Module 4

MODULE 4: LABOUR LEGISLATIONS 10 HOURS

Labour legislation in India - Social security and welfare legislations - Concept of social
security - ILO and social security -Social security measures in India –

PPT of ACTS

Workmen’s Compensation Act,1923 - Employees State Insurance Act, 1948 -Employees

Provident Fund and (Miscellaneous Provisions) Act, 1952 - Maternity benefit
Act,1961,Payment of
Gratuity Act 1972, Payment of Bonus Act 1965.

Labour legislation in India:

Labour Legislation refers to all laws of the Government which have been enacted to provide
social and economic security to the labour or workers. The evils of industrial evolution have
led to the labour legislation. Now the state has a direct interest in the industrial peace and
prosperity. These acts are aimed at reduction of production losses due to industrial disputes
and to ensure timely payment of wages and other minimum amenties of the workers.

Need of labour Legislation :

The basic principle of industrial legislation is to ensure social justice to the workers . The
object of legislation is the equitable distribution of profits and benefits accruing from industry
between industrialists and workers and affording protection to the workers against harmful
affects to their health safety and morality.In a developing country like India, Labour
legislation becomes especially important because of the following reasons :

1. Labour organizations are relatively weak and in most of the cases, they depend merely on the
mercy of the employers. Individual worker is economically very weak and is unable to bargain his
terms with the employers. Now the prior payment of wages lay off, dismissal, retrenchments etc ,
are all governed by legislation. The economic insecurity of the workers is removed to a great extent.

2. In many organizations, workers may feel occupational insecurity. The workers may not be given by
amount in case of accidents, death, occupational Act, Employees State Insurance Ac, certain benefits
have been statutarily given to workers which the employees otherwise may not get from their
employers.

3. In any factories, there important working conditions on account of which the employees health
and safety is always in danger. The factories Act contains a number of provisions relating to health
safety and welfare of workers. Special provisions have been made for the women.

4. Labour legislation is also necessary from the view point of law and order situation and national
security of the country. State plays a vital role I the continuing production. It helps in the economic
development of the country. The idea of Welfare State is embodied in the Directive Principles of the
constitution and for reason, various labour laws have been enacted to protect the sections of the
society.
5. Labour Legislation is one of the most progressive and dynamic instruments for achieving socio-
economic progress :

Objectives of Labour Legislation

The main objectives for various labour laws are as follows :
To protect the workers from profit seeking exploiters.
To promote cordial industrial relations between employers and employees.
To preserve the health safety and welfare of workers.
To product the interests of women and children working in the factories.

Principles of Labour Lesgislation :

There are four principles on which the labour legislation is based viz,
1. Social Justice
2. Social and Economic Justice
3. National economy
4. International conventions

Social Justice:
The concept of social justice refers to providing justice to everyone in the society so that the
poor are not exploited by the rich. It is an in the interest of both employers and employees
that they should consider themselves as two wheels of a cart and firmly believe that one
cannot exist without the other.
Social and Economic Justice: concentrates more on the equal distribution of profits among
employers and employees.thus, removing inequality between the two parties.

National Economy :

Labour legislation ensures industrial peace and helps in the industrialization of the country. The
Directive principles of the constitution contain the idea of welfare state. It is a fundamental of a
welfare state to look after the interest of workers who are the weakest section of the society and
satisfy their physical needs with the increase in productivity the benefits are shared with the
workers, resulting in their prosperity. Thus for the growth of economy and development of the
country, labour legislation acts as guiding principle.

International Conventions :-
International labour origanizations aims at securing the minimum standard of living for the workers
throughout the world. If any convention is passed by govt, it becomes binding if it is ratified by any
country. Thus, labour legislation is guided by these conventions.

Social Security and welfare measures in India:

In her drive to provide protection to the needy workers, the Government of India has made

the various enactments from time to time.

The important among them are:
1. The Workmen’s Compensation Act, 1923
2. The Employee’s State Insurance Act, 1948
3. The Employee’s Provident Funds and Miscellaneous Provisions Act, 1952
4. The Maternity Benefit Act, 1961
5. The Payment of Gratuity Act, 1972
The social security provisions in these Acts are now briefly outlined as under:

1 .The Workmen’s Compensation Act, 1923:

This Act is the first planned step in the field of social security in India. The main objective of the Act is
to ensure compensation to workers for accidents occurred during the course of employment. The
main features of the Act are as follows:

Coverage:

This act covers workers employed in factories, mines, plantations, mechanically propelled vehicles,
construction works, railways, ships, circus and other hazardous occupations specified in schedule II
of the Act. It does not apply to the Armed Forces, casual workers and workers covered by the
Employee’s State Insurance Act, 1948.

