Unorganised Workers Social Security Act, 2008

Reading time: 8-10 minutes.

Social security means the protection provided by the society to its members against any possible mishaps over which a person has no control. It consist­s of public programmes intended to protect workers and their families from income losses associated with the old age, illness, unemployment, or death.

Social Security for unorganised sector

In India, mostly all the social security legislations and the schemes fail to address unorganised sector workers and thus exclude them and their problems. This is a harsh truth for the nation as more than 90% of the total work force falls under unorganised sector. These unorganised sector workers are compelled to spend out of their meagre incomes for all contingencies and remain helpless in their old age. These workers face serious problems which range from the uncertainty of employment to hazardous conditions at work. This led to the need for specific legislation of social security for unorganised workers who are poor and vulnerable and are in dire need of welfare programs.

In light of this, Unorganised Workers’ Social Security Act 2008 was enacted to provide social security and welfare to unorganised sector. The act got President assent on 30 December 2008. This act is crucial for India as it is the first time the term unorganized workers is defined thereby identifying them in the eyes of law. The Act enlist various welfare schemes under which workers can get some protection and allows for registration of unorganized workers and it empowers Governments at Central and State levels for framing the rules.

The prime objective behind the Act was to provide social security and welfare of the unorganized workers and all matters that is in connection with it. It defines unorganised worker as –self- employed worker , home- based worker, or a wage worker in the unorganized sector and also includes a worker in the organized sector who is not covered by any of the Acts mentioned in Schedule II to this Act.

Salient Features Of Aforementioned legislation

  1. Enabling Framework for Social Security Schemes

The Act enables the central government to formulate welfare schemes for unorganized sector workers. These welfare schemes consist of health and maternity benefits, life and disability cover, old age protection and any other benefit by the government. The Act, lists down 11 schemes for the unorganized sector workers. Further, the Act also enables state governments to formulate welfare schemes which are related to provident fund, employment injury benefits, educational schemes for children, and skill up graduation of workers, funeral assistance and old age homes. These notified schemes may be wholly funded by the central or state government or both and it might require contributions by the beneficiaries of the schemes or their employers to unorganized sector workers.

  • Establishment of State and National Social Security Advisory Boards

The Act provides for institution of a National Social Security Advisory Board to recommend formation and implementation of suitable welfare schemes for the unorganized sector workers. This national board will consist of an appointed chairperson, a member secretary, and 31 nominated members. Further, the Act seeks to establish state level Social Security Advisory Boards. These state boards will have alike functions as the central board at the relevant state and district levels. Each state board consists of an appointed chairperson, a member secretary, and 26 nominated members.

  • Provision for Registration and Smart Cards for Unorganized Sector Workers

The unorganized workers should mandatorily apply for registration with the district administration. An individual must be 14 years of age or older and should declare that he is an unorganized sector worker. Upon registration, the district administration will issue a smart card which will carry a unique identification number. If any scheme requires contribution from worker, then the worker will become eligible for scheme only on contribution.

Progress Made Under It

 To follow up the aforementioned act , government has set up a National Social Security Fund with an initial allocation of Rs 1000 crore. Government has also announced that the benefits of the Rashtriya Swasthya Bima Yojana (RSBY) will now be extended to all Mahatma Gandhi National Rural Employment Guarantee Scheme (NREGA) beneficiaries who have worked for more than 15 days during the preceding financial year. The scheme provides health insurance cover to below poverty Line (BPL) workers and their families and so far more than one crore smart cards have been issued under this scheme.Some State Governments have also taken steps for enforcing the provisions of the Act. For example, Orissa Government has started the process of for formation of Orissa State Social Security Board for the unorganized workers engaged in the construction sector.

Critical Appraisal

The Act has number of flaws which needs to be corrected.

  1. The term “social security” has been defined on the basis of various schemes, which instead should have been articulated from the perspective of rights derived from the constitution. Unorganised sector has been defined as an establishment which employ less than 10 workers. It should be amended to include all enterprise not falling under the purview of the factories Act, 1948. It creates a cleavage among the workers by only providing for schemes for workers who are below poverty line.
  2. It has not acknowledged the principle of unemployment allowance in the case of job losses for unorganised workers or any form of employment and wage/income guarantee.
  3. The passage of the Act is not accompanied by any legally stipulated guarantee for the establishment of a Central Welfare fund.
  4. The advisory boards are supposed to monitor the working of the welfare schemes, the act does not vest them with executive powers.
  5. Thirdly, the Act missed out considerable number of things like it has not laid down its scope, targeted beneficiaries, implementation and grievance redressal mechanisms or penalties for violation, regulation of entry into jobs and exit from jobs. Further, it also fails to recognise the right to organise, to represent groups and to enter into collective bargaining.
  6. Further, the Central and State Governments are authorized to notify an amount as monthly wage as the case may be. The reason why Central Government should at all be authorized to notify a monthly wage is not clear, particularly when there can be different rates prescribed by the Central & State Government. The legislative policy should warrant the law itself to prescribe a limit, with a provision for changes semi -annually depending on the movement of Consumer Price Index numbers. 


The act aims at imparting social security to unorganized workers and place them in a better position turning away from all miseries and crisis. But, there is a dire need of removing the flaws and ambiguities of the legislation as it is the principal law with regard to unorganised sector. The terms Social Security and Family must be defined so that  worker and his family can get benefits that are covered by the ILO Convention on minimum standards .There is a need to spell out legislative policy and intent of act.

Author: Sulekha Punyani from Maharashtra National Law University, Mumbai.

Editor: Silky Mittal, Junior Editor, Lexlife India

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