Keywords: Unorganized Sector, Employment Rights, Social Security, Indian Labor Law
INTRODUCTION
In the early 1970s“the concept of an unorganized sector started to get world–wide attention as the International Labour Organization (ILO) initiated serious efforts to identify and study the area of informal sector through its World Employment Programme Missions in Africa. The British Economist Keith Hart in 1971 coined the term informal sector. Unorganized business plays a big part, especially in developing nations like India. More than 90 per cent of workforce and about 50 per cent of the national product are accounted for by the informal economy. A high proportion of socially and economically underprivileged sections of society are concentrated in the informal economic activities. It encompasses a wide range of occupations, such as those in agriculture, street vending, home assistance, and small-scale informal business ownership. Despite this industry's major economic contribution, workers in it frequently contend with challenges related to job rights and social security.
In present scenario insecurities of life have increased to the maximum extent. To safeguard such uncertainty employment rights and social security has become very important in unorganized sector. It is regarded as a program to provide the economic security and program for the certain security and health care, mainly in old age, loss of a breadwinner, unemployment, illness, injury during work or maternity. It is considered as human right by UN instruments and ILO convention. Social security is a chief agenda for the social development. It is a basic human right and every citizen has certain right such as basic standard of living.
The Ministry of Labour and Employment's Employment in Informal Sector and Condition of Informal Employment of 2015 shows that “82% of those employed in agriculture (minus crop and animal husbandry) and non-agriculture sector had no written job contract, 77.3% got no paid leave and 69% were not eligible for any social security benefits.” If we see the Report of the Periodic Labour Force Survey (PLFS) Quarterly Bulletin [January – March 2024] for male, Unemployment rate increased from 6.0% in January – March 2023 to 6.1% in January – March 2024, while for female unemployment rate decreased from 9.2% in January – March 2023 to 8.5% in January – March 2024.
The Welfare State concept has paved a way for the development of human society by states active participation. The Preamble of the Indian Constitution is the only foundation of Social Security as the word Socialist State is mentioned in it. The basic objective of socialism is to abolish inequalities in income, status, and standard of living, as well as to offer adequate standard of living for all working class. As per the Constitution of India, right to life contains all the essential rights which include foods, clothing, a home, medicine and education which are essential aspects of human life in a civilized society.
Social justice assurance to the weaker sections of society has been a major task for the judiciary. Eminent work is done by the judiciary to protect the rights of the unorganised sector when laws are not properly implemented. In peoples’ Union for Democratic Rights v. Union of India,” Supreme Court stated that whoever working for less payment than what is given in the minimum wages is violation of Article 23 of Indian constitution ,i.e., abuse of the fundamental right of such labourer. The court further stated that that “begar is a form of forced labour, in whatever form it may manifest itself because it is violative of human dignity and contrary to basic human rights.”
In Sanjit Roy V. State of Rajasthan, case Court held “whenever any person is engaged in service who are affected by scarcity condition and drought, then state cannot pay him less than the minimum wages on the ground that it is given to them to meet famine situation. The state cannot take advantage of their helplessness.”
India, being a socialist democratic state, committed for providing economic justice and social reasonableness to its citizen for the abidance of egalitarianism in India. Moreover, DPSP ensures the creation of a welfare state which serves as the foundation for the state’s activity in social, economic, and welfare programmes directed at correcting labour circumstances.A number of legislation has been made to operationalize the constitution’s perspective regarding the Social Security but if we see at grassroots level, Labourers are affected with uncertainty and poor wages.
ASSESSING THE PRESENT STATE OF EMPLOYMENT RIGHTS AND SOCIAL SECURITY INITIATIVES FOR UNORGANIZED WORKERS
Labor is on the concurrent list of India's constitution, which means that both the central and state governments can legislate on it. According to the government, there are approximately 100 state and 40 central laws governing labour issues such as social security and employment rights.
The Second National commission on labor (2002) has stated that existing labor related legislation is very complex and to improve ease and ensure uniformity in labor laws, it has recommended to consolidate all the labor laws into broader groups such as industrial relation, social security, safety, wages, welfare and working conditions. The labour and employment ministry submitted four bills in 2019 to integrate 29 central laws.”
