Information about the issue:

The Code on Social Security, 2020, widens the ambit of social security policies by including employees and workers of both organised and unorganised sectors, which is a crucial step in the right direction for ensuring social security for all. The Code promises to pioneer the rights of employees in a sector agnostic manner by extending effective policies for guaranteeing social security. While it has paved the way for affecting the much needed change in India’s social security policies, there is scope for improving the language of the provisions of the Code for ensuring that it achieves the desired results. In the absence of such modifications in the specific provisions, it runs the risk of misinterpretation which can adversely impact the same rights that the Code otherwise sets out to reinforce.

Specific Provisions and Associated Concerns: 

  • The First Schedule of the Code prescribes a threshold w.r.t. to the size of the establishment which continues to be mandatory in case of pension and medical schemes with a minimum number of employees prescribed as not less than 20 and 10 respectively. This can lead to the exclusion of the informal workers from gaining the benefit of pension or medical allowances who are employed in smaller establishments, with a total number of workers lesser than 10. 
  • Although under the Code, gig workers, platform workers and unorganised sector workers have been separately defined, there exists an overlapping in certain parts of these definitions under Sections 2(35), 2(61) & 2(85). As an outcome of such overlap, such employees might be deprived of social security as all/any of the employers can shrug off their social security entitlements due to the lack of clarity with respect to the nature of their employment.
  • Under Section 103 of the Act, the employer is allowed to determine the cess amount himself without having to consult any authority for confirmation of the same. This allows the employer to get away with any kind of manipulation in determination of the cess amount payable by him, thereby leaving the employee’s rights subject to the discretion or even the arbitrariness of the employers. 
  • In order to receive the social security benefits, every unorganised worker, gig worker and platform worker must be registered through an application including the Aadhar number under Section 113. This Section is however, not legally tenable as per the SC verdict stating that an Aadhaar Card is not mandatory for accruing rights based benefits of any kind. 
  • The Code postulates two different sets of social security instruments, one of which is to be provided by the Central Govt. and the other is to be provided by the State Govt. under Section 109(1) and 109(2). This could result in clumsy implementation and as a consequence can hamper the benefits to be accrued by the unorganised sector workers due to conflict of the authorities of the Centre and the States.

What are we doing in this regard?

We have written a letter to the Minister of State for Labour & Employment; Vice Chairman, NITI Aayog; Secretary (Labour &Employment) Ministry of Labour & Employment; Additional Secretary, Social Security Division Ministry of Labour & Employment; elucidating our concerns and recommending specific changes in the Act.

Highlighting the fact that the Code purports to achieve desirable aims, we stated that certain provisions can undermine the rights of workers in the formal as well informal sector of employment. In this context, our recommendations to modify the Code are as follows:

  1. Amend the compulsory requirement of attaching “Aadhar card” for registration of unorganised workers, gig workers and platform workers under Section 113 of the Code to replace it with “any identification proof”. 
  2. Expand the definition of unorganised workers under Section 2(86) to include gig workers and platforms workers as it would help in avoiding duplication and would be beneficial in ensuring access to the various social security benefits to every unorganised worker covered under the Code.
  3. Expand the definition of employee under Section 2(26) to include Anganwadi workers and ASHA workers to help them obtain social security benefits which they are currently deprived of.
  4. Amend the definition of “Establishment” under Section 2(29) of the Code to include “exchange of services” with a provision for including as per Section 2(29)(a), establishments with less than 10 employees. 
  5. Amend Section 103 to include an audit mechanism to be conducted by auditors who specialize in matters of the relevant industries by specifying the procedure in the said provision. 
  6. Incorporate a mechanism for the portability of the BOCW (Building of Construction Workers) funds among the States so that the due funds reach the beneficiaries irrespective of the State in which they were collected. 
  7. Amend Sections 109(2) & 109(3) to make the States solely responsible for providing social security benefits to the unorganised sector workers for  clarity in terms of accountability. The provision can also allow for the States to share a certain portion of the total cost of providing such security benefits with the Central government.

How can you help?

  • You can share our updates regarding the issue, to help us increase the outreach of this campaign.
  • If you can help us identify any other such laws/policies that need provisional improvements, write to us.
  • You can volunteer to support our advocacy efforts, as per your skill set.

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Important Documents:

  1. Letter to stakeholders by LQF dated 30th November, 2020
  2. The Code on Social Security, 2020