Legal Aspects of Business

Term Paper-1


Labour Issues in India

Social Security Measures
Team-4 Slow Starters












Submitted by
G.Priyanka
I MBA
Register no - 1491034.
Introduction:
Every regulation relating to social security and working conditions of the Labour has
different meaning and implication for every segment. For many segments, still there is no
such regulation which is protecting/providing decency and is related to regulate working
conditions.
Types of Labour:
Labour market is not homogenous. It is broadly segmented into unorganised and
organised, wage earners and self-employed, skilled, semi-skilled and unskilled and so on. We
are going to concentrate more on unorganised and other labours which includes landless
agricultural labourers, small and marginal farmers, share croppers, persons engaged in animal
husbandry, fishing, horticulture, bee-keeping, toddy tapping, forest workers, rural artisans,
etc. where as in the urban areas, it comprises mainly of manual labourers in construction,
carpentry, trade, transport, communication etc. and also includes street vendors, hawkers,
head load workers, cobblers, tin smiths, garment makers, etc.

Concept of Social Security:
The International Labour Organisation (ILO) defines Social Security as "the security
that society furnishes through appropriate organization against certain risks to which its
members are perennially exposed. These risks are essentially contingencies against which an
individual of small means cannot effectively provide by his own ability or foresight alone or
even in private combination with his fellows. The mechanics of social security therefore
consists in counteracting the blind injustice of nature and economic activities by rational
planned justice with a touch of benevolence to temper it.
Need for Social Security of Labour:
Worker/employee is a source of Social Security protection for themselves and their
family. As the employers has the responsibility for providing adequate social security
coverage to all their workers i.e. Social Security is a comprehensive approach designed to
prevent deprivation, assure the individual of a basic minimum income for himself and his
dependents and to protect the individual from any uncertainties. The State bears the primary
responsibility for developing appropriate system for providing protection and assistance to its
workforce. Social Security is increasingly viewed as an integral part of the development
process. It helps to create a more positive attitude to the challenge of globalization and the
consequent structural and technological changes.

Social Security Act to create a framework for providing social security to unorganized
workers. Thus, it can be concluded from these findings that there has been a negative growth
in the organized sector in comparison the growth in the unorganized sector.