“These codes regulate are basically categorized in the four groups. They are:
wages,
industrial relations,
Social security and
Occupational safety, health and working condition.
Code on social security, 2020 was introduced after the withdrawal of the code of 2019, the main aim was to cover the social security to all the worker, employees either in unorganized, organized or any other sector. It has replaced nine laws associated to social security, they are:
“The Employees’ State Insurance Act, 1948;”
“The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952;”
“The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959;”
“The Building and Other Construction Workers’ Welfare Cess Act, 1996 ;”
“The Employees’ Compensation Act, 1923;”
“The Maternity Benefit Act, 1961;”
“The Cine-workers Welfare Fund Act, 1981;”
“The Payment of Gratuity Act, 1972 and”
“The Unorganized Workers Social Security Act, 2008.”
As it is well documented that there is no specific legislation especially for the unorganized worker and they cannot claim the benefits such as minimum wages, minimum hours of the works, leave, overtime etc. But the new code has come to rescue and introduced the same opportunities as well as provided the provision for the protection which was generally given to the other employees like government employees or private sector employees as per the various labour laws.”
The code has specified that there will be right to the central government and the state government to frame and notify the required social security schemes for the workers on certain matters relating to the life and disability covers, health and maternity benefits, accident insurance, crèche and old age protection. The scheme may be funded by the collective combination of the state government, Central government, aggregators, and beneficiaries of the scheme or may be funded by the corporate social responsibility.”
The Code has stated that there will a compulsion on the central government to constitute the National Social Security Board for the wellbeing of the gig worker and platform worker as well as unorganized sector. The central Government can claim and supervise the arrangements for such worker. They will setup and administer the social security fund the welfare of such worker. The code has also provided the right to the Government to setup the helpline and other facilitation center etc. for the workers. And this will definitely encourage the worker to participate in such types of the jobs and can avail such benefits.””
The code has made compulsory for the registration of every employees of the unorganized sector, gig worker and the platform worker so that they can avail the benefits from the concerned scheme that is framed under this code. But these should be subject to the fulfillment of the said conditions. They state:
That the worker should have completed the sixteen years of the age or such age as may be prescribed by the Central Government.”
That he should submit the self-decleration containing the specified information as may be prescribed by the Central Government.”
All the eligible worker after fulfilling the above said requirement should make an application for the registration in such said form along with the documents which includes Aadhaar number as may be specified by the Central Government.
The Labour secretary Apurva Chandra has stated that section 142 of the code on social security is only notified for the collection of the database of the unorganized worker including the migrant workers. If the worker failed to give the required details than no benefit will be denied for the want of the Aadhaar.
The labour minister has previously stated that it has been hoped to bring atleast 25 crore of the unorganized worker under the social security in net five years and they have planned to extent the old age pension, disability aids, health insurance and all the social security benefits to all the sections, including the platform worker, gig worker and migrant worker, under the social security code. Only a 10% of the country’s estimated 50 crore working population comes under the social security cover. The social security benefits will flow from the database developed by the portals. “The platform will be used for registration, identification, enrollment and collection of all the required data. It will act as primary database through which mandatory social security scheme will be structured.””
On May 3, 2021, the ministry issued a notification mandating the ministry and agencies operating under it to obtain Aadhaar numbers from recipients under the code of social security. Therefore here we can state that on the 3rd day of the May, 2021 the provision of Section 142 of the code on social security came into force.
Few Concerns relation to Code on Social Security,2020 are:
Online registration process: The onus lies on the unorganized worker to register himself as a beneficiaries and they do not have digital literacy and connectivity.
Lack of corporation among state: The implication of the said code will vary from state to state.
Complicated Processes and jurisdiction: “To provide social security benefits to the unorganized worker in an effective manner, the code has lost somewhere between the center state procedural complications and jurisdictional overlapping.”
Maternity benefits: Women worker in unorganized sector are kept out of the preview of the maternity benefits.
Payment of Gratuity: The gratuity has expanded in the said code but still it remains out of the preview of the majority of the unorganized worker.
