2023 To Be the Focus Area for Social Security Coverage to Informal Workers!
Karma Management Global Consulting Solutions Pvt. Ltd. is one of the top 5 consultancy firms, established in the year 2004, with headquarters in the business district of Santacruz East, Mumbai, India, and full-scale operation in all the States, having about 200 direct and indirect staff on its roll, is a leading service provider for payroll and payroll compliances, outsourcing, facility services, HR services, Training & Development, Recruitment & Talent Acquisition, Legal and Para legal services, Disputes and Litigation Handling, Inspection Management and Liaising, Advisory Services, Social, Environment and Vendor Audits, Regulatory Compliances ad Governance.
Compliance with labour and employment laws has become one of the most important issues that many establishments in India have to deal with. Many employment disputes result in litigation and take a prolonged time for effective conclusions. Karma Global is an Indian HR, Payroll, and Compliance Firm advising clients worldwide on local, regional and global regulatory compliances in relation to their business goals, business strategies, and resolving disputes.
It gives valuable suggestions and advice to Corporates, Investors, Institutions, Contractors, Establishments, Industries etc. on the need for lowering employment risk across all levels and adhering to the laws of the land. It has a lot of expertise on employment-related compliance issues, as well as day-to-day support for Human Resource Services with in-house Counsel.
Karma Global is also into employment agreements and policies, structuring of compensation and benefits, employment aspects of merger and takeover, etc.
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According to Morgan Stanley, India is moving towards becoming the world’s third-largest economy in the next 4-5 years, while the CEO of McKinsey has said this is not only India’s decade, but India’s century.
2023 To Be the Focus Area for Social Security Coverage to Informal Workers!
What Does ILO Say ……………….!
Social security is a human right which response to the universal need for protection against certain life risks and social needs. Effective social security systems guarantee income security and health protection, thereby contributing to the prevention and reduction of poverty and inequality, and the promotion of social inclusion and human dignity. They do so through the provision of benefits, in cash or in kind, intended to ensure access to medical care and health services, as well as income security throughout the life cycle, particularly in the event of illness, unemployment, employment injury, maternity, family responsibilities, invalidity, loss of the family breadwinner, as well as during retirement and old age. Finally, it reinforces social cohesion and therefore contributes to building social peace, inclusive societies, and fair globalization by ensuring decent living conditions for all.
The Conventions and Recommendations that make up the ILO’s standards framework on social security are unique: they set out minimum standards of protection to guide the development of benefit schemes and national social security systems, based on good practices from all regions of the world. They are therefore based on the principle that there is no single model for social security, and that it is for each country to develop the required protection.
Relevant ILO instruments
- Social Security (Minimum Standards) Convention 1952 (No. 102)
- Social Protection Floors Recommendation 2012 (No. 202)
- Equality of Treatment (Social Security) Convention 1962 (No. 118)
- Maintenance of Social Security Rights Convention 1982 (No. 157)
Further social security instruments
A later generation of conventions expands the scope of protection provided by Convention No. 102.
Medical care – Convention No. 102 and 130
Sickness benefit – Convention No. 102 and 130
Unemployment benefit – Convention No. 102 and 168
Old-age benefit – Convention No. 102 and 128
Employment injury benefit – Convention No. 102 and 121
Family benefit – Convention No. 102
Maternity benefit – Convention No. 102 and 183
Invalidity benefit – Convention No. 102 and 128
Survivors’ benefit – Convention No. 102 and 128
Ministry of Labour & Employment Definition of Unorganized Worker Before the Passing of Labour Codes!
The term unorganized worker has been defined under the Unorganized Workers’ Social Security Act, 2008, as a home-based worker, self-employed worker or a wage worker in the unorganized sector who is not covered by any of the Acts mentioned in Schedule II of the Act i.e. the Employee’s Compensation Act, 1923 (3 of 1923), the Industrial Disputes Act, 1947 (14 of 1947), the Employees’ State Insurance Act, 1948 (34 of 1948), the Employees Provident Funds and Miscellaneous Provision Act, 1952 (19 of 1952), the Maternity Benefit Act, 1961 (53 of 1961) and the Payment of Gratuity Act, 1972 (39 of 1972).
With Labour Codes Around, What Will Be the New Dynamics in Store for Unorganized Workers?
Union Labour & Employment Minister Bhupender Yadav told PTI:
Expanding the social security coverage for unorganized workers and pursuing states to make rules for labour codes will be the key priorities for the government in 2023, as efforts continue to strengthen the country’s labour market.
With India set to host the G-20 leaders’ summit for the first time next year, the Union labour ministry will also pursue key employment-related agenda touching upon global skill gaps, gig, and platform economy, sustainable financing of social security schemes, and other issues.