Administration:

The Act is administered by the State Government by appointing commissioners for this purpose
under Section 20 of the Act.

Benefits:

Under this Act, compensation is payable by the employer to the workman for all personal injuries
caused by industrial accidents which disable him/her for more than three days. In case of the death
of workman, the compensation is paid to his/her dependents. The Act also Specifies that in case a
workman contracts any occupational disease, which is specified in its third schedule, such disease
shall ordinarily, be treated as an employment injury arising out of and in the course of employment.

The compensation is paid depending upon the type of injury. In case of permanent total
disablement, the rate of compensation varies between Rs.60, 000 to Rs.2.74 lakhs. In case of partial
disablement, compensation at the rate of 50 per cent of wages is payable for a maximum period of 5
years.

There is no age limit to the coverage of the Act. In case of injuries causing death, the rate of
compensation varies from Rs.50, 000 to Rs. 2.28 lakhs depending upon the salary and age of the
worker at the time of his/her death.

The employer is under obligation to make the payment of compensation within one month from the
date on which it falls due. In case of default in paying the compensation due under the Act, the
commissioner may direct for recovery of the amounts of arrears with interest @ 12% p.a. on the
amount due. If, in the opinion of the commissioner, delay is without convincing justification, a
runner due not exceeding @ 50% of such amount by way of penalty may also be recovered from the
employer.

2. Employee’s State Insurance Act, 1948:

The main object of this Act is to provide social insurance for workers. It is a contributory and
compulsory health insurance scheme that provides medical facilities and unemployment insurance
to industrial workers for the period of their illness.

Following are main features of this Act:

Coverage:

The Act covers all workers (whether manual, supervisory or salaried employees) whose income do
not exceed Rs. 6,500 per month and are employed in factories, other than seasonal factories which
run with power and employ 20 or more workers. The State Government can extend the coverage of
the Act with the approval of the Central Government.

Administration:

The Act is administered by the Employees State Insurance (ESI) Corporation, an autonomous body of
40 persons consisting of representatives of the Central and State Governments, employers,
employees, medical profession and the parliament.

Benefits:

Under this Act, an insured is entitled to receive the following types of benefits:

(i) Medical Benefit:

An insured or a member of his/her family requiring medical help is entitled to receive medical facility
free of charge in a hospital either run by the ESI Corporation or by any other agency.

(ii) Sickness Benefit:

An insured worker in case of certified sickness is entitled to receive cash payment for a maximum
period of 91 days in any continuous period of one year. The daily rate of sickness benefit is
calculated as half of average daily wages. The insured worker should be under medical treatment at
a dispensary of other medical institutions maintained by the corporation.

(iii) Maternity Benefit:

An insured woman is entitled to receive cash payment calculated at a full average wage for a period
of 12 weeks of which not more than 6 weeks shall precede the expected date of her confinement.

(iv) Disablement Benefit:

This benefit is entitled to insured worker in case of industrial accidents and injury. In case of
temporary disablement, the worker is paid 70 per cent of wages during the period of disablement. In
case of permanent partial disablement, the insured individual is entitled to a cash benefit for life to
be paid as a percentage of the full rate. In case of permanent total disablement, 70 per cent of the
wages is paid as monthly pension to the worker for life.

(v) Dependents’ Benefit:

This benefit is available to the dependents of a deceased worker due to industrial accident or injury.
The rate of benefit differs depending upon the relationship between the deceased and the
dependents. For example, the widow of the deceased will receive during her lifetime of until
remarriage, an amount equivalent to three-fifth of the full rate. Every dependent son receives two-
fifths of the full rate till he reaches to the age of 15 years. Every dependent daughter gets the same
amount till she reaches to 15 year or until marriage, whichever is earlier.

Since its inauguration in October 1948, the ESI Corporation has 129 ESI hospitals with 23,690 beds,
43 ESI annexes and 1,450 dispensaries including mobile dispensaries and 66.13 lakhs employees had
received benefits as on 3December, 1998. During a single year 1997-98, the Corporation had
distributed Rs.932 crores by way of sickness benefits, maternity benefits, temporary and permanent
disablement benefits and dependents benefit.

