At present, an employee who is covered under the existing ESI Act and earns a sum of Rs. 20000 pm as wages, gets about Rs. 14000 pm as Sickness Benefit, Rs. 16000 as Extended Sickness Benefit and Rs. 18000 as Total Disablement Benefit and about Rs. 20000 as Maternity Benefit, if the period of abstention is assumed to be one month. Because, the quantum of benefit is decided on the basis of total wages the employee receives, as per Sec. 2 (22) of the ESI Act.
But if and when the Social Security Code, 2020 is implemented, the benefit rate would be quantified only on the basis of the ‘minimum wages’ prescribed by the respective State Governments, as per Sec. 2 (88) of the impugned Code read with Sec.2 (y) of the Code on Wages, 2019, and, consequently, the same employee would roughly get only about Rs. 7000 pm as Sickness Benefit (instead of Rs.14000), about Rs. 8000 as Extended Sickness Benefit (instead of Rs. 16000), about Rs. 9000 as Total Disablement Benefit (instead of Rs. 18000) and about Rs. 9000 or 10000 as Maternity Benefit (instead of Rs. 20000).
The livelihood of the employee is, thus, directly affected because the impugned Code has restricted the social security benefits by linking it only to the Minimum Wages instead of linking it to the maximum of the wages earned, i.e., the maximum of the Living Wage mentioned in Art. 43 of the Constitution of India or, the maximum of at least, Fair Wages, as provided at present under the ESI Act.
The following table would illustrate the position even more clearly:
The quantum of benefits is required to be calculated on the basis of the “standard benefit rate” with reference to “average daily wages” defined in Rule. 2 (f), (g) & (zf) of the Code on Social Security Rules, 2020.
Minimum Wages for this illustration is assumed to be Rs. 380 per day for an unskilled worker in a State. 380 multiplied by 26 arrives at the monthly income of Rs. 9880. So, a sum of Rs.10000 is assumed to be the minimum wages that would be taken into account by the employer and the ESI Corporation for providing all kinds of cash benefits to an employee who is actually earning, now, Rs 20000 in a factory covered under the ESI Act, 1948.
A drastic reduction in the rights and benefits of the working population is the main thrust of the labour Codes, especially the Code on Social Security, 2020. No Social Impact Assessment was done before these codes were floated because they knew that it was going to wreck the social security scenario of the nation and that the earlier laws brought in with care and compassion during the period from 1948 to 1961 were to be made mincemeat.
The Code on Social Security, 2020 was made law through various tricks played by three IAS Officers in the Ministries of Labour, Law and Parliamentary Affairs. Instead of acting as checks and balances against one another, the three ministries of these officers colluded with one another and ensured the Code with questionable aspects pass through Parliament.
How these three officers cheated the Parliamentary Standing Committee on Labour and how they manipulated things through a ‘fresh’ Bill No. 121 of 2020 would read like a thriller, more interesting and more poignant than the BBC fame serial, ‘Yes, Minister’.
Now the cat is out of the bag.
These codes were brought in to satisfy the demand of the employers.
“The changes that the four codes are expected to bring about have been long overdue and it has been an industry ‘ask’, says Mr. Pratik Kumar, CEO, Wipro Infrastructure Engineering & Executive Director – Wipro Enterprises, in his keynote address,
What is evident from the report is that these employers, who were and are interested only in the ease of doing business, found only the wages, the benefits and the service conditions of the workforce irksome. They do not have any opinion about the political donations and bribery which far exceed the wages paid to the workers. Perhaps they are part of the ‘ease’. World has seen noble employers like Robert Owen, George Cadbury and others who considered workmen as human beings and assets. But these employers in India consider workmen as impediments and liabilities. What a fall in civilisation !
Anyway, the confession of Mr. Pratik Kumar has made it clear that these labour codes have been brought in for the welfare of employers and because of the pressure of employers.
The welfare of the labour class had not been a factor reckoned with, in spite of pious statements of the ministries regarding extension of social security to gig workers and others, which were made just in order to camouflage the real intentions.
The ESI Act, 1948 provides the goal post in the matter of benefits.
Its extension to other unorganised sectors had been examined very often, even during the golden jubilee celebrations of 2002. The practical problems faced in the field resulted in delay. Those problems have not vanished till date.
But never was the rate of benefits attempted to be reduced. The Code on Social Security, 2020 reduces the benefits drastically or denies those benefits in toto.
The Code is meant for the employers only. Not in the interest of the vast multitude of working population.
When the scheme was extended to cashew workers as an experimental measure in the year 1989, the quantum of benefits were not reduced. Law was then made with compassion.
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 less than 50% of it 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.
The Parliamentary Standing Committee on Labour (PSCL) was examining the Bill No. 375 of 2019 during the period from 23.12.2019 to 29.07.2020.
The Committee was seriously apprehensive of involving ESI Corporation with the responsibility of medical education and wanted the Corporation be absolved of the duty of medical education related aspects.
But the officials used the concept of ‘Quota for the Wards of IPs’ to convince the MPs that running the Medical Colleges by the ESIC was beneficial to the IPs. They threw out the said concept, later, within six days after they got the Code passed with Sec. 39 (5) of it coming out of Parliament unscathed.
Now, the details:
When the PSCL asked questions about the need for medical colleges to be run by the ESIC, the officials of the Ministry of Labour & Employment, adduced inappropriate reasons and justified the Clause 39 (5).
They said that the said cause was parallel to the provisions of Sec. 59 B of the ESI Act. This was a section inserted unlawfully without following the Due Process of Law in the years 2009 and 2010. Moroever, the Corporation regretted that decision to start medical colleges and resolved to get out of it in 2015.
Yet the officials of the Ministry of Labour & Employment ventured to justify the medical colleges in the ESIC fold and convince the PSCL by uttering misleading statements, as recorded in Para 8.9 of the Report dated 30.07.2020 of the PSCL.
