BMS Comments on the New “LABOUR CODE ON SOCIAL SECURITY, 2018”

Author: BMS      Date: 11 Jun 2018 20:05:02



Regarding the 1st Draft of the above Code, BMS has sent comments on 15-5-17. But it is highly disappointing that none of the major objections were taken into consideration while making the 2nd Draft. Such a way of handling important legislations will defeat the very spirit of tripartism under which our labour system is functioning.

We have already welcomed that the proposed Labour Code on Social Security as a historic and revolutionary legislation that would benefit the entire world of work in its ambit. But it is highly disappointing that such an ambitious legislation has been contaminated with ill motivated, casual and highly objectionable provisions that will defeat the very purpose of the Code and adversely affect the beneficiary workers. It is a typical example of how ambitious ideas of the Government can be spoiled easily by mixing contentious issues.


We welcome the following provisions:

  1. BMS has in a resolution of its National Conference held in Jaipur of 2014 named “Social Security for all”, demanded uniform Social Security with indexation for all workers including self employed. It is a welcome move to provide Social Security Benefits to all the workers in the organized as well as unorganized sector.
  1. An ambitious attempt on Codification, simplification and rationalisation of all Social Security laws is always welcome. There has been a huge void in the labour legislative realm relating to Social Security.
  2. Our existing Social Security laws are associated with many flaws which require basic changes. Eligibility criteria of length of service and age of workers, infancy period system of the establishment, restrictions of area, sector, threshold limit of number of employees, wage limit, exclusion clause, monitory ceilings both in the application and payment of benefits etc. are the current hurdles in the benefits reaching the beneficiaries.
  3. 135.1- Right of Social Security coverage ensured to all workers.
  4. 28-Allowing of Benefits even when contribution is not received.
  1. 4- Medical benefit even after retirement.
  1. 38.1- Administration charge is kept as a separate State Administrative Fund.
  1. Creating fund for gratuity is good for both employer and worker in case when unit is closed or when there is massive retrenchment.
  2. Tripartite participation at every level.
  1. 2.76- National minimum wages recognised.
  2. 2.36 proviso- Deemed wage shall not be less than Minimum Wages.
  3. 3.3- In National council, employer representatives added.
  4. Nearly six general labour laws (ESI, PF, Maternity, Gratuity, Employer Liability, UO Social Security laws) plus central labour welfare Acts of 13 Welfare Funds are proposed to be replaced.
  1. The Code will be a step towards massive formalization of the informal sector by compulsorily registering all entities in the country failing which stringent punishment is imposed.
  2. There is compulsory registration of establishments and restriction on employment of workers beyond a specified period by an unregistered establishment.
  3. 1- Provision for non-members and the members of families of such non-members for availing such medical facility. They should be progressively provided all benefits under the Code.
  1. 1.5; 2.48, 2.43, 2.54- Social Security coverage of entities employing even one worker. At present units with more than 20 workers are covered for the purpose of EPF benefits and 10 workers for the purpose of ESI, Maternity and Gratuity benefits and Factories Act.
  2. 20.3- Unorganised sector workers belonging to SEC IV were allowed not to pay contribution. There should be difference in contribution between the workers under organized and low paid workers in unorganized sectors.
  3. Employer includes house owner, Entity includes enterprises and houses, Enterprises include Associations, trust, SHGs, Society etc.- They are welcome provisions.
  1. 18- Decentralisation up to Ground level Facilitation centres. Involving local bodies for registration/disbursement.
  1. 114, 2.108- creates a new category of “Samajik Suraksha Mitra” -means the officers appointed by the local bodies under section 114.1. Samajic Suraksha Mitras are to enrol workers. 114.1- “The local bodies shall appoint as many officers as may be authorized by the State Board”. Samajik Suraksha Mitra will be an exploited category of workers. Now such Mitras are engaged in Banks, Education, Agriculture etc. where they are paid very low wages. The work should be assigned to full time officers of Local bodies and should not be assigned any other work of local bodies.
  2. 11.1- Local body officer to register workers.
  3. 2.118- Social assistance- Government assistance on pension, maternity, food support. 25C (3)-Social assistance Fund. 2.118, 13A- Social assistance- state govt funded program kept separate.
  4. 2.119- Social security is healthcare and income security.
  5. 51.2- Commissioner to order interim payment of gratuity within 1 month of receipt of notice from gratuity fund or from the employer.
  6. 80.2, 85.1- State Govt. to pay to board excess sickness payment, medical benefit.
  7. 112-Constitution of a new Indian Social Security Service and inspectors. 2.61 & 113- Inspectors.
  8. 24.5- Social Security Benefits have been increased from the 6 ESI benefits and PF benefits to about 14 benefits. Benefits are:

(ESI benefits-6):

  1. Medical Benefit
  2. Sickness Benefit- Cash benefit and Periodic payment (Temporary, Extended, Enhanced Sickness Benefit)
  3. Maternity Benefit- Confinement, Miscarriage, MTP, Premature Birth, Sickness.
  4. Disability Benefit- (Permanent and Temporary) with Periodic payment.
  5. Dependants Benefit
  6. Funeral Expenses included in 63.7 under Employer’s liability

(Rehabilitation allowance of ESI not seen in Code)


  1. Pension & international pension,
  2. Invalidity benefit (non job accidents),
  3. unemployment benefit,
  4. PF,
  5. Group insurance benefit