Some of the important social security measures in India:
1. Workmen's Compensation Act 1923The Act provides for the compensation lo those
workmen who sustain personal injuries by accidents arising out of and in the course of their
employment. The Act applies to all permanent employees employed in railways, factories,
mines, plantations, mechanically propelled vehicles, construction work and certain other
hazardous occupations drawing a salary riot exceeding Rs 1,000. The Act does not cover
those employees who arc in clerical or administrative capacity in armed forces, on casual
work and to those who are getting a monthly salary exceeding R s. 1,000/-. The State
Governments are empowered to extend the application of the Act to other classes of persons
or diseases also. ,
The employer is liable to pay, under this Act, the compensation in case of personnel
injury caused by accident arising out of and in the course of employment. No compensation
is, however, payable if the incapacity does not last for more than three days or is caused by
the default of the worker, not resulting in death. Besides bodily injury, compensation is also
payable in the case of certain occupational diseases as given in Schedule III. The State
Governments are empowered to add any other disease to the list of diseases.
The amount of compensation payable depends on the nature of injury and the average
monthly wages of the worker concerned. For this purpose, injury has been divided under
three categories (i) causing death, (ii) total or partial permanent disablement, and (iii)
temporary disablement. The rates of compensation are fixed for all types of injuries according
to wage-ranges. No compensation is paid for first three days if the period of disablement does
not exceed 28 days.
The Act does not apply to those workers who are covered under the Employees State
Insurance Scheme.
2. Employees State Insurance Act 1948In order to provide sickness benefits to workers,
the Employees State Insurance Act was passed in 1948. The Act applies to all non-seasonal
factories run with power and employing 20 or more persons. It covers all types of employees
manual, clerical, supervisory and technicalnot drawing a salary of more than Rs. 1600
per month (the amount has been raised from Rs. 1000 to Rs. 1600 p.m. w.e.f. 27th January
1985). The scheme is compulsory and contributory. Compulsory in the sense that all workers
covered under the act must be insured and contributory in the sense that it is financed by the
contributions from employees and employers.
The administration of the scheme has been entrusted to an autonomous body called
the Employees State Insurance Corporation.
Insurance Corporation: The Corporation is managed by a governing body of 40 persons
representing the Union and the State Governments, Parliament, employers and employees'
organisations and the medical profession. This body elects a standing committee consisting of
13 members. A third body called Medical Benefit Council is constituted consisting of 26
members to advise the corporation on matters relating to medical benefits. State wise regional
boards have also been constituted.
The scheme is financed by the Employees State Insurance Fund which consists of
contributions from employers and employees, grants, donations and gifts from Central and
State Governments, local authorities or any individual or body. The rate of contribution of
employees depends upon its daily wages.The scheme provides five types of benefits to the
insured workers and their dependents. These benefits are:
(i) Medical Benefitan insured person or (where medical benefit has been extended to
his family) a member of his family who requires medical treatment is entitled to receive
medical benefit free of charge. Such medical benefit may be given either in the form of
outpatient treatment or as in patient treatment in a hospital which may be either run by the
ESI Corporation or by any other agency.
(ii) Sickness BenefitAn insured person, when he is sick, is also entitled to get sickness
benefit at 62.5% of the average wage which he would have earned had he been well and at
work.
(iii) Maternity Benefit-An insured woman is entitled to receive maternity benefit (which
is twice the sickness benefit rate) for all days on which she does not work for remuneration,
during a period of 12 weeks of which not more than 6 weeks shall precede the expected date
of confinement.
(iv) Disablement Benefit-An insured person is entitled to receive disablement benefit for
any injury -arising out of and in the course of his employment. If the disablement is
temporary for not less than 3 days, excluding the day of accident, he is entitled to receive
compensation according to the First Schedule to the Act. If the disablement is preeminent-
whether total or partial -he is entitled to receive compensation according to the Second
Schedule to the Act. Artificial limbs are also provided at the cost of Corporation to those who
lose their limbs as a result of employment injury. Spectacles, dentures, pace-makers, etc., are
also provided to insured person free of cost, depending upon the nature of the case.
(v) Dependents BenefitIf an insured person meets with an accident in the course of
his employment and dies as a result thereof, his dependent, i.e., his widow, legitimate (or
adopted) sons and legitimate unmarried daughters get pension. The widow gets it throughout
her life or till remarriage. The sons get it up to the age of 18 years or until they marry,
whichever is earlier.
(vi) Funeral Benefitthe eldest surviving member of the family of an insured person who
has died is entitled to receive payment for the expenditure incurred on funeral. However, this
amount cannot exceed Rs. 100. The amount should be claimed within 3 months of the death
of the insured person.
3. Maternity Benefits ActBefore Independence, many states passed the Maternity
Benefits Acts but there was only one central Act in this respect-Mine's Maternity Benefits
Act 1941. After independence two Central Acts-Employees State Insurance Act 1948 and
Plantation Labour Act 1951-were also passed. With a view to achieve uniformity, Central
Government passed in 1961 the Maternity Benefits Act. The Act applies to all mines,