They informed the PSCL
that the medical colleges under the ESIC fold was “fulfilling the objective of reducing” the shortage of doctors in the ESIC and
that under the Wards of IPs Quota, “more than 300 ward of IPs have got admission in ESI Medical Colleges to pursue the MBBS courses”.
Both statements cannot constitute the proper and relevant reply to the apprehensions raised by the PSCL.
The Quota for the Wards of IPs for medical seats has been annulled all of a sudden on 28.09.2020 on the ground that there had been court judgments of June and August 2019.
Now the question is,
If the court judgments of June and August 2019 could be cited as the reason for annulling the quota in medical seats for the Wards of IPs, why was the PSCL not informed of this fact, when it was functioning for seven months from 23.12.2019 to 29.07.2020?
Why was the order annulling the quota issued abruptly all of a sudden on 28.09.2020, six days after the Parliament passed the Code on Social Security, 2020 on 22.09.2020?
The impression that one can legitimately gather from these facts is that the bureaucrats were working for a lobby, willy nilly, to hand over the ESIC Medical Colleges along with the major hospitals to private persons without imposing any obligation on them even to accommodate the Wards of IPs in providing medical education, especially when the judgments concerned were appealable on valid grounds.
If there is no utility at all for the ESIC to run the medical colleges, the ESIC should close down the medical colleges and utilise the infra (created amidst a lot of corrupt activities of humongous scale) to generate permanent revenue to the ESI Corporation by leasing them out to business houses in public auction in a transparent manner.
Working overtime to entrust the ESIC medical institutions to ‘any person’ as mentioned in Cl. 41 (5) of the Draft Code on Social Security circulated on 17.09.2019 or to ‘any other body of persons’ as inserted later in the Bill No. 375 of 2019 point to the lobby that is working for siphoning off the property of the Corporation.
It was absolutely improper for the officials to inform the PSCL about the benefit derived by the wards of IPs in admission to medical colleges and convince them about the need for the ESIC to run the medical colleges, while they had annulled the quota on 28.09.2020 and had been aware of the consequence of the concerned judgments given by the Courts 13 or 15 months ago.
Are they accountable or not for such a conscious and deliberate misleading statements made by them before the Parliamentarians?
The Code on Social Security, 2020 which was presented as the Bill No. 121 of 2020 in the Parliament on 19.09.2020 by the central bureaucrats and got passed by the two Houses on 22.09.2020 and 23.09.2020 was a record of sorts exemplifying the capability of the bureaucrats to bend the Parliament to their will. The tricks played by the British bureaucrats to use the politicians in power, as shown in the legendary BBC serial ‘Yes, Minister!’, pales, simply, into oblivion when one sees the audacious capability of the Indian bureaucrats who have mastered the art of deceiving the Parliamentarians and diverting their attention to get any law passed as the bureaucrats pleased.
The law-making-process adopted by the central bureaucrats in the making of the Code on Social Security, 2020 poses the following Questions of Law:
a. whether a law can be enacted with provision to reduce or annul the existing benefits payable to the working class under the ESI Act, which amounts to denial of the recognized fundamental human rights, especially when the benefits had been paid for decades from the funds contributed only by the employers and employees and not by the Central Government with the financial position of the ESI Corporation still remaining stable and commendable;
b. whether a law can be enacted without placing before the nation in general and the Parliamentarians in particular the fact whether the Respondents had estimated and assessed, on record, the impact of the proposed legislation on fundamental rights, lives and livelihoods of the affected people, the working population in this case, as mandated in Para 2 of the Decision of the COS communicated in the D.O. letter No. 11 (35)/ 2013-L. 1 dated 05.02.2014;
c. whether a law can be enacted without following the ‘due process of law’ codified in the Pre-Legislative Consultative Policy evolved by the Ministry of Parliamentary Affairs and publicized on 05.02.2014.
d. whether a law can be made without incorporating the suggestions given by the PSCL but making false statement to the Parliament that the fresh Bill has been proposed after incorporating the valuable suggestions of the PSCL;
e. whether a law can be made without following the due process of law, codified in Para 9.11.7 of the Manual of Parliamentary Procedure of the Government of India, and without making changes in the Bill scrutinised by the PSCL, through amendment motions;
f. whether the Secretaries of the Ministry of Labour, the Ministry of Law & Justice and the Ministry of Parliamentary Affairs do have the authority to pilot the Bill No. 121 of 2020 as a ‘fresh Bill’ containing numerous modifications made by them on their own, as per their own whims and fancies, without the knowledge of the PSCL, without any suggestion by the PSCL and after the report had been given by the PSCL;
g. whether the abovementioned three officers can place a ‘fresh Bill’ , the Bill No. 121 of 2020, before the Parliament on 19.09.2020 with numerous new modifications and expect the Parliamentarians to go through those contents and find out for themselves what those modifications were, especially when the Parliament session had, already, been scheduled to be a very short one; and
h. whether the Secretary, Ministry of Labour and the Secretary, Ministry of Parliamentary Affairs, can deviate from the established procedure of legislative drafting and place as Bill a bland document which does not specifically show and invite the attention of the Parliamentarians to the specific modifications proposed to be made, especially when the Bill is not for enacting a new law in the field but only meant for amending, amalgamating and consolidating the existing laws.
A Black Day for the nation. The sinister Code on Social Security, 2020 got passed in the LS without proper discussion. A death knell for a civilised society.
The personal contribution of B. R. Ambedkar to India during his tenure as Labour Minister from 1942 to 1946 was the three basic laws for working population which materialised in 1948 as the Minimum Wages Act, The ESI Act and the Factories Act, even before Constitution came into existence.
These laws which make the society civilised have been buried deep by the BJP today. The Code on Social Security, 2020 is an eyewash to remove the real security provided so far.
The walk out by the opposition is puzzling. It cannot be appreciated at all.
