Concept of Social Security under Indian Labour Laws

By
Siddhartha Singh Roy

Social security ranges from basic employers’ liability for occupational accidents to
comprehensive schemes that include income security in the form of sickness, unemployment,
retirement, employment injury, maternity, family, invalidity, and survivors’ benefits and medical
care. As with other aspects of labour law, a progression from the particular to the general has
been characteristic of the development of social security legislation. Social Security protects not
just the subscriber but also his/her entire family by giving benefit packages in financial security
and health care. Social Security schemes are designed to guarantee at least long-term sustenance
to families when the earning member retires, dies or suffers a disability. Thus the main strength
of the Social Security system is that it acts as a facilitator - it helps people to plan their own
future through insurance and assistance. The success of Social Security schemes however
requires the active support and involvement of employees and employers.

India is a founder member of the International Labour Organization, which came into
existence in 1919. At present the ILO has 175 Members. There are 41 ILO conventions and 1
protocol ratified by India. 8 are core conventions. Amongst these 8 core conventions, 4 have been
ratified by India. They are as follows:-
 Forced Labour Convention (No. 29)
 Abolition of Forced Labour Convention (No.105)
 Equal Remuneration Convention (No.100)
 Discrimination (Employment Occupation) Convention (No.111)
Four of these 8 core conventions are yet to be ratified by India. They are as follows:-
 Freedom of Association and Protection of Right to Organised Convention (No.87)
 Right to Organise and Collective Bargaining Convention (No.98)
 Minimum Age Convention (No.138)
 Worst forms of Child Labour Convention (No.182)

The Social Security (Minimum Standards) Convention, 1952 (No. 102), is the flagship
of all ILO social security Conventions, as it is the only international instrument, based on basic
social security principles, that establishes worldwide-agreed minimum standards for all nine
branches of social security. These branches are:

 medical care;
 sickness benefit;
 unemployment benefit;
 old-age benefit;
 employment injury benefit;
 family benefit;
 maternity benefit;
 invalidity benefit; and
 survivors' benefit.

While Convention No. 102 covers all branches, it requires that only three of these branches be
ratified by Member states, which allows for the step-by-step extension of social security coverage
by ratifying countries.

Social Security Benefits in India are Need-based i.e. the component of social
assistance is more important in the publicly-managed schemes. In the Indian context, Social
Security is a comprehensive approach designed to prevent deprivation, assure the individual of a
basic minimum income for himself and his dependents and to protect the individual from any
uncertainties. The State bears the primary responsibility for developing appropriate system for
providing protection and assistance to its workforce. Social Security is increasingly viewed as an
integral part of the development process. It helps to create a more positive attitude to the
challenge of globalization and the consequent structural and technological changes.

Recent researches reveal that there has been a growth of only about one million in the
organized sector in comparison to the growth of about 55 million in the unorganized sector.
The organized sector includes primarily those establishments which are covered by
the Factories Act, 1948, the Shops and Commercial Establishments Acts of State Governments,
the Industrial Employment Standing Orders Act, 1946 etc. This sector already has a structure
through which social security benefits are extended to workers covered under these legislations.
Social Security to the workers in the Organized Sector is provided through five Central Acts,
namely, the ESI Act, the EPF & MP Act, the Workmens’ Compensation Act, the Maternity
Benefit Act, and the Payment of Gratuity Act. In addition, there are a large number of welfare
funds for certain specified segments of workers such as beedi workers, cine workers,
construction workers etc.
The unorganized sector on the other hand, is characterized by the lack of labour law
coverage, seasonal and temporary nature of occupations, high labour mobility, dispersed
functioning of operations, casualization of labour, lack of organizational support, low bargaining
power, etc. all of which make it vulnerable to socio-economic hardships. The nature of work in
the unorganized sector varies between regions and also between the rural areas and the urban
areas, which may include the remote rural areas as well as sometimes the most inhospitable urban
concentrations.

The principal social security laws enacted in India are the following:

(i) The Employees’ State Insurance Act, 1948 (ESI Act) which covers factories and
establishments with 10 or more employees and provides for comprehensive medical care
to the employees and their families as well as cash benefits during sickness and maternity,
and monthly payments in case of death or disablement.
(ii) The Employees’ Provident Funds & Miscellaneous Provisions Act, 1952 (EPF & MP
Act) which applies to specific scheduled factories and establishments employing 20 or
more employees and ensures terminal benefits to provident fund, superannuation pension,
and family pension in case of death during service. Separate laws exist for similar
benefits for the workers in the coal mines and tea plantations in the State of Assam and
for seamen.
(iii) The Workmen’s Compensation Act, 1923 (WC Act), which requires payment of
compensation to the workman or his family in cases of employment related injuries
resulting in death or disability. It is the first social security legislation.
(iv) The Maternity Benefit Act, 1961 (M.B. Act), which provides for 12 weeks wages
during maternity as well as paid leave in certain other related contingencies.
(v) The Payment of Gratuity Act, 1972 (P.G. Act), which provides 15 days wages for each
year of service to employees who have worked for five years or more in establishments
having a minimum of 10 workers.
(vi) The Unorganised Workers Social Security Act, 2008, which provides for the social
security and welfare of unorganised workers and for other matters connected therewith or
incidental thereto
Apart from these legislations Art 41, 42 and 43 of the Indian Constitution along with
the concurrent list plays an important role as far as social security of workers is
concerned.

New Initiatives

 The various Central Acts on Social Security are being examined in the light of the
recommendations of the 2nd National Commission on Labour. Relevant amendments
are proposed in the EPF and MP Act as also the ESI Act. The consultation process is
on with reference to the amendment suggestions received in case of the Maternity
Benefit Act and the Workmen’s Compensation Act.
 Innovative measures are proposed in the running of the Social Security Schemes of
EPFO and ESIC. This includes flexible benefit schemes tailored to the specific
requirements of different segments of the population.

Social Security Coverage In India

(ii) We do not face the problem of exit rate from the workplace being higher than the
replacement rate. Rather on the contrary lack of employment opportunities is the key
concern,

(iii) 92% of the workforce is in the informal sector which is largely unrecorded and the
system of pay roll deduction is difficult to apply.

Extension Of Coverage
Currently, social security policy makers and administrators are engaged in a wide-ranging
debate to redress the problems in providing social security in the country. This debate has
thrown up various arguments on the efficacy of publicly managed social security schemes as
opposed to privately managed schemes. There is no standard model that can be adopted on this
issue. In the Indian context the privately managed schemes can at best be considered as
supplementary schemes after the mandatory schemes managed publicly. It is only the publicly
managed scheme, which will extend to all the sectors of the workforce. The challenge of closing
the coverage gap in social security provisions has to be developed at two levels. The first level
involves the re-engineering of the institutional arrangements to increase efficiency. The second
level is to create an appropriate legislative and administrative framework for significant increase
in the social security coverage especially in the unorganized sector.