3. The Employee’s Provident Funds and Miscellaneous Provisions Act, 1952:

The main object of this Act is to afford the retired workers financial security by way of provident
fund, family pension, and deposit linked insurance. The Act is characterised by the following
features:

Coverage:

The Act covers workers employed in a factory of any industry specified in Schedule 1 in which20or
more workers are employed or which the Central Government notifies in its official Gazette. The Act
does not apply to co-operative societies employing less than 50 persons and working without the aid
of power. It also does not apply to those new establishments till they become 3 years old.

Administration:

The Act is administered by Tripartile Central Board of Trustees represented by employers,

employees and the Government.

Benefits:

The Act provides 3 (Three) types of benefits:

(a) Provident Fund:

Under this benefit, an employee can avail non-refundable withdrawal or take advances from the
Provident Fund Account for various purposes. On superannuation, the employee gets the full
balance at his credit with interest.

(b) Pension:

Under the new pension scheme which has come into force from 16-11 -1995 replacing the 1971
scheme, several types of pension are available to an employee and his/her dependents.

(c) Deposit Linked Insurance:

Under the deposit-linked insurance scheme, an amount equal to the average balance in the
Provident Fund Account of the deceased employee during the preceding one year subject to a
maximum of Rs.35, 000 is granted to his/her nominee/legal heir.

4. The Maternity Benefit Act, 1961:

The main object of this Act is to regulate women employment in industrial establishments for certain
specified period before and after childbirth.

Coverage:
The Act is applicable to all establishments not covered under the Employee’s State Insurance Act,
1948.

Administration:

The Act is administered by the Employee’s State Insurance (ESI) Corporation.

Benefits:

Under the Act, a woman worker is entitled to receive the payment for maternity benefit at the rate
of average daily wages for a total period of 12 weeks. With effect from 1 st February 1996, a woman
worker is entitled to grant of leave with wages for a maximum period of one month in cases of
illness arising out of MTP or tubectomy. Women workers who will undergo tubectomy operation will
get two weeks’ leave.

5. The Payment of Gratuity Act, 1972:

The object of this Act is to provide economic assistance on the termination of an employee.

Coverage:

The Act is applicable to the employees employed in factories, mines, oil fields, plantations, ports,
railways, companies, shops or other establishments employing 10 or more persons.

Administration:

The act is administered by a controlling authority appointed by the appropriate Government

Benefits:

Under this Act, on completion of 5 years of service, the employees are entitled to gratuity payable at
the rate of 15 days wages for each completed year of service subject to a maximum of Rs. 3.5 lakhs
with effect from September 1997. The wage ceiling has been removed with effect from 24 th May,
1994.

Concept of Social Security:

What is Social Security?

 any of the measures established by legislation to maintain individual or family

income or to provide income when some or all sources of income are disrupted or
terminated or when exceptionally heavy expenditures have to be incurred (e.g., in
bringing up children or paying for health care)
 social security may provide cash benefits to persons faced with sickness and
disability, unemployment, crop failure, loss of the marital partner, maternity,
responsibility for the care of young children, or retirement from work
 Social security benefits may be provided in cash or kind for medical need,
rehabilitation, domestic help during illness at home, legal aid, or funeral expenses
 It acts as a facilitator – it helps people to plan their own future through insurance
and assistance.
History of Social security

 Germany was the first country to introduce Social security scheme (1883)
 each member of a particular trade (blacksmiths, painters, weavers etc) was
required to contribute at regular intervals;
 Money from this fund was used for food,lodging, hospital and feneral expenses of
aged and disabled members.
 In USA, Social Security Act came into existence in 1935. (years not important,
this is only fodder material for Essay.)

Social Security in India

 India has always had a Joint Family system that took care of the social security
needs.
 However with rise of migration, urbanization, nuclear families and demographic
changes, Joint family system has declined. Hence we need a formal system of
social security.

Social Security: Constitutional Provisions

Concurrent List
 Social Security and labour welfare falls under Concurrent list, it means both union and state
Government can make laws regarding these topics.

 (List III in the Seventh Schedule of the Constitution of India)

 Item No. 23
o Social Security and insurance,
o employment and unemployment.
 Item No. 24
 Welfare of Labour including conditions of work,
 provident funds,
 employers’ liability,
 workmen’s compensation,
 invalidity and old age pension and maternity benefits.

Part IV Directive Principles of State Policy

Article 41

 Right to work, to education and to public assistance in certain cases

 State shall, within the limits of its economic capacity and development, make
effective provision for securing the right to work, to education and to public
assistance in cases of unemployment, old age, sickness and disablement, and in
other cases of undeserved want.