The year was 1983. The ESI Corporation wanted to make some path-breaking changes and to bringing in suitable amendments. The Contribution Card system with stamps had already been replaced with the Contribution Card system with cash. The issue now was that the classification of employees into three sets, viz., A, B and C, was to be given a go by. Common Contribution Period and Benefit Period was being contemplated. The Hqrs. Office of the ESI Corporation asked the Regional Directors to offer their opinion. The Regional Directors asked, in turn, the field officers the Managers of the Local Offices and the Insurance Inspectors to explain their stand. The outcome was the evolvement of law which ensured the introduction of new system providing for all the practical difficulties in its implementation. The opinions offered ensured that the procedure evolved was not only not cumbersome but also one that advanced the purpose of the Act. Continue reading →
It is Corona times. The date is 25.05.2020. Lord Yama Dharma Raja is hovering over the earth along with his assistant, Chitragupta, watching the events taking place in various nations under lock-down. For the past three months there were unusual increase in the number of entrants to his Court. While on the move, he gets attracted by the conversation of two men in a cocktail party at a hotel in New Delhi. He stopped moving further and has started observing their conversation. Chitragupta, who is standing nearby, is also keen to hear the duo, who were drunk and did not care to keep anything secret. Their conversation reveals that they are power-brokers in the capital of India who get things done from the politicians in power as desired by the business magnates who engage them. This night they are in an ebullient mood, feeling buoyant as if they are swimming in a pool of alcohol. Their conversation reveals that they are Mr. Wall and Mr. Suffer.
Mr. Suffer: Have some more drinks please! (Pours more into the glass of his companion).
Mr. Wall: Yes, Mr. Suffer! I agree, we should go on drinking and drinking. You can float in a pool of alcohol only as long as you swim. You will sink, if you stop swimming. Pour me more, I am so happy that we could influence the people in power to prepare the Code on Social Security the way our masters wanted.
Mr. Suffer: What a nice thing we have done! We have virtually wrecked the entire social security structure in India but project the image that we are expanding the structure. I am not able to control laughing. Nobody knows that a social security enactment of the nation could be so easily wrecked by tampering with the definition of the terms ‘employee’ and ‘wages’. Hah hah haa! We have poured hot water just at the root of the plant. And, it won’t be noticed by anyone. With this one single shot through Cl. 2 (26) and Cl. 2 (80) of the Bill No. 375 of 2019, the entire edifice of the social security structure evolved through the ESIC collapses in a flash. I caused it to be made that way. And the bureaucrats did what I wanted. Funny, the way the legislations are drafted by the bureaucrats who do not care for the poor.
Mr. Wall: Hey, I do not know anything about the concept of ‘wages’ you talk of. But I got what I wanted for PPP, divestment of medical colleges, etc., The manner in which we could cause various words and phrases inserted at various places in the Code is amazing, even for me. The interesting part of it is that nobody can understand the depth of those innocuous-looking phrases and foresee the impact of our mischief. We are very clever. So, we could cheat the others easily. But one thing. We could do all that only because the legislation is about the poor working class about whom nobody cares. We cannot do such thing in a legislation that would affect the rich.
Mr. Suffer: Yes, of course! Poor should be cared for by the government only. When the government is not inclined to be so, who will care for them. None. Moreover, the rich who care only for themselves are able to dictate terms to the government. We do not see rich benefactors like Robert Owen or George Cadbury in the Indian scene. They evolved the social security structure in the international arena. But the ultra rich in India want to wreck the already established structure. What is more? They are able to get the law they want by paying the political parties through Electoral Bonds. The party in power gets about 92% of such corporate donations. Naturally the nation goes the way the rich want it.
Mr. Wall: You are right! The Indian society becomes less civilised with every such labour law passed by the government recently to exploit the labour in the manner in which the rich wanted to exploit them. Anyway, our concern is that we should make money and it is the rich who pay us. Why should we then bother about the poor?
Mr. Suffer: Why should we? The politicians in power want to get the votes of the poor but they do not bother about the poor. Why we should feel concerned about them, then?
Mr. Wall: Yes, Mr. Suffer! You are right! We have convinced the politicians in power that they should choose between ‘Production in Industry’ and ‘Protection for the labour class’. Both cannot go together, we told them. They believed our theory.
Mr. Suffer: Funny, these politicians in power do not know that only strong labour welfare measures can increase production. They do not want to see what is happening in the civilised countries like Norway, Sweden, Finland, Japan, etc., They are more interested in getting money for their political parties from the Corporates. So all of them are at the beck and call of the Corporates and are ready to work as their agents instead of protecting the large mass which constitute the working class.
Mr. Wall: Be happy about it! It suits us! Otherwise we will also have to do some real work that would be really beneficial to the society. We cannot live this kind of happy parasitical life otherwise. Our work helps the rich exploit the masses without limit. I am surprised how the bureaucrats have been helping us in playing so many tricks in preparing the Code on Social Security to provide no meaningful security to the working population.
Mr. Suffer: Yes, the bureaucrats did not even explain to the politicians in power the circumstances under which various terminlogies had been defined in the ESI Act the way they have been and their importance in the Indian context. We know that as Sir William Beveridge said, industry in a nation will flourish, only when there is “Willing participation of labour”. But in India, the politicians in power do not want to listen to reason. They want to live off the rich; the rich want to live off the poor. The only goal amont the rich is to become ultra rich, and feature themselves in the Forbes magazine.
Mr.Wall: That they can achieve only when the politicians in power help them to exploit the poor through ‘Forced labour”. (He pours some more liquor for himself and drinks).
Mr. Suffer: I am not able to come out of the dizzy feeling I had when all our efforts bore fruit in the form of the Bill on the Code on Social Security, 2019 (Bill. No.375 of 2019) which contained the definition of the term ‘employee’ in Clause under Clause 2 (26) and the term ‘Wages’ under Clause 2 (80) as we wanted it. Nobody is going to notice it. Hah hah haa. With these two definitions, the entire ESI structure gets demolished so silently. The private insurers will then have a field day. I am so happy. I feel as if I am in heaven.