  1. gratuity,
  2. welfare schemes,
  3. Employer’s liability.
  1. 2.9 Benefits means gratuity, employee compensation, maternity and sickness benefits as well as benefits under any of the Schemes framed under section 24.
  1. 42-Contribution deduction at source in case of works contract.
  2. 2- Principal employer is to pay and recover from contractor. The Principal Employer may, pay the contribution in respect of employees employed by him, or through a contractor, and deduct the amount later from contractor. 43.3- The Principal Employer and the Contractor/sub-contractor shall be jointly and severally liable for payment of contributions. 2.43- employed through contractor, administrative works also employee.
  1. 20.2- Gratuity liability is cast on principal employer regarding contract workers.
  1. 48-Explanation: where an establishment consists of different departments or has branches, whether situated in the same place or in different places within the State, all such departments or branches shall be treated as parts of the same establishment.
  2. 37- “Dependent family” is wide enough to include even brother or sister wholly dependent upon the earnings of the person.
  1. 2.37(iv)(b) & 2.51- Minor brother or unmarried or widowed sister covered under dependant or family. 2.37- Son upto 25 years covered as dependant.
  2. 31-Portability of SS account- 11- Portable Social Security account, to be named as ‘VIKAS’ (Vishwakarma Karmik Suraksha Khata), which shall be linked to Aadhar Number of the worker.
  3. Digital collection of contribution and disbursal of benefits through Banks will speed up the system. Village officers, Post offices etc. should be added to it.
  4. Definition of wages is expanded. Gratuity, Bonus and EPF Acts include only basic plus DA in wages. But in the Code 2.137, wage includes everything except bonus, gratuity, gift etc. It also includes retrenchment/closure compensation.  
  5. Deviating from the present laws like ESI, EPF etc., the Code covers a long list of casual worker, Commission worker, informal worker, outworker, seasonal worker, domestic worker, home based worker, self employed, owner working units, workers outside India etc. Any one working is included in the Act.
  6. Provisions of making Community Service order as a punishment for compliance by the offender.
  7. 44.1- Original employer and transferee employer are jointly and severally liable. In 44.1 proviso- In case of public auction also liability should be transferred.
  8. Immediately legislate the Code on Social Security amalgamating all similar schemes.
  9. Sc.1.8 Explanation 2- Where a worker enters into an agreement with his employer for granting him more favourable rights and privileges, the rights and privileges, shall be enforceable under the provisions of this code.
  10. 11.13- Compulsory registration of Contractor, middleman, agency, placement agency and their workers.
  11. 14.3- House hold to furnish return cum challan as per Sc.37(2) for registration of household.
  12. 2.15- Services whether or not profit is motive. Include Lawyers, priests etc.
  13. 2.45- Enterprise include political party, Trade union, association, Govt dept etc.
  14. 2.44 Expl- Notional extension of workplace included.
  15. 2.50- has a definition for factory different from Factories Act. It exclude only hotels under Shop Act, exclude Mines, Railway shed, Armed forces mobile unit.
  16. 2.137- wage definition is wide? All remuneration.
  17. 2.130- Worker definition wide? Any person who perform work or provide service.
  1. 3- Classification of registered workers in Category I to IV.
  1. 22.6 “spending workers fund for public health, sanitation, water supply, training of workers, nutrition, family planning, transport etc.” removed in 2nd Draft. It should not be from the Social Security fund.


Our Objections and Suggestions:

  • None of the major objections of the BMS and other Trade Unions considered in the 2nd draft.
  • BMS demands that Social security should be incorporated as a fundamental right in the Constitution of India as recommended by 2nd NCL.
  • India should ratify all ILO conventions on social security as recommended by 2nd National Commission on Labour.
  • 33-When on one side Govt. is trying to abolish Cess on goods and services under the new GST regime, new Social Security code relies on such Cess. These laws are contradictory. Cess based welfare schemes are under threat now.
  • The draft does not fulfil the preliminary requirement of having the ‘Statement of Objects and Reasons’ to understand the intent of the code.

Not a Comprehensive Code

  • The “Code” in fact is not a comprehensive Code. It does not attempt to universalise benefits or bring comprehensive and uniform social security coverage so that every worker is benefitted by all the Social Security benefits. It does not fully achieve simplification, amalgamation and rationalization of Central Labour Laws on Social Security. It will result in non uniformity in serving benefits across the country. The labour welfare schemes and laws should be fully merged in the comprehensive benefit regime.
  • Constitution of old fashioned multiplicity of Social Security architecture under the code along with Regulator General and Director General will increase red-tapism preventing the benefits from reaching the real beneficiaries at the earliest. (Different administrative organisations are: 3.3-National SS Council with Regulator General 3.6-the Central Board with Director General 3.9-the State Boards with Commissioner 2- The Executive Committee of the National Council, 5.4- The Standing Committee of State Boards 5.8-The Medical Benefit Council of State 6.4- Central Advisory Committee and the State Advisory Committees, State Medical Council. The Funds are State SS Fund, State Gratuity Fund, State Administrative Fund, Welfare Fund). National Council, Central Board and State Boards are SS organisations. Under them are National Executive, State Standing Committee, Meidcal Benefit Council, Central and State Advisory Committees.
  • If there is different fund management and duplication of administration, the ultimate cost will have to be borne by the workers and employers.
  • 2.129 prescribe Central Govt. to notify threshold limit. Threshold less than 5 is UO sector as per 2.134.
  • Even though Sc.147.1 says all Central and State welfare schemes and funds will cease to operate, 22.2 says of keeping separately 13 Central categories of funds like that for Nine Ores and Minerals workers, Building and other Construction workers, Bidi Workers and Cine (Audio Visual) workers. Keeping various welfare funds and schemes both at State and Central level separate will only duplicate the benefits and functions of the code and will defeat the purpose of codification. Amalgamate fully similar schemes together through Concept of mother board as recommended by 2nd NCL.
  • Not a complete Code, there would be further a caravan of legalities coming up like rules, schemes, regulations and by-laws etc. under this Code.
  • 11 say about “Bye –Laws” framed by the Central Board. Generally Labour laws do not contemplate bye laws as in a local club.
  • This social security code covers mainly integration of the existing schemes in organized sector.
  • 24-25, 147.1- Creating several funds is not desirable at all. Separate schemes and funds for each benefit also needs to be re considered. Instead of central management of funds, the Corpus is proposed to be split into numerous small funds which have to be managed by the respective State boards. There will be huge administrative cost involved due to the duplication of management involved in the splitting of schemes and funds, as instead of managing one scheme or fund, it will be required to manage as many schemes or funds as the number of State Boards, which itself is a wasteful expense and exercise. All funds should be consolidated in a Central fund managed under the supervision of the central board.
  • Keeping multiplicity of funding should be avoided like Consolidated Fund of India, State Social Security Fund, State Gratuity Fund, welfare Funds, Reserve Funds, Scheme Funds etc.
  • 22.2- Picking and choosing only 15 Augmentation funds is not proper. It should be merged with the general fund and all benefits under the Code should be provided to them.
  • Multiplicity of judicial and Appellate bodies like Commissioner, Appellate Officer, Tribunal, Principal Appellate Tribunal, High Court, Supreme Court.
  • 2.14, 165.2(ii)- Employee working in managerial or administrative capacity or supervisory capacity should be covered if the wages is less than for example Rs.25000.
  • BPO workers etc should be covered.
  • 46.1- Gratuity benefit should be provided to even employees of the unregistered entities.
  • 2.82-“outworker” should be made more clear to include a sales or medical representative.
  • MGNREGA is another type of unemployment allowance scheme. MGNREGA should be related to the comprehensive social security scheme at the local level.
  • Now there is not much need to keep separate the other Social Security Schemes of the present Government intended to the low strata of the society. All the existing social security and other similar schemes should be merged and brought under the new Social Security Umbrella Code. Social assistance programmes wholly subsidised by Government can be merged with this code. Even Motor insurance cover also should be linked to the Comprehensive social security.
  • [Other Current Social Security programs in India are:
  1. Taxpayer Funded Schemes: 1. Indira Gandhi National Old Age Pension Scheme (Ministry of Rural Development) and Annapurna giving old age benefit, 2. IGNWPS giving death benefit, 3. IGNDPS giving disability benefit, 4. Aam Admi Bima Yojana (Department of Financial Services) giving death benefit, 5. National Family Benefit Scheme (Ministry of Rural Development) giving death benefit, 6. Janani Suraksha Yojana (Ministry of Health and Family Welfare) giving maternity benefit, 7. Unorganised worker Social Security Act.
  2. Voluntary schemes (Hence not considered social security): 1. Handloom/ Handicraft medical insurance giving medical benefit. 2. Mahatma Gandhi Bunkar Bima Yojana (for handloom weavers) giving death and disability benefit, 3. Pradhan Mantri Jeevan Jyoti Bima Yojana giving death benefit, 4. Pradhan Mantri Suraksha Bima Yojana giving death benefit. 5. Atal Pension Yojana (50% Contributary).
  3. Financial Risks Schemes- Group Insurance giving Death benefit.
  4. Medical & Occupational Schemes: 1. Universal Health Scheme giving Medical benefits, 2. Rashtriya Swasthya Bima Yojana (Ministry of Health and Family Welfare) giving Medical benefits.
  5. State/ Local Body Schemes: 1. Old Age Pension, 2. State Health Schemes giving medical benefits, 3. Disability Pension, 4. Bima Yojnas, 5. Many Schemes run by Local Bodies from their own funds.
  7. Social Security Hospital system includes State Health Services, Municipal Hospitals, ESIC Hospitals, RSBY Hospitals and Welfare Board Hospitals.
  8. SS to U O sector (only in selected districts and states) covering 8 among the above schemes:- 1. IGNOPS, 2. NFBS 3. Janani Suraksha Yojana,  4. AABY, 5. RSBY,  6. Atal Pension Yojana (50% Contributary), 7. PMJJBY and 8. PMSBY.]

