W.P. 4809 of 2021 regarding the definition “Wages” under Sec. 2 (88) of the Code on Social Security, 2020!

Sec. 2 (88) of the Code on Social Security, 2020 tampers with the existing and time-tested definition of the term ‘wages’ under Sec. 2  (22) of the Employees’ State Insurance Act, 1948, and, thereby, totally nullifies the purpose for which the ESI Act was brought into existence along with the Minimum Wages Act, in the year 1948, even before the Constitution of India was finalised and brought into existence.

The Minimum Wages Act (Act No. 11 of 1948) was made law on 15.03.1948 and the ESI Act (Act No. 34 of 1948) was made law, one month later, on 19.04.1948. It would thus become clear that the law-making process had been going on simultaneously for both laws. But the definition of the term ‘Wages’ that appeared in both these enactments of 1948 was kept different from each other, deliberately, and with foresight by the lawmakers who knew the subject in depth.

But the present Code on Social Security, 2020 published in the Gazette on 29.09.2020 has been prepared by the officials without understanding and appreciating the basic concepts behind the Minimum Wages Act and the ESI Act.

The Minimum Wages Act, 1948 was enacted to ensure minimum livelihood to the workers when they do their work in the factories covered under the Act whereas the ESI Act was intended to provide the security of livelihood to the workers when they are not able to work and earn owing to various contingencies like sickness, maternity, etc.,

The definition of the term ‘Wages’ as available in the Minimum Wages Act, 1948, prevented the employer from showing from many variable components of remuneration (like overtime allowances) paid by him to his workers as part of the said minimum wages. The definition of the term ‘Wages’ under the ESI Act, on the other hand, made it incumbent on the employer to take into account many variable components of remuneration paid by him to his employees and pay contribution on them too, so that the cash benefit that the workers would receive, in the event of sickness or other contingencies, would be attractive and substantial with reference to the total emoluments that they earned under whatever nomenclature.

An employee who draws total wages of Rs. 20,000 pm and is covered under the ESI Act, now, would get Rs. 18,000 pm, if he meets with an accident during the course of employment and gets temporarily disabled from doing his work for a month. Because the ESI Act takes into account all his remuneration as wages, except a few exceptions. But he would get only about Rs. 5000 or even less if and when the impugned Sec. 2 (88) of the Code on Social Security, 2020 comes into force. Because, Sec. 2 (88) decides the quantum of benefit payment only on the minimum wages.

Payments made to the employees as Overtime Allowance, House Rent Allowance, Incentive Bonus, Attendance Bonus, etc., are now excluded. Similar is the case with the women whose Maternity Benefit which is around their entire wages now, would be halved, because of the impugned Sec. 2 (88).The working population in the entire nation would never find the concept of Social Security meaningful, hereafter, because of the impugned Sec. 2 (88) wrongly inserted into the Code which claims to provide Social Security.

Social Security implies reasonable standard of living for the working population, by providing ‘income security’ as mentioned in Sec. 2 (78) of the Code on Social Security, 2020 itself. But the impugned Sec. 2 (88) of the said Code denies the attractive income security, that had, so far, been provided under Sec. 2 (22) of the ESI Act. The impugned Sec. 2 (88) of the Code on Social Security, affects the reasonable standard of living assured to the workers by the ESI Act, affecting the fundamental rights of the employees covered under the ESI Act..

There cannot be one and the same definition of the term ‘wages’ for both the Code on Wages, 2019 and the Code on Social Security, 2020. The officials did not follow the Due Process of Law in the law-making-process, and did not adhere to the canons of Pre-Legislative Consultative Policy dated 05.02.2014 and the established procedure laid down in Para 9.11.7 of the Manual of Parliamentary Procedure.

The Writ Petition filed before the Hon’ble High Court of Madras at Chennai challenges the said Sec. 2 (88) of the Code on Social Security, 2020 published in the Gazette of India on 29.09.2020 and prays for quashing it.

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