the Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 is one of the nine Acts proposed to be amalgamated with the Social Security Code, 2019. Justifying the proposed amalgamation, the Ministry have deposed that the labour market information collected under the provisions of the said Act and Rules made thereunder facilitates
connecting the employers with the workers and fresh job seekers and moreover such amalgamation would help achieve the objective of having minimum number of Acts/Legislations. The Committee are not impressed with the logic adduced firstly because the said Act provides for reporting of vacancies to the Employment Exchanges which act as labour market facilitation institutions and do not in any way connect with the theme and thrust of Social Security. Moreover, just to reduce the number of Acts/Legislations, any Act not connected with the subject matter of the Code should not be illogically subsumed in it. The Committee would, therefore,like to urge the Ministry to revisit the proposed amalgamation of the said Act with the Code and rather contemplate examining the compliance aspect to the provisions contained in the Act during more than six decades of its existence.
2.9 The Committee note that while the Cine Workers Welfare Fund Act, 1981; the Building and Other Construction Workers (BOCW) Cess Act, 1996; and the Unorganised Workers Social Security Act, 2008 are being subsumed with the Code, a number of similar Labour Welfare Fund Laws like the Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines Labour Welfare Fund Act, 1976; the Beedi Workers Welfare Fund Act, 1976; the Limestone and Dolomite Mines
Labour Welfare Fund Act, 1972, etc. have been left out of the Code on the contention that the first three Acts were in force at the time of introduction of the Code and hence they are being subsumed. The Committee are not convinced with the Ministry's reasoning as it appears inconsistent with the primary purpose to facilitate the implementation of various labour laws without compromising the basic concepts of welfare and benefits to workers. The Committee
are of the considered opinion that when welfare of workers is the noble intent, it should universally be extended to workers from all social strata. Needless to say, it becomes imperative on the part of the Ministry to have a relook at those Labour Welfare Laws which have been left out of the amalgamation process irrespective of the abolition, so as to ensure that the merited and principled provisions as contained in such laws are duly incorporated in the Code for the overall benefit of the sector specific labour force without discrimination.
2.10 The Committee are apprehensive that the codification exercise is full of stipulations like "as may be specified"; "as may be prescribed"; "as may be framed"; etc. in respect of almost all substantive provisions pertaining to entitlement, contributions, benefits, etc. The Ministry have explained that it is a conscious decision of the Government as it provides for dynamism and flexibility to those provisions which are amenable to change as per the needs of time, without undermining the powers of Parliament. The Ministry have also narrated in detail the effect of the notification, regulation etc. once they come before Parliament after being made or framed, in terms of Section 159 of the Code. The Committee are well aware of the procedure detailed by the Ministry.
The moot point is whether so many substantive provisions ought to be left to the Executive Orders when an important legislation is being framed by subsuming with it as many as nine extant Labour Laws. The Committee take into cognisance the Ministry's submission that to make the legislation dynamic and attuned to the emerging scenario, it is necessary to provide the Executive certain powers of modifications, but they do not agree with the sweeping powers intended to be conferred upon the Central Government on the plea of dynamism and flexibility and at the cost of duplicity and ambiguity in the lawmaking process. The Committee, therefore,
exhort the Ministry to review all such equivocal and cryptic provisions and endeavour to have a course correction so as to determine a transparent and inclusive legislation with due regard to
the powers and privileges of Parliament.
2.11 The Committee would like to emphasize that while proposing to amalgamate the nine extant Acts by simplifying and rationalising them, the Code ought to assume value addition over the said Acts so as to provide a firm legal and institutional framework for a universal right based social security with a secure financial commitment and within a definite time frame.
III. PREAMBLE, SHORT TITLE, EXTENT, COMMENCEMENT AND
APPLICATION
3.1 The Preamble to the Social Security Code, 2019 provides that the Bill seeks ‘to amend and consolidate the laws relating to social security of the employees and the matters connected therewith or incidental thereto.’
3.2 Various stakeholders have expressed concerns that the Preamble is non-
committal in so far as it only states that existing laws are amended and
consolidated whereas it was expected that the Code would highlight the
importance of Social Security in the lives of workers and emphasise it as a
right. The Ministry in their response stated that the suggestion would be
accepted and certain changes have been made.
3.3 Clause 1(1) of the Code provides the short title of the Act to be called as
‘The Code on Social Security, 2019’.
3.4 Suggestions have been received from certain quarters that the short title
should be ‘The Code on the Labour Welfare and Social Security’. In response,
the Ministry clarified as follows:-
“The Second National Commission on Labour, which submitted its report in June, 2002 had recommended that the existing set of labour laws should be broadly amalgamated into the following groups, namely:–– (a) industrial relations; (b) wages; (c) social security; (d) safety; and (e) welfare and working conditions. In line with the recommendations of the Second National Commission, the Code has been named as Code on Social Security. Further, the word “social security” includes labour welfare.”
3.5 Clause 1(3) provides that ‘It shall come into force on such date as the
Central Government may, by notification in the Official Gazette, appoint; and
12
different dates may be appointed for different provisions of this Code and any
reference in any such provision to the commencement of this Code shall be
construed as a reference to the coming into force of that provision. Sub Clauses
(4),(5),(6) and (7) of Clause 1 further provide for differential commencement of
different provisions of the Code.
3.6 Concerns were raised at many quarters on the non-provision of a specific
time frame within which the provisions of ‘The Social Security Code, 2019’
would be given effect. Stakeholders suggested that a new provision specifying a
timeline by which all workers including unorganised workers would be covered
under Social Security benefits needed to be included in the Code itself.
3.7 When the Committee sought clarifications on non-provision of any time
limit stipulations for formulation and implementation of Schemes in the Code
itself, the Ministry stated as under:-
“Formulation of scheme is a process which requires consultation with stakeholders, such as, representatives of employers, employees and various Departments of the Government and completion of various statutory and administrative requirements.”
3.8 As it is expected that the Preamble to the Code should
explicitly express its commitment for provision of social security
benefits to all types of workers, the Committee desire that it should
highlight the importance of social security in the lives of workers
and emphasize it as a right, as also agreed to by the Ministry.
Keeping in view the larger socio-economic interests of the
Workforce and ensure their dues in terms of Social Security
benefits, the Committee also recommend that there is an imperative
13
need to clearly spell out, either in the Preamble or at any other
appropriate place, the principles to be followed for provision of
Social Security benefits to all workers in accordance with the
provisions stipulated in the Constitution of India, ILO Conventions
and other International Instruments which espouse and guarantee
various labour rights.
3.9 On a suggestion to rechristen the short title of the Code as
'The Code on the Labour Welfare and Social Security', the Ministry
have submitted that the title 'Code on Social Security' has been put
in place in line with the classification of labour laws as
recommended by the Second National Commission on Labour.
Moreover, 'Social Security' includes labour welfare. The Committee
find merit in the reasoning advanced by the Ministry and desire that
status quo of the title of the Code be maintained, albeit with the
expansion in the definition of 'Social Security' which has been
highlighted at the appropriate place in this Report.
3.10 The Committee are concerned to note that there is no
provision of a specific time frame within which the stipulation of
the Code would be given effect. Keeping in view the heightened
expectation and aspirations of the labour force on a comprehensive
law on Social Security which is being brought in after 73 years of
14
the Country’s Independence, the Committee desire that a clear and
specific enforcement date need to be stipulated in the Code itself so
as to ensure effective provision of Social Security to all the workers
within a definite timeline.
IV. DEFINITIONS (CLAUSE 2)
(i) Appropriate Government
Clause 2(3)
4.1 Clause 2(3) defines ‘Appropriate Government’ as under:-
”(a) in relation to, an establishment carried on by or under the authority of the Central Government or the establishment of railways, mines, oil field, major ports, air transport service, telecommunication, banking and insurance company or a corporation or other authority established by a Central Act or a central public sector undertaking or subsidiary companies set up by central public sector undertakings or autonomous bodies owned or controlled by the Central Government, including establishment of contractors for the purposes of such establishment, corporation or other authority, central public sector undertakings, subsidiary companies or autonomous bodies or in relation to an establishment having departments or branches in more than one State, as the case may be, the Central Government; and (b) in relation to any other establishment, the State Government”.
4.2 Some Stakeholders have suggested that the definition of ‘appropriate
Government’ be given as the ‘Union Government’ to take up the role of devising
all policies and implementation role for plantations across the Country. In
response thereto, the Ministry stated that in the proposed Occupational Safety,
Health and Working Conditions Code, a separate Chapter for plantations has
been provided which specifically mentions the facilities for the workers in
plantations which would greatly reduce workers exploitation.
4.3 Various Stakeholders have suggested that Central Government should be
the Appropriate Government for those establishments in which Central
Government or any of its establishments have fifty percent or more share.
15
Further, suggestions were made for a new clause containing definition for
controlled industry as ‘any industry the control of which has been transferred
to the claim by any Central Act in public interest.’
4.4 In response thereto, the Ministry stated that in the revised Industrial
Relations Code, the proposed definition of “appropriate government” includes
controlled industry as under:-
“appropriate Government” means,–– (i) in relation to an industrial establishment or undertaking carried on by or under the authority of the Central Government or concerning any such controlled industry as may be specified in this behalf by the Central Government or the establishment of railways including metro railways, mines, oil field, major ports, air transport service, telecommunication, banking and insurance company or a corporation or other authority established by a Central Act or a central public sector undertaking, subsidiary companies set up by the principal undertakings or autonomous bodies owned or controlled by the Central Government including establishments of the contractors for the purposes of such establishment, corporation, other authority, public sector undertakings or any company in which not less than fifty-one per cent. of the paid-up share capital is held by the Central Government, as the case may be, the Central Government;”
4.5 The Committee appreciate that pursuant to their
recommendations in the OSHWC Code and Industrial Relations Code
to foster more clarity in the definition of 'Appropriate Government',
the Ministry have come up with a new proposed definition of
‘Appropriate Government’ in the revised Industrial Relations Code,
2019 which includes ‘controlled industry’ and also contains
provisions clearly stipulating that the appropriate authority would
be the Central Government where not less than fifty-one percent of
the paid up share capital is held by the Central Government in any
16
establishment, corporation, other authority, public sector
undertaking or any company. In view of the fact that clear
demarcation of responsibility between the Central Government and
the State Governments would remove confusion and facilitate
smooth implementation of the enactments, the Committee urge the
Ministry to have a uniform and unambiguous definition of
'Appropriate Government' in all the Codes.
(ii) ‘Building or Other Construction Work’ and Building Worker’.
Clauses 2(6) and 2(7);
4.6 Clause 2(6) defines “Building or Other Construction Works’ as under:-
“Building or other construction work" means the construction, alteration, repair, maintenance or demolition in relation to buildings, streets, roads, railways, tramways, airfields, irrigation, drainage, embankment and navigation works, flood control works (including storm water drainage works), generation, transmission and distribution of power, water works (including channels for distribution of water), oil and gas installations, electric lines, internet towers, wireless, radio, television, telephone, telegraph and overseas communications, dams, canals, reservoirs, watercourses, tunnels, bridges, viaducts, aqua-ducts, pipelines, towers, cooling towers, transmission towers and such other work as may be specified in this behalf by the Central Government, by notification, but does not include any building or other construction work of any factory or mine or any building or other construction work employing less than ten workers or any building or other construction work related to own residential property not employing the workers more than such number as may be notified by the Central Government from time to time”
Further, Clause 2(7) defines ‘Building workers’ as under:-
“building worker" means a person who is employed to do any skilled, semi-skilled or unskilled, manual, technical or clerical work for hire or reward, whether the terms of such employment are express or implied, in connection with any building or other construction work, but does not include any such person who is employed mainly in a managerial or supervisory or administrative capacity”.
