INTRODUCTION

Social Security means the protection given by society to its members against contingencies. It is a security provided by the
society to its members, particularly the weaker ones, so that they can lead a normal and decent life even under adverse
circumstances. It is a kind of wise investment earning rich dividends in the long run. It consists of schemes by which all citizens
of the country are assured by the government a minimum standard of material welfare on a basics wide enough to cover the
contingencies of modern life. Germany was the first country who introduced the social security schemes in 1883.
MEANING OF SOCIAL SECURITY
Social security is any government system that provides monetary assistance to people with an inadequate or no income. These
services typically include provision for retirement pensions, disability insurance, survivor benefits and unemployment
insurance.
DEFINITION
According to a definition given in the ILO publication’, Social security is the security that society furnishes through appropriate
organisation against certain risks to which its members are exposed.
OBJECTIVES
1. Compensation
2. Restoration
3. Prevention
Compensation: Compensation ensures security of income. It is based on this consideration that during the period of
contingency of risks, the individual and his/her family should not be subjected to a double calamity, i.e., destitution and loss of
health, limb, life or work.
Restoration: It connotates cure of one’s sickness, reemployment so as to restore him/her to earlier condition. In a sense, it is an
extension of compensation.
Prevention: These measures imply to avoid the loss of productive capacity due to sickness, unemployment or invalidity to earn
income. In other words, these measures are designed with an objective to increase the material, intellectual and moral well-
being of the community by rendering available resources which are used up by avoidable disease and idleness.
THE EVALUATION OF SOCIAL SECURITY IN INDIA
The evaluation of social security in India can be studied broadly in two segments Pre-Independence Period and Post-
Independence Period.
There was large scale industrialization in Indian from 1850 especially in the Textile Industries. But as workers being totally
unorganized no attention could be paid towards the welfare.
PRE-INDEPENDENCE PERIOD AND SOCIAL SECURITY OF WORKERS

