Social security for unorganized sector workers and related issue

Unorganised sector faces basic constraints such as a) casual nature of employment; b) ignorance and illiteracy; c) small size of establishments with low capital investment per person employed; d) scattered nature of establishments; and e) superior strength of the employer operating singly or in combination


Photo Credit : Anshul Prakash, Partner and Utkarsh Kumar, Associate,


There are different terminologies used to interchangeably signify the unorganized sector like informal sector, informal economy, and even informal labour or unorganised labour. According to the National Commission on Labour; unorganised labours are those who have not been able to organise themselves in pursuit of common objectives on account of constraints like casual nature of employment, ignorance and illiteracy, small and scattered size of establishments and position of power enjoyed by employers because of the nature of industry. National Commission on Labour also listed ‘illustrative’ categories of unorganised labour: contract labour including construction workers; casual labour; labour employed in small scale industry; handloom/power-loom workers; beedi and cigar workers: employees in shops and commercial establishments; sweepers and scavengers; workers in tanneries; tribal labour; and ‘other unprotected labour’. In India, the unorganised sector, makes up 90% of India’s workforce and contributes to about 45% of the economy.

Unorganised sector faces basic constraints such as a) casual nature of employment; b) ignorance and illiteracy; c) small size of establishments with low capital investment per person employed; d) scattered nature of establishments; and e) superior strength of the employer operating singly or in combination. However, the major difficulty starts from identifying or defining the unorganised sector itself. There is no a single or primary criterion by which the sector could be defined. For example, in the Trade Unions (Amendment) Act 2001 the explanation in clause 8 states, ‘unorganised sector’ means “any sector which the appropriate government may, by notification in the official gazette, specify”. The Unorganised Workers’ Social Security Act 2008 defines Unorganised Sector and Unorganised Workers as ‘Unorganised Sector’ means “an enterprise owned by individuals or self-employed workers and engaged in production or sale of goods or providing service of any kind whatsoever, and where the enterprise employs workers, the number of such workers is less than ten” and ‘Unorganised worker’ means a “home-based worker, self-employed worker or a wage worker in the unorganised sector and includes a worker in the organised sector who is not covered by any of the acts mentioned in schedule II of the Act”. Evidently, the sector has not been identified uniformly and appropriately by the legislators, that acts as the major fall-back in lack of social security in the unorganised sector.

Legislative Protection

In India, there are several legislations that provide for social security for workers in general, as well as specific classes of workers including the unorganised workers. 

The major breakthrough was the enactment of the Unorganised Workers’ Social Security Act 2008 that provides social security to the unorganised sector by way of framing of schemes by the Central as well as State Governments and funding of Central Government schemes. It provides for constitution of Board at the State level and also the funding of State Government Schemes for record keeping by district administration and for the setup of the workers facilitation centre. Other, specific legislation interalia includes Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act 1979 that provides for employment of inter-State migrant workmen and provides for their conditions of service; the Contract Labour (Regulation & Abolition) Act 1970 that protects and regulates the contract labours; Beedi Workers welfare Fund Act 1976 to promote the welfare of persons engaged in beedi establishments; Building and other Construction Workers (Regulation of Employment and conditions of service) Act 1996 to regulate the employment and condition of service of buildings and other construction workers and to provide for their safety, health and welfare measures and for other matters connected therewith or incidental thereto.

Other legislation that protects the workers or labours in general i.e. organised as well are unorganised labours interalia are the Employees’ Compensation Act 1923; the Employees State Insurance Act 1948; the Employees’ Provident Fund & Miscellaneous Provisions Act 1952; the Maternity Benefit Act 1961; and the Payment of Gratuity Act 1972.

Judicial Pronouncements

The Indian Judiciary has played a significant role in not only identifying and evolving the industrial relations jurisprudence and the rights of weaker section of society but have reinforced the same and directed implementation of the existing laws.

In Bandhua Mukti Morcha v. Union of India, AIR 1984 SC 802, the Supreme Court held that both the Central Government and State Governments are bound to ensure observance of social welfare and labour laws enacted by parliament for the purpose of securing to the workmen a life of basic human dignity in compliance with the Directive Principles of State policy.

Recently, the Supreme Court of India in National Campaign Committee for Central Legislation on Construction Labour v. Union of India and Ors, 2018 (3) BomCR 347, directed the implementation of the Building and Other Construction Workers (Regulation and Employment) Act 1996, as well as the Building and Other Construction Workers’ Welfare Cess Act 1996, noting that, despite the 12 years lapse since the Acts came into force, their provisions had not been implemented.


Evidently, there are various legislations extending social security benefits to the unorganised sector or the unorganised workers, the challenge remains in the implementation of these legislation and schemes and identification of such workers. The legislators may require providing a universal and concrete definition to such classes of workers and extend social security such as food, nutrition, health, housing, employment, etc. to such class of workers. 

The authors are Anshul Prakash, Partner and Utkarsh Kumar, Associate from Khaitan & Co

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anshul prakash Partner and Utkarsh Kumar Associate


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