17
4.7 The State Governments of Punjab and Telangana have submitted inter-
alia removal of threshold of 10 workers in the definition in Clause 2(6);
exemption of construction of own residential house upto a certain limit;
inclusion in the definition of ‘Building Workers’ in clause 2(7) any such person
who is employed mainly in a managerial or supervisory or administrative
capacity. In response, the Ministry clarified that the First Schedule has been
added specifying the applicability of thresholds on various chapters such as
Employees’ Provident Fund, ESIC, gratuity, maternity benefit, employees’
compensation, building and other welfare cess and social security for
unorganized sector. Most of these thresholds required amendment of
respective Acts earlier. Now, these thresholds have been made part of the
Schedule and can be modified (increased or decreased) through notification.
4.8 The Ministry also stated that most of the definitions have been taken
from the Code on Wages or from the Occupational Safety, Health and Working
Conditions Code, 2019, to maintain uniformity in definitions, which was one of
the main objectives of codification.
4.9 The Committee find that the definition of ‘Building and Other
Construction Work’ and ‘Building Workers’ have been taken from
the Code on wages and the Occupational Safety, Health and Working
Conditions Code to maintain uniformity in consonance with the
objective of the codification process. On the suggestions made by
some State Governments for a provision for removal of threshold
applicability in the definition of ‘Building Workers’ in Clause 2(7)
itself, the Ministry have clarified that the First Schedule has been
added to the Code specifying the applicability of thresholds which
18
can be easily increased or decreased through notifications without
the requirement of amending the respective Acts. Though
Committee find merit in the reasonings adduced by the Ministry,
they, however, are of the opinion that instead of leaving things to be
taken care of by the notification process, it would be appropriate to
lower the threshold limit in the Code itself to address the concerns
of the State Governments and for the benefit of the BOCWs.
(iii) Multiple Definitions of Various Types of Workers
4.10 The Code defines various types of workers viz. Gig Worker, Home-based
Worker, Inter-State Migrant Worker, Platform Worker etc. differently under
different Clauses. Various stakeholders/Trade Unions/Experts have expressed
reservations on the multiple definitions of various types of Workers which
would create confusion, as the definitions are scattered and in order to
understand their applicability, one has to refer to a number of places.
4.11 Responding to the above observation, the Ministry stated as under:
“The definition of worker has been deleted as they are sub-set of employee for social security. For the rest, it is a matter of fact that the other form of workers like Building Workers, unorganised workers, unorganised sector workers, home based workers, platform workers have to be defined separately as certain provisions are related to them only.”
4.12 As regards another suggestion to define ‘Domestic Workers’ in the Code,
the Ministry submitted as follows:
“Presently domestic workers are not covered in Unorganised Workers Social Security Act (UWSSA), 2008”.
4.13 It has also been highlighted in various quarters that in the unorganised
sector, most of the times workers are involved in multiple trades
simultaneously and a high percentage of unpaid family labour is involved in
19
unorganised trades. Moreover, their livelihoods are not sustainable and trades
keep on changing. They have suggested that an exhaustive definition of the
unorganised sector to cover all the aspects including unpaid family labour be
brought about in the present Code.
4.14 The Committee note that the Code defines various types of
workers differently under different clauses on the premise that
certain provisions are exclusively related to certain types of
workers. In this context, the Committee note that while Clause 45
of the Code contemplates bringing the Gig Workers and Platform
Workers under the ESI Scheme which is basically meant for the
Organised Sector, they are also included under the Chapter on
‘Social Security for the Unorganised Workers’ wherein Clause 114
provides for framing of exclusive Schemes for Gig Workers and
Platform Workers. Keeping in view the fact that specific welfare
schemes are envisaged in the Code for ‘Unorganised Workers’ as
distinguished from the ones available for those in the ‘Organised
Sector’, the Committee feel that there is a need for more clarity in
the definitions indicating unambiguously whether a particular
worker belongs to the Unorganised Sector or Organised Sector or
both. While appreciating the desirability of having different
definitions for different workers for effecting worker specific
provisions, the Committee are, however, of the firm opinion that
20
adequate safeguards have to be built in to ensure that such
multiplicity in definitions do not in anyway impede extension of
social security benefits to any type of worker.
(iv) Contract Labour and Contractor
Clause 2(18) and Clause 2(19)
4.15 Clause 2(18) and Clause 2(19) of the Code defines ‘Contract Labour’ and
‘Contractor’ as under:-
Clause 2(18):“contract labour" means a worker who shall be deemed to be employed in or in connection with the work of an establishment when he is hired in or in connection with such work by or through a contractor, with or without the knowledge of the employer and includes inter-State migrant worker but does not include an employee (other than part time employee)who is regularly employed by the contractor for any activity of his establishment and his employment is governed by mutually accepted standards of the conditions of employment(including engagement on permanent basis), and gets periodical increment in the pay, social security coverage and other welfare benefits in accordance with the law for the time being in force in such employment;”
Clause 2(19): “contractor", in relation to an establishment means a person, who—
(i) undertakes to produce a given result for the establishment, other than a mere supply of goods or articles of manufacture to such establishment through contract labour; or (ii) supplies contract labour for any work of the establishment as mere human resource and includes a sub-contractor.”
4.16 Suggestions have been received from stakeholders that many contractors
would evade the provisions of law by saying that they are not the contractors,
as they are concessionaires or licensees, the terms largely used in railways and
airports and in other infrastructural sectors. They, therefore suggested that a
proviso may be added in the definition to include agencies engaged by any
establishment in the name of concessionaire/licensee.
4.17 In response to the above suggestion, the Ministry submitted as under:
“The Code has been finalised after consultation with stakeholders and to maintain the uniformity, the definition of “contractor” which has been
21
provided in the Code on Wages, 2019 (which has been notified in the Gazette of India on 8th August, 2019) has been proposed in the Social Security Code. This definition of “contractor” is as defined in the existing Contract Labour (Regulation & Abolition) Act, 1970 and worked well over the years.”
4.18 Regarding the ambiguity in the definition of Contract Labour which
might become a major source of litigation, the Ministry stated as under:
“The Code has been finalised after consultation with stakeholders and to maintain the uniformity, the definition of “contract Labour” which has been provided in the Code on Wages, 2019 (which has been notified in the Gazette of India on 8th August, 2019) has been proposed in the Social Security Code.”
4.19 The Committee note that the definition of ‘contractor’ does
not include terms like ‘concessionaire or licensee’ which are largely
used in Railways, Airports and other Infrastructural Sectors on the
justification that the definition of ‘contractor’ is in line with the
existing definition in the Contract Labour (Regulation & Abolition)
Act, 1970 which had worked well over the years and retained in ‘The
Code of Wages, 2019’ to maintain uniformity and this had been done
in consultation with Stakeholders. Notwithstanding the stand taken
by the Ministry and keeping in view the need to incorporate new
and evolving terms in the labour market, the Committee
recommend that a proviso may be added in Clause 2(19) stating that
‘the contractor includes the agencies engaged by any establishment
in the name of concessionaire/ Licensee’.
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4.20 As regards the definition of 'Contract Labour', though the
Ministry have deposed that it has been done as per the Code on
Wages, 2019 after consultations with the Stakeholders, the
Committee feel that some terms used in the definition viz.,
‘regularly employed’, ‘employment governed by mutually accepted
standards of conditions of employment’; engagement on permanent
basis’; ‘periodical increment;’ and ‘other welfare benefits’ seem to be
ambiguously worded which are liable to be interpreted differently
and may be a major source of litigation detrimental to the interests
of contract labour. The Committee, therefore, desire that these
terms need a review for appropriate interpretation.
(v) Contribution
Clause 2(20)
4.21 Clause 2(20) defines ‘contribution’ as under:-
“contribution" means the sum of money payable by the employer, under this Code, to the Central Board and to the Corporation, as the case may be, and includes any amount payable by or on behalf of the employee in accordance with the provisions of this Code;”
4.22 A number of Stakeholders suggested that the Code must accommodate
the long standing demand of workers for considering the Government as the
employer of a worker when a clear employer-employee relationship cannot be
established and therefore the definition should be amended to include
contribution by the Central and/or State Government on behalf of workers.
4.23 In terms of the provisions made in Clause 109 of the Code,
contributions to the Social Security Fund for provision of Social
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Security to the Unorganised Workers, includes contributions from
Central Government, State Government, beneficiary workers,
Corporate Social Responsibility funds or any other source as may be
specified in the Schemes. Keeping in view the various types of
contribution envisaged in the Code, the Committee recommend that
the definition of ‘contribution’ be modified to make it inclusive of
the other types of contribution intended from other sources too.
The Committee would also like the Ministry to specifically pay
attention towards making contribution by the Appropriate
Government in cases where a clear employer-employee relationship
does not exist or cannot be established and where the employee is
not able to contribute, especially those who do not come under the
threshold limit.
(vi) Employee
Clause 2(26)
4.24 Clause 2(26) of the Code defines ‘Employee’ as under:-
“"employee" means any person (other than an apprentice engaged under the Apprentices Act, 1961) employed on wages by an establishment to do any skilled, semiskilled or unskilled, manual, operational, supervisory, managerial, administrative, technicalor clerical work for hire or reward, whether the terms of employment be express or implied, and also includes a person declared to be an employee by the appropriate Government, but does not include any member of the Armed Forces of the Union:
Provided that for the purposes for Chapter III and Chapter IV, the term "employee" shall mean only such employee drawing wages less than or equal to the wage ceiling notified by the Central Government,
24
respectively, for said Chapters and such other persons or class of persons as the Central Government may, by notification specify to be employee for the purposes of either of such Chapters, or both:
Provided further that for the purposes of Chapter VII, the term "employee" shall mean only such persons as specified in the Second Schedule and such other persons or class of persons as the Central Government, or as the case may be, the State Government may add to the said Schedule, by notification, for the purposes of that Government”
4.25 Some Stakeholders pointed out that the provisions made in earlier drafts
included the suggested definitions which would ensure the effective inclusion
of a vast number of workers in these categories such as home-based workers,
domestic workers, Anganwadi and ASHA workers, part-time workers, any
worker employed or engaged on ‘retainer-ship fee’ basis, a fixed term worker,
commission or piece rate worker, apprentice not covered under Apprentice Act,
1961, informal worker etc.
4.26 Domain experts also submitted with respect to the first proviso of the
clause that “the wage ceiling for employees for the purpose of applicability of
Chapter III and Chapter IV to be notified by the Government”, is restrictive in
nature in terms of coverage and hence may be done away with. They also
pointed out that the present wage ceiling of Rs. 15,000 for EPF and Rs. 21,000
in case of ESIC is very low and excludes many informal workers in the formal
sector from the ambit of the EPF and ESIC benefits. In response thereto, the
Ministry clarified that the provisions for determining wage thresholds by
Central Government for EPFO/ ESIC through subordinate legislation was as
per the existing practice.
4.27 Further suggestions have been received that for purposes of Chapter III
and IV – the wage thresholds should be determined by an automatic process of
wage indexation with CPI every three or five years or any reasonably
determined period so that dependence on notification could be done away with.
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4.28 In response to suggestion received from various quarters for entire
modification of definition of ‘employee’, the Ministry stated that the definition of
“employee” was based on the definition contained in the Code of Wages, 2019.
