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New social security Bill
Why is it in the news?
- Labour Minister introduced the Code on Social Security, 2019, in the Lok Sabha.
- The Bill seeks to amend and consolidate laws relating to the social security of employees, subsuming eight Central laws.
- As part of its reform initiatives, the labour ministry has decided to amalgamate 44 labour laws into four codes:
(1) On wages
(2) Industrial relations
(3) Social security.
(4) Safety, and health and working conditions.
Key Provisions of the Code
- Social security fund:
(1) The bill seeks to establish a social security fund and tap the corporate social responsibility fund to offer unorganized sector workers medical, pension, death and disability benefits via the employee’s state insurance corporation.
- Gratuity on a pro-rata basis:
(1) The Bill also has a clause to make fixed-term contract workers eligible for gratuity on a pro-rata basis.
(2) Currently, workers are not entitled to gratuity before completing five years of continuous service, as prescribed in the Payment of Gratuity Act, 1972.
- Provident Fund contribution:
(1) The new code will give the option for the reduction of Provident Fund contribution by employees in some sectors from 12% to 10%.
(2) The rationale for allowing lower employee PF contribution is that higher take-home pay may boost consumption, which has been falling, dragging growth down.
(3) The Bill, however, retains employers’ PF contribution at 12%.
Source
The Hindu.