Home Spotlight Ambiguities may make proposed social security code less effective

Ambiguities may make proposed social security code less effective

‘The Code on Social Security, 2019’ was introduced in Lok Sabha last year in December and was subsequently referred to the Standing Committee on Labour to complete the examination. The Code is the result of amalgamation of nine Central Labour Laws including the Building and Other Construction Workers Welfare Cess Act, 1996. The amalgamation of nine laws is being done to facilitate the implementation and remove the multiplicity of definitions and authorities without compromising the basic concepts of welfare and benefits to workers. The proposed legislation supposedly would facilitate the use of technology ensuring transparency and accountability leading to effective enforcement of the provisions of the proposed legislation.

Though the intent of the legislation is laudable, in certain quarters doubts have been raised about the ability of the proposed code, in its present form, to bring about the desired results, especially for the building workers. For example, concerns are being raised on the non-provision of a specific time frame within which the provisions of ‘The Social Security Code, 2019’ would be given effect. It would have been better if a new provision specifying a timeline by which all workers including unorganised workers would be covered under Social Security benefits needed to be included in the Code itself.

The Code provides for the payment of cess (as prescribed in the Code) by the employer within 60 days of the completion of the building on the basis of his self-assessment on the cost of construction worked out on the basis of the documents and in the manner prescribed by the Central Government. The amount so collected will go to the Building and Other Construction Workers’ Welfare Fund. However, the Code is absolutely silent about the management of the fund collected out of the Cess. It is important to clearly specify the items on which the Fund amount can be spent and these should be framed on the basis of the experience on the expenses pattern from various States. While certain social security benefits have been mentioned for Building and Other Construction Workers (BOCW), the details of benefits, entitlement, calculation, mode of delivery etc. have not been specified leaving them totally at the disposal of State Level Boards. Trade Unions feel that the Code should have more stringent provision for proper enforcement and implementation.

The Trade Unions strongly feel that the Building and Other Construction Workers (Regulation and Condition of Service) Act, 1996 and the Building and Other Construction Workers Welfare Cess Act 1996 should be taken out of the Codification exercise and separately examined in consultation with the Trade Unions for its improvement in implementation/enforcement of both the Service Conditions and Welfare and Social Security Measures.

Recent lockdown has highlighted the significance of migrant workers in construction sector. It also showed that in most of the cases domicile state and the state where they actually work are different. Therefore, some experts have suggested that the Code must provide for a mechanism for the creation of a Clearing House between States, so that funds that are due to the beneficiary are transferred back to the State of origin of the migrant worker.
Another problem faced with the BOCW Act was the low registration and renewals of the building workers with the BOCW Boards. Besides, the problem of fake registration has also been rampant. It is, therefore, suggested that the power for getting the workers registered should be given to the officers authorized by the appropriate Government. As significant part of the construction workers are inter-state migrants and vulnerable, its also advisable to add a clause detailing out the process of their continuous registration/ enrolment, issuance of identity cards, portability and disbursal of benefits.

On the brighter side, the Code has rectified some shortcomings of the earlier Act. At present, assessment of cess to be paid by the employer is done by authorized officers. The shortcomings of the present system seem to include lack of common guidelines in rules available to authorized officers for assessment of value, no prescribed qualification for such authorized officer, time consuming case to case basis assessment, huge discretion available with the authorized officer for assessment. The existing system gives the scope for arbitrariness, lack of transparency and accountability. Therefore, it has been proposed that the employer shall, within sixty days or such period as may be notified by the appropriate Government, pay such cess payable under this Chapter on the basis of his self-assessment.
Before the pandemic breakout states had accumulated massive sum under BOCW cess which were lying idle. The Code hasn’t considered this real problem underlying the accumulation of Cess Funds leaving the BOCWs at the mercy of the State Level Boards which are generally not constituted or do not function effectively. So there is need to issue specific guidelines and hold periodical meetings with such Boards at the appropriate level to ensure better monitoring and potent management of funds collected out of Cess.

It is a matter of serious concern that States are sitting on thousands of crores of rupees collected towards the welfare of construction workers, even as labours have been left to fend for themselves amid the prolonged lockdown period arising out of the COVID-19 Pandemic. Sometimes, the Cess collected was diverted elsewhere contrary to the purpose, as was disclosed by C&AG Report relating to a State. Therefore, the Government should clearly specify and frame regulations on the items on which the Cess Fund should be spent, the violations of which should attract stringent penalty and criminal liability. In other words, there must be legislative checks in the law itself on the reported under-utilisation and misutilisation of BOCW funds for fixing accountability for poor implementation or non-implementation of the directives regarding spending of Cess Fund.

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