4.29 The Committee find that the definition of ‘employee’ in Clause
2(26) has left out many types of workers from its ambit though the
earlier drafts included Anganwadi and ASHA workers etc. Further,
the first proviso to the clause stipulating that ‘the wage ceiling for
employees for the purpose of applicability of Chapters III & IV to be
notified by the Government’ appears to be restrictive in nature in
terms of coverage. Moreover the prescribed low wage ceiling of
Rs.15,000/- for EPF and Rs.21,000/- for ESIC, would exclude many
informal workers in the formal sector from the ambit of EPF and
ESIC benefits. The Committee are not convinced with the Ministry’s
clarification that provisions for determining wage thresholds by
Central Government for EPFO/ ESIC through subordinate legislation
is as per the existing practice. Just because a practice has been
going on since ages, it does not any way obstruct the Government to
initiate improvements in the existing system. The Committee,
therefore, impress upon the Ministry to expand the definition of
'employee' so as to encompass all sorts of workers such as
Anganwadi and Asha workers as found place in earlier drafts of the
26
Code. Further efforts ought to be made to determine wage
thresholds through an automatic process of wages indexation with
Consumer Price Index (CPI) periodically which would obviate
dependence on notifications/subordinate legislation.
(vii) Employment Injury
4.30 Clause 2(28) of the Code defines ‘Employment Injury’ as under:-
“"employment injury" means a personal injury to an employee, caused by accident or an occupational disease, as the case may be, arising out of, and in the course of his employment, being an insurable employment only for the purposes of Chapter IV, whether the accident occurs or the occupational disease is contracted within or outside the territorial limits of India;”
4.31 Suggestions have been received from Stakeholders that the definitions
and occupational disease as defined for the purposes of Chapter IV may be
included in this clause uniformly throughout ‘The Code on Social Security,
2019’ . It has been stated that currently, these categories of accident and
occupational disease have only been defined in relation to insurable
employment for the purposes of Chapter IV whereas insurance must be a
provision for all workers, including those in contract and/or in the unorganised
sector.
4.32 In response to suggestions received from certain quarters for
modification of the definition of ‘employment injury’, the Ministry clarified that
the definition was based on the definition contained in the ESI Act, 1948.
4.33 The Committee find that the definition of ‘employment injury’
in Clause 2(28) is based on the definition contained in the ESI Act,
1948 and it includes only the types of accidents and occupational
diseases as defined for the purposes of Chapter IV on ‘Employees’
27
State Insurance Corporation’ (ESIC) in relation to insurable
employment. The Committee are of the considered opinion that the
definition needs to be standardized and made more inclusive so that
the unorganized sector is also given due coverage for availing
benefits due to ‘employment injury’.
(viii) Establishment
Clause 2(29):
4.34 Clause 2(29) defines establishment as under:-
“establishment" means—
(a) a place where any industry, trade, business, manufacture or occupation is carried on; or (b) a factory, motor transport undertaking, newspaper establishment, audiovisual production, building and other construction work or plantation; (c) a mine or dock work;”
4.35 Domain Experts suggested that the definition should include any
industry, trade, business and these must be defined in the Code. It has also
been pointed out that the definition does not clarify whether it covers
agricultural holdings and households. Some Stakeholders on the other hand
had suggested that the definition must be amended to explicitly state that it
includes a place where an industry, trade, business, manufacture, occupation
or exchange of services is carried on, including with less than ten workers as
they have been excluded from the provisions of the Code in the current
definitions of establishment and factory.
4.36 On the specific point that the definition of ‘establishment’ does not clarify
whether it covers agricultural holdings and households, the Ministry clarified
that it did not cover either of the two.
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4.37 Some Stakeholders suggested that a common definition of
‘establishment’ should be arrived at incorporating all the provisions of various
other relevant Acts. The Ministry thereupon responded that the definition was
based on the one contained in the Occupational Safety, Health and Working
Conditions Code. The Ministry further submitted that a common definition
across all Codes was being attempted and the existing definition seemed
adequate.
4.38 According to the Ministry the definition of ‘Establishment’ is
based on the one contained in the Occupational Safety, Health and
Working Conditions Code and does not cover agricultural holdings
and households. The Ministry have also submitted that a common
definition of 'Establishment' is being attempted across all the Codes.
The Committee desire that with a view to extending social security
benefits to all the workers without discrimination or differentiation,
the definition of Establishment should also include 'exchange of
services' with a provision of less than ten workers alongwith trade,
business, manufacturer or occupation, etc. is carried on etc. as
mentioned in Clause 2(23)(a).
(ix) Fixed Term Employment
Clause 2(34)
4.39 Clause 2(34) defines ‘fixed term employment’ as under:-
“fixed term employment" means the engagement of an employee on the basis of a written contract of employment for a fixed period: Provided that—
29
(a) his hours of work, wages, allowances and other benefits shall not be less than that of a permanent employee doing the same work or work of a similar nature; and (b) he shall be eligible for all benefits under law available to a permanent employee proportionately according to the period of service rendered by him even if his period of employment does not extend to the required qualifying period of employment;”
4.40 Some Stakeholders suggested that benefit needed to be given regardless
of the qualifying period and therefore the words “even if his period of
employment does not extend to the required qualifying period of employment
should be deleted. It was submitted that the clause would defeat the qualifying
period. The Ministry responded that the definition was as per the Industrial
Relations Code, 2019.
4.41 On the suggestion received from some Stakeholders that the term ‘fixed
term employment’ should be replaced with the term ‘contract worker’, the
Ministry clarified that the term was as per the Industrial Relations Code.
4.42 The issue of ‘Fixed Term Employment’ has been extensively
dealt with by the Committee in their Report on 'The Industrial
Relations Code, 2019'. A critical analysis of the concept of Fixed
Term Employment has revealed that its biggest advantage is that it
accords all the benefits to a worker which are available to a
permanent employee and there is no distinction between a fixed
term employee and a regular employee. However, what concerns the
Committee is the flexibility envisaged for the employer, without
coherence in the definition, which might result in exploitation of
the employees and promotion of 'hire and fire' policy by the
30
employer. The Committee, would therefore, like the Ministry to
ensure incorporation of more protective and pre-emptive provisions
in the definition, explicitly mentioning the conditions under which
and the areas where the employers can secure Fixed Term
Employments from a Designated Authority strictly based on an
objective situation. The Committee also desire that the other
suggestions relating to various issues of fixed term employment, as
highlighted in the Report on Industrial Relations Code, 2019, be
taken into consideration for appropriate implementation.
(x) Gig Workers; Platform Work; and Platform Workers
Clause 2(35);2(55) and 2(56);
4.43 Clauses 2(35); 2(55) and 2(56) define ‘Gig Worker’; ‘Platform work’ and
‘Platform Workers’ as follows:-
"gig worker" means a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship;” “platform work" means a form of employment in which organisations or individuals use an online platform to access other organisations or individuals to solve specific problems or to provide specific services in exchange for payment;” “platform worker" means a person engaged in or undertaking platform work;”
4.44 Various Stakeholders pointed out that the definition of gig worker in
terms of all activities outside traditional employer-employee relationship
seemed to be very broad and appeared to correspond to the concept of non-
standard forms of employment (including temporary work, part-time work,
temporary agency work and other multi-party employment arrangements,
disguised employment relationships and dependent self-employment) as laid
31
out by the ILO (2015). They therefore suggested that it would be useful to
narrow the definition of ‘gig worker’ to avoid confusion.
4.45 Some experts also suggested that the status of the gig workers and the
platform workers must be clearly indicated in the Code and the Law must be
clear whether these workers should be included in the organised or in the
unorganised sectors.
4.46 It was also suggested that the definition of platform workers should be
expanded to include work, employment, service and other activities (important
to keep this blanket option to accommodate new forms of labour market
activities that will emerge and will conform to the future of work model) – or
there should be a facilitating provision in the Code to empower the Government
to declare emerging consequences in the labour market.
4.47 In the above context, when the Committee desired to have the comments
of the Ministry, they submitted as under:
“At present gig workers do not have a traditional employer-employee relation. Although no specific provision has been made for their social security, but scheme can be made under sections 45 and section 114 of the code. Further a social security fund has also been created.”
4.48 The Committee then asked, in the absence of a formal relationship
between the Employer and the Gig/Platform Workers, the safeguards proposed
to bring in obligations on the both parties. In reply, the Ministry deposed as
under:
“The Gig workers and platform workers are newly emerging classification of workers which may in future are likely to form a separate class and separate nature of work involving characteristics of both organised as well as unorganised workers. ‘Gig worker’ is a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship. However, it is imperative that the company/establishment with whom he is in work arrangement for a continuous period of time, may also contribute
32
towards his social security. For the same enabling provisions has been provided for in Clause 109 and Clause 114 of the Code”.
4.49 The Ministry further supplemented as under:-
“The Provisions for Gig and Platform Workers are a new concept and have been drafted keeping in view flexibility to frame suitable social security schemes for them in future. The provision in Chapter IV to allow framing of Schemes for such workers through ESIC is an additional measure. Freelancer is also a kind of Gig Worker and is therefore included in the Code.”
4.50 The Committee find that the provisions for Gig and Platform
Workers are a new and emerging concept and have been drafted
keeping in view flexibility to frame suitable Social Security Schemes
for them in future. The Committee also note that Gig workers and
platform workers are likely to form a separate class with separate
nature of work involving characteristics of both organised as well as
unorganised workers. Thus, there is no clarity as to whether Gig and
Platform workers belong to the organized sector or the unorganized
sector. It, therefore, becomes imperative to clearly mention the
status of the Gig workers and platform workers in the Code itself so
as to effectively extend the social security provision as per specific
categorisation. Further, since the definition of ‘Gig Workers’, given
in terms of all activities outside the traditional employer-employee
relationship, appears too broad, the Committee desire that the
definition of ‘Gig Workers’ needs to be made more specific and
33
unambiguous to obviate any scope for any confusion and
misinterpretation.
4.51 On the definition of ‘Platform work’, the Committee are of the
considered opinion that the definition needs to be expanded to
include work, employment, service and other activities and an
enabling provision should be incorporated in the Code to empower
the Government to accommodate new emerging forms of labour
market activities that may conform to the future work model.
(xi) Inspector-cum-Facilitator
Clause 2(37)
4.52 Clause 2(37) defines ‘Inspector-cum-Facilitator’ as under:-
“"Inspector-cum-Facilitator" means an Inspector-cum-Facilitator appointed under section 122;”
4.53 Suggestions were received from various Stakeholders that in the term
‘Inspector-cum-Facilitator’, the word ‘facilitator’ should be deleted since
facilitation work is not part of the work of ‘inspector’. Similar suggestions were
received from various Stakeholders that in clause 2(37), Inspector-cum-
Facilitator may be divided into Inspector and Facilitator separately. In response
thereto, the Ministry stated as under:-
“The word Inspector-cum-Facilitator has been introduced in the Code in place of Enforcement Officer, Inspector, Social Security Officer, etc. Now, in addition to enforcement functions, an Inspector-cum-Facilitator would supply information and impart advice to employers and workers concerning the most effective means of complying with the provisions of this Code.”
34
4.54 The Committee note that the term ‘Inspector-cum-Facilitator’
as defined in Clause 2 (37) has been introduced to supply
information and impart advice to employers and workers concerning
the most effective means of complying with the provisions of the
Code, in addition to enforcement functions. A number of
Stakeholders have suggested that the word ‘Facilitator’ should be
deleted since facilitation work is not part of the work of ‘Inspector’
or they should be divided into ‘Inspector’ and ‘Facilitator’
separately. The matter has extensively been dealt with by the
Committee while examining the OSHWC Code, 2019 and in that
Report, the Committee had agreed to the Ministry's justification
that the Inspector should facilitate giving guidance to both the
employer and the employee for better working relationship. The
Committee reiterate their stance and desire the Government to
ensure that the purpose and intent of entrusting the role of
facilitator to the inspector are well served in the effective
implementation of social security to the workers.
(xii) Social Security
Clause 2(70)
4.55 Clause 2(70) defines ‘Social Security’ as under:-
“Social security means the measures of protection afforded to employees to ensure access to health care and to provide income security, particularly in cases of old age, unemployment, sickness, invalidity, work
35
injury, maternity or loss of a breadwinner by means of rights enshrined and schemes framed under the Code.”