 Employers Liability

  • Employers’ Liability should not be kept separate. 61- When there is a consolidated Social Security regime envisaged and employer contributing to it, what is the need for a separate Employer’s personal Liability to compensate? Worker will have to run after an Employer who may be reluctant to pay or is adjudged insolvent. Sc.61- Employee compensation provisions should be deleted and be substituted by a simple provision saying that only till the Schemes under Sc.24(1) &(5) is framed, the Employer Liability Act will continue. It should be compulsorily integrated in the general scheme of the new Code as stated in 61.1 and 24(1) & (5). In Sc.24 (1) & (5), all Benefit liabilities including Employer liability should be integrated compulsorily. In order to ensure that workers are promptly provided benefits, employer's liability (employment injury compensation and medical expenses, Maternity benefit, gratuity, lay-off, retrenchment and closure compensation) is to be converted into social insurance, but should not be opened to commercial insurance. For the purpose no additional premium should be collected from the worker.
  • 69.1 “Where any employer has entered into a contract with any insurers in respect of any liability under this Part to any employee”. When the employer has already contributed to the social security fund, he should not be still made liable and be forced to purchase insurance policies. It would lead to double jeopardy.
  • 61.1 says compensation is to be paid by employer in certain cases of employment injury. 63.6 says employer is to reimburse medical expenses for employment injury. 63.7 says about employer’s liability on death of worker. 68.1 says about employers liability to contract labour. 71.5 also says about employer liability cases. 74.3 says about recovery of employer liability as per Sc.137. All these are to be replaced by integrated liability of the new Social Security organisation.
  • Employer’s Liability on gratuity is to be fully replaced by Fund Liability for Gratuity.
  • 62- Occupational disease (ESIC Sc.52A) should not be made an Employer’s personal liability.
  • Sec. 22.6 of the Code paves way for an enabling provision for providing “subsidy” to “employer” under Sec. 22.6 (b) from the Welfare Funds, by the State Board and to provide for “defraying the cost” of “provision of cost of transportation to and from work” for the employees under Sec. 22.6 (d) (vi). No clarity on the circumstances under which payment of “subsidy” is contemplated in these cases. It is totally contrary to Sec. 51-C of ESI Act which provides ESI benefits for accidents happening while travelling for work.

Alternate Coverage Mechanism

  • Optional schemes were opposed by Trade Unions in ILC of 2015.
  • Alternate Coverage Mechanism is against the spirit of a Comprehensive Code. Many units which were exempted on the ground of providing better benefits later on become defaulters.
  • 94.2 “Permitting alternate coverage mechanism” should be better than that the Code provides. Otherwise workers will be the losers.
  • 25.2 mandatory schemes and voluntary schemes- There is no clear description of mandatory schemes and voluntary schemes in the draft Code.
  • 61.1. Explanation 1- “where the employer has covered his employees for the Disablement Benefit”- Coverage for disablement benefit should not be optional.
  • Sc.1.4- & Sch I part I second item- PSUs, Boards, authorities, local bodies etc. having equal or better Social Security schemes- They also should be integrated in the new Social Security Organisation.

 Exemption Provisions should be Dropped

  • 94, Sch. I Part II - State Govt.’s Power to Exempt and 97- Central govt.’s power to Exemption from levy of Cess. The First Schedule says about entities to whom certain provisions of the Code shall not apply which includes Public sector undertakings- These are highly objectionable.
  • Exemption clauses in the Code should be avoided. Code exempted for workers specified in Sch.I Part II which is kept blank. See also 148.1 susbject to exemption clause in 94.
  • Code dropped the very important word “substantially” in Part L of the draft Labour Code dealing with Exemptions. Sec. 89 ensures that the ESIC carries out the Constitutional mandate as per Art. 41. Reasonable opportunity was there for the ESIC to represent its case in cases for exemption. Sec. 17 (2) of the EPF Act also is similar to it and it uses the phrase “not less favourable” instead of “substantial” in the ESI Act. These are absent in new Code.
  • 97.2-It is also wrong that employer can be exempted retrospectively.
  • 20.1- Central Govt. is given power to reduce or waive contribution of employers. Then who will pay to the fund is a question. So no such power of reduction and waiver is needed.
  • 97.1,2- It is objectionable that Central Govt. can exempt State or Employer from payment of Cess.


  • The Definition part includes about 144 definitions which will make the law too complicated.
  • Even though the Code uses the word employee as defined in 2.42, the word worker is also used as defined in 2.140. In the modern era there is no need of considering two classes of workers.
  • 2.42- gives a lengthy definition of “employee”.
  • 2.4 “Apprentice” should be as per Apprentice Act and not as per agreement.
  • 2.43 (c), 2.140- Apprentice excluded from definition of employee or worker.
  • 2.34- Cost of construction does not include profit etc.
  • 2.45- Enterprise does not include households, but entity under 2.46 includes enterprise and households. It is good to make concepts simpler.
  • 2.17 (b) Casual worker means freelancer is not correct. It is because of helplessness that people go for casual employment. “Not main work”- this is changing the law regarding perennial jobs.