Mr. Wall: I feel that I am in heaven too.
(Lord Yama Dharma Raja looks at Chitragupta with a smile. Chitragupta smiles in response. He knows the meaning of the smile of the Lord and understands what is in store for this duo when they appear in the Court of the Lord, later.)
Mr. Suffer: Yes, of course. We have done a brilliant work. It requires a lot of talent to do what we have done. Even if you keep the present ESI Act in tact and continue to provide 70% to 90% of wages as compensation, the questionable phrases that we have caused to be included in the definition of the term ‘Wages’ under Cl. 2 (80) of the Bill No. 375 of 2019 would ensure that there is no meaningful social security net for the working population in India. What a marvellous work we have done! I admire at our own capability of deceit. And the bureaucrats, simply, fell for us. Oh, how easy to cheat the masses in India, with the help of the bureaucrats who do not care about their social responsibility under the Constitution!
Mr. Wall: Yes, yes! First of all, nobody cares for the poor; secondly, nobody knows where we have done what to undermine the social security system. Wah ! It is so easy to scuttle labour welfare measures in India.
Mr. Suffer: I admire myself ad infinitum. What a wonderful way in which I have caused insertion of the term “any overtime wages” in Clause 2 (80) and removed the same from Clause 2 (26) of the Bill concerned! Nobody knows the consequences of it. Because the overtime wages had been specified in Sec. 2 (9) of the ESI Act to be excluded for the purpose of coverage, but included for calculation of contribution payable on the wages defined under Sec. 2 (22) thereof. Its consequence has been phenomenally favourbale for the welfare of the labour, for the past 68 years. These terms have had a chequered history to protect the working population. But, we have reversed the relevant phraseologies in the present Bill on the Code on Social Security, in such a clever manner that it would be difficult for the people to understand the extent of the crime committed in drafting the Bill.
Mr. Wall: What would be the impact of such inclusions and exclusions?
Mr. Suffer: You see, the defintion of the term ‘wages’ as given in Sec. 2 (y) of the already promulgated Code on Wages, 2019 has been copied and pasted in Clause 2 (80) of the Bill on the Code on Social Security. The Code on Wages, 2019 replaced the Minimum Wages Act, 1948. The ESI Act had also been brought into existence only in 1948. But the term ‘wages’ had been defined differently in Sec. 2 (22) of the ESI Act. But now the bureaucrats did not care to examine why there was discrepancy between these two enactments while defining wages. They did not care either to analyse or even to record their observations in the Statement of Objects and Reasons accompanying the Bill on the Code on Social Security.
Mr. Wall: Why did the two Acts had two different definitions for the term ‘wages’?
Mr. Suffer: The very purposes of the Minimum Wages Act, 1948 and the Employees’ State Insurance Act, 1948 were totally different. The former was intended to ensure that the working population got, at least, a certain minimum amount as wages and to prevent the employer from including many variable components of remuneration paid by him to the workers and showing them also as part of the said minimum wages. The latter was to ensure that the employer brought within the purview of social security provided by the State more employees by excluding many variable components so that the cash benefit that he would receive in the event of sickness or other contingencies would be attractive and substantial with reference to the total emoluments that he receives from his employer in whatever form, so that he would be able to maintain a reasonable standard of living during the periods of such unforeseen contingencies. For example, an employee who earns a sum of Rs. 20000 pm as wages now, would get about Rs. 14000 pm as Sickness Benefit, Rs. 16000 as Extended Sickness Benefit and Rs. 18000 as Total Disablement Benefit. This is the position as on date.
Mr. Wall: I understand now. It seems that the Minimum Wages Act, 1948 was for excluding many variable components of remuneration paid by the employer to identify the ‘wages’ while the ESI Act, 1948 was for adding many variable components of remuneration to the ‘wages’ paid otherwise. The definition in Sec. 2 (h) of the Minimum Wages Act, 1948 ensured not only a specific minimum as wages payable to the working population but also prevented the employer, through the ‘Exclusion Clause’ in the said Sec. 2 (h), from citing those extra allowances or payments as part of the said minimum wages.
Mr. Suffer: Yes. The goal of the Minimum Wages Act was to put at least a minimum money in the pocket of the worker while the goal of the ESI Act was to provide maximum possible cash benefit by the Government to enable the worker to meet the contingencies. There cannot, therefore, be one and the same definition of the term ‘wages’ for both enactments.
Mr. Wall: True. Both these enactments came into force immediately on the wake of independence and they came along with the another important labour welfare legislation, the Factories Act, 1948. The desire of the leaders of modern India, then, was not to allow exploitation of labour even after the independence of the nation. That was the precise reason for enacting all these legislations, on priority basis on attaining independence. It had been made clear in the Statements of Object and Reasons of all these three enactments, in the year 1948, that they were intended for the welfare of the working population.
Mr. Suffer: The definition of the term ‘wages’ in Sec. 2 (22) of the Employees’ State Insurance Act, 1948 read with the definition of the term ‘employee’ in Sec. 2 (9) of the said Act, (which specifically excluded over time allowance to decide the coverage of the insured person) ensured that the employee was not denied coverage because of variable components of remuneration but was given substantial amount as cash benefit (by taking into account many variable components of remuneration also as wages) and was thus enabled to maintain a reasonable standard of life even when he was affected by certain contingencies like Sickness, Disablement due to Employment Injury, etc.,
Mr. Wall: Yes, I got it. If the employee who draws total wages of Rs. 20000 is shown by the employer to have received only Rs. 7000 as wages and the remaining Rs. 13000 as extra allowances which have not been classified as Wages, as per Cl. 2 (80) of the Bill on the Code on Social Security, he would get only Rs. 4900 pm as Sickness Benefit, Rs. 5600 as Extended Sickness Benefit and Rs. 6300 as Total Disablement Benefit. As one who maintained his standard of life at Rs. 20000 pm, it would become very hard to him to maintain a reasonable standard at Rs. 4900 pm in the event of even ordinary sickness. It is essential in the context to know that the tendency of the employers to cheat and evade both his employees and the ESI Corporation has been real as borne out by the judgments of the courts of law in thousands of cases. A law-maker cannot just presume to the contrary and put the lives of the working masses at the mercy of the employers, going back once again to the pre-1948 era.