4.56 On being asked whether there was a uniform and all encompassing
definition of ‘Social Security’, the Ministry merely reproduced the definition as
given in Clause 2(70) above.
4.57 On the suggestion given by Stakeholders that the word ‘employee’ in the
definition of ‘Social Security’ be replaced with the words ‘permanent or
temporary employee’, the Ministry responded that the definition of employee as
provided in clause 2(26) of the Code would be inclusive of any person (other
than an apprentice engaged under the Apprentices Act, 1961) employed on
wages by an establishment and there was no distinction on the basis of
permanent or temporary.
4.58 On further being asked whether it would be appropriate to define the
term ‘Social Security’ encompassing various Superannuation and Insurance
Schemes like Life Insurance, Medical Insurance, Accidental Insurance and
Occupational Insurance etc., the Ministry stated that the term ‘Social Security’
as defined in clause 2(70) of the Code on Social Security, 2019 covered the
essential elements of social security viz, access to health care, income security
particularly in case of old age, unemployment schemes, coverage during
inability to work due to injury, maternity or loss of breadwinner and thus
different aspects of insurance were adequately covered under the existing
definition.
4.59 On a specific suggestion given by certain quarter for replacement of the
words ‘by means of rights enshrined and schemes framed under the Code’ with
‘by means of rights enshrined and under the relevant provisions of the Code’,
the Ministry responded that the words have been proposed to give flexibility to
the Government to frame Social Security Schemes.
36
4.60 The Committee note that ‘Social Security’ as defined in Clause
2(70) covers essential elements of Social Security viz access to
health care, Income security particularly in case of old age,
unemployment schemes, coverage during inability to work due to
injury, maternity or loss of breadwinner. However, the definition
does not appear to be all encompassing as Superannuation and
Insurance Schemes like Life Insurance, Medical Insurance,
Accidental Insurance and Occupational Insurance do not find
mention therein. Further, the provisions made for Social Security
benefits are proposed to be extended through ‘Schemes’ framed
under the Code and not through ‘relevant provisions’ of the Code on
the plea of giving flexibility to the Government to frame Social
Security Schemes. Keeping in mind the fact that the whole fulcrum
of the Social Security Code would lie on the very definition of
‘Social Security’, the Committee are of the firm opinion that the
definition be appropriately modified to make it all encompassing
with specific mention of all the nine components contained in the
International Labour Organisation (ILO) Convention on Social
Security (minimum standards) 1952 viz, medical care, sickness
benefits, unemployment benefits; old age benefit; employment
injury benefit, family benefit, maternity benefit; invalidity benefit
37
and survivors’ benefits. The Committee also desire that requisite
housing facility to the workers be added in the components of Social
Security.
4.61 Since concrete Schemes for provision of social security
benefits to the workers have to be framed as per the flexibility
accorded to the Government in line with the provisions under the
Code, the Committee feel that it would be appropriate to replace the
words 'schemes formed under the Code' with 'under the relevant
provisions of the Code'.
(xiii) Unorganised Sector
Clause 2(77)
4.62 Clause 2(77) defines ‘Unorganised Sector’ as under:-
“"unorganised sector" means an enterprise owned by individuals or self- employed workers and engaged in the production or sale of goods or providing service of any kind whatsoever, and where the enterprise employs workers, the number of such workers is less than ten”.
4.63 Various Stakeholders pointed out that no definition of enterprise has
been given in the Code. It was also not clear whether other forms of ownership
such as cooperatives have been excluded. There has been no clarity on how
Self Employed Workers defined in the Code would be classified if their
enterprises would employ less than ten workers or if these workers were above
the ceiling of prescribed income or land threshold. The general apprehension of
the Stakeholders was that if 'unorganised sector' was not identified and defined
properly, categories of workers such as domestic workers, home-based
workers, workers on a piece-rate or commission basis and other similar
categories of workers might be excluded.
38
4.64 Some experts further pointed out that the concept of enterprise was
generally being used in India only in the context of the non-agriculture sector.
The use of such a restrictive meaning of enterprise would lead to the exclusion
of a large number of workers in the agriculture sector, unless a corresponding
unit of enterprise in agriculture was specified and used.
4.65 The Committee asked whether the definition of ‘Unorganised Sector’
should include an expressed set of parameters for provision of Social Security
for the protection of the unorganized workers. In response, the Ministry
submitted as under:
“Both the Central and State Governments are empowered to make laws, Schemes, programmes for the welfare of the labourers.
109(1) The Central Government shall formulate and notify, from time to time, suitable welfare schemes for unorganised workers (including audio visual workers, beedi workers, non-coal workers) on matters relating to –
i) life and disability cover; ii) health and maternity benefits; iii) old age protection; iv) education; v) any other benefit as may be determined by Central Government.
109(2) The State Government shall formulate and notify, from time to time, suitable welfare schemes for unorganised workers, including schemes relating to –
i) provident fund; ii) employment injury benefit; iii) educational schemes for children; iv) skill upgradation of workers; v) funeral assistance; and vi) old age home.
As suggested by the Hon’ble Committee, the set of parameters can be provided while framing suitable welfare schemes for unorganised workers on the matter given in the above table by the appropriate Government.”
4.66 The main contention in the definition of ‘Unorganised Sector’
as given in Clause 2(77) is the usage of the word ‘enterprise’ without
a clear definition of the term anywhere in the Code making it
39
unclear as to whether other forms of ownership such as cooperatives
have been excluded. The Committee find merit in the general
apprehension expressed that if ‘unorganised sector’ is not identified
and defined properly, categories of workers such as domestic
workers, home-based workers on a piece rate or commission basis
and some other categories of workers might get excluded. The
Committee further observe that the concept of enterprise is
generally being used in India only in the context of the non-
agriculture sector and use of such a restrictive meaning of
enterprise would lead to exclusion of large number of workers in the
agriculture sector. The Committee, therefore, recommend that the
word ‘enterprise’ used in the definition of ‘unorganised sector’ be
defined specifically within the definition or separately to remove
any ambiguity in the interpretation of the provision.
(xiv) Unorganised Worker
Clause 2(78)
4.67 Clause 2(78) defines “Unorganised Worker’ as under:-
“unorganised worker" means a home-based worker, self-employed worker or a wage worker in the unorganised sector and includes a worker in the organised sector who is not covered by the Industrial Disputes Act, 1947 or Chapters III to VII of this Code;”
4.68 Some Stakeholders suggested that:-
“(a) Definition of wage worker in clause 2 (82) includes a domestic worker; but in Clause 2 (78) the reference is to “wage workers in the unorganised sector “which is an enterprise based definition.
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(b) The exclusion of workers covered under the Industrial Disputes Act, 1947 and Chapter VII (Employees Compensation) in definition of unorganised workers will make identification and creation of database for such workers impossible and will create unwarranted complexity. Hence, the exclusion for identifying unorganised workers should be restricted to Chapters III (EPF) and IV (ESI) only. All other workers should be treated as unorganised workers. There is robust database for the Chapter III and Chapter IV. (c) The applicability of the I.D Act, 1947 has been interpreted in various judgments of the Courts and the I.D Act, 1947 is being subsumed in the I.R Code 2019. (d) It shall not be possible to create a database for unorganised workers as envisaged in Clause 113 of Social Security Code with such complex definition of unorganised worker. Further, such a definition may also lead to unnecessary litigation and prevent access to social security & welfare by the unorganised workers.”
4.69 Some other Stakeholder suggested that the definition of ‘Unorganised
Worker’ should be expanded to include gig, platform, economy and freelance
workers, Scheme workers, Part-time workers, own account workers,
contributory workers, Agricultural Labourers and workers in allied
occupations.
4.70 In response to the above suggestions the Ministry stated that the
definition of ‘unorganised worker’ was based on the definition of the existing
‘The Unorganised Workers Social Security Act, 2008”.
4.71 The Committee are not convinced with the Ministry's
contention that that the definition of ‘Unorganised Worker’ in
Clause 2(78) of the Code is as per the definition given in ‘The
Unorganized Workers Social Security Act, 2008’. When the UWSS
Act, 2008 is being proposed to be subsumed with the Code, it
becomes incumbent upon the Ministry to iron out the grey areas
existed in the earlier Act and bring in improvement in the new
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legislation. The Committee, therefore, impress upon the Ministry to
modify the definition of 'Unorganised Worker' and include in it gig
workers, platform workers, freelance workers, agricultural workers,
self-employed workers etc. so as to ensure access to social security
and welfare benefits by every single kind of unorganised worker. The
Committee are confident that an unequivocal and conclusive
definition of Unorganised Workers would facilitate creation of a
national database of such workers as envisaged under Clause 113 of
the Code and prevent unnecessary litigations.
(xv) Wage Worker
Clause 2(82)
4.72 Clause 2(82) defines ‘Wage Worker’ as under:-
“wage worker" means a person employed for remuneration in the unorganised sector, directly by an employer or through any contractor, irrespective of place of work, whether exclusively for one employer or for one or more employers, whether in cash or in kind, whether as a home- based worker, or as a temporary or casual worker, or as a migrant worker, or workers employed by households including domestic workers, with a monthly wage of an amount as may be notified by the Central Government and State Government, as the case may be;”
4.73 Suggestions have been received from Experts that the words ‘with a
monthly wage of an amount as may be notified by the Central Government and
State Government, as the case may be’ should be deleted from the definition as
otherwise the implication would be to limit the scope of wage worker in the
unorganised sector, which would be anomalous.
4.74 Stakeholders have also suggested that in the definition of ‘Wage Worker’,
the agricultural workers and allied workers should also be included. In
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response thereto, the Ministry stated that the definition of ‘wage worker’ was
based on the one contained in the Unorganised Workers’ Social Security Act,
2008.
4.75 According to the Ministry, the definition of ‘Wage Worker’ is
based on the one contained in ‘The Unorganized Workers’ Social
Security Act, 2008'. The Committee, however, feel that the scope of
wage workers may stand limited in the unorganized sector in terms
of the extant definition which stipulates that monthly wage amount
to be notified by the Central Government or the State Government
as the case may be. As it would be impractical for any Government
to notify that monthly wage of a domestic worker employed by a
single employer, the Committee recommend that the definition of
wage worker be appropriately modified so as to remove artificial
restrictions in the implementation of the social security provision.
V. REGISTRATION OF ESTABLISHMENT
Clause 3
5.1 Clause 3 provides for registration of establishment as under:-
“Every establishment to which this Code applies shall be registered within such time and in such manner as may be prescribed by the Central Government: Provided that the establishment which is already registered under any other labour law for the time being in force shall not be required to obtain registration again under this Code and such registration shall be deemed to be registration for the purposes of this Code.”
5.2 Domain Experts suggested that it might be preferable to continue the
process of giving Social Security Code numbers to all the establishments and
the employees and workers as suitably devised and portable. The present
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scheme envisaged by the Central Government must be extended to all
establishments coming under the coverage of the Code i.e. all the
establishments in the non-agricultural sector and own account workers too.
5.3 It was also suggested that the database of registered enterprises along
with types of employment (permanent, temporary, part-time, contract) and
other details should be maintained online and should be made available to the
public. The registration procedure and modalities may also be outlined
including time frame for completion. It has also been pointed out that it would
be important to clarify whether this clause implies that every establishment to
which this Code applies would be compelled to formalise or register as a formal
enterprise.
5.4 In response thereto, the Ministry stated that Clause 3 of the Bill sought
to provide for registration of establishment to which the proposed Code would
apply in the manner that would be provided in the rules.
5.5 The Ministry supplemented as under:-
“The exercise of codification is to simplify systems and processes. Towards this end, a common system of registration across all the Codes (wherever registration is required) would be developed.”