Reducing role of Trade Unions

  • The Tripartite nature of the existing ESI and PF and many other welfare schemes are responsible for safeguarding the fairly effective delivery of benefits to crores of employees in the country. This structure is being destroyed in the present Code and is being replaced by political and bureaucratic people.
  • The present Labour Code is an attempt to amalgamate 15 labour laws which have various representative bodies to enforce those laws. The supreme bodies of these organizations do have in all not less than 59 employers’ representatives and 59 employees’ representatives. When all of them are brought together under a single umbrella body, the National Council under the Labour Code, there must, at least, be 20 representatives each for employers and employees. But, the draft Labour Code shows that there would be only 2 representatives each.
  • 3.3- The Code does not give adequate representation to unions. The ILO tradition says the tripartite proportion should be 1:1:2 for worker, employer and Government. Parliament members should be included in Government.  BMS strongly demands that in the apex Social Security Council, labour representatives should have a predominant role. Giving nominal role will not give it a tripartite character. This is against the ILO mandate. The ILO proportion of 1:1:2 for worker, employer and Government should be maintained.
  • 3.3- Trade Union representatives at present are 10 each in EPF and ESI. It is reduced to 2 at the apex Council. This is a sinister design to reduce Trade Union participation in the policy and decision making.
  • 3.3- National council & Board only 2+7 worker representative. Similarly State Board 5 members.
  • The Vice Chairperson of National Council should be full time and a representative of the beneficiary i.e. Trade Union representative, considering the slow expansion and poor implementation of social security schemes to the entire India; and for the effective implementation and outreach of the Social Security schemes. Otherwise it will also meet the ill fate of the Unorganised Worker Social Security Act of 2008. Already in many states, well functioning Social Security bodies are even chaired by representatives of Trade Unions.
  • 3.6(b)- The Vice Chairperson of Central Board is a Bureaucrat, which needs to be changed. Should not start the practice of making Bureaucrat (Regulator General) as Vice Chairman of the Board. He should be the secretary. Bureaucratisation will be a great hazard. Bureaucrats overpowering democratic institutions will be a threat to democratic principles enshrined in our Constitution. So it should be given to the representative of beneficiary i.e. of Trade Union should be Vice Chairman.
  • 5.4- Standing Committee Vice Chairman shall be Trade Union representative and not Secretary Labour.
  • 5- In Medical Benefit council also, Trade Union representative should be Co- Chairperson, not Bureaucrats.
  • 6- Even in Central Board etc. the representation of trade unions compared to the present situation is very less.
  • 6- ‘Most represented unions’ should be the basis for the selection of workers representative in the body. Also under State Board under 3.9.
  • Further, whether the prime minister as a chairperson of the national council will have time to convene meetings and grasp the finer details of the huge programme, will be a problem in its functioning. 
  • 8- No role for Trade union in the form of identifying etc. of workers.
  • Any worker should be enrolled if he gives a self certification affidavit about the requirements of the eligibility.
  • 3.3 Proviso & 3.6 (l) proviso, 3.9, 5.5- Only one out of two 3.3(g) TU & (h) Employer organisation members are women. Other categories including Bureaucracy also, women members are required.
  • 3.2- National Council to advise, 3.5 Central Board to administer.
  • New additions- Central and State advisory councils.
  • 4.12- Meeting of SS organisation shall be at least once in three months or lesser time. Period should be specified.

 Role of Govt.

  • Separate single ministry or department for social security should be constituted considering its large importance. Now 4 ministries deal with social security- Rural, urban, finance and labour ministries. They should be in the National Council and other bodies.
  • 132- unclaimed amount for 3-5 years. 25A says about national Stabilisation fund for managing unclaimed amounts. 108.4 says that no claim or liability against the Board shall be maintainable in respect of unclaimed amounts that have been confiscated under sub-section (2). Confiscation of unclaimed amounts is a controversial issue which should remain in the concerned fund. “Unclaimed amount” should not be planned to be diverted to non Social Security funds.
  • 19.4- Fund in State bank of India!!
  • 23- New separate reparation fund by State Govt. State need not have different funds for themselves.

Shifting Role to State Govt is condemnable

  • 1 proviso- In the name of ‘Cooperative federalism’, ESI and PF fund are going to be transferred to States. 147.2- Assets of PF, ESI, 6 central welfare schemes and state welfare schemes will now vest with the State Governments. “19.1 Social security fund in each State/UT 19.2 Gratuity fund for each state/UT.” 25.3-The Scheme Funds shall vest in and be administered by the State Board.” This is wrong. It is not feasible to allot funds directly to State Government.
  • 2-All 15 Central Welfare Augmentation Funds are being transferred to State Boards. This will place the workers at risk of depriving their duly entitled benefits.
  • The Social Security architecture in the new Code is shaped in the model of the Building and Other Construction Workers Welfare Act. The said Act was intended to provide social security benefits to around 50 Million of the Construction workers in the country, but has miserably failed to provide the benefits, because the administration of welfare boards were left to the respective States. Even after 20 years of the enactment, many states are yet to form the Welfare Boards for Building construction workers. And in many states, where the board has been formed, the administration of the welfare scheme is very poor. Recently, Supreme Court has pointed out this fact in the PIL filed by National Campaign Committee for Central Legislation on Construction Labour: “We see that in States like Andhra Pradesh, Haryana, Punjab and Maharashtra, money collected is lying in the banks and workers do not have even spectacles to protect their eyes. We have passed order after order, but nothing has been done”. In that PIL, SC sought answers from Delhi Government for illegally diverting for other purposes Rs.900 crores out of Rs.1500 crores collected, from the building construction workers’ welfare fund. Hence it is not prudent on the part of the Central Government to dissolve the existing central social security organizations and their funds, and hand over the responsibility of providing social security benefits to the individual states. It will be disastrous to the working population.
  • 3.2 (i), 19.1- The respective State Social Security Fund. States can be given a prominent participatory role in managing the Central funds along with Central Government; but the funds should not be distributed to States. Funds should not be administered entirely by State Board.  
  • None of the studies or discussion has pointed out that the existing Central Social Security schemes are in any manner behind the State social security management. All have pointed out just the reverse in the interest of workers.
  • The level of efficiency of the administrative machinery and quality of service of different states are different.
  • State Governance has the issues regarding governance, diversion of funds, corruption, nepotism, political interference etc. which are prevalent in current state social security schemes (including in BCOW schemes). Hence such things should not be allowed to affect the implementation of the draft Social security code.
  • Deviation from prescribed rules, fiscal indiscipline owing to populist measures, inefficiency in management of funds, political interference into administration of the Social security schemes in the areas of settlement of claims, grant of exemptions to employers from compliance under the social security schemes on extraneous grounds, misapplication of welfare funds, frequent transfer of officials etc. are bound to increase manifold if the Social security schemes are handed over to the control of state governments, as could be seen from observations of CAG in their reports.
  • Smaller states may find it difficult to sustain the Schemes without budgetary support and to run the medical infrastructure i.e. hospitals and medical colleges established under the ESI Scheme owing to the huge overheads and the meagre fees collected.
  • 116.13- The earlier attempt for roping in officers of the state governments for recovery operations by the ESIC had created havoc. Hence, the recovery operations were taken back by the ESIC. So the recovery powers under the Code should not be delegated to officers of the State Governments.
  • It is pertinent to note that neither the Central Board nor the National Council have been entrusted with powers to take remedial measures (to recover the money) against financial profligacy of State Boards.