Mr. Suffer: Very funny, indeed. The bureaucrats do have neither the understanding of the concept of social security nor any understating of the consequences. That was why the draftsman had simply inserted in Cl. 2 (80) of the Bill on the Code on Social Security the entire definition of the term Wages as given in Sec. 2 (y) of the Code on Wages, 2019, as it is.
Mr. Wall: It is not only that. They do not even know why the merger of the ESIC and the EPFO could not take place for the past 40 years, in spite of various studies undertaken by them. That merger could not materialise only because the term ‘Wages’ for the purpose of compliance and contribution, could not be given a common definition to answer the purpose of both the ESI Act, 1948 and the EPF Act, 1952.
Mr. Suffer: Exactly. If only the present Bill on the Code on Social Security, 2019 with its Cl. 2 (80) as it is becomes law, it will be a death-knell for the entire concept of social security in India. Our nation will go down even lower in the list of civilised nations, because Social Security provided by the government has been recognised world-wide as the symbol of civilisation. This Code will make the cash benefits payable to the beneficiaries (insured persons or their dependant family members) totally unattractive with reference to the real wages earned by the insured person.
Mr. Wall: Yes, you are right. That benefit will not be useful to the workers in any real sense, unless contribution is made payable by the employer on all items of wages paid by them, as per the existing definition under Sec. 2 (22) of the present ESI Act. There would be no real Social Security to the working population. There would be no real “State Insurance” although Chaper IV of the Code on the Social Security, 2019, proclaims to the public that there would be an “Employees’ State Insurance Corporation”.
Mr. Suffer: Hey, that is not our botheration. Let us celebrate our victory in our mission to destabilise the social security system of the nation. We are not Mahatma Gandhi. I wonder whether he would have fought for independence if only he had known that people like us would be roaming around in the independent India manipulating the bureaucrats to our will, which is in fact the will of our pay-masters, the ultra and greedy rich.
Mr. Wall: I understand. I find that there is no way for the nation to extricate itself from the web woven by you to destroy the social security system. Am I correct?
Mr. Suffer: True. As things stand, the enemies of the working population, the ultra-rich who have already cornered more than 75% of the national resources are commanding the politicians in power and demanding the laws they want in the manner in which they want them. It is as per their desires, I have woven a spider-net to trap and destroy the organisation which provides proper security-net to the working population. Yet, the social security system can be retrieved from the hands of these ultra rich, if the Parliamentary Standing Committee on Labour directs the bureaucrats to have a relook at the Cl. 2 (80) of the Bill on the Code on Social Security, 2019 (Bill No. 375 of 2019) and to delete the following from the definition therein for the term ‘wages’:
The phrase ‘any conveyance allowance or” appearing in the Exclusion Clause (d) of the definition has to be deleted;
The phrase ‘house rent allowance” appearing in the Exclusion Clause (f) of the definition has to be deleted;
The phrase ‘any overtime allowance” appearing in the Exclusion Clause (h) of the definition has to be deleted;
The phrase ‘any commission payable to the employee” appearing in the Exclusion Clause (i) of the definition has to be deleted;
The first proviso should be totally deleted as it does not have relevance in a social security enactment. In other words, this proviso starting with the phrase “provided that for calculating” and ending with the phrase “added in wages under this clause” requires to be deleted in toto.
Mr. Wall: (After remaining silent for some time) Hey, Mr. Suffer! C’mon, let us go home. You have drunk too much. Your eyes are red.
Mr. Suffer: Yeah, yours are red too. (He tries to make a move reclining himself on the shoulders of Mr. Wall)
Mr. Wall: No. Yours are redder. Redder, much more.
(Lord Yama Dharma Raja looks at Chitragupta and nods at him to move on. Chitragupta notices that the eyes of the Lord are red.)
Excerpts from the letter sent to the authorities on the unlawful and unwarranted inclusion of the phrase “Nursing and Para-medical” and the word “Gazetted” in Clause 24 (8) of the Code on Social Security, 2019 (Bill No. 375 of 2019) without any explanation for it anywhere in the Bill.
2. I submit that although the aforesaid Clause 24 (8) has been modelled on the existing Sec. 17 (3) of the Employees’ State Insurance Act, 1948, the inclusion of (1) the phrase “Nursing and Para-medical” and (2) the word “Gazetted” therein is unwarranted either by operation of any law or because of any practical problem which could arise in the enforcement of the existing law. The simple fact is that this proposition under Clause 24 (8) is purely unwarranted and has not been made keeping public interest in view. There had been no in-depth study for making such a modification in the existing procedure permitted in the ESI Act. The proposition made, now, through the Clause 24 (8) of the Code on Social Security is arbitrary and hence unlawul.
3. The original ESI Act did not exempt even the medical posts. All appointments to posts corresponding to Class I and Class II posts under the Central Government were required to be made only in consultation with the Union Public Service Commission. The then Sec. 17 (3), i.e., the provision that was in force upto 26.01.1985, read as under:
“Every appointment to posts corresponding to Class I and Class II posts under the Central Government shall be made in consultation with the Union Public Service Commission”
4. As the classification of the posts based on Class was changed as a matter of policy by the Central Government, the subsequent amendment of 1984 reflected that policy decision and the amended provision which came into effect from 27.01.1985 read as under:
“Every appointment to posts corresponding to group A and group B posts under the Central Government shall be made in consultation with the Union Public Service Commission”.