5.6 The Committee find that though mandatory registration of
establishment has been stipulated in Clause 3, there are some
lacunae in the registration process especially with respect to
registration of the unorganized sectors since the definition of the
word establishment in the Code has been restricted without a clear
inclusion of agricultural holdings and households. The Committee
are of the considered opinion that a robust registration process of
each and every establishment is an integral step towards a real time
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database of all Establishment and Workers employed therein
including the Unorganised Workers. The Committee, therefore,
desire that the registration process be made more comprehensive
and inclusive to extend it to all establishments in the agricultural,
non-agricultural as well as self-employed or own-account workers so
as to create a real-time database of registered enterprises alongwith
types of employment viz. permanent, temporary, part-time,
contract, etc. which has to be maintained online and updated
periodically. In other words, all establishments, without exception,
should be required to be registered on mandatory basis with one
body, instead of with multiple organisations and that sole body
should remain responsible for provision of social security for all
types of workers in the Country. Needless to say, the definition of
'Establishment' has to be accordingly revised in a more conceptually
clear and definite manner.
VI. SOCIAL SECURITY ORGANISATIONS
Clauses 4 to 13
6.1 Chapter II of the Code, on ‘Social Security Organisation’ inter-alia
provides for constitution of Central Board of Trustees; Constitution of
Employees’ State Insurance Corporation, National Social Security Boards;
Constitution of State Building Workers Welfare Boards; Disqualification and
Removal of a Member of any Social Security Organisation; Procedure for
45
transaction of business of Social Security Organisation; Constitution of State
Board, Regional Boards, Local Committees etc.
6.2 Clause 6 of the Code provides for constitution of the ‘National Social
Security Board’ as under:-
“(1) The Central Government shall, by notification, constitute a National Social Security Board for unorganised workers (hereinafter referred to as National Social Security Board) to exercise the powers conferred on, and to perform the functions assigned to it under this Code, in such manner as may be prescribed by the Central Government. (2) The National Social Security Board shall consist of the following members, namely:—
(a) Union Minister for Labour and Employment as Chairperson; (b) Secretary, Ministry of Labour and Employment as Vice Chairperson; (c) thirty-five members to be nominated by the Central Government, out of whom—
(i) seven members representing unorganised sector workers; (ii) seven members representing employers of unorganised sector; (iii) seven members representing eminent persons from civil society; (iv) two members representing the Lok Sabha and one from the Rajya Sabha; (v) five members representing Central Government Ministries andDepartments concerned; (vi) five members representing State Governments; and (vii) one member representing the Union territories; (d) Director General Labour Welfare—Member Secretary, ex officio. (3) The Chairperson and other members of the National Social Security Board shall be from amongst persons of eminence in the fields of labour welfare, management, finance, law and administration. (4) The number of persons to be nominated as members from each of the categories specified in clause (c) of sub-section (2), the term of office and other conditions of service of members, the procedure to be followed in the discharge of their functions by, and the manner of filling vacancies among the members of, the National Social Security Board shall be such as may be prescribed by the Central Government: Provided that adequate representation shall be given to persons belonging to the Scheduled Castes, the Scheduled Tribes, the minorities and women. (5) The term of the National Social Security Board shall be three years. (6) The National Social Security Board shall meet at least thrice a year, at such time and place and shall observe such rules of procedure relating to the transaction of business at its meetings, as may be prescribed. (7) The National Social Security Board shall perform the following functions, namely:—
(a) recommend to the Central Government suitable schemes for different sections of unorganised workers;
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(b) advise the Central Government on such matters arising out of the administration of this Code as may be referred to it; (c) monitor such social welfare schemes for unorganised workers as are administered by the Central Government; (d) review the record keeping functions performed at the State level; (e) review the expenditure from the funds under various schemes; and (f) undertake such other functions as are assigned to it by the Central Government from time to time. (8) The Central Government may, by notification, constitute with effect from such date as may be specified therein one or more advisory committee to advise the Central Government upon such matters arising out of the administration of this Code relating to unorganised workers and such other matters as the Central Government may refer to it for advice. (9) Every State Government shall, by notification, constitute a State Board to be known as (name of the State) Unorganised Workers' Social Security Board (hereinafter referred to as the State Unorganised Workers' Board) to exercise the powers conferred on, and to perform the functions assigned to it under this Code, in such manner as may be prescribed by the State Government. (10) Every State Unorganised Workers' Board shall consist of the following members, namely:—
(a) Minister of Labour and Employment of the concerned State- Chairperson, ex officio; (b) Principal Secretary or Secretary (Labour) as Vice-Chairperson; (c) twenty-eight members to be nominated by the State Government, out of whom—
(i) seven representing the unorganised workers; (ii) seven representing employers of unorganised workers; (iii) two members representing the Legislative Assembly of the concerned State; (iv) five members representing eminent persons from civil society; (v) seven members representing State Government Departments concerned; and (d) Member Secretary as notified by the State Government. (11) The Chairperson and other members of the State Unorganised Workers' Board shall be from amongst persons of eminence in the fields of labour welfare, management, finance, law and administration. (12) The number of persons to be nominated as members from each of the categories specified in clause (c) of sub-section (10), the term of office and other conditions of service of members, the procedure to be followed in the discharge of their functions by, and the manner of filling vacancies among the members of, the State Unorganised Workers' Board shall be such as may be prescribed by the State Government: Provided that adequate representation shall be given to persons belonging to the Scheduled Castes, the Scheduled Tribes, the minorities and women. (13) The term of the State Unorganised Workers' Board shall be three years.
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(14) The State Unorganised Workers' Board shall meet at least once in a quarter at such time and place and shall observe such rules of procedure relating to the transaction of business at its meetings, as may be prescribed by the State Government. (15) The State Board shall perform the following functions, namely:—
(a) recommend the State Government in formulating suitable schemes for different sections of the unorganised sector workers; (b) advise the State Government on such matters arising out of the administration of this Code as may be referred to it; (c) monitor such social welfare schemes for unorganised workers as are administered by the State Government; (d) review the record keeping functions performed at the district level; (e) review the progress of registration and issue of cards to unorganised sector workers; ( f ) review the expenditure from the funds under various schemes; and (g) undertake such other functions as are assigned to it by the State Government from time to time. (16) The State Government may, by notification, constitute with effect from such date as may be specified therein one or more advisory committee to advise the State Government upon such matters arising out of the administration of this Code relating to unorganised workers and such other matters as the State Government may refer to it for advice.”
6.3 Clause 7 of the Code provides for constitution of State Building Workers
Welfare Boards as under:-
“(1) Every State Government shall, with effect from such date as it may, by notification, appoint, constitute a Board to be known as the................(name of the State) Building and Other Construction Workers' Welfare Board (hereinafter referred to as Building Workers' Welfare Board) to exercise the powers conferred on, and perform the functions assigned to, it under this Chapter. (2) The Building Workers' Welfare Board shall be a body corporate by the name aforesaid, having perpetual succession and a common seal and shall by the said name sue and be sued.(3) The Building Workers' Welfare Board shall consist of a chairperson to be nominated by the State Government, one member to be nominated by the Central Government and such number of other members, not exceeding fifteen, as may be appointed to it by the State Government: Provided that the Building Workers' Welfare Board shall include an equal number of members representing the State Government, the employers and the building workers and that at least one member of the Board shall be a woman. (4) The terms and conditions of appointment and the salaries and other allowances payable to the chairperson and the other members of the Building Workers' Welfare Board, and the manner of filling of casual vacancies of the members of the Building Workers' Welfare Board, shall be such as may be prescribed by the State Government. (5) (a) The Building Workers' Welfare Board shall appoint a Secretary and such officers and employees as it considers necessary for the efficient
48
discharge of its functions of the Building Workers' Welfare Board under this Code. (b) The Secretary of the Building Workers' Welfare Board shall be its chief executive officer. (c) The terms and conditions of appointment and the salary and allowances payable to the Secretary and the other officers and employees of the Building Workers' Welfare Board shall be such as may be prescribed by the State Government. (6) The Building Workers' Welfare Board shall perform the following functions, namely:— (a) provide death and disability benefits to a beneficiary or his dependants; (b) make payment of pension to the beneficiaries who have completed the age of sixty years; (c) pay such amount in connection with premium for Group Insurance Scheme of the beneficiaries as may be prescribed by the appropriate Government; (d) frame educational schemes for the benefit of children of the beneficiaries as may be prescribed by the appropriate Government; (e) meet such medical expenses for treatment of major ailments of a beneficiary or, such dependant, as may be prescribed by the appropriate Government; ( f ) make payment of maternity benefit to the beneficiaries; (g) frame skill development and awareness schemes for the beneficiaries; (h) provide transit accommodation or hostel facility to the beneficiaries; (i) formulation of any other welfare scheme for the building worker beneficiaries by State Government in concurrence with the Central Government; and (j) make provision and improvement of such other welfare measures and facilities as may be prescribed by the Central Government. (7) The State Government may, by notification, constitute with effect from such date as may be specified therein one or more advisory committee to advise the State Government upon such matters arising out of the administration of this Code relating to building workers and such other matters as the State Government may refer to it for advice.”
6.4 Stakeholders/Experts pointed out that in terms of the provision made in
this Chapter, multiple Social Security Organisations have been envisaged
whereas no Country in the world including large, populous federal Countries
has multiple organisations governing Social Security. They further suggested
that a framework of a model composite scheme should be there to bring in
greater uniformity and sectional representation like inclusion of SCs, STs,
minorities etc. should be there in the National and State Boards apart from
maintaining gender balance.
49
6.5 The Committee desired to hear the views of the Ministry on the proposed
composition of various Social Security Organisations. In response, the Ministry
submitted as under:-
“The proposed composition of various Social Security Organisations under the Code is as per the existing Acts. The Social Security Organisations are tripartite bodies and a over a period of time balance has been created which helps a lot in their smooth functioning. Therefore, it is not envisaged to disturb the system which is functioning well. However, the Committee may like to take a view in this regard.”
6.6 The Committee asked whether there was a need for widening the
sectional representation of SCs, STs etc. to help in bringing them to the
discussion tables to know the issues faced by the deprived sections of the
workers and thereby extending the outreach of Social Security to them. In
response the Ministry stated that there was no restriction on representation of
members belonging to any category based on caste.
6.7 The suggestion made by Stakeholders that in the compositions of the
National Social Security Board in clause 6(2) and State Social Security Board in
clause 6 (10), representation from other Backward Classes should also be
there, was not found acceptable by the Ministry on the ground that they were
as per the existing provisions in sections 5 and 6 of the Unorganised Workers’
Social Security Act, 2008 which has been found to be working well.
6.8 Some Stakeholders pointed out that the Code has left it to the Central
Government which may, by notification, constitute ‘Board of Trustees’ and
Executive Committee’ allegedly diluting and undermining the tripartite
character of the Standing Committee of ESI by leaving it to the Central
Government to decide. On being asked to furnish justification for the provision,
the Ministry assured that the Government would not dilute the tripartite
structure of the Board of Trustees of EPF or Corporation of ESIC. The Ministry
50
further clarified that this was done to bring more flexibility so that the
composition could be adopted to the changing requirements of time.
6.9 On being asked to state the reasons for alteration/dilution of the
definition, composition and responsibility of the tripartite Central Board of
Trustees, a Statutory Body under the existing Act, the Ministry submitted that
the said provisions were similar to section 5A of the EPF & MP Act, 1952 and
the composition of the Committee is laid down in section 4. The Central
Government has only been empowered to notify the constitution of Central
Board and Executive Committee. The Ministry clarified that as such, there was
no departure from the existing definitions and appointment procedures.