“Our efforts will be to cover a large number of unorganized sector workers under the ambit of social security schemes in 2023 and provide them with eligible benefits online. We want to make processes paperless in the ministry,”
“India has a federal structure. Labour is a concurrent subject. We have already pre-published draft rules on the four labour codes. The States are in the process of completing this exercise. We are pursuing them to complete the exercise. I hope that the codes are implemented at the appropriate time,” Yadav said.
Status of Labour Codes and Labour Rules as of today:
The four labour codes on social security, industrial relations, wages, and Occupational Safety Health & Working Conditions (OSH) have already been cleared by Parliament but they can be implemented only when the Centre and States notify the respective rules since labour is a concurrent subject.
The Centre is ready with the rules, while some States are yet to complete the rule-making exercise.
As many as 31 States and Union Territories have issued draft rules for The Code on Wages, 2019 while 28 states each have done this exercise for The Industrial Relations Code, 2020, and The Code on Social Security. There are 26 states which have issued draft rules under The Occupational Safety Safety Health and Working Conditions Code, 2020.
The Centre is working with States for the implementation of the four codes that will be the key in providing social security to all informal workers in the country.
The four codes envisage strengthening the protection available to workers, including unorganized workers, in terms of statutory minimum wage, social security and healthcare. They also provide for a statutory right for minimum wages and timely payment of wages for all workers to support sustainable growth and inclusive development.
Union definition of wages:
Among others, the codes provide for a uniform definition of ‘wages’ that will help in reducing multiple interpretations of the labour law and related litigations. It also envisages provisions for annual health check-ups and medical facilities to enhance labour productivity and increase life expectancy.
As part of efforts to formalize the employment of more people, the codes also require the issuance of appointment letters to every employee of an establishment. Such a system is expected to enhance job security as well as enable a worker to claim statutory benefits such as minimum wage and social security.
Under the codes, the gig and platform workers have been defined for the purpose of formulating schemes to provide social security benefits.
On the verge of extending benefits of PF & ESI to unorganized workers:
Another provision is that the central government may extend benefits to unorganized workers, gig workers and platform workers and the members of their families through the Employees’ State Insurance Corporation or Employees’ Provident Fund Organization.
The applicability of the Employees’ Provident Fund has been extended to all industries under the codes as against scheduled industries at present under the new legal framework.
Supreme Court Judgement on EPS 1995
Another major issue will be the way forward with respect to the Supreme Court order on the Employees’ Pension Scheme 1995 (EPS-95).
“We are examining the judgment,” Yadav said. Last month, the apex court upheld the Employees’ Pension (Amendment) Scheme, 2014, and allowed employees to opt for enhanced pension coverage alongside their employers in four months’ time.
In a written reply to Rajya Sabha earlier this month, Minister of State for Labour and Employment Rameshwar Teli said the apex court judgment has legal, financial, actuarial, and logistical implications.
As per the court order, employees who were existing EPS-95 members as on September 1, 2014, can contribute up to 8.33 percent of their actual salaries, as against 8.33 percent of the pensionable salary capped at Rs 15,000 a month towards pension.
It had also struck down the requirement in the 2014 amendments mandating employer contribution of 1.16 percent of the salary exceeding Rs 15,000 per month. This will facilitate the subscribers to contribute higher to the scheme and get enhanced benefits accordingly.
The Employees Provident Fund Organization (EPFO) has more than six crore subscribers and a large number of them will benefit from opting for contributions on wages higher than the threshold of Rs 15000 per month.
As the chair of the influential G-20, a grouping of developed and developing nations, India will host the G-20 leaders’ summit in November 2023, where labour issues will also be discussed.
CONCLUSION – Informal economy is a lifeline for people who fail to find employment in the formal economy!
In fact, the informal economy is a lifeline for those people that fail to find employment in the formal economy and are thus forced to rely on informal wage employment, self-employment, or alternative activities to survive.
However, the persistence or even growth of the informal economy – often linked to low productivity, continuing decent work deficits, working poverty, and excessive inequality – calls for urgent attention to the double challenge of extending protection to workers in the informal economy and facilitating their transition to the formal economy
Barriers to social protection coverage for workers in the informal economy include their exclusion from legal coverage; costs and inadequate financing arrangements; complex and burdensome administrative procedures; a lack of enforcement and control; a lack of information, awareness, and trust; a lack of representation and organization; and a lack of coordination and integration between social protection policies and related institutions and between social protection policies.
To facilitate the transition to formality, the ILO has adopted an integrated strategy promoting decent work that aims to boost employment, improve social protection coverage, enhance social dialogue and realize human rights at work.
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This blog has been collated and compiled from various sources, adaptations, and illustrations by the internal staff of Karma Global with the knowledge and expertise that they possess, for its monthly newsletter Issue 08 of February 2023, and in case of specific or general information or compliance updates for that matter, kindly reach out to the Marketing Team – Kush@karmamgmt.com / yashika@karmamgmt.com