Beneficial or not: Labour Welfare Acts & Schemes

“A person who feels appreciated will always do more than what is expected.” The main motive behind labour welfare schemes is to maintain a work-life balance. These schemes will motivate employees to yield fruitful results. In India, labour welfare schemes are developed due to the industrial revolution with the involvement of Philanthropists, religious leaders, social workers, and voluntary organisations. Many people migrated from different parts of the country in search of work to the cities fascinated by the high wages and comforts of city life. But these workers were exposed to an unsatisfactory working environment and faced serious health issues.

These workers were mercilessly exploited with a heavy workload and a long duration of working hours for low wages [1]. The first Act to ensure occupational safety and health in factories was introduced in 1948 which is known as the Factories Act, 1948 but now this Act was repealed and the provision of this Act combined with other 13 old Central labour laws consolidated into a single law which is known as The Occupational Safety, Health and Working Conditions Code, 2020. There are two types of sectors in India, they are organised sector and the unorganised sector. The sectors which are registered under the government in which the terms are fixed and regular are known as the organised sector, these sectors are regulated and liable to pay tax to the government. The benefits of organised sectors include job security, allowances and perquisites, fixed working hours, monthly salary, and a hike in salary at regular intervals. Unorganised sectors are the ones which are not registered with the government, there is no need to follow government rules and regulation in this sector. These sectors include small enterprises, shops, etc as they are not registered with government taxes and are not levied in these sectors. There are no fixed working hours and sometimes they are forced to work on holidays also and they get low wages than the wage prescribed by the government [2].

The Code on Social Security, 2020 (SS) [3]

This Code consolidated the nine central Acts relating to social security, they are the Employees’ Compensation Act, 1923, the Employees’ State Insurance Act, 1948, the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, the Employment Exchange (Compulsory Notification of Vacancies) Act, 1959, the Maternity Benefit Act, 1961, the Payment of Gratuity Act,1972, the Cine Workers Welfare Fund Act, 1981, the Building and Other Construction Workers Welfare Cess Act, 1996, the Unorganised Workers’ Social Security, Act, 2008. The main objective of this Code is to provide social security to all the employees and workers both in organised and unorganised sectors or any other sectors.

This Code gives a clear definition to an aggregator, employee, gig workers, platform work, social security, unorganised sector, and unorganised workers. The SS Code does not specifically provide social security to the platform and gig workers but gives the authority to the central and state government to make beneficial schemes that include life and disability cover, health and maternity, provident fund, employment injury benefit, and housing, etc. To obtain the benefits under the SS Code it is mandatory for every unorganised worker, gig worker, and platform worker to be registered and they must also fulfil the required conditions for the registration.

The SS Code made changes to the Employees’ Provident Fund scheme, this scheme is now applicable to every establishment that has 20 employees or more. This scheme further states that the contribution paid by the employer to the fund shall be 10% of the pay for the time being payable to each of the employees (both direct and indirect employees). The employee’s contribution will be equal to the contribution of the employer. The Central Government can also increase the contribution to 12% if needed. If anyone fails to pay the contribution under the SS rules they will be imprisoned for about three years which shall not be less than 1 year, if there is a failure of pay in employee contribution he/she will be liable to fine up to Rs 1,00,000 or imprisonment up to 6 months for other cases the fine will up to Rs. 50,000.

The SS Code established a fixed threshold for the eligibility of the gratuity of permanent and fixed-term employees. Gratuity must be paid to every eligible employee of an establishment in which 10 or more persons were employed on any day of the preceding 12 months. Gratuity must be paid to the employee on the termination of his employment if he worked for 5 years or more that is on retirement, resignation, death, disability caused by accident or disease in his contract period under fixed-term employment. If anyone fails to pay the gratuity amount to the employee he/she will be imprisoned for a term of 1 year or liable to a fine of Rs. 50,000 or both.