5. The provisions of Sec. 17 (3) of the ESI Act, as quoted supra, were in accordance with the Art. 320 (3) (a) of the Constitution of India read with the Proviso thereto and the provisions in the UPSC (EFC) Regulations, 1958 (As amended).
Unwarranted amendment in 1989 and later regrets:
6. It was only in the year 1988 that a very big lobby that had been canvassing for a long time for exempting the medical posts from the purview of the UPSC, succeeded in its venture, for reasons which were specious. The UPSC had also accepted the proposal for it. The resultant amendment of 1989 saw the said Sec. 17 (3) of the ESI Act modified as under:
“Every appointment to posts (other than medical posts) corresponding to group A and group B posts under the Central Government shall be made in consultation with the Union Public Service Commission”.
It was later found that the reasons recorded earlier for amending the Sec. 17 (3) thus, to exempt the medical posts from the purview of the UPSC, were improper and wrong and the amendment unnecessary. The then Director General regretted later the amendment of 1989. There had been various unwarranted pressure on the honest Director Generals thereafter.
Unwarranted amendment in 2009 and later regrets:
7. Similar misadventure was there, again, twenty years later, in 2009. That was about the establishment and running of medical colleges by the ESI Corporation. And a Bill (Bill No 66-C of 2009) was tabled on the Lok Sabha to amend, inter alia, Sec. 59-B in the ESI Act to pave way for establishing such medical colleges by the ESI Corporation. A strong lobby, had been canvassing from the year 2007 onwards, through the Standing Committee and the ESI Corporation, for constructing large number of medical colleges. But after frittering away thousands of crores of the fund of the organisation, the same bodies recorded their regret, in the year 2015, and confessed that the ESI Corporation did not have core competency and that the objective of Sec. 59-B was unlikely to be met. The Minutes of the meeting of the Corporation on 05.01.2015 would testify to this fact. The ESIC was gifting away, subsequently, the mammoth buildings constructed at a huge cost to State Governments.
8. Taking wrong decisions first, making herculean efforts to amend the Act by informing, misinforming and disinforming the Parliament, and then regretting the decision after realising the wrongs committed earlier did not remain a one-time phenomenon. It has become a recurring feature as could be seen from the contents of the present Bill No. 375 of 2019 in the Lok Sabha.
Unwarranted meddling, again, in 2019:
9. Now, ten years later, in 2019, another attempt has been made to yield to another lobby. The proposition for the inclusion of the phrase “Nursing and Para-medical” and the word “Gazetted” therein has no legitimate justification at all. It is the indicator of yielding to such a lobby. And the regrets will be coming later. This is not only in violations of the provisions in the UPSC (EFC) Regulations, 1958 (as amended up to 07.10.2009) but also not necessary, in public interest.
10. I, therefore, submit that it is only right and proper to take action at least at this stage to prevent such a defective Clause from becoming law by deleting the said word and phrase from the proposed Clause 24 (8) of the Code on Social Security, 2019, and, consequently, take action to prepare the said Clause identically on the lines of the existing Sec. 17 (3) of the ESI Act, 1948.
11. It is a fact that the Bill No. 375 of 2019 does not explain how and why the phrase “Nursing and Para-medical” and the word “Gazetted” have been added all of a sudden in Clause 24 (8) of the Code on Social Security, 2019 without explaining the need for it, either in the ‘Statement of Objects and Reasons’ or even in the ‘Note on Clauses’.
12. The ‘Statement of Objects and Reasons’ is totally silent on this issue. The ‘Note on Clauses’ contain only a laconic observation that “Clause 24 of the Bill seeks to provide appointment of Principal Officers and other staff of the Corporation”. It is very clear that the Legislature is just ill-treated by the Executive.
UPSC (EFC) Regulations violated by the ESIC:
13. It is essential for the Executive to convince the Legislature about the necessity that had arisen, from the perspective of the Executive, to make such additions. But the Executive has deliberately omitted doing so, in the matter of including the Nursing and Para-medical staff in the said Clause 24 (8). The bureaucrats have inserted these additions silently and without inviting the particular attention of the legislators for such an addition, especially when the Recruitment Regulations for the post of Nurses have been amended only in July 2019, in accordance with the law on the subject and, accordingly, conceding the role of the UPSC in the matter of appointment and promotion of Nurses in Group B and A.
14. In fact, the proposal for such an amendment was sent by the ESI Corporation, after inviting comments from the stakeholders two years ago, on 04.05.2017, and the UPSC, has given its concurrence to those amendments as per its letter F. No. 3/12 (8) /2019 – RR dated 05.07.2019 and has, thereby, assumed jurisdiction over the appointment and promotion of Nursing personnel in the ESI Corporation. The salient features of those amendments were:
a. The posts in the Nursing cadre were re-designated and re-classified as Nursing Officer ( Group B ), Senior Nursing Officer (Group B) and Assistant Nursing Superintendent (Group A).
b. The recruitment process in respect of all these posts would go to the UPSC.
c. The DPC meeting would be conducted by the UPSC and a member of the UPSC would be the Chairman of the DPC.
15. When all these actions are facts on record, there should be convincing reason advanced by the ESIC in the ‘Statement of Objects and Reasons’ and the ‘Notes on Clauses’ accompanying the Bill No. 375 of 2019, for deliberately violating the provisions of the UPSC (EFC) Regulations, 1958 and trying to usurp the powers of the UPSC. But the Bill concerned is totally silent on the issue.
Legislative Policy, a pre-requisite for Legislative Drafting, kept secret:
16. The Parliamentarians are entitled to know who made what changes in this Clause and who advised whom to insert the phrase “Nursing and Para-medical” and the word “Gazetted” in the Clause 24 (8) of the Bill No. 375 of 2019. The desire of the bureaucracy to keep this information secret is unlawful and impermissible. The legislature should always be, invariably, informed of the specific reasons behind the deletion of existing words and phrases and insertion of these new words and phrases in the already existing provisions. The legislative policy behind such a proposition should be made known to the Legislature beforehand. That has not been done in this case.
