The draft labour code on social security 2018 talks of community service for individuals in a company’s top management for violations of mandatory social security provisions. If a violation attracts a fine and a jail sentence of up to two years, the choice of undertaking a fixed number of hours of community service will be extended to the top executives in lieu of the jail-term. Violations that will attract a community service order include failure to pay social security contribution of workers, maintain records and furnish information to inspectors, pay gratuity, provide creche facility and retrenching women workers during maternity leave.
Over 48,000 firms in the country had been listed by the Employees’ Provident fund Organisation for failing to deposit provident fund contributions for March 2018—EPFO contributions are mandatory for firms hiring at least 20 workers while those that have at least 10 must provide employees medical cover under the Employees’ State Insurance Corporation (ESIC). The idea is to have a form of punishment that could serve as a deterrent while not meaning imprisonment. Many developed nations use it to punish lesser offences.
While, also, having to do unpaid work would seem just desserts for company executives who fail to provide for workers’ social security , the fact is it is not only industry that is hamstrung by rigid and anti-jobs labour laws, workers suffer under it, too. Social security obligations punish low-wage workers by deducting a significant part of their salary, leaving them with “in-hand” incomes that are hardly enough to get by with.
ESIC also happens to have one of the lowest claims ratio in the country, of just 45%, meaning a lot of workers are actually unable to access the money they have earned because of the programme. That apart, the larger labour law ecosystem is so rigid—hiring and firing laws, for instance— that the choice for employers boils down to increasing hiring of contractual labours, which ultimately harms workers. The need is to fix India’s rigid labour laws on a priority. Deterrents for violations can come later.