Article 42

 Provision for just and humane conditions of work and maternity relief
 State shall make provision for securing just and humane conditions of work and
for maternity relief.

Difference between Organized and Unorganized Sectors

Organized sector

 includes primarily those establishments which are covered by the Factories Act,
1948, the Shops and Commercial Establishments Acts of State Governments, the
Industrial Employment Standing Orders Act, 1946 etc.
 This sector already has social security benefits under above laws.
 Examples: employees of union and state Government, army, navy, airforce,
Multinational companies, Infosys, TCS and so on.

Examples of Unorganized sector

Rural Areas Urban Areas

1. landless agricultural labourers 1. street vendors

 2. small and marginal farmers
3. share croppers
4. persons engaged in 2. hawkers
a. animal husbandry 3. head load workers
b. fishing 4. cobblers
c. horticulture 5. tin smiths
d. bee-keeping 6. garment makers
e. toddy tapping 7. Construction workers
5. forest workers
6. rural artisans

Unorganized sector

 Unorganized sector doesn’t have labour law coverage. These are seasonal and
temporary nature of occupations.
 Casual nature of work, labour mobility is high hence bargaining power is low.

SOCIAL SECURITY LAWS in India

Employees’ State Insurance Act, 1948 (ESI Act)

 covers factories and establishments with 10 or more employees

 Provides medical care to employees and their families.
 Provides Cash benefits during sickness and maternity
 Monthly pension after death or permanent disability.

Employees’ Provident Funds Act, 1952

  applies to specific scheduled factories and establishments employing 20 or more
employees and ensures terminal benefits to provident fund, superannuation
pension, and family pension in case of death during service.

Workmen’s Compensation Act, 1923 (WC Act)

 Requires payment of compensation to the workman or his family in cases of

employment related injuries resulting in death or disability.

Maternity Benefit Act, 1961 (M.B. Act)

 provides for 12 weeks wages during maternity as well as paid leave in certain
other related contingencies.

Payment of Gratuity Act, 1972 (P.G. Act)

 provides 15 days wages for each year of service to employees who have worked
for five years or more in establishments having a minimum of 10 workers.

Social Security In India : Different From Developed Nations

 We do not have an existing universal social security system

 92% of the workforce is in the informal sector which is largely unrecorded
 today 1/8th of the world’s older people live in India. The overwhelming majority
of these depend on transfers from their children.
 Addressing social security concerns with particular reference to retirement
income for worker
 In India the coverage gap i.e. workers who do not have access to any formal
scheme for old-age income provisioning constitute about 92% of the estimated
workforce of 400 million people.

Provident Fund

 Here the employers to contribute to a provident scheme providing a lump-sum

payment in the event of death or disability or on retirement.

3 disadvantages of Provident Fund

1. Money is inadequate for risks occurring early in working life.

2. Provident funds are generally invested in government securities, which have very
low interest rate (~8%) compared to other investment options such as mutual fund
or even Bank fixed deposits
3. Inflation erodes the real value of savings.

But From the point of view of government, Provident Fund is attractive because it generates
forced savings that can be used to finance national development plans.
Social security and ILO

International Labour Standards on Social security

Social security is a human right which responds to the universal need for protection against
certain life risks and social needs. Effective social security systems guarantee income security
and health protection, thereby contributing to the prevention and reduction of poverty and
inequality, and the promotion of social inclusion and human dignity. They do so through the
provision of benefits, in cash or in kind, intended to ensure access to medical care and health
services, as well as income security throughout the life cycle, particularly in the event of
illness, unemployment, employment injury, maternity, family responsibilities, invalidity, loss
of the family breadwinner, as well as during retirement and old age. Social security systems
therefore constitute an important investment in the well-being of workers and the community
as a whole, and facilitate access to education and vocational training, nutrition and essential
goods and services. In relation with other policies, social security contributes to improving
productivity and employability, and to economic development. For employers and
enterprises, social security helps to maintain a stable workforce that can adapt to changes.
Finally, it reinforces social cohesion and therefore contributes to building social peace,
inclusive societies and a fair globalization by ensuring decent living conditions for all.