6.10 On a specific suggestion of some stakeholders regarding the need to
enhance representation of workers from different sectors including women
workers, to be represented in the various bodies to be constituted under the
Code the Ministry stated as under:-
“The composition of various Social Security Organisations is as per the existing Acts. The Social Security Organisations are tripartite bodies and over a period of time, balance has been created which helps a lot in their smooth functioning. Therefore, it is not envisaged to disturb the system which is functioning well.”
6.11 Clause 6(2)(a), 6 (2)(b) and 6(3) of the Code provide for composition/
background of the Board Members. Clause 6(2)(a) provides that the Union
Minister for Labour & Employment as Chairperson of the National Social
Security Board. Clause 6(3) however, provides that the Chairperson and other
Members of the National Social Security Board shall be from amongst persons
of eminence in the fields of labour welfare, management, finance, law and
administration. A similar provision exists in clause 6(11) regarding qualification
and domain expertise of State Social Security Board.
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6.12 Stakeholders have suggested that instead of 7 members representing
unorganised sector workers in the Board, it should be 10 members; increase of
State Governments representation from 35 members to 40 and inclusion of
OBC members in clause 6(4). In response thereto, the Ministry stated that it
was as per section 5(2)(c)(i) of the existing unorganised workers’ Social Security
Act, 2008.
6.13 Asked to state whether the proposed provisions might be difficult to
implement especially in the event of Chairperson and other Members not
possessing qualification and domain expertise as per the requirement, the
Ministry submitted that these provisions were as per the existing section 5 and
6 of the Unorganised Workers’ Social Security Act, 2008. The Ministry further
clarified that the existing scheme of things or provisions was functioning
properly and there did not seem to be any need to make any change.
6.14 Clause 7(6) of the Social Security Code prescribes functions of the
Building Workers Welfare Board outlining types of benefits. However, at
present, inter-state portability is unfeasible across State Boundaries as
benefits differ across States. In this context, the Ministry were asked to clarify
as to whether a ‘model composite Scheme’ to bring greater uniformity among
States would be a better alternative which should lay down ‘minimum
mandatory entitlement’ across the States with inter-state portability. In
response the Ministry stated as follows:-
“The Occupational Safety, Health and Working Conditions Code, 2019 envisages formulation of a scheme for portability of benefits for Building and other Construction Workers.”
6.15 Some petitioners submitted that clauses 5(1) and 5(3) of the Code seek to
deliberately dilute and undermine the tripartite character of the Standing
Committee of ESI leaving it to Central Government to decide. In response, the
Ministry clarified that there was no change in the constitution of CBT and ESIC
and no Committees or Regional/ State Boards have been abolished.
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6.16 Some Stakeholders pointed out that the Central Board as provided for in
clause 4(1) has not been benefitted by the representation of domain Experts.
Though all the members of the Board bring with them varied experience and
knowledge, which was very much necessary, the picture remains incomplete
without in-house representation and therefore the Central Board need to be
benefitted by expert members as well.
6.17 In response to the above suggestion the Ministry were not in agreement
to amend the clause to specifically provide for domain experts in the Board of
Trustees on the ground that the provision was as per the existing stipulations
where CPFC was the ex-officio member Secretary of the CBT. He would be
assisted by the Experts in the field who have vast service experience.
Suggestions have also been received that for efficient functioning of Social
Security Organisations and making it a world class Social Security System, a
talented pool of Social Security Officers would be essential. The Ministry
responded that the suggestion was not acceptable as the existing structure has
been maintained.
6.18 In response to another specific query regarding clear mention of the
proportion of women to be inducted in the National Social Security Board, the
Ministry stated as under:-
“These provisions are as per the existing section 5 and section 6 of the Unorganised Workers’ Social Security Act, 2008. The existing provisions, of adequate representation to be given to persons belonging to the Scheduled Castes, the Scheduled Tribes, the minorities and women which was there in the Unorganised Workers’ Social Security Act, 2008, have been retained in clause 6(4) and 6(12) of the Code on Social Security, 2019.”
6.19 On the suggestion received from various quarters for the need for
enhanced role of Central Government in management of State Building
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Workers Welfare Boards, the Ministry clarified that the composition of the State
Building Welfare Boards was in line with the composition of the same
prescribed in Section 18 of the existing Building and Other Construction
Workers (Regulation of Employment and Conditions of Service) Act, 1996.
6.20 Clause 4 of the Code provides for constitution of the Central
Board of Trustees for Social Security Organisations. Stakeholders
have expressed apprehension over the possible dilution and
undermining of the tripartite Character of the Standing Committee
of ESI when it is left to the Government to decide the constitution
of Board of Trustees. The Ministry have assured that there is no
change in the constitution of the Central Board of Trustees and
ESIC and no Regional/State Boards have been abolished. While
taking note of the Ministry's statement, the Committee desire that
the tripartite character of the composition of CBT and ESIC should
not be diluted or undermined so as to justly address the
apprehensions raised at many quarters.
6.21 The Committee's attention has been drawn to the fact that no
Country in the World including large and populous federal
Countries, has multiple organisations governing social security
whereas the provisions of the Code have multiple social security
organisations viz. National Social Security Board (NSSB), State
54
Social Security Boards (SSBs), State Building Workers Welfare
Boards, EPFO, ESIC etc. The Committee feel that such an
arrangement in the new legislation would be a mere continuation of
the extant fragmented structure of social security. The Committee
would, therefore, like the Ministry to look into the matter and
explore the feasibility of putting in place a more compact system of
governance of social security, without of course diluting the basic
federal character.
6.22 According to the Ministry, the proposed composition of various
Social Security Organisations under the Code is as per the existing
Acts which are functioning well and therefore it is not envisaged to
disturb the system. The Committee are not convinced with the
argument because bringing in improvements does not tantamount
to disturb the system. Since there is no restriction on
representation of members based on caste or gender, as admitted by
the Ministry, the Committee desire that a framework of a model
composite scheme should be put in place to ensure greater
uniformity and sectional representation like inclusion of members
belonging to SC/ST/Minority/OBC communities in the
organisations/Boards so as to address the labour related issues
besetting the deprived sections of the workers. Equal attention
55
needs to be paid towards representation of women members not
only to maintain gender balance but also to effectively extend the
intended social security benefits to the women workers. Most
importantly, sectoral representation in the Boards should not be
lost sight of and accordingly the number of members representing
the unorganised sector be suitably enhanced in view of the
whopping percentage of workers employed in such sector whose
interest and welfare have to be effectively safeguarded.
6.23 The Committee are concerned to note that at present inter-
State portability of benefits for Building and Other Construction
Workers is infeasible across State Boundaries as benefits differ
across States. On the suggestion for a ‘Model Composite Scheme’ to
bring greater uniformity amongst States as a better alternative
laying down ‘minimum mandatory entitlement’ across the States
with inter-State portability, the Ministry have submitted that the
Occupational Safety, Health and Working Conditions Code, 2019
envisages formulation of a Scheme for portability of benefits for
Building and Other Construction Workers. In view of the imperatives
involved, the Committee desire that the Scheme as envisaged in the
OSHWC Code be appropriately reflected in and synchronized with
the Code on Social Security.
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VII. EMPLOYEES PROVIDENT FUND (EPF)
Clauses 14-23
7.1 Clause 15 of the Code provides for the EPF Scheme as under:-
“(1) The Central Government may, by notification:—
(a) frame a scheme to be called the Employees' Provident Fund Scheme (herein after referred to as the Provident Fund Scheme) for which the provident funds shall be established under this Chapter for employees or for any class of employees and specify the establishments or class of establishments to which the said scheme shall apply; (b) frame a scheme to be called the Employees' Pension Scheme (herein after referred to as the Pension Scheme) for the purpose of providing for— (i) superannuation pension, retiring pension or permanent total disablement pension to the employees of any establishment or class of establishments to which this Chapter applies; and (ii) widow or widower's pension, children pension or orphan pension payable to the beneficiaries of such employees; (c) frame a scheme to be called the Employees' Deposit Linked Insurance Scheme(hereinafter referred to as Insurance Scheme) for the purpose of providing life insurance benefits to the employees of any establishment or class of establishments to which this Chapter applies; and (d) modify any scheme referred to in clauses (a), (b) and (c) by adding thereto, amending or varying therein, either prospectively or retrospectively. (2) Subject to the provisions of this Chapter, the schemes referred to in clauses (a), (b)and (c) of sub-section (1) may provide for all or any of the matters respectively specified in Part A, Part B and Part C of the Fifth Schedule. (3) The schemes may provide that all or any of its provisions shall take effect either prospectively or retrospectively on and from such date as may be specified in that behalf in the scheme.”
7.2 As may be seen from above Clause-15 provides for framing of Employees’
Provident Fund Scheme and Employees’ Deposit Linked Insurance Scheme for
the purpose of providing life Insurance benefits to the employees of any
establishment or class of establishment to which Chapter III applies. The Fifth
Schedule to the Code provides for ‘Matters that may be provided in the
Scheme. In this context, the Committee desired to know about the Agencies
which would implement the Schemes and whether private Insurance agencies
were being included as ‘intermediate agencies. In response, the Ministry stated
as under:-
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“It is informed that the schemes of EPF, EPS and EDLI will be run only by EPF and no option whatsoever is provided to any establishment to become member of private insurance companies as against EDLI (Employees Deposit Linked Insurance Scheme). All existing provisions of EPF&MP Act, 1952 have been kept intact”.
7.3 On a pointed query as to whether an employee was given an option to
choose any scheme from a basket of schemes, the Ministry stated that there
was no such option of choosing schemes from a basket of schemes. The
employees would be covered according to the applicability schedule of different
chapters of the Code (First Schedule) which would cover distinct branches/
components of social security. Also, an eligible employee might also get covered
under two chapters simultaneously, for instance under both EPFO and ESIC.
7.4 The Committee asked whether any scheme was privately administered
and its mode of compliance with the regulatory norms/ guidelines. In reply, the
Ministry submitted as under:-
“No private administration of the schemes is proposed in the Code on Social Security, 2019. Social Security Organisations have been proposed to be constituted under Chapter II of the Code of administration of various social security schemes under different chapters of the Code. The administering authorities proposed for different chapters of the Code are officers of the Central/ State Government and not private entities.”
7.5 On being asked to state the specific measures contemplated to
strengthen the enforcement mechanism including grievance redressal
machinery for the EPF Scheme, the Ministry stated as under:-
“To strengthen enforcement mechanism, the Code provides for generation of a web-based inspection and calling of information relating to the inspection, jurisdiction of randomised selection of inspection to the Inspector-cum-Facilitators, protocols for uploading inspection report electronically, etc. Under section 123 of the Code, the records to be maintained for inspection by employers and period thereof are proposed to be specified to bring in more accountability, transparency and purpose in the Inspection mechanism. As regards, grievance redressal, the CPGRAMS of the Government of India is an electronic grievance redressal forum and organizations like EPFO have their own electronic EPIFGMS. Besides, a large number of services of EPFO are also available on web and UMANG App.”
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7.6 Some Stakeholders pointed out that the parent EPF and MP Act has four
Schedules. These are all connected with coverage and scheming and
scheduling the social security benefits. The present Code, in the name of
simplification of labour laws omitted the 'industry’ definition itself and
abolished all the schedules which might result in unlimited executive power.
7.7 On being asked to state the considerations under which the Code
proposes to altogether abolish all State/Regional Boards which were effectively
functioning under the extant Act, the Ministry replied as under:-
“It is submitted that although section 5B of the present EPF & MP Act, 1952 provides for constitution of State Boards, such Boards were never constituted and instead there is an advisory body for each Political State known as Regional Committee as per Para 4 of the EPF Scheme, 1952. Such Committee is constituted by the Chairman of the Central Board until a State Board is constituted. That in the Code under section 12, there is provision for appointment of State Board of Trustees by the Central Govt. in consultation with the State Govt. The role and functions of the Regional Committee has been subsumed in the State Board to be constituted under section 12 of the Code.”