17. The procedure of drafting legislations require the rulers to entrust the Drafting Team with the ‘legislative policy’. Mr. Justice. M. Jagannadha Rao, Chairman of the 17th Law Commission of India, has written a paper on Legislative Drafting. He says, “The draftsman is not the author of the legislative policy, he merely tries to transform the legislative policy into words. The legislative policy is made by the political executive which belongs to the political party which is ruling the legislature or by the monarch who reigns over the country. The draftsman must, therefore, digest the legislative policy fully before he produces the instrument of legislation which can achieve the legislative purpose”. The issue here, with the impugned Code, is why the Executive has not made the concerned ‘legislative policy’ also known not only to the public but even to the Legislature. The Executive has not informed the Legislature about the direction in which the draftsman was advised to make a move, while drafting the Bill No. 375 of 2019. And that is unlawful.
The strange insertion of the word ‘Gazetted’:
18. It is submitted that the word ‘Gazetted’ inserted in Cl. 24 (6) of the Bill No. 375 of 2019 restricts the jurisdiction of the UPSC in respect of Groups B posts, which jurisdiction is now available under the existing Sec. 17 (3) of the ESI Act. The proposed law is that “Every appointment to posts..….corresponding to group A and group B Gazetted posts under the Central Government shall be made in consultation with the Union Public Service Commission”. This inclusion of the word ‘Gazetted’ in Clause 24 (8) in the Bill concerned is not at all necessary when the UPSC had already assumed jurisdiction over all the Group B Non-Gazetted posts also, in the Stenographic cadre as well as in the Nursing cadre. Moreover, no explanation to justify such an inclusion has been given either in the “Statement of Objects and Reasons” or in the “Notes on Clauses” accompanying the Bill. The draftsman did not think it necessary to adduce reasons and convince the law-makers for such an inclusion. His action and inaction are improper and unlawful and is a serious misconduct.
Inaction of the Ministry of Law:
19. Moreover, it is shocking that the Legislative wing of the Ministry of Law & Justice had not considered it necessary to probe into the legality or otherwise of this kind of silent insertion of the phrase “Nursing and Para-medical” in the Bill No. 375 of 2019, especially when the legislation, the Code on Social Security, 2019 is not a new one but one intended only to replace the ESI Act, 1948 and 8 others. Besides, the Ministry of Law ought to have made the Ministry of Labour & Employment explain its stand, about the absence of explanations to such commissions and omissions in the ‘Note on Clauses’ and the ‘Statement of Objects and Reasons’ which accompanied the Bill.
Observations of the Apex Court:
20. It is submitted that the Clause 24 (8) of the Code on Social Security, 2019 deals with the policy pertaining topublic employment. Such an important policy cannot be evolved without there being a transparent legislative policy. It is only when the Bill in question is compared with the aforesaid legislative policy, one would be able to know whether the draftsman had performed his role right or had made such commissions and omissions in the draft Code to sabotage the policy.
21. It would be appropriate to recall in the context what the Hon’ble Apex Court had said, in Ramana Dayaram Shetty vs. The International Airport Authority of India and others (04.05.1979). Drawing support from the proposition laid down in M/s. Erusian Equipment and Chemicals Ltd, Hon’ble Supreme Court had observed as under: “This proposition would hold good in all cases of dealing by the Government with the public, where the interest sought to be protected is a privilege. It must, therefore, be taken to be the law that where the Government is dealing with the public, whether by way of giving jobs or …., the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norm which is not arbitrary, irrational or irrelevant.”
22. The phrase “Nursing and Para-medical” and the word ‘Gazetted’ inserted in the Clause 24 (8) of the Bill No. 375 of 2019 would adversely affect the chances of employment of the aspiring candidates of the nation in the ESI Corporation, if and when the Bill becomes law, without proper modifications. It is unnecessary and totally unwarranted to take the jurisdiction of the UPSC away from the Group B posts in the ESIC. It is not in public interest too.
23. I, therefore, request you to kindly re-examine the issue and set things right in the interest of the nation.
1. Hon’ble Speaker,
House of the People (Lok Sabha),
17, Parliament House,
New Delhi 110011
2. Mr. Bhartruhan Mahtab,
Hon’ble M.P. & Chairman,
Standing Committee of Parliament on Labour,
New Delhi – 110011
(Through Mr. Kulvinder Singh, Deputy Secretary, Parliament of India, House of the People. Email: firstname.lastname@example.org)
Sub: Appointment of Consultants and Specialists in ESI Corporation – – insertion of Second Proviso to Clause 24 (7) (a) of the Bill No. 375 of 2019 – legislative process – bureaucrats continue to cheat the Parliament – representation – submitted.
Ref: 1. Bill No. 66-C of 2009 placed before the Lower House of the Parliament as The ESI (Amendment) Bill, 2009 on 30.07.2009. 2. Report dated 09.12.2009 of the Parliamentary Standing Committee on Labour. 3. Record (Minutes) of the proceedings of the Lok Sabha on 03.05.2010. 4. Bill No. 66-C of 2009 as passed by the House of the People on 03.05.2010 titled The ESI (Amendment) Bill, 2010. 5. CAG Report No. 40 of 2015 on Special Audit of Medical Education Projects in the ESI Corporation. 6. Draft Code on Social Security circulated in the MOL&E Circular No. Z-13025/13/2015-LRC dated 17.09.2019. 7. The Code on Social Security, 2019, placed as Bill No. 375 of 2019 before the House of the People (Lok Sabha).
1. I submit this representation to the Parliamentary Standing Committee on Labour (hereinafter referred to as the PSCL) with a request to kindly examine in depth the Second Proviso to Clause No. 24 (7) (a) of the Bill on The Code on Social Security, 2019 (Bill No. 375 of 2019 of the Lok Sabha) which has been worded in a nebulous and ambiguous manner.