The SS allows the voluntary registration of the employees under the Employee State Insurance Scheme if the employer and majority of employees agree to it. The Government also has the authority to extend the Insurance scheme for any hazardous occupation irrespective of the number of employees. This scheme also covers the gig workers and unorganised sectors. The employer is responsible to pay for every employee under him (both direct and indirect employees) for this insurance the employer should not recover any money from the employees.

The SS Code states that Maternity benefits on any day of 12 months shall be applicable to every establishment that has 10 or more employees and other shops notified by the government. No employer or a woman should employ a woman for a duration of 6 weeks of her delivery, miscarriage, or medical termination of pregnancy. A woman can claim maternity benefit not less than 80 days in the 12 months preceding her expected delivery. The maximum duration of maternity benefit is 26 weeks in which not more than 8 weeks shall precede the expected date of delivery. If any person does not provide maternity benefit or dismiss, penalize a woman employee shall be imprisoned for a term up to 6 months or liable to a fine of Rs. 50,000 or both.

Other unorganised sector schemes [4]

  • Revised Integrated Housing Scheme for workers
    • This scheme was last revised in 2016. The workers who work in mines and industries and registered for at least 1 year with the Labour Welfare Organisation are eligible for this scheme. This scheme provides a subsidy of Rs. 1,50,000 for workers for the construction of the house in three instalments.
  • Centre Sector Scheme for Rehabilitation of Bonded labourer, 2016
    • This scheme covers bonded labour and child bonded labour. For which a male beneficiary can get Rs. 1,00,000 and children including orphan and woman can get up to Rs. 2,00,000. In extreme cases of bonded labour, the beneficiary can get up to Rs. 3,00,000. This scheme is in addition to their other land and housing schemes.
  • Pradhan Mantri Shram Yogi Maan-dhan
    • This scheme is created for the old age protection of unorganised workers such as domestic workers, rickshaw pullers, ragpickers, etc., to enter in this scheme the beneficiary must be between 18 to 40 years and their monthly income should be Rs. 15,000 or below. The persons who are enrolled in this scheme will receive Rs. 3,000 after attaining the age of 60 and after their death their spouse will receive 50% of their pension.
  • Atal Beemit Vyakti Kalyan Yojana: This welfare measure was implemented by the Employees’ State Insurance Corporation. From this yojana, the ensured employee will receive cash compensation at the period of unemployment. Initially, this scheme was only introduced for a period of 2 years but now this scheme is extended up to June 20, 2021.


A country’s development and welfare are dependent on the country’s labourer’s involvement and contribution. The creation of labour welfare schemes is an efficient way to obtain 100%  work productivity from the employees. A question arises whether these welfare schemes are in real provide benefits to the labourers. The answer is yes these welfare schemes are designed for the welfare of labourers and they have a lot of benefits for the labourers. The problem is they are benefitted only if they opt or register for these schemes. 92% of  India’s total labour population belongs to unorganised sectors many of them are illiterate and many don’t even know these types of schemes exist even if they know they don’t know how to register for these schemes. Another biggest drawback is corruption in our country. Many people disguise themselves as poor labourers to obtain money from these schemes. This type of fraud leads to the failure of schemes and the people who are really in need will not be benefitted. It is the duty of the government to ensure that these schemes will only reach the labourers who need them and also conduct camps on a monthly basis regarding the benefits of schemes and how to register for these schemes. A scheme is beneficial only if it is implemented in the right way otherwise it will become a failure.

“ An Organisation that truly values its human capital as an asset makes an excessive investment on the employees’ welfare than an extravagant expenditure on the publicity warfare” – Anuj Somany.


[1] Labour Welfare, available at: (last visited on January 20, 2021).

[2] Difference Between organised and Unorganised Sector, available at: (last visited on January 20, 2021).

[3] India: The Social Security Code, 2020, available at: (last visited on Jan. 20, 2021).

[4] Schemes – Unorganised sector, available at: (last visited on January 21, 2021).


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