Role of Local Bodies

  • 3.2 (f) It is not prudent to assign framing of Schemes of social security to the local bodies who may not have such expertise. It will also be against the uniformity and universality of the Code.
  • 167.4 (xv) “authorization to local bodies or intermediate agencies to receive contributions and returns on behalf of State Board”. Fund management should always be online and through banks and in a consolidated State/Central fund.

 Anomalies in Contribution

  • Social Sector spending in India is one of the lowest among world nations with 1.68% of GDP. In Germany it is 25.89%. France spends 33.7% of GDP on Social Security. Greece’s allocation is 30.2% and Denmark’s 34.3% [source: ADB 2013]. The Government should provide Budget allocation of at least 10% to the Social Security Funds as demanded by BMS in the resolution “Social Security for All” passed in its National Conference held in Jaipur in 2014. It should be shared by both central and state Governments.
  • It is Government’s duty to subsidise weaker sections. There should be provision for contribution in respect of workers who are unable to pay contribution. Contribution of BPL and those who get below minimum wages etc. should be paid by Govt. Social security benefits are addressing various unexpected contingencies faced by the people; hence they are a part of the developmental concerns of the Nation especially of rural India.
  • If no sufficient fund is provided by Government, if there is paucity of funds, burden of providing benefits to the vast unorganised sector will be shifted to the earning class through increased taxes.
  • How can Minister for Finance be included in the National Council if the Government is not financing the fund?
  • 20.3- Non Employees or Self employed in SEC I, II & III Workers should not be compelled to pay 20%.
  • In self employed sector and other jobs where there is no definite employer, and in some unorganised sectors where employer is invisible, Government has to take up the place of employer and subsidise the contribution of employers.
  • 20.2-For Gratuity, at present employer is paying more than 4.8% per year. Gratuity should be taken out of employer liability completely. Worker on the day of retirement or leaving work should immediately get the full gratuity from the Gratuity Fund under the Code without waiting at the doorstep of Employer. Hence employer contribution to Gratuity fund should not be the present 2%, but it should not be less than 4.8%.
  • 2.6; 2.33; 2.40; 20; 21.1- Assessee does not include Government. There is no clear mention about the contribution by Government. As per EPF Act Central Govt. has to contribute 1.16% of wages of each worker towards EPS (Employee Pension Scheme). But the new Code exempts the contribution of Central Govt. even for the administrative expenses. It is going to be like PFRDA where Government escaped the liability of paying contribution. Slowly the entire system will be progressively privatised.
  • 2.33 & 40-Government’s allocation for funds as Contribution and otherwise has to be made more clear. 22.3 says Contribution by way of grant to Augmentation fund by Central Govt. Even though 25.1 and 54.3 make a vague reference to the contribution by the Government, government’s contribution is not clear.                            
  • 20.1 &2 &3- Employer contribution proposed is only 17.5% of wages to State SS Fund + 2% to State Gratuity Fund. At present it is between 24-30% now. Worker’s contribution is 12.5%. The new Code reduces employer liability to contribute. Similarly while the EPF and ESI contribution of the employer is being paid by the Government for the first three years, Government do not care to pay the contribution of employees.
  • 18.2- Facilitation centre is empowered to collect transaction charges in addition. No additional charge should be collected.
  • 38.2- Employers and self employed workers to pay in addition, administrative charge not more than 5% of the Contribution. At present it is: EPF-0.65%, EDLI-0.01%. So 5% is very high and intended to feed and maintain a large Bureaucracy.
  • Employers should not be put to a situation to be directed to deposit the amount in case of insufficiency of funds etc.
  • 76.4, 79.4, 83.5- Bar of retrospective effect even after payment of default is against 28 which says that benefit is payable even if employer has not paid contribution. 76.4 says in such case employer will be liable to pay benefit.

