Context: Some of the states have demanded that the crucial Code on Social Security Bill, 2019, should be brought in the upcoming monsoon session of Parliament for early passage.
More on the news:
- This comes amid the migrant issue and labour rights gaining spotlight over the last three months, due to hardships faced as a result of COVID-19 pandemic.
- The reverse migration of over 7 million people to Uttar Pradesh, Bihar, Madhya Pradesh and Jharkhand, has made the issue more immediate.
Background: The Code on Social Security Bill, 2019 was introduced in the Lok Sabha and was later sent for review to the standing committee.
The Code on Social Security, 2019:
- The bill introduced by the Ministry of Labour and Employment, replaces nine laws related to social security, including the Employees’ Provident Fund Act, 1952, the Maternity Benefit Act, 1961, and the Unorganised Workers’ Social Security Act, 2008.
- Social security refers to measures to ensure access to health care and provision of income security to workers.
- Social security schemes: Under the Code, the central government may notify various social security schemes for the benefit of workers. These include an Employees’ Provident Fund (EPF) Scheme, an Employees’ Pension Scheme (EPS), etc.
- In addition, the central or state government may notify specific schemes for gig workers, platform workers, and unorganised workers to provide various benefits.
- Gig workers refer to workers outside of the traditional employer-employee relationship (e.g. freelancers).
- Platform workers are workers who access other organisations or individuals using online platforms and earn money by providing them with specific services.
- Unorganised workers include home-based and self-employed workers.
- Coverage and registration: The Code specifies different applicability thresholds for the schemes. For example, the EPF Scheme will apply to establishments with 20 or more employees.
- Contributions: The EPF, EPS, EDLI, and ESI Schemes will be financed through a combination of contributions from the employer and employee. For example, in the case of the EPF Scheme, the employer and employee will each make matching contributions of 10% of wages, or such other rate as notified by the government.
- Social security organisations: The Code provides for the establishment of several bodies to administer the social security schemes. These include:
- A Central Board of Trustees, headed by the Central Provident Fund Commissioner, to administer the EPF, EPS and EDLI Schemes,
- An Employees State Insurance Corporation, headed by a Chairperson appointed by the central government, to administer the ESI Scheme,
- National and state-level Social Security Boards, headed by the central and state Ministers for Labour and Employment, respectively, to administer schemes for unorganised workers, and
- State-level Building Workers’ Welfare Boards, headed by a Chairperson nominated by the state government, to administer schemes for building workers.
- Inspections and appeals: The appropriate government may appoint Inspector-cum-facilitators to inspect establishments covered by the Code, and advise employers and employees on compliance with the Code.
- Administrative authorities may be appointed under the various schemes to hear appeals under the Code. For example, industrial tribunals (constituted under the Industrial Disputes Act, 1947) will hear disputes under the EPF Scheme.
- Offences and penalties: The Code specifies penalties for various offences, such as:
- The failure by an employer to pay contributions under the Code after deducting the employee’s share, punishable with imprisonment between one and three years, and fine of one lakh rupees, and
- Falsification of reports, punishable with imprisonment of up to six months.
Advantages of introducing the code:
- The Social security code Bill, 2019 covers all those workers not covered in the previous laws. For example, online platform workers such as Ola, Uber etc.
- The ambit of this social security code is truly large as it covers workers involved in hazardous nature of work as well.
- Less regulatory hurdles for employers and employees. For example, an inspector, under the new code, cannot open an EPFO (Employees’ Provident Fund Organisation) record of more than five years.
- Under the Code, the central government may notify various social security schemes for the benefit of workers.
- No uniform definition of “social security”.
- No central fund: The corpus is proposed to be split into numerous small funds creating a multiplicity of authorities and confusion.
- Crucial categories such as “workers”, “wages”, “principal-agent” in a contractual situation and “organised-unorganised” sectors have not been clearly defined.
- The Bill welcomes aboard“gig workers”, which constitutes a large section of the workforce such as those working in taxi aggregate companies like Uber and Ola.
- But how exactly the government proposes to facilitate their access to PF or medical care is not clear.
The above mentioned issues related to the Bill needs to be addressed first. The tabling of the Standing Committee report should not be rushed as members are busy with relief work related to the covid-19 pandemic.
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