In 1877 first labour unrest took place at “Empress Mills Nagpur” for improving their wages.
In 1890 first Trade Union Bombay Mill Hands association was formed under the leadership of N.M. Lokhande.
In 1885 the first Fatal accident Act was passed. Inspite of this workers were living under very poor inhumane
conditions. There was no provisions of any measures for social security before 1920.
In 1920 International Labour Organization gave a boost to labour welfare and social security schemes. In the
convention of 1929 of ILO the workers social security schemes.
In the convention of 1929 of ILO the workers social security was considered as of high importance. Then there came
the appointment of strong recommendations on labour welfare and social security.
After the first world war, due to Indian National movement. British Government started thinking about the
employees and accordingly (i) Workmen’s compensation Act, 1923 (ii) The payment of wages Act’ 1936 (iii)
Minimum wages Payment Act (iv) Maternity Benefits Act were passed from time to time Mr.B.R. Ambedkar was
appointed as a ‘labour member of the victory’s council” after second world war.
In 1937 a contributory Health Insurance scheme was formulated. At the same time , the Bombay Textile enquiry
Committee also recommended the formulation of health Insurance Scheme in which the (i) employer (ii) Employee
and (iii) The state Government contributed towards the fund.
In 1940 during the first Labour Minister’s conference the need for sickness Benefit fund was felt.
In 1943 Indian Government appointed a commission under the chairmanship of B.R. Ambedkar and its report was
submitted in 1944.
B.R. Ambedkar commission strategy recommended the upper age limit of 60 years and employment was divided
into three categories- permanent, temporary and casual. The employer was required to pay contribution towards
insurance schemes for all the workers, whereas only permanent and temporary workers were required to pay.
In 1947, the Industrial dispute Act was enacted with the main objective was to make provisions for the investigation
and settlement of industrial disputes. Most important contribution of employee’s State insurance Act 1923.
POST–INDEPENDENCE PERIOD AND SOCIAL SECURITY
In 1947 India got Independence and Indian Government intensified the labour welfare and social security measures.
In 1948 employees state Insurance was duly modified and that was beginning of the era of Social Insurance of Indian
labour.
“In 1952 international Labour Organization provided the expert advice of eight experts on social security for long six
month for proper implementation of the schemes of employee state Insurance Act. They devised and advised the
method of its administration, the development of the panel system of medical benefit and training of the necessary
staff in order to extend the scheme throughout the country.”
In 1948 Indian government made certain important amendments in existing Indian factories act 1934 and came with
an entirely new nomenclature “The factories act 1948” with a main purpose of regulating conditions of work in
manufacturing establishment for ensuring adequate health, welfare measures, hours of work and leave with wages.
`In 1948 Indian government made certain important amendments in existing Indian factories Act 1934 and came
with an entirely new nomenclature “ The Factory Act 1948” with a main purpose of regulating conditions of work in
manufacturing establishment for ensuring adequate health, welfare measures, hours of work and leave with wages.
In 1948 the Government enacted Maximum wages Act for prevention of exploitation of labour due to payment of
unduly low wages.
In 1952 Government enacted Employee’s Provident fund and miscellaneous provision act with a main objective of
providing substantial measures of financial security and timely monetary assistance to industrial works and ‘Besides
this’ their families.
(i)“The Assam tea plantations provident fund act 1995.” The personal injuries (Compensation Insurance) act, 1963.
(ii) The seamen’s provident fund Act 1966
(iii) The plantation labour Act 1951
(iv) The(central) maternity benefit Act, 1961Were enacted for providing social security to weaker section of the
society where there were more chances of exploitation and victimization.
 THE CODE ON WAGES,2019
 The Code on Wages, 2019, has been notified on 08 August 2019, and the provisions of the Payment of Wages Act,
1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976, have
been rationalised and subsumed in it.
 The Code provides for universal minimum wage across employments in organized and unorganized sector.
 The Code mandates the Central Government to fix floor wage and that the minimum rates of wages fixed by the
appropriate Governments shall not be less than the floor wage.
 The Code prohibits gender discrimination in matters related to wages and recruitment of employees for the same
work or work of similar nature done by an employee.
 DEFINITIONS:
1. WAGES: 2(y) of the Code, “all remuneration whether by way of salaries, allowances or otherwise, expressed
in terms of money or capable of being so expressed which would, if the terms of employment, express or
implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in
such employment, and includes basic pay, dearness allowance; and retaining allowance, if any.” However, the
Code excludes certain payments covered under the previous legislations, as follows:
a. any bonus payable under any law for the time being in force, which does not form part of the
remuneration payable under the terms of employment;
b. the value of any house-accommodation, or of the supply of light, water, medical attendance or other
amenity or of any service excluded from the computation of wages by a general or special order of the
appropriate Government;
c. any contribution paid by the employer to any pension or provident fund, and the interest which may have
accrued thereon;
d. any conveyance allowance or the value of any travelling concession;
e. any sum paid to the employed person to defray special expenses entailed on him by the nature of his
employment;
f. house rent allowance;
g. remuneration payable under any award or settlement between the parties or order of a court or Tribunal;
h. any overtime allowance;
i. any commission payable to the employee;
j. any gratuity payable on the termination of employment;
k. any retrenchment compensation or other retirement benefit payable to the employee or any ex gratia
payment made to him on the termination of employment:

2. MINIMUM WAGES: The minimum wage is the lowest wage in the scale. The minimum wage includes not only
the bare physical necessities but also a Medium of comfort. The Minimum wages must, therefore, provide
not merely for the bare subsistence of life but also for the preservation of the efficiency of the worker. For
this purpose, the minimum wage must also provide for the same measure of education, medical
requirements, and amenities. Therefore any employer who is unable to pay this minimum wage to workers
has no right to exist. Where a person provides labour or service to another for remuneration which is less
than the minimum wages, such labour is 'forced labour' within the meaning of Article 23 of the Indian
Constitution.
Kamani Metal Alloys Ltd. V/s Workmen in this case Supreme court held that an employer cannot be allowed
to run the scheduled industry if he is unable to pay even the minimum wages to his employees.

The Code incorporates the idea of a floor wage to be decided by the Central Government, taking into
account the minimum living standards of employees in a manner that may be different for different
geographical areas. Under no circumstances should the appropriate government set a minimum wage rate
which is lower than the floor rate fixed by the central government. However, if the current minimum wage
set by the relevant government is higher than the minimum wage, the minimum wage cannot be lowered.
 Further, the Code prescribes that the minimum rate of wages are to be reviewed and revised by the
appropriate Government in intervals not exceeding five years
Payment of minimum rate of wages (Section 5) - No employer shall pay to any employee wages less than
the minimum rate of wages notified by the appropriate Government.