plantations and factories except those covered by the Employees State Insurance Scheme.
The expectant mothers are entitled for 12 weeks leaves i.e., 6 weeks up to and including the
day of delivery and 6 weeks immediately following that day, if they have put in 160 days
service during twelve months preceding the date of expected delivery. A payment of Medical
Bonus of Rs. 25/- by the employer if pre-natal and post-natal care is not provided free of
charge.
4. Coalmines Provident Fund and Bonus Act 1948The Coalmines Provident Fund
and Bonus Act was passed in 1948 to make the old age provisions for all coalmine workers.
The act was amended in 1950, 1951 and 1965. Under this Act two different schemes, i.e., the
Coalmines Provident Fund Scheme and the Coalmines Bonus Scheme are in application and
these schemes have been amended several times. Under the Provident Fund Scheme the
employers contribute 8% of their total emolument to the fund and an equal contribution is
made by the employees. In June 1963 a provision was made in the scheme whereby the
members are allowed to contribute voluntarily up to another 8% of their emoluments. The
scheme is administrated by a Board of Trustees, consisting of equal members of
representatives of the Government, employers and employees. A Special Reserve Fund was
set up to make the payment to outgoing members. A Death Relief Fund has also been set up
to ensure a guaranteed minimum payment of Rs. 750 to the dependents off the deceased
whose accumulations in the fund are less than the amount at the time of death. The
employees Family Pension Scheme 1971 also applies to coalmine workers.
5. Employees Provident Fund Act 1952The Act was passed in 1952 covering
factories employing 50 or more workers in 6 major industries, viz., iron and steel, textiles,
engineering, cement, paper and cigarettes. By an amendment in 1960, the scheme was
extended to all factories of five years standing and 20 or more workers. An exemption has
been made for new undertakings, for a period of 3 years, Establishments employing between
20 and 50 persons are also exempted for 5 years. The scheme is contributory and compulsory.
The employees and employers contribute 6 '/4% of the total emoluments. The employees
may, however, contribute 8 1/3%of the total emoluments. The rate of contribution of
employees has been raised to 8% in some notified industries.
The scheme covers every employee drawing a salary of Rs. 1,000 or less and who has
completed one year's continuous service and actually worked for 240 days in that period.
The PROVIDENT FUND ACT 1952 was amended in 1971 to provide for the benefit of
family pension to the members of the deceased in case of their death while in service. A
family Pension-cum-life Insurance Scheme was introduced in 1971.
6. Family Pension Scheme 1971This was launched for industrial workers covered by
Provident Fund Schemes. Under this scheme, a financial assistance i.e., pension is provided
to workers monthly after retirement till he survives and to his widow thereafter till she
survives. The scheme is financed by the Central Government and the provident fund.
7. Payment of Gratuity Act 1972Under this employees in factories, mines, oil fields,
plantation, ports, railways etc. are entitled to gratuity after completing 5 years of service at
the rate of 1/2 month's wages for each completed years of service subject to a maximum of 20
months wages.
8. Old-Age Pensions SchemeVarious State Governments - U.P Kerala, Andhra
Pradesh, Tamilnadu etc. have introduced a scheme of old-age pension to persons of 60 years
of age and are poor and destitute. It is open to all.
9. Compulsory Group InsuranceThe scheme was introduced by the Central
Government with the cooperation of the Life Insurance Corporation and applies to certain
groups of workers. The employees contribute certain amount monthly towards the premium.
If the member dies while in service, an amount of Rs. 10,000 is paid to the heir of the
deceased. The U.P. Government has introduced the scheme for teachers, lawyers and police
employees. The Government of Haryana has also taken certain steps.
10. Deposit-linked Insurance Scheme 1976This scheme was launched on 1st August
1976 for the benefit of employees covered under Employees Provident Fund Scheme, and
Coalmines Provident Fund Scheme. Under this scheme, a legal heir of the deceased or the
nominee under provident fund schemes will get the average amount of balance in the
provident fund account of the deceased in three years preceding death or Rs. 10,000
whichever is less. This scheme is financed by the Government and the employers.
11. Social Security CertificatesSocial security certificates were introduced on 1st June
1982. These certificates can be purchased by any person who is between 18 and 45 years of
age, maximum for an amount of not exceeding Rs. 5000. The holder of the certificate will get
three times of the amount invested after 10 years. There will not be any premature payment
but in case where the holder of the certificate dies after two years from the date of purchase
the legal heir can claim the maturity value of the certificate immediately.


Conclusion:
Hence we see that social security is an indispensable factor for any labour scenario.
The purpose of any social security measure is to give individuals and families the confidence
that their level of living and quality of life will not erode by social or economic eventuality. A
worker works not only for the economic motivation but also for the sense of belongingness
and security within his workplace. Hence it is the duty of the employer to ensure as best as he
cans that his workers have this psychological satisfaction as well as their families lives are
socially secured and cared for. Indian legislations have gone a long way in strengthening this
cause and because of this and many other factors, today in the world of labour and
employment, the employee and employers interest is at par with each other and the principal
focus is on the combined interest and satisfaction of both. If these conditions are fulfilled
with a joint effort and contribution from the employer and the employee then the workplace
to a great extent will become a home of sorts.