The Conventions and Recommendations which make up the ILO’s standards framework on
social security are unique: they set out minimum standards of protection to guide the
development of benefit schemes and national social security systems, based on good practices
from all regions of the world. They are therefore based on the principle that there is no single
model for social security, and that it is for each country to develop the required protection.
For this purpose, they offer a range of options and flexibility clauses for the progressive
achievement of the objective of the universal coverage of the population and of social risks
through adequate benefit levels. They also set out guidance on the design, financing,
implementation, governance and evaluation of social security schemes and systems, in
accordance with a rights-based approach. In a globalizing world, in which individuals are
exposed to ever greater economic risks, it is clear that a significant national policy of social
protection can contribute to attenuating the many negative effects of crises. It was for this
reason that the International Labour Conference adopted a new instrument in 2012, the Social
Protection Floors Recommendation (No. 202) . Moreover, the 2019 General Survey ,
focusing on universal social protection for life in dignity and health, prepared by the
Committee of Experts, which will be examined by ILO constituents at the International
Labour Conference in 2019, covers this Recommendation.
Relevant ILO instruments

 Social Security (Minimum Standards) Convention, 1952 (No. 102)   -

[ratifications ]
This Convention sets out minimum standard for the level of social security benefits
and the conditions under which they are granted. It covers the nine principal branches
of social security, namely medical care, sickness, unemployment, old age,
employment injury, family, maternity, invalidity and survivors' benefits. To ensure
that it could be applied in all national circumstances, the convention offers states the
possibility of ratification by accepting at least three of its nine branches and of
subsequently accepting obligations under other branches, thereby allowing them to
progressively attain all the objectives set out in the convention. The level of minimum
benefits can be determined with reference to the level of wages in the country
concerned. Temporary exceptions may also be envisaged for countries whose
economy and medical facilities are insufficiently developed, thereby enabling them to
restrict the scope of the convention and the coverage of the benefits provided.
 Social Protection Floors Recommendation, 2012 (No. 202) 
This instrument provides guidance on introducing or maintaining social protection
floors and on implementing social protection floors as part of strategies to extend
higher levels of social security to as many people as possible, in accordance with the
guidance set out in ILO social security standards
 Equality of Treatment (Social Security) Convention, 1962 (No. 118)   -
[ratifications ]
 Maintenance of Social Security Rights Convention, 1982 (No. 157)   -
[ratifications ]
These instruments provide for certain social security rights and benefits for migrant
workers, who face the problem of losing entitlements to social security benefits which
they enjoyed in their country of origin.
 Further relevant instruments 

Further social security instruments

A later generation of conventions expands the scope of protection provided by Convention

No. 102. While offering a higher level of protection in terms of scope and level of benefits to
be guaranteed, these instruments authorize certain exceptions which ensure flexibility.
The benefits provided under Convention No. 102 and under later conventions are outlined
below. This information does not include provisions on the duration and conditions of
entitlement to benefits, derogations allowed under these instruments, or higher levels of
benefits provided by relevant Recommendations. (Note 1)

Medical care
  Convention No. 102  - [ratifications ]: provides for preventive care, general
practitioner care, including home visits, specialist care, essential pharmaceutical
supplies as prescribed, prenatal, confinement and postnatal care by medical
practitioners or qualified midwives, and hospitalization where necessary.
 Convention No. 130  - [ratifications ]: provides the same benefits as Convention No.
102, plus dental care and medical rehabilitation.

Sickness benefit

 Convention No. 102  - [ratifications ]: periodical payments, corresponding to at least

45% of the reference wage.
 Convention No. 130  - [ratifications ]: periodical payments, corresponding to at least
60% of the reference wage. Also provides for funeral expenses in case of death of the
beneficiary.

Unemployment benefit

 Convention No. 102  - [ratifications ]: periodical payments, corresponding to at least

45% of the reference wage.
 Convention No. 168  - [ratifications ]: periodical payments, corresponding to at least
50% of the reference wage. Beyond the initial period, possibility of applying special
rules of calculation. Nevertheless, the total benefits to which the unemployed may be
entitled must guarantee them healthy and reasonable living conditions in accordance
with national standards.

Old-age benefit

 Convention No. 102  - [ratifications ]: periodical payments, corresponding to at least

40% of the reference wage. The rates of relevant benefits must be revised following
substantial changes in the general level of earnings and /or the cost of living.
 Convention No. 128  - [ratifications ]: periodical payments, corresponding to at least
45% of the reference wage. Same conditions as Convention No. 102 relating to the
revision of rates.

