Recently, Parliament passed enactments on three important aspects of labour law – the Codes on Industrial Relations; Occupational Safety, Health and Working Conditions (OSH); and Social Security. The provisions for informal workers in the Code on Social Security, 2020 [“2020 Code”] are broadly the same as those in the 2019 version, which in turn are almost identical to those in the Unorganised Workers Social Security Act, 2008 [“UWSSA”]. We have commented on many of these provisions in our policy brief here. In this post, we provide some additional comments on social security for informal workers as it now stands under the 2020 Code.
Applicability of the Code to Informal Sector Workers
The Code makes a distinction between those in the organised and unorganised sectors. S. 2(85) provides that an unorganised sector enterprise is one with fewer than 10 workers. The effect of this is that the bulk of workers in India are excluded – numerous commentators have pointed out that more than 90% of India’s workforce is employed in the informal sector, and that 70% of workplaces have fewer than 6 employees. Additionally, the Periodic Labour Force Survey, 2018-19 noted that about three-quarters of India’s workforce does not have a regular income.
The 2020 Code must be examined in light of these figures. Workers in the organised sector have access to Provident Fund, gratuity, Employees’ State Insurance and maternity benefits. However, provisions for informal workers, gig workers and platform workers are limited to Chapter IX of the 2020 Code. Ss. 109 and 110 provide that the Central and State governments shall frame schemes for the welfare of informal workers. Several commentators have noted that this is sorely inadequate. In particular, the Parliamentary Standing Committee on Labour criticised s. 109 on the ground that there was no specific provision to extend the ‘general’ schemes covered under the UWSSA to unorganised workers, nor was there any minimum entitlement spelt out in the 2020 Code. The Committee recommended that these mandatory minimum entitlements be included in the text of the enactment, and to be extended to all workers as a matter of right. This would also enable inter-State portability of benefits. The Committee also specifically recommended that a clear funding mechanism be put in place for social protection of informal workers.
In this regard, we note that s. 109 provides that contributions by beneficiaries and their employers may be used to fund the schemes. While it is encouraging that employers of informal workers may be accountable for social protection, we note that this provision only enables the government to require employer contributions. It does not make it mandatory for a funding model to be put in place.
It is concerning that social security for some of the most vulnerable workers in the country is still subject to the discretion of the executive. This is particularly so, in light of the Parliamentary Standing Committee’s suggestions on workable solutions for this issue. We reiterate that there is a need for social security to be extended to all workers and that there be a set of minimum floor level entitlements available to all persons, irrespective of the type of employment.
Lack of clarity on definitions of workers and provision for gig workers
Many commentators have noted that there is little clarity on the distinction between ‘gig workers’ and ‘platform workers’, and how these categories intersect with other classes of unorganised workers. A driver-partner for a cab aggregator, for instance, would fall under definitions for gig worker (s. 2(35)), platform worker (s. 2(61) r/w 2(60)), self-employed worker (s. 2(75)), unorganised worker (s. 2(86) r/w s. 2(85)) and wage worker (s. 2(90)) under the 2020 Code. Meanwhile, s. 45 provides that gig workers are to be included in the ambit of ESIC coverage. These distinctions are important, as the 2020 Code makes different provisions for the social welfare of each of these classes. S. 114, in Chapter IX on Unorganised Workers, Gig Workers and Platform Workers, provides that the Central Government may frame schemes for the welfare of gig workers. The use of the term ‘may,’ in contrast to ‘shall’ in s. 109, implies that s. 114 is directory rather than mandatory. Although s. 114 provides that aggregators may be required to make contributions towards funding these schemes, this provision has little effect without clarity on what exactly it is that is being funded.
As the Parliamentary Standing Committee correctly noted, gig workers have features both of organised and unorganised sector workers. The Standing Committee then suggested that the Code clarify which category these workers would fall into. We submit, instead, the case of gig workers illustrates that hard distinctions between organised and unorganised sector workers could have the effect of simply leaving some classes of workers outside the protection of any safety net. In other words, this illustrates the need for mandatory minimum entitlements for all classes of workers.
Lack of Provision for Self-Employed Workers
According to the Periodic Labour Force Survey, 2018-19, self-employed workers comprise more than half of the Indian workforce. However, as Dr. Saurabh Bhattacharjee has noted here, there are few specific provisions for the self-employed. Chapter IX does not make any provision for modifying contribution periods or making specific financial provision for the social security of self-employed workers. This is problematic because, as the lockdown following the outbreak of COVID-19 showed, self-employed workers are particularly vulnerable to livelihood shocks. Moreover, the 2020 Code does not account for workers who may only be self-employed for a part of the year or as a subsidiary occupation.
A positive development in this respect is that self-employed workers are expressly included in the definition of “worker” in s. 2(zr) of the Industrial Relations Code, 2020. CLL-NUJS have noted that this opens the way for unionisation of informal workers, which will, in turn, have implications for supporting workers’ rights.
Mandatory Registration of Workers
S. 113 of the Code provides that every unorganised worker, gig worker or platform worker must be registered. The worker must make a self-declaration with respect to their status as a self-employed worker. The registration is to be linked to the worker’s Aadhaar number. However, as noted above, there is little clarity on the benefits that informal workers will receive under the 2020 Code. As Prof. Irudaya Rajan has argued here, this means that there is little incentive for workers to register, which in turn means that many workers will continue to fall through the cracks. There is a need to link concrete social protection benefits, such as health or unemployment insurance, to the registration requirement to provide adequate incentives for enrolment. Under the 2020 Code, there are few clear benefits to workers – meaning that registration may become more of a burden to workers than a means to provide greater protections.
Earlier versions of the Code on Social Security envisioned universal social protection, and sought to provide equal protection for all classes of workers. In July 2020, Parliamentary Standing Committee reiterated that social security “universally be extended to workers from all social strata.” In this light, it is disappointing that the provision for informal workers in the 2020 Code is far from adequate, and that many of the concerns that were raised with the 2019 Bill have gone unaddressed. There is an urgent need for a social protection framework that takes the needs of informal workers into account. It is hoped that this comes into existence in the near future.