3. LIVING WAGES: Living wages are wages without which working people cannot live and perform their duties
as a citizen. It varies from country to country depending upon the price level of necessaries of life, and it is
determined by the socio-economic conditions of a particular country. The living wage should enable the
wage earner to provide for himself and his family not merely the bare essentials of food, clothing and shelter
but the measure of frugal comfort including education for the children protection against ill health,
requirements for essential social needs and a measure of insurance against the more important misfortune
including old age. In India, there is no statutory definition for the term 'living wage'. According to Article 43
of the Indian Constitution, the State shall endeavour to Secure to all workers living wages, conditions of
ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities.
Workmen v/s Retakes Breet & co. Ltd It was held by the court that a living wage has been promised to the
workers under the constitution in part IV under article 43.

4. FAIR WAGES: Fair wage is a mean between the living wage and the minimum wage. A fair wage is related to
fair work load and the earning capacity. It can say that it is more than minimum wage but less than the living
wage. It may roughly be said to approximate to the need-based minimum, in the sense of the wage which is
adequate to cover the normal needs of the average employee regarded as a human being in a civilized
society. Fair wage is fixed, taking into consideration, the present economic position and further prospects of
the industry. Between these two limits (Living Wage and the Minimum Wage) actual wage would depend
upon a consideration of certain factors namely-
i)the productivity of Labour.
ii) the prevailing rates of wages in the same industry for similar occupations in the same or similar
occupations in the same or neighbouring localities;
iii) the level of national income and its distribution; and the place of the industry in the economy of the
country.

5. FLOOR WAGES: Section 9 of the Code has incorporated a new concept of ‘floor wage’ whereby, the
minimum wages supposed to be paid to each and every employee cannot float back anywhere below the
floor wage set by the Central Government.
Previously, under the Minimum Wages Act, 1948, both the Central and State Governments were given the
power to decide wages with respect to the employments mentioned under the schedule. However, under
the new Code on Wages, the power to determine ‘floor wage’ solely rests with the Central Government.
The floor wage refers to the minimum wage set by the government to ensure that workers receive a basic
standard of living, regardless of the sector or industry they work in.
Under the Code on Wages, the floor wage acts as a national minimum wage floor that sets the baseline for
determining minimum wages across various states and sectors. It is not necessarily the wage that all workers
must receive, but it serves as a starting point for calculating the minimum wages in different regions and
industries.
Key Aspects of the Floor Wage under the Code of Wages, 2019:
i. Determination by Government: The floor wage will be determined by the Central Government,
considering factors like the cost of living, inflation, and socio-economic conditions. The wage will be
revised periodically.
ii. State Flexibility: While the central government sets the floor wage, individual state governments can
set the minimum wage for their region. However, the state-set minimum wage cannot fall below the
floor wage.
 iii. Different Wage Levels: The floor wage can differ between geographical regions and sectors. This
allows the government to take into account the varying cost of living in urban vs. rural areas or across
different industries.
iv. Protection for Workers: It ensures that workers in every state or industry receive wages that are
adequate to meet their basic needs, contributing to overall social and economic fairness.

6. EQUAL REMUNERATION: Section 3 (1) of the Code provides that there shall be no discrimination in the
payment of wages based on the gender of the employee in relation to the same work or similar work done
by the employee. This is a change from the earlier act, ERA, which provided for payment of equal
remuneration to men and women workers exclusively.

7. BONUS: Section 2(13) -A bonus refers to a sum of money that is paid by the employer to the employee in
addition to their basic wages, typically as a reward for performance, profit-sharing, or other forms of
incentive. The Code on Wages, 2019 defines bonus as: Gratuity-type or profit-linked payments made to
employees for their services. It includes any payment (in cash or kind) that is given by an employer to an
employee under a contractual or customary arrangement, where the employee is not directly compensated
as part of their salary or wage but receives a separate amount as an additional benefit.
It also makes it clear that the bonus may be paid annually or at any other interval, but the employer is
mandated to follow the statutory rules and criteria for calculating and disbursing such bonuses.