Integration or Existing EPFO and ESIC and Transition

  • 171- Repeal of ESI, PF, Building construction Fund. The present EPFO and ESIC which are working for the last several decades efficiently is being replaced by a structure similar to that of the structure under the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 which has a miserable experience in its working. Many States are yet to constitute Boards under the said BOCW Act.
  • A nationwide debate is required whether it will be prudent to dismantle ESI and EPF system since they are serving crores of workers and their family on a day to day basis. Dissolving the existing central Social Security Organizations like ESIC and EPFO which are providing commendable service to the workers of the country and leaving every responsibility to the respective states will destroy the entire social security frame work of the country. The poor workers will be deprived of even the existing social security benefits which they are enjoying. It will end up in poor services in the existing schemes.
  • EPF and ESI are among the largest Social Security organizations in the whole world. EPF accounts including pensioners are in Crores. The number of Monthly Pensioners in EPFO is more than 51 Lakhs. All the EPF Pensioners shall continue to receive monthly pension on the 1st day of the month in their bank accounts as being received now. The total No of PF Claims settled in a Year is 76 Lakhs. Total Amount of benefit paid to PF members in a Year is Rs. 50,000 crores including Pension, Provident fund and Insurance. Total Corpus In EPFO is Rs.10 lakh Crores. Similarly total No of ESI Beneficiaries (including dependant family) is 8.29 Crores. Total Fund Corpus in ESIC is nearly Rs 1,00,000 Crores. The Disablement and Dependant Pensioners in ESI shall continue to receive their pension on the 1st day of the month in their bank accounts. Hence it should be very careful before disturbing the system and dismantling the entire organizations.
  • Hence it will be desirable to have progressive expansion of the existing system of ESI and EPF organisations amalgamating with welfare and other bodies merging in it. All the new benefits proposed should be delivered under its experienced guidance and monitoring. Since most of the social security benefits are provided under the main legislations viz. EPF Act and ESI Act, the applicability of these Acts may be made universal to all establishments and the minimum coverage strength may be removed, so that all the employees working in the organized sector will continue to be covered by EPFO and ESIC. The large number of unorganised sector workers has to be included as a separate wing inside the amalgamated organisation with more assistance from State Governments.
  • If there is a mixing of funds of both organised sector and unorganised sector, it may lead to cross-subsidisation from organised sector. Cross subsidizing of the contributions paid by the employees in the organized sector will take place to meet the expenses towards providing social security benefits to the workers in the unorganized sector.
  • It will be better if the contributions of workers of unorganized sector are pooled into a separate fund, so that functioning of the Schemes could be reviewed and customized Schemes could be formulated for the workers of the unorganized sector in a scientific manner, to cater to the special needs of the workers of unorganized sector, on a sustainable basis.  Based on scientific analysis, budgetary support could be resorted to from the Central and State governments, for extension of social security to the workers of the unorganized sector.
  • The present social security schemes that are centrally managed, viz., EPFO and ESIC could be merged together to start with, and the departments or institutions at state level could be merged in each of the states, before proceeding with the overall merger of the centrally managed and the state run schemes, in a phased manner. Even this was opposed saying practically not viable. Now employees are getting the same benefits twice through different organisations like EPFO and ESIC. Now they are getting very marginal benefits. If these two are merged, better attractive benefits can be given. Administration charges will not be multiple. Employer’s paying burden will be come down. There will not be multiple inspectors and inspections.
  • The entire social security scheme should be managed by central board and by forming state boards but controlled by central board.
  • Central management of the social security schemes would help in development of a professional cadre of administrators, adoption of best practices, and also efficiency in the financial and administrative management of the social security schemes.
  • In Para 61 and 62 of the Budget Speech of the Hon’ble Minister of Finance on 28.02.2015, false and unsubstantiated allegation levelled against the ESIC and EPFO that these organisations had been holding the working population as “hostages, rather than clients”. This shows the false understanding of Government about such big organisations.
  • 3.2 (m), 25.1 (c) & its proviso- Net assets and fund corpus of EPF and ESI funds should not be distributed among State Boards and state SS funds.
  • There is no provision analogous to Sec. 89 of the ESI Act in the proposed Labour Code, necessitating consultation with the Apex Organisation before granting exemption. It means, the proposed Social Security Organisation is really not the monitoring agency.
  • Integration or Existing EPFO and ESIC and Transition- How officers of ESI and PF are integrated is a big question mark. All the officials in EPF and ESI except highest officers are proposed to come under the State Board chaired by the Chief Minister.
  • 109- Officers and staff of SS organisation- One chapter full description. Following are the important but vague provisions on such integration of the organizations:
  • 154- Reorganisation of Employees of Employee Provident Fund Organisation, Employees’ State Insurance Corporation and Director General Labour Welfare. 1. The Central Government, in consultation with the National Council, shall by notification, prepare a Scheme for reorganization and division of posts in the Central Board and State Boards.
  • 93- “predecessor organizations” means the Employees’ Provident Fund Organisation, the Employees’ State Insurance Corporation and the Directorate General Labour Welfare.
  • 5- All employees of ESIS shall be deemed to be the employees of the concerned state Board.154.5- All employees of the predecessor organisation equivalent to Central Service Group “B”, Group “C” and “Group ”D”, shall be deemed to be the employee of the corresponding State Board,
  • 5- Provided that the employees posted in the Headquarters of aforesaid organisations shall be deemed to be the employees of the Central Board.
  • 5. b- All employees of predecessor organization equivalent to Central Service “Group A”, shall be deemed to be the employee of the Central Board.
  • 2- The apportionment of – (a) assets and liabilities, (b) land and all stores (c) articles and other goods belonging to the predecessor organisations, would be governed by the regulations.
  • 4- The total of the cash balances in all treasuries or accounts of the predecessor organisations and the credit balances of the predecessor organisation shall be divided between the State Boards in such manner as may be stipulated.
  • 4- Provided further that such portion of reserves of Administrative Fund of the predecessor organisations, as may be stipulated, shall be transferred to the Central Board, and only the balance shall be divided amongst the State Boards.
  • 2,4- The liability of the predecessor organisations to refund any contribution or any other amount collected in excess, provident fund and pensions shall be the liability of the successor State Board in whose territories the establishment is situated.


  • Draft Code reduces many of the existing benefits provided in the ESI scheme:
  • ESIC provides attractive unemployment allowance of about 50% of wages for 12 months, But Sec. 24 (5) (i) of the Code does not give any such assurance.
  • When the ESI Act provides about 90% of the last drawn wages of an employee to his dependant family as “Dependants Benefit” in the event of death of that employee due to employment injury, the draft Labour Code reduce it to 50% in 1.
  • 1- When the ESIC provides about 90% for Permanent Disablement, the said Benefit is reduced to 60% in the Code.
  • 1- When the ESIC provides about 90% for temporary Disablement, the said Benefit is reduced to 25% multiplied by the relevant factor as lump sum in the Code in 63.1.
  • It also fails to consider the loss of earning capacity while arriving at the quantum of benefit.
  • ILO convention requires periodic payment and not one time payment.
  • Totally omitted the benefits provided to the employees under Sections 51-B, 51-C, 51-D and 51-E of the ESI Act, 1948 dealing with disablement benefit.
  • 1.1 No qualifying period should be prescribed for disablement benefit.
  • 11- “Explanation 3 in Sc.2.12 of old draft- Benefit is payable in case of personal Invalidity benefit scheme.
  • Group insurance benefit scheme removed from Sc.24.5 but retained in Sc.147.1- 3&7.
  • Code ignores Reg. 103-B (1) of the ESI Act that enables the Permanently Disabled Persons to get medical benefit until his superannuation for him and his wife.
  • ESI Act provides about 80% of the wages to the insured person for about 730 days, if he suffers from 34 long term sickness. He and his family members can get medical benefit for 3 years, in such cases. But the Code does away with the provisions of the Extended Sickness Benefit altogether.
  • When the ESIC provides about 70% of the wages as Sickness Benefit for 91 days in two consequent contribution periods, the present Sec. 63 (1) (a) and (b) of the Labour Code maintains total silence about the period and quantum of Sickness benefits and left it for the decision through Subordinate Legislation to be done in future which is very vague.
  • Enhanced Sickness Benefit for 7 or 14 days (For Family Welfare operations) equivalent to the total wages of the employee, has been omitted in toto in the Code.
  • ESIC provides medical benefit to an insured person and his family right from the day of his entry into insurable employment. But the Code does not assure any such benefit.
  • Code does not have any provision similar to Reg. 103 (B) (2) to enable a retired insured person and his spouse to have medical cover forever on payment of Rs. 120 per month.
  • “Injury after cessation of employment” is seen removed.
  • Whatever existing benefits are provided to workers in the existing laws should be reiterated in the Code.
  • Employment assistance is to be provided for non-employed, dis-employed (employed becoming unemployed) and unemployed (not entered any job). There should be a national employment assurance scheme.
  • Sc.24 (1) & (5)- Schemes on various benefits under the Code should be framed with priority at the earliest.
  • Rehabilitation allowance under ESI Act (i. Vocational Rehabilitation, ii. Medical Benefit to Retired Insured Persons and Permanent Disabled Insured Persons.), assistance for housing, education of children and marriage expenses of girls in the family should be added to the list of benefits.
  • We see handicapped or physically challenged or aged dependents of the workers in Indian houses. Assistance or pension is to be given to handicapped /deaf /dumb /blind /mentally retarded /mentally sick children.
  • Family allowance & Child allowance are to be provided. It should include child benefits like compulsory universal education till 14 years coupled with school going allowance and incentives to attend school to eliminate child labour. Education of children should include scholarship, grant, cash awards, school allowance, incentive to attend classes, discouragement of child labour etc.
  • 5 says that every establishment having fifty or more employees shall have the facility of crèche. This will discriminate employees working in entities with less than the threshold limit. Hence, village based day care centres or crèches have to be provided with active involvement of local bodies especially for unorganised sector workers. This is an issue that was actively pending before National Women’s Commission.
  • 2.44- In employment injury, notional extension of workplace should be included. By the addition of Section 51E, ESI Act now covers such commuting accidents w.e.f. 2010.
  • Maternity benefit should be extended to relatives of workers or Non workers up to two children.
  • 55.2 provides that no woman shall be entitled to maternity benefit unless she has actually worked in an establishment for a period of not less than eighty days in the twelve months immediately preceding the date of her expected delivery. This may lead to the employee being exploited by the employer.
  • 58.3- A woman suffering from illness arising out of pregnancy, delivery, etc. shall be entitled to leave with wages for an additional period of one month. This should be extended as per Medical advice.  
  • 7-Funeral expenses should not be merely an employer’s personal liability, it should be a common liability under the code and be paid from the social security fund.
  • 62.6(b)- Accident of contracting disease is deemed to have occurred on the date of notice is quite unjustifiable. It should be from the date of difficulties of disease.
  • Pension should be indexed to price rise. All pensions are to be integrated to a National pension scheme.
  • 2.114-The definition for “retirement” should be redrafted.
  • 84.3- All benefits should continue even after retirement or cessation of work. It is the people in old age who require more social security support.

