Draft rules for the Code on Social Security, 2020 | 16th November, 2020

Context: Draft rules for the Code on Social Security, 2020 have been released by Ministry of Labour and Employment for comments.

Salient features of Draft rules for the Code on Social Security, 2020

Beneficiaries of the rules will be Unorganised Workers, Gig Workers, Platform Workers, and BOCWs.

For workers

• Unorganised workers, gig workers, and platform workers would require to be registered on a central government portal for availing any benefit under any of the social security schemes framed under the Code.
• The rules also provide for the Aadhaar-based registration of BOCW (Building and Other Construction Workers) on a portal of the Centre, State government or the BOCW welfare board of the State.
• Draft rules operationalize the benefits of Code for Social Security i.e.
  • Employees’ Provident Fund, Employees’ State Insurance Corporation, Gratuity, Maternity Benefit, Social Security and Cess in respect of Building and Other Construction Workers
  • Social Security for Unorganised Workers, Gig Workers, and Platform Workers.
• Where a building worker migrates from one State to another he shall be entitled to get benefits in the State where he is currently working and it shall be the responsibility of the Building Workers Welfare Board of that State to provide benefits to such a worker.
• Provision has also been made in the rules regarding gratuity to an employee who is on fixed term employment.

For establishment,

• Rules provide single electronic registration or cancellation.
• Procedures for self-assessment and payment of cess has been defined with regard to building and other construction workers
• The rate of Interest for delayed payment of such cess has been reduced from 2% every month or part of a month to 1%.
• Assessing officer can visit the construction site only with prior approval of the secretary of the Building and Other Construction Workers Board.

Labour Code on Social Security 2020

Key Features

• Consolidation of multiple laws: It will replace nine social security laws, including Maternity Benefit Act, Employees’ Provident Fund Act, Employees’ Pension Scheme, Employees’ Compensation Act, among others.
• Universalizes social security: Social security has been extended to those working in the unorganised sector, such as migrant workers, gig workers, and platform workers.
• Covers Agricultural workers: For the first time, provisions of social security will also be extended to agricultural workers also.
• National Social Security Board: It proposes a National Social Security Board which shall recommend to the central government for formulating suitable schemes for different sections of unorganised workers, gig workers, and platform workers.
• Social security organisations: The Bill provides for the establishment of several bodies to administer the schemes. These include a Central Board to administer the provident fund schemes and national and state-level Social Security Boards to administer schemes for unorganised workers.
• Social security fund: The Bill proposes setting up a social security fund using a corpus available under corporate social responsibility.
• Reducing employee PF contribution: The bill provides for an option for reducing provident fund contribution (currently at 12% of basic salary) to increase workers’ disposable income.
• Gig Workers: The bill states that the central or state government may notify specific schemes for gig workers, platform workers, and unorganised workers to provide various benefits, such as life and disability cover.
• Exemption: Under the bill, the central government is empowered to exempt selected establishments from all or any of the provisions of the code and makes Aadhaar mandatory for availing benefits under various social security schemes

Concerns related to Code on Social Security, 2020

Following are the concerns that are associated with the Labour Code for Social Security and welfare:

• It does not provide for a uniform definition of “social security”.
• There is no dedicated central fund. The proposed corpus will be split into numerous small funds creating a multiplicity of authorities and confusion.
• There is no clarity on how the proposed dismantling of the existing and functional structures, such as the Employees’ Provident Fund Organisation (EPFO) with its corpus of ₹10 lakh crore will be handed over to a government.
• Though gig workers are covered under social security schemes none of these benefits are secure, which means, the Central government, from time to time, can formulate welfare schemes that cover these aspects of personal and work security, but they are not guaranteed.  All these benefits will be dependent upon the will of the state government.
  • • For Ex; in some states like Karnataka, where a platform-focused social security scheme was in the making last year, will possibly offer some financial assistance by the Centre.
• The Social Security Code states the provision of basic welfare measures is a joint responsibility of the Central government, platform aggregators, and workers. But doesn’t mention which measures will be provided by which stakeholder.
• Following recommendations of the National Commission on Labour (2002) have not implemented:
  • Removal of thresholds based on the size of establishment for making certain benefits mandatory and application of social security system to all establishments.
  • the existing wage ceilings for coverage should be removed
• Mandatory linking with Aadhaar may violate Supreme Court judgment

Way forward

•  2^nd National Commission on Labour (2002) had recommended a separate law for small scale units (having less than 20 workers) with less stringent provisions for conditions such as payment of wages, welfare facilities, social security, retrenchment and closure, and resolution of disputes.
• The government in India should also consider granting the gig workers the status of employees of the aggregators. That would automatically provide them all the labor benefits like PF and ESI.
• The government should consider providing a loan scheme to the platform workers, to end their dependency on the platform aggregator companies.
• To mitigate operational breakdowns in providing welfare services, a tripartite effort by the State, companies, and workers to identify where workers fall on the spectrum of flexibility and dependence on platform companies is critical.
• All important recommendations of the National Commission on Labour (2002) and the standing committee on labor 2020 must be incorporated in the bills.