Employees’ provident fund: Unorganized worker do not have access to the employees’ provident fund in this code also .
Mandatory Linking of the Aadhaar may violate Supreme Court Judgement
Comparative analysis of Code on Social Security,2020 with Unorganized Worker Social Security Act, 2008”
The unorganized worker’s security act, 2008 was enacted by the Parliament by the president assent in 2008. It is implemented by the Ministry of Labour and Employment. The main goal of the act was to ensure social security and protect the worker of the unorganized sector from many contingencies. The silent features of this act are such as:
The act state that there should be constitution of the National Social Security board and will have power to recommend the suitable scheme for the unorganized sector.
It laid down the provision related to the issue of the unique number in identity card to the worker of the unorganized sector.
There will be Facilitation center which will circulate the information related to the available data on the social security scheme and will facilitate the filling process and take care of forwarding the said registration application to the district administration.
District administration will perform the function of record keeping.
To ensure that unorganized worker shall meet the basic need and have decent standard of life, this act mentioned the list of the Social Security Scheme in its Schedule I.
Schedule I consist of following scheme:
“Indira Gandhi National Old Age Pension Scheme.
National Family Benefit Scheme.
Janani Suraksha Yojana.
Janshree Bima Yojana.”
“Aam Admi Bima Yojana.”
Handloom Weavers' Comprehensive Welfare Scheme.
“Handicraft Artisans' Comprehensive Welfare Scheme.”
“National Scheme for Welfare of Fishermen and Training and Extension.”
Pension to Master craft persons.
Rashtriya Swasthya Bima Yojana
The act has number of flaws such as:
The act has not defined the meaning of the term social security and many social security schemes has been laid down in the act which are not included in the body of the act.
The act only apply to the unorganized worker below the poverty line.
There is no effective provision were complaint can be filed on violation and seek remedies.
Does not acknowledge the “principle of unemployment allowance” where unorganized worker losses the job.
It do not mention about the central welfare fund.
It do not mention the targeted beneficiaries, implementation and grievance readressal mechanism, etc.
The family and dependent should “be defined so that his family or dependent can get the benefits that are covered by the ILO convention on minimum standards.”
In order to“register as an unorganized worker, an individual must be 14 years of the age and declare himself unorganized worker but there is no process to verify such declaration.”
Prof. Shyam Sundar, labour economist of XLRI, Jamshedpur has stated that if the administrative measures given under the said act had been operative, than a database would have enabled the states and center to provide immediate relief to the migrant worker in the present crisis” (in the lockdown period) He added Government has slept for almost 11 years. Neither UPA nor NDA had the will to amend the said laws, if it was required that the ambit of the left out migrant category worker should be included.”
The most important concern is related to the interstate migrant worker. They among the most vulnerable part of the society. The Occupational Safety, Health and Working Conditions Code, 2020 (OSHWC Code) has increased the scope of the migrant worker by including the worker who move from on state to another state either by the contractor or on their own for better opportunity. But code on social security code, 2020 do not separately deal with the interstate migrant worker. The OSHWC Code is an Indian legislation that consolidates and amends various existing laws related to occupational safety, health, and working conditions. The primary objective of the OSHWC Code is to ensure the safety, health, and welfare of all workers in India, including those in the unorganized sectors.
There is separate chapter on the interstate worker in OSHWC Code but it has been altered to the worse if we see particularly the coverage part of the code. In the previous Legislation on the “Interstate Migrant Workmen (Regulation of Employment and Conditions of the service) Act, 1979”, the threshold limit was set 5 or more migrant worker but in the recent code threshold limit has been doubled to the 10 workers. Therefore, neglect the small establishment migrant worker. But the other provision in the code can be said be beneficial for these workers as there is provision for setting up the social security fund and helpline with toll free call center. And database on the interstate migrant worker is also provided where they can register themselves on the portal on the sole basis of the aadhar and self-declaration.
Another important piece of legislation aimed at improving employment rights is the Code on Wages, 2019 which consolidates and simplifies existing wage laws, reducing complexity and ambiguity. These changes aim to provide fairer wages, better working conditions, and increased protection for workers in India. Four act which this code has replaced are Minimum Wages Act 1948, Payment of Wages Act 1936 , Payment of Bonus Act 1965 , Equal Remuneration Act 1976.