Employment injury benefit

 Convention No. 102  - [ratifications ]: medical care, periodical payments

corresponding to at least 50% of the reference wage in cases of incapacity for work or
invalidity. Benefits for widow and dependent children in case of death of breadwinner
with periodical payments corresponding to at least 40% of the reference wage.
Possibility of converting periodical payments into lump sums under certain
 conditions. Except in the case of incapacity for work, obligation to revise the rates of
periodical payments following substantial changes in the cost of living.
 Convention No. 121  - [ratifications ]: same as Convention No. 102, plus certain types
of care at the place of work. Periodical payments, corresponding to at least 60% of the
reference wage in cases of incapacity for work or invalidity, benefits for widow, the
disabled and dependent widower, and dependent children in case of death of
breadwinner, with periodical payments corresponding to at least 50% of the reference
wage. Obligation to prescribe minimum amount for these payments, possibility of
converting payments into a lump sum under certain conditions, and supplementary
benefits for disabled persons requiring the constant help of a third person.

Family benefit

 Convention No. 102  - [ratifications ]: provides either periodical payments or the

provision of food, clothing, housing, holidays or domestic help, or a combination of
these.
 No new convention exists on this topic.

Maternity benefit

 Convention No. 102  - [ratifications ]: medical care including at least prenatal,

confinement and postnatal care either by medical practitioners or by qualified
midwives and hospitalization where necessary; periodical payments, corresponding to
at least 45% of the reference wage.
 Convention No. 183  - [ratifications ]: medical benefits including prenatal, childbirth
and postnatal care, as well as hospitalization care when necessary; cash benefits to
ensure that the woman can maintain herself and her child in proper conditions of
health and with a suitable standard of living. At least two-thirds of previous earnings
or comparable amount.

Invalidity benefit

 Convention No. 102  - [ratifications ]: periodical payments, corresponding to at least

40% of the reference wage; the rates of relevant benefits must be revised following
substantial changes in the general level of earnings and/or in the cost of living.
 Convention No. 128  - [ratifications ]: periodical payments corresponding to at least
50% of the reference wage; the rates of relevant benefits must be revised following
substantial changes in the general level of earnings and/or in the cost of living.

Survivors' benefit
  Convention No. 102  - [ratifications ]: periodical payments, corresponding to at least
40% of the reference wage; the rates of relevant benefits must be revised following
substantial changes in the general level of earnings and/or in the cost of living. .
 Convention No. 128  - [ratifications ]: periodical payments corresponding to at least
45% of the reference wage; the rates of relevant benefits must be revised following
substantial changes in the general level of earnings and/or in the cost of living.

Social Security Measures in India: An Overview

In the pre-industrial society, security against various contingencies was provided by the
institutions like joint family, caste, guild, village community, religious institutions, etc.
Eventually, the emergence of industrial revolution changed both the nature of insecurity as
well as the remedies provided for it. The United States of America is considered to be the
birth place of modern social security measures.
The social security measures in the USA were inaugurated with the enactment of the Social
Security Act, 1935 under which a United Social Insurance System was established as the first
major step taken in the field of social security. An old age pension system was also
established by the Act of 1935. In 1938, a Social Security Board was set up to administer
social security measures in the United States. Later on, the term ‘social security’ was adopted
in various countries, of course, in different forms.
The introduction of social security measures in India is expectedly a recent one. In fact, the
making of climate for industrial security in India started from the 10 Session of the
International Labour Conference held in 1927 in which two Conventions and
Recommendations were adopted for social security in the country.
These were discussed thread bare in the Indian Legislative Assembly in 1928. However, the
Assembly resolved that the introduction of any comprehensive scheme for social security on
the lines proposed by the ILO was impracticable under the conditions then prevailing in the
country.
Later the Preparatory Asian Regional Labour Conference, held in New Delhi in 1947 adopted
a comprehensive resolution on social security implementation in various Asian Countries.
Following this resolution, the Employees State Insurance Act, 1948 was enacted in India to
inaugurate the social security measures in the country.
As stated earlier, India, as a ‘Welfare State’, is expected to take care of the citizens from the
‘cradle to the grave’. It is this realisation the constitution of India lays down that the State
shall, within the limits of its resources and development, make effective provisions for
securing public assistance in event of unemployment, old age, sickness, and disablement.
This constitutional obligation has served as epoch making in India’s efforts in the field of
social security provisions in the country. Since then, various social security schemes have
been introduced in the country. Among the social assistance schemes, old-age assistance
schemes are the most important ones. It was the Government of Uttar Pradesh who
introduced old-age assistance scheme for the first time in 1957.
The scheme was designed to pay a monthly benefit to needy individuals over the age of 70
years who had no one to support them. Later on, similar schemes were introduced in Andhra
Pradesh in 1961, Tamil Nadu in 1962, Punjab and Haryana in 1963 and subsequently in many
other states. Yes, the eligibility conditions to avail of these benefits and levels of benefits
differ across the States.
Subsequently, with increasing need for social security along with the increasing levels of
national development, the Government made various legislative provisions to afford the
needy people/workers protection against uncertainties in their lives.