2. This Clause is shown to have been included for the purpose of appointing Specialists and Consultants in the ESIC Hospitals for better delivery of Super Speciality Services. But this clause which is the exact reproduction of the Second Proviso to the Sec. 17 (2) (a) of the ESI Act, 1948 did not serve that purpose. In fact the Second Proviso to the Sec. 17 (2) (a) of the ESI Act, 1948, was inserted in the ESI Act, ten years ago, with ulterior motive, through an amendment vide Bill No. 66-C of 2009 of the Lok Sabha, and it had been the cause of various scandals unearthed later by the Comptroller and Auditor General of India and some of them recorded in Para 2.3, Para 2.4 and Para 2.5 of his Report No. 40 of 2015 (Page 8 to 12 – Special Audit of Medical Education Projects).
3. I submit that such scandals became possible because of (a) the insertion of that provision as Second Proviso to Sec. 17 (2) (a) of the ESI Act, 1948, instead of its appropriate place as the Second Proviso to Sec. 17 (3) of the said Act and (b) the absence of insertion of definition to the terms ‘Specialists’ and ‘Consultants’ in the ESI Act along with the aforesaid amendment.
4. I therefore submit that the present Cl. 24 (7) (a) of the Bill No. 375 of 2019, as it is at present, would definitely become the cause of further abuse as had happened in the past decade in the ESI Corporation, unless the PSCL inquires the authorities of the facts behind it and causes modification of it. What is required to be done is to insert this Clause in its appropriate place below the Cl. 24 (8) of the Bil No. 375 of 2019 and to incorporate, in the Bill itself, the definitions for the terms ‘Specialists’ and ‘Consultants’. I, therefore, request that the Committee may kindly bestow more attention for evaluating this provision, in the light of facts submitted in this representation and the Appendices.
5. The Second Proviso to the Clause No. 24 (7) (a) of the Bill No. 375 of 2019 which is, now, under the scrutiny of the PSCL at present reads as under:
“Provided further that this sub-section shall not apply to appointment of consultants and specialists in various fields appointed on contract basis.”
6. The second proviso to the Clause 5 of the Bill No. 66-C of 2009, introduced ten years ago to make amendment to Sec. 17 (2) (a) of the ESI Act,1948, which was scrutinized by the then PSCL, read as under:
“Provided further that this sub-section shall not apply to appointment of consultants and specialists in various fields appointed on contract basis.”
7. The PSCL had examined this provision in depth then and did not approve it the way it approved many of the other genuine provisions in the Bill No. 66-C of 2009. Yet the procedure had been manipulated, the observations of the PSCL overlooked and the defective Clause 5 of the Bill became law on 03.05.2010 enabling the persons in power to indulge in various scandals.
8. I submit that this Clause, which had been inserted in through the Bill No. 66-C of 2009, was not an innocuous provision. It was inserted in a pre-meditated manner with a view to indulge in various scandals. Instead of placing it as the second proviso to Sec. 17 (3) of the ESI Act, the bureaucrats connived to insert it as the second proviso to Sec. 17 (2) (a) of the ESI Act. (Please see Appendix B). Their apparent intention was (i) to appoint anyone as Specialist or Consultant for any non-medical purpose, (ii) to ignore the proper method of recruitment, (iii) to pay such an appointee extraordinary remuneration without any guideline being anywhere and (iv) to keep those appointees beyond the pale of all kinds of disciplinary provisions. I request that this provision need not again be made a part of law through the proposed Code on Social Security, 2019 vide the Bill No. 375 of 2019 which is now under the effective consideration of the PSCL.
9. It is essential for the PSCL to know the fact that when the Secretary, Department of Economic Affairs, suspected the bona fides of the provision in the Bill No. 66-C of 2019 and came forward with valid suggestion during the meeting of the Committee of Secretaries held on 06.01.2009 to prevent the abuse of this provision, the Director General, ESI Corporation chipped in and clarified that it was only an enabling provision and that the rules would be framed later. His defence was endorsed by the Cabinet Secretary who was present in the meeting and observed that the issue might be examined “at the time of framing of rules.” But it is a pity that the promises of the Director General of the ESI Corporation and the Cabinet Secretary were not kept. Consequently, no rules under the provisions of Subordinate Legislation have ever been framed regarding the appointment of Specialists and Consultants till date, although many had been appointed through questionable means in the organization leading to the objection by the CAG too.
10. I, therefore, request that the Parliamentary Standing Committee on Labour may be pleased
a. to dispense with this provision altogether and direct the ESI Corporation to follow the procedure adopted in the AIIMS, JIPMER, etc., for appointment of Specialists and Consultants in medical fields, or
b. to advise the authorities concerned to formulate the provision properly to enable them to appoint only the Specialists and Consultants with medical qualifications to meet the requirement of the ESI Corporation in providing super speciality medical benefit to the ailing beneficiaries in the ESIC run medical institutions;
c. to advise the authorities to incorporate suitable definition for the terms ‘Specialists’ and ‘Consultants’ under Clause 2 of the Bill under consideration; and
d. to shift this impugned proviso from the present position as the Second Proviso to Clause 24 (7) (a) of the Bill on the Code on Social Security, 2019 ( Bill No. 375 of 2019) and to insert the same as the Second Proviso to Clause 24 (8) of the said Bill to prevent abuse of the provision once again by making extraordinary payments to the people who are appointed as Specialists and Consultants. (Please see Appendix C)
11. I submit herewith a Write-up containing the relevant details pertaining to the abuse of law-making-process in the year 2009 and 2010 to insert the Second Proviso under Sec. 17 (2) (a) of the ESI Act. I believe that the PSCL may find the precedent and the details thereof useful to arrive at a decision, as deemed fit, on the unwarranted Proviso which has been inserted as Clause No. 24 (7) (a) of the Bill,