Under the Code on wage, the minimum wage has been universalized for all employees and consequently those who were earlier out of the ambit of minimum wages will be covered under the protection of minimum wages as granted under the Code. The procedure for determination of minimum wages by the appropriate Government is in line with the provisions of the Minimum Wages Act, 1948. However, the Code introduces the concept of Floor Wage, which is to be determined by the Central Government after taking into account the minimum living standards of workers in a manner to be prescribed, which may be different for different geographical areas. The appropriate Government can, under no circumstance, fix a minimum wage rate which is lower than the floor rate determined by the Central Government. Further, the Code prescribes that the minimum rate of wages is to be reviewed and revised by the appropriate Government in intervals not exceeding five years.
The new code strengthens equal pay provisions, making it applicable to all workers, including contract and casual workers, whereas earlier laws had limited scope. The code enhances provisions for timely payment of wages, with stricter penalties for late payment. The new code mandates wage slips for all workers, whereas earlier laws did not have this requirement and has also strengthens inspection and enforcement mechanisms, with increased penalties for non-compliance. The ‘Inspector’ under the previous regime has been replaced with an ‘Inspector-cum-Facilitator’, who has additional duties of guiding and advising employers and employees on effective implementation of the Code. Employer can seek help of Inspector-cum-Facilitator’ to ensure compliance under the Code.
Employer can make deductions from wages on certain grounds like fine, absence from duty, recovery of advances, etc. The deductions shall not exceed 50% the employee’s wage. Employer shall pay bonus as per the provisions of the Code if he engages 20 or more employees. Employer shall take a note that the period of limitation for filing claims relating to wages and bonus has been enhanced to 3 years as against existing period varying from 6 months to 2 years.
In the context of industrial relations, another significant piece of legislation that consolidates and amends existing labor laws is Code on Industrial Relations, 2020. It replaces three existing laws, that is, Industrial Disputes Act, 1947, Trade Unions Act, 1926, Industrial Employment (Standing Orders) Act, 1946.
The code on Industrial Relations expanded the definition of "industry" to include all establishments, regardless of size or nature of work. It has simplified the process for the recognition of trade unions and also streamlines the process for resolving industrial disputes through negotiations, conciliation, and arbitration. One of the important measure for the protection on employment right in this code is formation of working committee. If the number of workers in an industrial establishment exceeds 100, a working committee will be formed between representatives of workers and employer to promote measures for securing and preserving amity and good relations between the employer and workers.
Industrial Relations Code 2020 provides for the creation of a “reskilling fund” for employees laid off from the industrial establishment by the employer. The fund must be used to pay the last 15 days of salary extracted by the worker, to his account, within 45 days after the worker’s dismissal.
CONCLUSION
The unorganized sector, which employs a sizable share of the workforce, has long been hampered by insufficient employment rights and social security. However, the implementation of the new laws is a significant step toward addressing these concerns.
Unorganized workers are now entitled to employment rights and social security benefits, recognizing their major contribution to the economy. Streamlined processes make registration easier, allowing workers to receive benefits and protections. Provisions for pension, insurance, and gratuity plans provide a safety net for employees, boosting financial security. Enhanced laws on health, safety, and working conditions are intended to reduce hazards and enhance well-being. Workers are entitled to information on their rights, responsibilities, and benefits, which promotes awareness and empowerment.
While these achievements represent a substantial step forward, adequate implementation, awareness, and monitoring are required to ensure that the intended benefits reach unorganized workers. The judiciary has also been instrumental in ensuring social justice for the most disadvantaged sections of society. The Indian judiciary plays an important role in the advancement of modern jurisprudence, and it strives to extend the benefits of labor welfare measures to the weaker segments of society. It has a unique role in maintaining not only individual human rights, but also the rights of unorganized workers who are denied access to courts of justice due to illiteracy, ignorance, or poverty. Ongoing work to refine and strengthen these protections will be critical in defending the rights and dignity of this vital workforce segment.