7.8 The Committee desired to be apprised of the specific reasons for the
removal of the definition of 'Industry' unlike in Schedule-I of the extant Act as
well as abolition of all the four Schedules as contained in the EPF and MP
Act.In reply, the Ministry stated as under:-
“Removal of schedule is a pro-worker as well as pro-establishment provision. Having a schedule means that an officer in EPFO issues a notice to an establishment that the establishment falls under the purview of EPFO and then it determines whether the workers in that establishment are eligible for joining the scheme or not. Removal of schedule will clear this doubt and all establishments in the country having 20 employees or more will fall under Employees’ Provident Fund (EPF) and there would be no issue of dispute whether an establishment is now under the social security coverage of EPF or otherwise. Further, the second, third and fourth schedule of the EPF&MP Act, 1952, provide for matters that may be provided for in the Employees’ Provident Fund Scheme, Employees’ Pension Scheme and Employees Deposit Linked Insurance Scheme. The same has been provided in Part A, Part B and Part C of the Fifth Schedule of the Code. Also, the Code does not have any empty schedule annexed to it.”
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7.9 Stakeholders submitted that there was no clarity on what would happen
to the existing corpus and funds of the EPFO and suggested that clause 15(1)
must state how the existing Provident Fund and Pension Schemes would be
subsumed or integrated into the new Schemes. Moreover, experts submitted
that clause 15(1) (a), (1) (b) and (1) (c) gives the power to the Government to
further restrict the coverage of EPF to any class of employees/establishments
through delegated legislation/notifications post enactment of the Code and not
in congruence with Clause 4 and first schedule which states that Chapter III
would be applicable to every establishment in which twenty or more employees
are employed. Further, EPF has an existing income threshold of Rs.15,000 for
applicability which restricts the coverage of EPF even to the informal workers
in the organised sector as minimum wages in metro cities (class A area) are
above Rs.15,000.
7.10 On being asked whether it was true that there was in ordinate delay in
voluntary coverage under EPF Scheme under section 1(4) of the existing EPF
Act and whether the power to grant EPF could be vested on the Regional Head
of each Scheme instead of centralising the power, the Ministry replied as
under:-
“As per the procedure in vogue at present, any establishment to which law is not applicable is at liberty to get itself registered online on Shram Suvidha Portal by declaring consent of majority of employees and employer and after online registration, the establishment get ID (Code number) and user ID/password for operating the online filing of returns and online payment of dues on Unified Portal. So there is no delay in start of compliance by any establishment covered voluntarily. As per the present procedure, after such registration, inspection is conducted to ascertain whether the establishment was statutorily coverable or not and based on the finding the notification is issued.
In section 3 of the Code on Social Security, the registration of establishment has been made a statutory requirement which shall remove the ambiguity in so far as Chapter III is concerned and will expedite the process of notification which may be in e-gazette soon after watching compliance for 3 months after registration.
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There is some delay in issue of notification u/1(4) of the Act in many cases of voluntary coverage as the Regional Offices conduct inspections to ascertain the statutory applicability of Act to such establishments and the finding with recommendations are sent by the Zonal Addl. CPFC.”
7.11 The Committee asked about the steps taken by the Ministry, while
amalgamating the EPF and MP Act, 1952 with the Code, to ensure that all its
aptly administered provisions including fund management were retained in the
Code. In reply the Ministry stated as under:-
“It is submitted that sub-section (2) of section 16 of the chapter III provides that the Central Government shall set up funds for Provident Fund, Pension and Insurance Schemes and these funds shall vest in, and be administered by, the Central Board in such manner as may be specified in the respective Schemes. So the Central Board as envisaged in section 4 of Chapter II as a tripartite body constituted by the Central Govt. to control, administer and manage the Schemes. Further, no substantive changes have been envisaged vis-Ã -vis present provisions.”
7.12 On the issue of threshold limit, the Ministry submitted as under:-
“Earlier EPF&MP Act had a schedule in addition to the requirement that an establishment will have 20 employees and employees having salary up to Rs. 15000 per month would become eligible. In the Social Security Code, schedule which was earlier attached to the EPFO has been removed and now applicability has been made universal. This will also facilitate enforcement as the dispute regarding applicability itself will disappear.”
7.13 Asked to state whether it would be appropriate to abolish the threshold
limit of 20 workers for EPF so as to enable universal coverage of all
workers/employees, the Ministry submitted as under:-
“As already indicated, the applicability of EPF&MP Act on an establishment means additional liability of 13% on employer and 12% on employee which is deposited in the EPF Fund, EPS Fund and the EDLI Fund. However there is a possibility which can be explored that the EPF&MP act can be made applicable on any person or self-employed persons to become the part of EPF. However, in this case the contribution which is about 20% of income or wage limit on account of employer share and employee share and administrative changes will have to be borne by that person individually. The Committee may like to take a view.”
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7.14 Regarding the dismantling of the existing functional structure of EPFO,
the Ministry clarified as under:-
“There is no proposal to dismantle EPFO.”
7.15 On being asked to state the reasons for exclusion of Cooperative Societies
from EPF Schemes, the Ministry stated as under:-
“Cooperative Societies are excluded from Chapter III if they employ less than 50 employees and work without aid of power. In the present scenario since most of the establishment work with aid of power, the exclusion is very rare to support certain establishments with very less disposable income for discharging the liability under EPF & MP Act, 1952. For example- weaver’s cooperative working on non-power looms.”
7.16 On suggestions given by various Stakeholders for inclusion of a provision
in Clause 21 for authorising certain employers to maintain provident fund
account and in case of plantations, maintenance to be done by EPFO, the
Ministry clarified that there has been an enabling provision as per the existing
EPF & MP Act, 1952 as provided for in clause 21 of the Code.
7.17 On suggestions received from various quarters on a more inclusive EPF
regime, the Ministry responded as under:-
“The Code provides that where it appears to the Central Provident Fund Commissioner whether on an application made to him by the employer of an establishment or otherwise, that the employer and majority of employees of that establishment have agreed that the provisions of Chapter III (EPF) should be made applicable to that establishment, the Central Provident Fund Commissioner, may, by notification, apply the provisions of the said Chapter to that establishment on and from the date of such agreement or from any subsequent date specified in the agreement (section 1(5)). Further, the applicability of Employees’ Provident Fund and Employees’ Pension Scheme and Employees Deposit Linked Insurance Scheme has been extended to all Industries and Establishments employing 20 or more employees as the Schedule of coverage in the existing EPF&MP Act, 1952 has been removed.”
7.18 Stakeholders suggested that the provisions for contribution by employees
and contractors, as contained in Clause 17, the deduction of PF contributions
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by the principal employer directly from the contractor should only be permitted
if the contractor does not have his own independent PF code or ESI code. Once
an establishment has its own code, enforcement of social security obligations
should be through the regulator, and not through the principal employer. In
response thereto, the Ministry stated that it was as per the existing provisions
(Section 8A) of the Employees’ Provident Fund & Miscellaneous Provisions Act,
1952. Otherwise, it would dilute rights of the workers.
7.19 The Government has launched PM Gareeb Kalayan Yojana on 26th March
2020 to help the poor fight the lockdown effects arising out of Corona Virus
pandemic. PMGKY package is aimed at preventing disruption in the
employment of low wage earning EPF members and extending support to the
eligible EPF covered establishments. On being asked about the steps taken by
the Ministry for timely and targeted relief to the beneficiaries, the Ministry
submitted as under:-
“Under PMGKY, there are schemes which have been launched with reference to the benefits of PF. The first is allowing withdrawal from EPF account to the members to the extent of 3 months’ salary or 75% of the outstanding balance whichever is less on the ground of Covid-19 pandemic. The scheme has already been rolled out and as on 17.04.2020, online Claims of more than 4.5 lakhs members has been processed and Rs.1416.5 Crore has been disbursed from the EPF accounts into Bank accounts of EPF members. Secondly, the Government has also sanctioned a scheme for payment of 24% of wages (12% each of employers and employees share) to all those employers who pay their salary in time to the workers. Estimated expenditure in the scheme is Rs. 4860 crore and is likely to benefit 72.2 lakh employees covering 3.77 lakh establishments. The employers of eligible establishments have started availing the benefits by filing Electronic Challan cum return (ECR). As on 17.04.2020 evening, contributions amounting to Rs.151.96 Crore has been credited to EPF accounts of 9.97 lakhs low wage earning employees (monthly wage less than Rs.15000/-) employed in 64107 establishments. This package has already incentivized the employers to disburse wages for March 2020 to extent of Rs.799.64 crore to 9.97 lakhs workers and prevented disruption in employment of these low wage earners.”
7.20 Concerns have been raised at many quarters that the threshold
limit of 20 or more employees for EPFO registration can be used by
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the employers to exclude themselves from EPFO coverage. Further,
the Government has been empowered to further restrict the
coverage of EPF to any class of employees/establishments through
delegated legislation/notification post enactment of the Code and
not in congruence with Clause 4 and the First Schedule as per which
Chapter III would be applicable to every establishment in which 20
or more employees are employed. The Committee also note that the
EFP has an existing threshold limit of Rs. 15,000/- p.m. for
applicability which restricts the coverage of EPF even to the
informal workers in the organised sector as minimum wages in Class
A cities are more than Rs. 15,000/-. The Ministry have clarified that
the Schedule which was earlier attached to the EPFO has been
removed in the Code which would make applicability universal
besides facilitating enforcement as the dispute regarding
applicability itself will disappear. While taking note of the self-
acclaimed pro-worker and pro-establishment intent of the
Government, the Committee feel that certain infirmities and just
apprehensions regarding the threshold limit in terms of employees
and income are to be appropriately addressed.
7.21 The Committee desire that possibilities be explored to make
the EPF&MP Act applicable to all the workers including self-
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employed ones to become the part of EPF, notwithstanding the
additional liability for deposit in EPF, EPS and EDLI Funds. As
economic development takes place, the wage levels increase and
therefore both the thresholds and rates of contributions should be
hiked proportionately as determined by law. Since the matter
affects labour welfare and employers' pay-roll tax burden, it should
be determined by Parliament and not through notification route.
7.22 However, provisions be made empowering the Central
Government to reduce the contribution rates in exceptional
circumstances like areas affected by disasters in terms of the
Disaster Management Act including pandemics because this would
enable the Government to provide relief to the affected persons in
Covid-19 like pandemics.
7.23 The Committee feel that the provisions made under Clause 19
appear to be fully misconceived as Section 36(4) of the Insolvency
and Bankruptcy Code itself stipulates that the PF and Pension dues
are excluded from liquidation estate of a corporate debtor and
therefore outside the prioritization scheme of Section 53. In other
words, the provisions of Clause 19 may have the effect of severe
deprioritisation of PF dues resulting in recovery of the workers
dues. The Committee, therefore, recommend that the first charge of
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the PF dues as mentioned in Section 11 of the existing Act be
retained to protect the interest of the workers.
7.24 The Committee note that the Central Government shall set up
funds for Provident Fund, Pension and Insurance Schemes which
shall vest in and be administered by the Central Board in such
manner as may be specified in the respective Schemes. The
Committee also find that the parent EPF&MP Act has four Schedules
which are well connected with the coverage, scheming and
scheduling of social security benefits. The Code proposes to remove
the Schedules on the reasoning that all establishments in the
Country having 20 employees or more will fall under EPF and there
would be no dispute whether an establishment is now under the
social security coverage of EPF or otherwise. The Committee would
like to caution the Ministry that while amalgamating the EPF&MP
Act with the Code it should be ensured that the enabling provisions
contained in it for effective coverage of workers and prudent
administration and management Schemes and Funds are not diluted
or compromised.