Social security is defined as the security that the society furnishes through appropriate
organizations against certain risks to which its members are exposed.
According to Lexicon Universal Encyclopaedia, the term social security has been defined as
‘consisting of public programmes intended to protect workers and their families from income
losses associated with the old age, illness, unemployment, or death.

The term sometimes is also used to include a broad system of support for all those who, for
whatever reasons, are unable to maintain themselves’.
The concept of social security is based on ideas of human dignity and social justice. The
underlying idea behind social security measures is that a citizen who has contributed or is
likely to contribute to his/her country’s welfare should be given protection against certain
hazards.
Learn about:- 1. Meaning and Definition of Social Security 2. Concept of Social Security 3.
Characteristics 4. Significance 5. Measures 6. Benefits.

Social Security: Meaning, Definition, Concept, Characteristics, Measures and Benefits

Social Security – Meaning and Definition
The term social security has been defined differently by authorities and, thus, there is no
commonly accepted definition of the term. There are mainly two streams of thought on this
issue, one represented by the ILO that limits the scope of social security to maintenance of
one’s income against loss or diminution.
Another view perceives social security in a broader sense; in this sense, it is a set of policies
and institutions designed to enable a person to attain and maintain a decent standard of life.
This is described as a preventive or promotional form of social security.
Few Definitions:
Social security is defined as the security that the society furnishes through appropriate
organizations against certain risks to which its members are exposed.
In the historical perspective, the term social security was coined for the first time when the
United States Social Security Act, 1935, came into existence. Subsequently, the term became
popular in other western nations of the world.
In the USA, the term is used to denote old age survivors, invalidity, and health insurance
schemes which function under the control of the Federal Government. In England, the term
social security includes social assistance as well as social insurance scheme and is inclusive
of the National Insurance Scheme, industrial injury scheme, and social assistance scheme
under which supplementary benefits are provided to the workers.
The ILO has defined social security as ‘the surety that society furnishes, through appropriate
organization, against certain risks to which the members are exposed. These risks are
essentially contingencies against which the individuals of small means and meagre resources
cannot effectively provide by their own ability or presight or even in private combination
with their fellow workers—these risks being sickness, maternity, invalidity, old age, and
death. It is the characteristics of these contingencies that they imperil the ability of the
working class to support itself and its dependent in health and decency’.
According to Lexicon Universal Encyclopaedia, the term social security has been defined as
‘consisting of public programmes intended to protect workers and their families from income
losses associated with the old age, illness, unemployment, or death. The term sometimes is
also used to include a broad system of support for all those who, for whatever reasons, are
unable to maintain themselves’.
According to Lord Beveridge, social security, “is an attack on five giants viz., want, disease,
ignorance, squalor and idleness.” This concept is related to social justice and equality. ILO
defines social security as, “the security that society furnishes, through appropriate
organisation against certain risks to which its members are exposed…. Social security is
designed to prevent and cure disease, to support when people are unable to earn and restore to
gainful employment.”

Social Security – Concept Defined by National Commission on Labour (NCL)

The concept of social security is based on ideas of human dignity and social justice. The
underlying idea behind social security measures is that a citizen who has contributed or is
likely to contribute to his/her country’s welfare should be given protection against certain
hazards.
The concept of social security, thus, is based on the ideals of human dignity and socio-
economic justice. Underlying the concept is also the desire to give protection to its citizens to
contribute to a country’s total welfare against certain hazards of life to which they are
exposed either in the working life or as a consequence of it.
The National Commission on Labour (NCL) (1969) has Defined the Concept of Social
Security as Follows:
Social Security envisages that the members of a community shall be protected by collective
action against social risk causing undue hardship and deprivation to individuals whose private
resources can seldom be adequate to meet them.
The concept of Social Security is based on ideas of human dignity and social justice. It
further tries to protect the citizens to contribute towards the countries total welfare.
The wages provided to the employees, particularly of the lower level may not be sufficient to
meet their needs like medical, children education, maternity needs of women employees and
employees’ wives’ etc. Therefore, Governments of various countries insist the employers to
provide the security to their employees against the social evils. In addition. Governments also
provide social security measures to the people.