8. INSPECTOR-CUM-FACILITATOR: Section 51- The appropriate government may appoint Inspector-cum-

Facilitator. Every Inspector-cum-Facilitator shall be deemed to be public servant.
i. Inspector-cum-Facilitator may advise employers and workers related to compliance and also inspect
the establishments assigned to him by appropriate government
ii. Inspector-cum-Facilitator may also examine any person who is found in any premises of the
establishment, whom the Inspector cum-Facilitator has reasonable cause to believe, is a worker of
the establishment;
iii. require any person to give any information, which is in his power to give with respect to the names
and addresses of the persons;
iv. search, seize or take copies of such register, record of wages or notices or portions thereof as the
Inspector-cum-Facilitator may consider relevant;
v. bring to the notice of the appropriate Government defects or abuses not covered by any law for the
time being in force;
vi. exercise such other powers as may be prescribed.
 PAYMENT OF WAGES (CH III)

1. Mode of payment of wages (Section 15) - All wages shall be paid in current coin or currency notes or by cheque
or by crediting the wages in the bank account of the employee or by the electronic mode

2. Fixation of wage period (Section 16) – Wage period can be daily, weekly, fortnightly or monthly but cannot be
more than a month

3.Time Limit for payment of wages (Section 17) – Payment of wages shall be based on employment
i. Daily basis – at the end of shift
ii.
iii. Weekly basis – on last working day of week (before weekly holiday)
iv. Fortnightly basis - before the end of the second day after the end of the fortnight
v. Monthly basis - before the expiry of the seventh day of the succeeding month
 Where employee has been removed or dismissed or retrenched or has resigned or became unemployed due to
closure of establishment, wages shall be paid within 2 working days.

4. Deductions which may be made from wages (Section 18) : There shall be no deductions from the wages of the
employee, except those as are authorised under this Code. Any payment made by an employee to the employer or
his agent shall be deemed to be a deduction from his wages.
Further, any loss of wages to an employee, for a good and sufficient cause, resulting from—
(i) the withholding of increment or promotion, including the stoppage of an increment; or
(ii) the reduction to a lower post or time-scale; or
(iii) the suspension,
shall not be deemed to be a deduction from wages in a case where the provisions made by the employer for such
purposes are satisfying the requirements specified in the notification issued by the appropriate Government in this
behalf.

 List of authorized deductions from wages of an employee is as under:

1. FINES IMPOSED ON HIM (SECTION 19):
 No fine shall be imposed on any employee except in respect of acts or omissions by the employee
which have been specified by the employer through notice with the previous approval of appropriate
government.
 Total amount of fine shall not exceed 3% of wages paid in a wage-period.
 No fine shall be imposed on an employee under 15 years of age Fine cannot be recovered in
instalments or after expiry of 90 days.
 Every fine shall be deemed to have been imposed on the day of the act or omission in respect of
which it was imposed.

2. DEDUCTIONS FOR ABSENCE FROM DUTY (SECTION 20):

 Deduction may be made on account of absence of an employee from the place or places where by
the terms of his employment, he is required to work.
 If 10 or more employed persons acting in concert absent themselves without due notice and without
reasonable cause such deduction from any such person may include such amount not exceeding his
wages for eight days.

3. DEDUCTIONS FOR DAMAGE OR LOSS (SECTION 21):

 Deduction for damage or loss shall not exceed the amount of the damage or loss caused to the
employer by negligence or default of the employee.
 Opportunity of show cause shall be given.
  All such deductions and realisations shall be recorded in a register
4. DEDUCTIONS FOR SERVICES RENDERED (SECTION 22):
 Deduction for house accommodation amenity or service rendered can be made only if accepted by
employee in employments terms and shall not exceed equivalent value.

5. DEDUCTIONS FOR RECOVERY OF ADVANCES (SECTION 23):

 Recovery of advance of money given to an employee before the employment began shall be made
from the first payment of wages to him in respect of a complete wage-period but no recovery shall be
made of such advances given for travelling expenses.

6. DEDUCTIONS FOR RECOVERY OF LOANS (SECTION 24):

 Deductions for recovery of loans granted to an employee, regulating the extent to which such loans
may be granted and the rate of interest payable thereon, shall be such as may be prescribed.

PAYMENT OF BONUS (CH IV)

1. ELIGIBILITY FOR BONUS (SECTION 26) – Employee who has put in at least 30 days work in an accounting year
is eligible for an annual minimum bonus calculated at the rate of eight and one-third percent of the wages
earned by the employee or one hundred rupees, whichever is higher.
 The maximum limit for surplus bonus, if any is 20%.