7.25 On the aspect of inordinate delays taking place in voluntary
coverage under the EPF Scheme under section 1(4) of the existing
EPF Act, the Ministry here admitted that there are some delays in
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the notification in many cases of voluntary coverage and assured
that the provision for registration of establishment as provided
under Clause 3 of the Code shall remove any ambiguity and will
expedite the process of notification. The Committee trust that the
new provisions and the assurance of the Ministry would pave way
for wider coverage and better fund management of the EPF.
7.26 The Committee appreciate to note that the Government have
launched the PM Gareeb Kalyan Yojana (PMGKY) on 26th March,
2020 to help the poor fight the lockdown effects arising out of the
Covid-19 Pandemic. Under PMGKY, withdrawal from EPF account
has been allowed to the extent of three months' salary and 75
percent of the outstanding balance, whichever is less, on the ground
of the pandemic. As a result, online claims of more than 4.5 lakh
members have been processed and Rs. 1,416.5 crore has been
disbursed from the EPF accounts as on 17th April, 2020. The
programme has also incentivised the employers which has
prevented disruption in the employment of low wage earners. In
view of the stress, duress and hardships that the low wage earners
are going through during the ongoing lockdown, the PMKGY appears
to be a timely scheme to come to the rescue of both employers and
employees. The Committee desire that the monitoring aspect of the
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Scheme be given due priority so as to ensure that the twin
objectives viz. preventing disruption in the employment of EPF
members and extending support to the eligible EPF covered
establishments are truly achieved.
7.27 The Committee note that Clause 17 provides for
contribution in respect of employers and contractors and recovery
of such contributions. The Committee however, find that no
stringent penalty for non contribution from the contractor or the
Principal employer has been stipulated. The Committee feel that as
an effective deterrent and to ensure appropriate and timely
contribution by the Principal Employer or by the contractor,
requisite penal provisions be incorporated in the clause.
VIII EMPLOYEES STATE INSURANCE CORPORATION (ESIC)
(Clauses 24 to 52)
8.1 Clauses 29, 31, 32, 44 and 45 provide for ‘Contributions’; ‘Benefits;
‘Scheme for other beneficiaries’ and ‘Schemes for Unorganised Workers, Gig
Workers and Platform Workers etc. under the ESIC Scheme as reproduced
below:-
Clause 29: “(1) The contribution payable under this Chapter in respect of an employee shall comprise contribution payable by the employer (hereinafter referred to as the employer's contribution) and contribution payable by the employee (hereinafter referred to as the employee's contribution) and shall be paid to the Corporation. (2) The contributions (employer's contribution and the employees' contribution both) shall be paid at such rates as may be prescribed by the Central Government. (3) The wage period in relation to an employee shall be the unit as specified
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in the regulation (hereinafter referred to as the wage period) in respect of which all contributions shall be payable under this Chapter. (4) The contributions payable in respect of each wage period shall ordinarily fall due on the last day of the wage period, and where an employee is employed for part of the wage period, or is employed under two or more employers during the same wage period the contributions shall fall due on such days as may be prescribed by the Central Government.”
Clause 31: “(1) The employer shall pay in respect of every employee, whether directly employed by him or by or through a contractor, both the employer's contribution and the employee's contribution.(2) Notwithstanding anything contained in any other law for the time being in force, but subject to the provisions of this Code and the rules and regulations, if any, made thereunder in this behalf, the employer shall, in the case of an employee directly employed by him (not being an exempted employee), be entitled to recover from the employee the employee's contribution by reduction from his wages and not otherwise: Provided that no such deduction shall be made from any wages other than such as relates to the period or part of the period in respect of which the contribution is payable or in excess of the sum representing the employee's contribution for the period.(3) Notwithstanding any contract to the contrary, neither the employer nor the Contractor shall be entitled to deduct the employer's contribution from any wages payable to an employee or otherwise to recover it from him.(4) Any sum deducted by the employer from wages under this Chapter shall be deemed to have been entrusted to him by the employee for the purpose of paying the contribution in respect of which it was deducted.(5) The employer shall bear the expenses of remitting the contributions to the Corporation.(6) An employer, who has paid contribution in respect of an employee employed by or through a contractor, shall be entitled to recover the amount of the contribution so paid (that is to say the employer's contribution as well as the employee's contribution, if any,) from the contractor, either by deduction from any amount payable to him by the employer under any contract, or as a debt payable by the contractor.(7) The contractor shall maintain a register of employees employed by or through him as provided in the regulations and submit the same to the employer before the settlement of any amount payable under sub-section (6).(8) In the case referred to in sub-section (6), the contractor shall be entitled to recover the employee's contribution from the employee employed by or through him by deduction from wages and not otherwise, subject to such conditions as may be specified in the regulations.(9) Subject to the provisions of this Code, the Corporation may make regulations for any matter relating or incidental to the payment and collection of contributions payable under this Chapter.”
Clause 32: “(1) Subject to the provisions of this Code, the insured persons, their dependants or the persons hereinafter mentioned, as the case may be, shall be entitled to the following benefits, namely:—
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(a) periodical payments to any insured person in case of his sickness certified by a duly appointed medical practitioner or by any other person possessing such qualifications and experience as the Corporation may, by regulations, specify in this behalf (hereinafter referred to as sickness benefit);
(b) periodical payments to an insured person being a woman in case of confinement or miscarriage or sickness arising out of pregnancy, confinement, premature birth of child or miscarriage, such woman being certified to be eligible for such payments by an authority specified in this behalf by the regulations (hereinafter referred to as maternity benefit);
(c) periodical payments to an insured person suffering from disablement as a result of an employment injury sustained by him as an employee for the purposes of this Chapter and certified to be eligible for such payments by an authority specified in this behalf by the regulations (hereinafter referred to as disablement benefit);
(d) periodical payments to such dependants of an insured person who dies as a result of an employment injury sustained by him as an employee for the purposes of this Chapter, as are entitled under this Chapter (hereinafter referred to as dependants' benefit);
(e) medical treatment for and attendance on insured persons (hereinafter referred to as medical benefit); and
(f) payment to the eldest surviving member of the family of an insured person who has died, towards the expenditure on the funeral of the deceased insured person, or, where the insured person did not have a family or was not living with his family at the time of his death, to the person who actually incurs the expenditure on the funeral of the deceased insured person (to be known as funeral expenses): Provided that the amount of payment under this clause shall not exceed such amount as may be prescribed by the Central Government and the claim for such payment shall be made within three months of the death of the insured person or within such extended period as the Corporation or any officer or authority authorised by it in this behalf may allow.
(2) The Corporation may, subject to such conditions as may be laid down in the regulations, extend the medical benefits to the family of an insured person.
(3) The qualification of a person to claim sickness benefit, maternity benefit, disablement benefit and dependant benefit and the conditions subject to which such benefit may be given, the rate and period thereof shall be such as may be prescribed by the Central Government.
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(4) Subject to the provisions of this Code, the Corporation may make regulations for any matter relating or incidental to the accrual and payment of benefits payable under this Chapter.”
Clause 44: “Notwithstanding anything contained in this Chapter, the Central Government may, in consultation with the Corporation, and by notification, frame scheme for other beneficiaries and the members of their families for providing medical facility in any hospital established by the Corporation in any area which is under utilised on payment of user charges, and prescribe the terms and conditions subject to which the scheme may be operated.
Explanation.—For the purposes of this section,—
(a) "other beneficiaries" means persons other than employees insured under section 28; (b) "under utilised hospital" means any hospital not fully utilised by the employees insured under section 28; and(c) "user charges" means the amount which is to be charged from other beneficiaries for medical facilities as may be specified in the regulations after prior approval of the Central Government.”
Clause 45: “(1) Notwithstanding anything contained in this Chapter, the Central Government may, in consultation with the Corporation, and by notification, frame scheme for unorganized workers, gig workers and platform workers and the members of their families for providing benefits admissible under this Chapter by the Corporation.
(2) The contribution, user charges, scale of benefits, qualifying and eligibility conditions and other terms and conditions subject to which the scheme may be operated shall be such as may be prescribed in the scheme.”
8.2 Some Stakeholders pointed out that the enforcement of the existing ESI Act continued to remain extremely tardy. Despite the fact that the coverage of ESI starts with all establishments employing 10 or above as compared to 20 in case of EPF, as on date total number of workers/employees covered under the Scheme is almost half or even less than that covered by EPF and that speaks about the precariousness of the situation and accountability of the enforcement machinery. The Stakeholders further opined that the Code has diluted and weakened even the existing provisions in the ESI Act to the advantage of the employers at the cost of sufferings of the workers and employees.
8.3 In response to that, the Ministry stated as under:
“By amalgamation of various Acts into the Code on Social Security, the enforcement mechanism is proposed to be strengthened through unified inspection conducted through the centralized Shram Suvidha Portal and use of digital technologies as provided in Clause 122 (2) of the Code. The power of search and seizure which were hitherto available to only few enactments earlier has been uniformly extended to all social security organizations through clause 122(6)(c). In ensuring the cooperation of the employer, the power of enquiry in the court under code of civil procedure 1908 have been extended to the authorized officer under clause 125(3). The above provision shall lead to strengthening of the enforcement mechanism.”
8.5 When asked about the reasons for reduction in the penal interest rate for violation of the provisions of the ESI Scheme, the Ministry stated as under:-
“Under the Code, it is being proposed that the penal interest shall be at such rate as may be prescribed by the Central Government. This is to maintain conformity with the prevailing interest rates.”
8.6 On being asked about the rationale for omission of the extant provision of the Principal Employer's obligation on payment of ESI contribution in the event of default of the contractor, the Ministry submitted as under:-
“The provisions of section 40(1) of the ESI Act, 1948 regarding principal employer’s liability of payment of ESI contribution in respect of every employee whether directly or through contractor has been retained in clause 31(1) of the Code.”
8.7 Some Stakeholders suggested that ESIC contributions should be compulsorily deducted from the salary of worker like EPF contributions, the rationale given being that through this, the ESI Scheme would be strengthened in every district to provide efficient and effective service for the workers. In response thereto, Ministry stated as under:-
“The coverage of ESIC has been extended to pan-India and to all establishments employing 10 or more employees. Earlier, under the ESIC Act, the applicability was based on the concept of notification for each district or part thereof. Under this Code, the applicability of ESIC Act has been extended to the entire country, only subject to the condition that establishments should have minimum 10 employees. However, contribution from employers and employees will be collected only after the benefits are provided. Further, an enabling provision has been added that the Central Government may notify applicability of ESIC Act on those classes of establishment which carries on such hazardous or life threatening occupation as the central Government may notify. In these classes of establishments the threshold would be even one worker. For example, silicosis is an occupational disease which is caught by workers while working in mines. Further, an employer of a plantation may opt for the ESIC by giving willingness to the Corporation (ESIC). An enabling provision has been incorporated for voluntary membership in ESIC in respect of establishment having less than 10 employees, i.e. below the normal threshold for ESIC. In case an employer and employees of an establishment enters into agreement to join ESIC, the Director General of ESIC can allow those employees to avail ESIC benefits. These measures will go a long way in extending social security for medical services, sickness benefits, and maternity benefits, dependent’s pension and employees compensation benefits etc. to all workers.”
8.8 The Committee then desired to be apprised of the considerations under which the power of the ESI Authority under the existing Act to add to the list of occupational diseases affecting the workers for the purpose of ESI benefits has been withdrawn. In response, the Ministry clarified as under:-
“The power to amend the Schedule III has been given to the Central Government in the Code which was earlier available with the Corporation also as per section 52A (2) (ii). The third schedule of the ESI Act, 1948 is similar to the schedule III of Employees’ Compensation Act, 1923 in which the power to amend is already vested with the Central Government.."
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