labour-ministry-seeks-feedback-on-draft-social-security-rules-summary

Context: The Union Labour and Employment Ministry has recently notified the draft rules under the Code on Social Security, 2020.

More on the news:

  • The Ministry notified the draft rules recently and sought suggestions and objections within 45 days.
  • The draft rules have been framed for the implementation of the provisions of the Code on Social Security, 2020, relating to the Employees’ Provident Fund, Employees’ State Insurance Corporation, gratuity, maternity benefit, social security and cess in respect of building and other construction workers (BOCW).

Provisions in the draft rules

  • Registrations:
    • The draft rules provide for Aadhaar-based registration, including self-registration by unorganised workers, gig workers and platform workers on the portal of the Central government.
    • The rules also provide for the Aadhaar-based registration of BOCW on a portal of the Centre, State government or the BOCW welfare board of the State.
      • 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.
      • Also, it shall be the responsibility of the Building Workers Welfare Board of that State to provide benefits to such a worker.
  • Procedural efficiency
    • The rules also provide for a single electronic registration of an establishment, including for cancellation in case the business is closed. 
  • The BOCW cess:
    • It would be calculated by the employer on the basis of the cost of construction according to the rates of the State Public Works Department or the Central Public Works Department or the documents submitted to the Real Estate Regulatory Authority.
    • The rate of interest for delayed payment of such cess has been reduced from 2% every month or part of a month to 1%.
  • Other provisions:
    • Under the existing rules, the assessing officer has the power to direct that no material or machinery can be removed or disturbed from the construction site. 
    • Such power for indefinitely stopping of construction work has been withdrawn in the draft rules. 
    • Also, the assessing officer can visit the construction site only with the prior approval of the secretary of the Building and Other Construction Workers Board.

The Social Security Code Act, 2020

  • Social security funds for unorganised workers, gig workers and platform workers: It proposes to empower the centre to constitute a social security fund for the provision of social security for the unorganised workers, platform workers or gig workers or any such class of workers.
  • National Social Security for gig workers and platform workers:It proposes to bring unorganised sector, gig workers and platform workers under the ambit of social security schemes, including life and disability insurance, health and maternity benefits, provident fund and skill upgradation.
  • It proposes to form a National Social Security Board that would recommend suitable schemes for the different sections of unorganised sector workers.
  • The Social Security Code will extend the scope of the Employees State Insurance Corporation to all 740 districts in the country and that of the Employees’ Provident Fund Organisation to all institutions with 20 or more workers as well as the self-employed. 

Platform work:

  • The Act defines Platform work as a work arrangement outside of a traditional employer-employee relationship in which organisations or individuals use an online platform to access other organisations or individuals.
  • Platform work aims to solve specific problems or to provide specific services or any such other activities which may be notified by the Central Government, in exchange for payment.

Changes in definitions:  The 2020 Act changes the definitions of certain terms in the Code.   These include: 

  • Expanding the definition of ‘employees’ to include workers employed through contractors, 
  • Expanding the definition of “inter-state migrant workers” to include self-employed workers from another state, 
  • Expanding the definition of “platform worker” to additional categories of services or activities as may be notified by the government, 
  • Expanding the definition of audio-visual productions to include films, web-based serials, talk shows, reality shows and sports shows, and 
  • Exempting construction works from the ambit of “building or other construction work” if the total cost of construction work exceeds Rs 50 lakhs (and if they employ more than a certain notified number of workers).

Criticisms:

  • Failing to delineate it from gig work and unorganised work: A categorical clarification could ensure that social security measures are provided to workers without compromising the qualities of platform work: flexibility and a sense of ownership.
  • Misclassification of platform workers as ‘independent contractors’ instead of employee status: Granting employee status to platform workers, guarantees minimum wage and welfare benefits.
  • Given the temporary nature of workers in the gig economy, there are question marks over social security for them.
  • Flexibility of the platform

    • The algorithm affects pricing per unit of work, allocation of work, and hours. 
    • To enter the platform economy, workers rely on intensive loan schemes, often facilitated by platform aggregator companies. 
    • This results in dependence on platform companies and reduces flexibility.
    • Smallholder agrarian labour migrants with access to vehicular assets and capital hailing from peri-urban areas rely on the low barrier of entry and flexibility of platform work to accumulate wealth that they invest back into farm work.
  • Undefined stakeholder
    • The Code states the provision of basic welfare measures as a joint responsibility of the Central government, platform aggregators, and workers. 
    • However, it does not state which stakeholder is responsible for delivering what quantum of welfare. 

Need for welfare of platform workers: The dependence of companies on platform workers merits a jointly assumed responsibility by public and private institutions to deliver welfare measures.

  • Doorstep delivery during pandemic: Platform workers were responsible for delivery of essential services during the pandemic at great personal risk to themselves. 
  • Public infrastructures: They have also been responsible for keeping platform companies afloat despite the pandemic-induced financial crisis. This has cemented their role as public infrastructures who also sustain demand-driven aggregators. 

Way forward:

  • 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.
  • A socio-legal acknowledgement of the heterogeneity of work in the gig economy, and the ascription of joint accountability to the State and platform companies for the delivery of social services is the way forward.

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