Labour Ministry Proposes Labour Code to Provide Social Security Cover to All Workers

The Union Ministry of Labour & Employment has proposed a preliminary draft of Labour Code on March 16, 2017 to provide social security cover to the entire workforce in the country including self-employed and agricultural workers.

  • The Code on Social Security & Welfare 2017 seeks to simplify, rationalize, consolidate, and amend the laws relating to social security of workforce so as to make them less complex for easier comprehension, implementation and enforcement.
  • Preliminary draft of the Code on Social Security & Welfare has been prepared by amalgamating all existing Labour Laws related to Social Security (total 15 Labour Laws including EPF Act, ESI Act, Maternity Benefit Act, Payment of Gratuity Act, Employees Compensation Act, Unorganised Social Security Act, and various Welfare Cess /Fund Acts).
  • Comments/suggestions of all concerned stakeholders/other members of the public are invited on this draft Code for consideration in the Ministry of Labour & Employment within one month time from the date of issuance.

Important Features of Draft Code

This is for the first time that the ministry has formulated a code to cover agricultural workers along with self-employed people and target to provide social security benefits to 45 crore workers.

The Code shall apply to

  • Workers that are employed by any entity;
  • Worker who may also be the owner or the proprietor of an entity or a self-employed unit;
  • International workers; and
  • Indian citizen, working outside the territory of India, who opts to become a member of social security schemes.
  • The code will apply to every working person in the country will be covered under the social security code whether she belongs to the organised sector or the unorganised sector.
  • It will also cover any factory, any mine, any plantation, any shop, charitable organisations and all establishments or households employing casual, part-time, fixed-term, informal, apprentice, domestic and home-based workers.
  • Besides, factories employing even a single worker will have to contribute towards social security benefits, as per the proposal.Labour Ministry Proposes Labour Code
  • Even the households employing domestic help will have contribute towards schemes including provident fund and gratuity for the worker.
  • All such establishments or factories will be liable to pay compensation if they fail to contribute towards the social security schemes of the workers.
  • As per the code, the total contribution to be made by employers towards Employees’ Provident Fund and Employees’ State Insurance Scheme is proposed to be capped at 30% of the workers’ income.
  • According to the proposed code, self-employed workers will contribute 20% of their monthly income towards provident fund, pension and other related schemes.
  • Self-employed workers will also include a person who takes land on share cropping or any other form of rent and tills the same using his own or family members’ labour.

National Social Security Council (NSSC)

A National Social Security Council under the Chairmanship of Prime Minister Shri Narendra Modi has been proposed to smooth functioning and formulation of policy on social security schemes related to all the Ministries.

  • Other members in the council will include Finance Minister, Labour Minister, Health and Family Welfare Minister along with employer and employees’ representatives.

Role of NSCC

  1. To co-ordinate between central and State governments,
  2. Monitor the implementation of social security schemes,
  3. Regulate funds collected under various social security schemes, among others.