States Running ESI hospitals

  • 86- says that establishment and maintenance of hospitals, etc., will be by the State Board. The experience of state running ESI facilities and Centre giving funds has proved to be a failure. Many State Governments are poorly managing Social Security and welfare schemes like ESI and Central welfare schemes. Except in Delhi as well as a few in other States where ESI is directly running hospitals, the State Govt. run hospitals and medical scheme are highly inadequate and poorly managed. Hence the Trade Unions as well as Employers demand that as an immediate step, all the State Govt. run ESI hospitals should be taken over by the ESIC directly for better health benefits. The reverse process is alarming.
  • In ILC of 2015, it was the general consensus among trade unions, employer organisations, Governments both State and Central that “ESIC should directly run the health services in all states” considering the failure of State Government run health services.
  • Considering the low expansion of ESI schemes to the entire India, 2nd National Commission on Labour has recommended that running medical services by ESI is to be reviewed. ESI’s direct medical service i.e. running hospitals is to be substituted by reimbursement or cashless facility as in modern health insurance schemes. In spite of passing nearly 69 years, ESI hospitals could not be spread to cover the entire organised sector. Hence if vast unorganised sector is also enrolled, the existing ESI hospital system cannot contain the new challenge.
  • Diversion of funds by many state governments to meet its other immediate expenses is commonly seen, which result in the depletion of the Corpus.
  • Hence BMS and other trade unions have demanded replacing ESI directly or through States running hospitals with modern concept of “cashless scheme” similar to which is now being provided by private medical insurers. New Code should have provisions for cashless facility tie up arrangements with maximum number of decentralised panel hospitals across the country. It should be widened to cover more listed hospitals across the country. Instead it should not be entrusted to middlemen like Corporate Insurance companies.
  • Provision for Primary, Secondary and Super speciality medical facilities should be there in the Code itself.


  • Gratuity calculation amount has to be raised to 25 days from the present 15 days.
  • Gratuity should be made transferable in the event of change of job by the employee.
  • 47- It should be specifically stated that gratuity, compensation etc. should be calculated on the basis of the last drawn full monthly wage.
  • 51.3- says it shall be responsibility of employer to pay gratuity, but 51.4 says no interest is payable if delay is due to the fault of employee. These are contradictory in case of employee’s ignorance except where employee has purposely avoided receiving it.
  • 46.2- Gratuity should be for less than 5 years also. Gratuity should be payable even for those with 1 year service, because of the decrease in permanent jobs and increasing contractuarisation, retrenchments, closures etc. 


  • 79.2- Those above wage ceiling shall not be denied benefits under the Code. They also should be enrolled in the purview of the Code.
  • 2.12- “Explanation 1- Minimum work for 14 days”- working for even one second should be covered.
  • 2.42 & 2.149 Expl 2- apprentice beyond a period of 1 year should be covered. Situations like every apprentice working near dangerous machines should be covered under accident benefits.
  • 2.42- Regarding definition of “employee”, apprentice under Apprentice Act and Standing orders Act are exempted, but in explanation says apprentice will not be exempted if not covered by Apprentice Act. Here words ‘Standing orders Act’ is omitted.
  • When 2.16 include any factory in the definition of “business”, 2.14 excludes such construction work to which Factories act and Mines act applies. It would be either contradictory or duplication of same purpose in two different areas.
  • 2.149-The definition “Worker” should include all seen / found in a work place. This will be in consonance with the section No.103 under Factories act.
  • Keeping different classes of beneficiaries is against the concept of codification, rationalisation and simplification.
  • 2.37 on “dependent family”- Sister of member should be beneficiary until marriage.
  • 2.37- Son upto 25 years covered, but daughter only till marriage covered as dependant. Widowed daughter not covered where as widowed sister is covered under 2.37 (iv)(b).
  • 77.2- Marriage or remarriage should not take away rights of dependant benefit.
  • 55.1- Adopted child entitled only if child is less than 12 months.
  • 2.55-“Explanation.-Where the personal law of an employee permits the adoption by him of a child, any child lawfully adopted by him.” Under Sc.38 of Juvenile Justice (Care and Protection of Children) Act, 2015 and also under the old act, all citizens irrespective of their personal law can adopt (As clarified by Supreme Court in Shabnam Hashmi case (2014) 4 SCC 1).

 Issues of implementation of the Code

  • The application, funding, benefits, administration and all other details of the legislation should be scientifically formulated after effectively discussing with BMS and other trade unions.
  • The canvas of coverage is vast and this gives rise to an apprehension over the capacity of the State to enforce this Code. The coverage is in huge magnitude once unorganised sector is included and the contributions are difficult to realise, if not impossible. Unorganized sector will be characterised by lower rate of contribution, high rate of default and difficulty in collection of contribution. The ill fate of poorly constructed and poorly implemented Unorganised Workers Social Security Act, 2008 is a lesson in this regard.
  • Depending on the nature of work, the same category of worker may become self employed as well as worker under an employee. Eg. Manual worker who is not working under a fixed employer. So categorization has to be practical.
  • Sc.61.5 (b)- An agreement between worker and employer should not be a reason to deny Civil Court’s power to provide accidental benefit to the worker.
  • Burden of proof that there is no employer-employee relationship shall lie upon the employer.
  • Now all the establishments/factories are given a unique Labour Identification Number (LIN) instead of the multiple registrations required under the various labour legislations. The filing of contribution and compliance can be centrally made through the ‘Shram Suvidha Portal’ and there shall be no need to file separate contribution and returns to different entities such as EPFO, ESIC etc. Hence it is not desirable to replace it and bring a new one “VIKAS”.