Social Security – 4 Main Characteristics of Social Security Program

The main characteristics of the social security program are as follows:
(1) Social Security Schemes are providing social assistance and social insurance to
employees who have to face challenges of life without regular earning due to some
contingencies in their life.
(2) These Schemes are implemented by enactments of law of the country.
(3) They generally are relief providers to employees who are exposed to the risks of
economic and social security. This protection is provided to them by members of the society
of which he is a part.
(4) These Schemes have a broad perspective. They not only provide immediate relief to the
employees who have suffered on account of contingencies, but also provide psychological
security to others who may face the same problems in times to come.

Social Security – Importance for the Employees as well as the Society

Social security is basically related to the high ideals of human dignity and social justice.
The importance of social security for the employee as well as the society is incredibly
high:
(a) Social Security is the main instrument of bringing about social and economic justice and
equality in the society.
(b) Social Security is aimed at protecting employees in the event of contingencies. This
support makes the employees feel psychologically secured. This enhances their ability to
work.
(c) Money spent on social security is the best investment which yields good harvest. The
workforce maintenance is very essential not only for the organization but also for the country
at large.
(d) In a welfare state, social security is an important part of public policy. In countries where
social security is not given adequate consideration in public policy, the government remains
unsuccessful in maintaining equality and justice.

Social Security – Measures

Ensuring social security measures for the citizens of a country is the fundamental
responsibility of the government. India being a welfare state, the Constitution of India has
described it as a democratic and socialist Republic.
The clauses that define fundamental rights and formulate the directive principles of State
policy in our Constitution leave no doubt about the concern and commitment of the
government to the rights of citizens to enjoy social security. Ours is a democratic country
based on the premise of equality and accountability.
We are also a socialist state which accepts the responsibility for providing and ensuring
Social Security to all its citizens without any discrimination. Broadly speaking, the idea of
Social Security is that, the Centre and the State government shall make itself responsible for
ensuring a minimum standard of material welfare to all its citizens on a basis wide enough to
cover all contingencies of life.
There is perhaps no country in the world which does not take care of the Social Security
measures. But the types of Social Security measures provided by the various governments
differ from country to country.

Social Security – Benefits in India: Social Insurance and Social Assistance

India is a Welfare State as envisaged in her constitution. Article 41 of the Indian Constitution
lays down, “The State shall within the limits of its economic capacity and development make
effective provision securing the right to work, to education and to public assistance in case of
unemployment, old age, sickness, and disablement and other cases of unserved wants.”
Thus, social security constitutes an important step towards the goal of Welfare State, by
improving living and working conditions and affording people protection against the various
kinds of hazards.
Social security benefits are provided in India through legislations. Workmen’s Compensation
Act, 1923 enforces the employer to provide compensation to a workman for any personal
injury caused by an accident, for loss of earnings etc. The Employees’ State Insurance Act,
1948 enforces the employers to provide sickness benefits, maternity benefit to women
employees, disablement benefit, dependent’s benefit, funeral benefit and medical benefits.
The Employees Provident Fund and Miscellaneous Provisions Act, 1952 enforces the
employer to provide provident fund, deposit-linked insurance etc. The Maternity Benefit Act,
1961 provides for medical benefits, maternity leave etc. The Payment of Gratuity Act, 1952
provides for the payment of gratuity at the time of retirement.
Social security legislations in India suffer from the defects like duplication. For example.
Employees’ State Insurance Act and Maternity Benefit Act provide for maternity benefits. In
addition, different administrative authorities implement the law, resulting from overlapping.
Hence, the Study Group (1957-58) appointed by the Government of India suggested an
integrated social security scheme in India.
This integrated social security scheme should provide for medical care, insurance against
sickness, maternity benefits unemployment insurance, employment injury, and old age
pension. This scheme should be enforced by a single agency in order to avoid overlapping
and duplication.
India is a welfare state and social security is an essential component of government policy.
Social security benefits in India are provided in two major way:
1. Social Insurance.
2. Social Assistance.
1. Social Insurance:
In this scheme, a common fund is established with periodical contributions from workers,
according to their nominal paying capacity. The employers and state provide the portion of
the finance. Provident fund and group insurance are example of this type.
2. Social Assistance:
Under this, the cost of benefits provided is financed fully by the government without any
contributions from workers and employers. However, benefits are paid after judging the
financial position of the beneficiary. Old age pension is an example.