Flourishing ESIC

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:

N.B:

1. 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.
2. 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,

For more: http://bwpeople.businessworld.in/article/New-Labour-Codes-Reveals-Industry-s-Readiness-To-Implement-Labour-Codes-KEA-and-BCP-Associates-Survey-/21-01-2022-418457/

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

1. that the medical colleges under the ESIC fold was “fulfilling the objective of reducing” the shortage of doctors in the ESIC and
2. 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.

1. The ESIC had let loose many home-grown graduates from the ESI Medical Colleges to go free, after completing their graduation. (For more, https://flourishingesic.info/2019/04/15/rationalisation-and-the-peculiar-claim-of-non-availability-of-doctors/ )
2. It did not enforce even the Bond executed already in respect of many of them. (For more, https://flourishingesic.info/2015/12/18/the-fine-art-of-squeezing-out-the-esi-fund-account-no-1/ )
3. 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,

1. 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?
2. 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.

Times of India 23.09.2020