2. PROPORTIONATE REDUCTION IN BONUS (SECTION 27) – Where an employee has not worked for all the
working days in an accounting year, the minimum bonus under section 26, if such bonus is higher than eight
and one third percent of the salary or wage of the days such employee has worked in that accounting year,
shall be proportionately reduced.

3. COMPUTATION OF NUMBER OF WORKING DAYS (SECTION 28) – An employee shall be deemed to have
worked in an establishment in any accounting year also on the days on which:
 He has been laid off under an agreement or as permitted by standing orders.
 He has been on leave with salary or wages.
 He has been absent due to temporary disablement caused by accident arising out of and in the
course of his employment.
 The employee has been on maternity leave with salary or wages, during the accounting year.

4. DISQUALIFICATION FOR BONUS (SECTION 29) – An employee shall be disqualified from receiving bonus
under this Code, if he is dismissed from service for
 fraud; or
 riotous or violent behaviour while on the premises of the establishment; or
 theft, misappropriation or sabotage of any property of the establishment; or
 conviction for sexual harassment

5. SECTION 30: Establishments to include departments, undertakings and branches, whether situated in same
place or different places.

6. PAYMENT OF BONUS OUT OF ALLOCABLE SURPLUS (SECTION 31) : The bonus shall be paid out of the
allocable surplus which shall be an amount equal to sixty percent in case of a banking company and sixty-
seven percent.
7. DEDUCTIONS OF CERTAIN AMOUNT FROM BONUS PAYABLE (SECTION 38) — Where in any accounting year,
an employee is found guilty of misconduct causing financial loss to the employer, then, it shall be lawful for
the employer to deduct the amount of loss from the amount of bonus payable by him to the employee.

8. TIME LIMIT FOR PAYMENT OF BONUS (SECTION 39): All amounts payable to an employee by way of bonus
shall be credited within a period of 8 months from the close of the accounting year (further extendable by 8
months but not beyond 2 years).
 where there is a dispute regarding payment of bonus pending before any authority, such bonus shall
be paid, within a period of one month from the date on which the award becomes enforceable or the
settlement comes into operation, in respect of such dispute.

9. NON-APPLICABILITY OF THIS CHAPTER (SECTION 41): This chapter will not apply to:
i. Employees in LIC
ii. Seamen (as per Merchant Shipping Act)
iii. Employees employed by Indian Red Cross Society, universities and other educational institutions,
institutions including hospitals, chamber of commerce and social welfare institutions established not
for purposes of profit.
iv. Employees employed by the Reserve Bank of India.

OFFENCES AND PENALTIES (CH VIII)

1. COGNIZANCE OF OFFENCES (SECTION 52): No court shall take cognizance of any offence punishable under
this Code, save on a complaint made
 By or under the authority of the appropriate Government or
 An officer authorised in this behalf, or
 By an employee or
 A registered Trade Union registered under the Trade Unions Act, 1926 or
 an Inspector-cum-Facilitator.

No court inferior to that of a Metropolitan Magistrate or Judicial Magistrate of the first class shall try the
offences under this Code.

2. POWER OF OFFICERS OF APPROPRIATE GOVERNMENT TO IMPOSE PENALTY IN CERTAIN CASES (SECTION 53):
The appropriate Government may appoint any officer not below the rank of Under Secretary for holding
enquiry, who shall have the power to summon and enforce attendance of any person.

OFFENCE PENALTY
1.Pays any amount less than the amount due. Fine up to Rs 50000
2. Found guilty of similar offence for which already Imprisonment up to 3 months and fine upto Rs 1
convicted within 5 years of the date of first offence. lakh, or both
3.Contravenes any provision or rule Fine up to Rs 20000
4.Found guilty of contravention again, already Imprisonment up to 1 months and fine up to Rs
convicted once within 5 years of the date of first 40000, or both
offence
5.Non maintenance or improper maintenance of Fine up to Rs 10000
records

Inspector-cum-facilitator will first give an opportunity of being heard and compliance requirement. This will
not be given in case of repeat offence within 5 years.
Compounding of offence can be done for a sum of 50% of maximum fine but not in case of repeat offence for
which earlier compounding or conviction was done.