 Delivery Mechanism

  • As recommended by 2nd National Commission on Labour, mechanism of delivery of benefits should be- 1. As decentralised and as close to the beneficiaries as possible. 2. It should be tripartite or multipartite involving other stake holders also. There should be district level or area level committees. Ultimate focus should be on improving the delivery mechanism for providing the social security benefits to the workers. Social security services should be delivered at the doorsteps of the beneficiaries.
  • Area based approach is suitable for unorganised sector instead of the present occupational based one, for the purpose of monitoring. Area level tripartite bodies with involvement of local bodies will serve the purpose.
  • Government should formulate exhaustive steps for social mobilisation for easy registration, digital collection of contribution and disbursal of benefits at doorsteps. Such mobilisation should be done involving trade unions, local bodies, co-operatives, NGOs, self help groups, women's organisations, farmers’ groups, social service organisations etc.
  • It is not clear as to how the state machinery will enlist the vast majority of self-employed workers which is just around half of the total workforce.
  • 2.102- Definition of “predecessor organizations” should include state welfare boards also.

 Inspection, Dispute Redressal

  • 134- Inspection system. 134.1- Commissioner to notify the system of inspection. In the context of liberalisation of inspector raj, it is difficult to brush aside the fears of “implementation and enforcement issues” pertaining to the Code.
  • 134.2 says “The Commissioner, while issuing order under this section shall not disclose the parameters and criteria fixed for the inspection system and may change it from time to time.” This takes away the transparency of inspection system and will lead to higher level corruption. It is also against ILO conventions. 
  • 158.1- Trade Union or worker is not given right to complain under the Code except on maternity benefit. Only inspector filing criminal complaint, that also with prior sanction from higher ups will make penal provisions a mockery.
  • 153- Applications pending before PF, ESI Tribunals, High Court and Gratuity Appellate Authority is to be transferred to Tribunals. This will stall all existing litigations and will delay already delayed litigations.
  • 159- Power of Commissioner to Compound Offences and make orders without permission from the worker-beneficiary affected is not legitimate.


  • Provisions of the Code are prepared to cater the needs of private insurers and not to the benefit of workers.
  • Code does not display the fundamental difference between social insurance, social assistance and commercial insurance.
  • All the following agencies amounts to privatization which is objectionable. 98- Railway “company” indicates Privatization. 2.10 “Benefit disbursement Agency” means an agency licensed under section 88(1) for the purpose of making benefit payments to the beneficiaries of Schemes. 25B- professional management of investment of SS funds. 2.54 & 2.62- Fund management agency means an intermediate agency licensed under sc.88(1). 2.62- Intermediary agency means any Fund manager agency, Point of presence Agency, Service delivery Agency, Benefit disbursement Agency or Recordkeeping Agency licensed under Section 88(1). 2.92- “Point of presence Agency” means an agency licensed under section 88(1) for receiving contributions and instructions and transmitting them to the Trustee Bank or Record keeping agency. 25.2 Contribution or premium or charges. 2.68, 85.2, 88- proposes that State Government will designate intermediate agency. 25.4- says about “payment of charges to the Intermediate agency.” “Intermediate agency” means any Fund manager agency, Point of presence Agency, Service delivery Agency, Benefit disbursement Agency or Recordkeeping Agency licensed under Section 88(1)”.
  • Intermediate Agencies will later show their predatory propensity inherent in them.
  • 25.6- Investment pattern of the hard earned money of workers is being notified by bureaucratic decision. It need not pass through tripartite consent. This may lead to already controversial investments in risky share market.
  • Privatisation of Social Security should be avoided as the intention of the whole exercise will be tainted by bringing private and foreign insurance and other companies into Social Security sector. Professionalize Govt. agencies and not privatise or outsource the work. The law should not be one to canvass business for private and foreign insurance and other companies. Moreover outsourcing the work of the Social Security Organisations to private Corporates by paying high charges from the hard earned money of workers is new inclusion and highly objectionable.
  • 88.1-Director General is empowered to licensing and cancellation of private agencies. “Director General may, by granting a License under this Code, permit any organization or person to act as an intermediate agency for all or any of the purposes” mentioned against each of the six agencies enumerated therein. This is privatisation of entire Social Security schemes.
  • 88.1- Bureaucrats and others regulating, licensing and cancellation of the private Corporate insurance companies will increase corruption.

 Contract Labour

  • 2.52- We oppose the employment under “Fixed Term” which only encourages the contractual employment. Hence the definition should not replace the permanent employment in the name of “Fixed Term” employment.
  • 2.30- Contract worker do not include those directly employed by employer on contract i.e permitting fixed term.
  • How to identify one Principal Employer if employees work through different contractors.
  • 48.1, 50.1 expln- Most of the Contract workers need not qualify 5 years qualifying period under one principal employer. Hence continuity of service under different principal employers and different contractors should be counted together for pay and recover for the current principal employer. This can be ascertained by a portable Social Security card.
  • 1-Exemptions for establishment employing more than 100 employees- It should be made clear that it would include not only permanent but also contract workers.

 Penal Provisions

  • The Code should be business friendly as well as worker friendly. Imprisonment and Fine Clauses on Employers may be revisited. Fines should be increased and should go to the Social Security Fund. Workers want Act to be implemented; and do not want first offender employers to be sent to jail.
  • When IPC envisages serious crimes in the category of cognisable offences, the new code includes not so serious offences like not keeping records etc. in cognisable offences category.
  • Regarding penalties for breach or violation of rules, Sec. 165.2 (liv) & Sec. 166.2 (xxxv) of the Code provide for excessive delegation to the Executive which are unconstitutional. The upper limit of penalties must be provided for, beforehand.

 Delegated legislation entrusted with Bureaucrats

  • There is a long list of legalities coming up like rules, schemes, regulations and by-laws etc. under this Code which will be under the control of Bureaucrats.
  • Regarding delegated legislation entrusted with Bureaucrats, Hon’ble Supreme Court has said, “Unlike Parliamentary legislation which is publicly made, delegated legislation or subordinate legislation is often made unobtrusively in the chambers of a minister, a secretary to the Governor or other official dignitary.” (ITC Bhadrachalam Paperboards Vs. Mandal Revenue Officer 1996 (6) SCC 634; Harla Vs. State of Rajasthan AIR 1951 SC 467; B.K. Srinivasan Vs. State of Karnataka AIR 1987 SC 1059).


  • 44.1 Sc.44 has only one para, so no numbering of paras required.
  • Sec. 74.9 contains four question marks, indicating incomplete.
  • 165.3- The State Government’s power to make rules is left as incomplete and blank.


Saji Narayanan C.K.

Pawan Kumar

Radhakrishnan V.

Jagadisvar Rao

Copyright@ Bharatiya Mazdoor Sangh