Unorganised Sector Workers and the Unorganised Workers’ Social Security
Act, 2008
Synopsis:
Ø Introduction
Ø Definition and Key Concepts
F
Unorganised Sector
F
Unorganised Worker
Ø Categorisation of Unorganised
Workers
F
Occupational Categories
F
Based on Nature of Employment
F
Specially Distressed Categories
F
Service Categories
Ø Social Security Benefits and
Schemes
Ø Institutional Framework Under the
Act
F
National Social Security Board (Section 5)
F
State Social Security Board (Section 6)
Ø Powers Under the Unorganised
Workers’ Social Security Act, 2008
Ø Implementation Challenges
Ø Recent Developments
Ø Suggestions and Way Forward
Ø Conclusion
Introduction
India’s
workforce is predominantly employed in the unorganised sector, which accounts
for over 90% of total employment. Despite their significant contribution to the
economy, workers in this sector often remain outside the purview of formal
labour laws, lacking job security, social protection, and access to welfare benefits.
Recognising the immense vulnerability of this workforce, the Government of
India enacted the Unorganised Workers’
Social Security Act, 2008. The Act provides a legal framework for
identifying unorganised enterprises and workers and aims to extend social
security benefits to them through targeted welfare schemes. This section
defines and explains the core concepts of the Act, such as ‘Unorganised Sector’ and ‘Unorganised Worker’, which are essential
for understanding its scope, coverage, and implementation.
Definition and Key Concepts
F
Unorganised Sector
As per
Section 2(m) of the Unorganised
Workers’ Social Security Act, 2008, "Unorganised sector means an enterprise owned
by individuals or self-employed workers engaged in the production or sale of
goods or providing services of any kind whatsoever and where the enterprise
employs less than ten workers."
1) Ownership: The sector is primarily dominated by individual entrepreneurs or family-run units, not registered under corporate or industrial law.
2) Type of Economic Activity: Includes production, manufacturing, trading, and service delivery (such as domestic services, tailoring, repairs, transport, etc.).
3) Size of the Enterprise: Employment of less than ten workers is the key threshold. This includes part-time, seasonal, or full-time workers.
4) Lack of Regulation: These enterprises typically operate outside the regulatory framework of labour laws, tax systems, or business licenses. They lack formal work contracts, wage security, and occupational safety mechanisms.
The
definition ensures that small informal setups, especially in rural and
urban slum areas, are recognized as part of the economic system and made
eligible for social security interventions.
F
Unorganised Worker
As per
Section 2(l) of Unorganised
Workers’ Social Security Act, 2008, “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 this Act.”
These are workers who produce goods or provide services from home, often as part of a supply chain. May work independently or under a contractor/middleman.
Examples: Beedi rollers, garment stitchers, handicraft artisans.
A person who owns and operates their own economic activity. No formal employer or wage system.
Examples: Vegetable vendors, barbers, small farmers, hawkers.
These workers work for wages (daily, weekly, or monthly) in unregistered or small enterprises. Often engaged without formal contracts or fixed working hours.
Examples: Domestic help, drivers, agricultural labourers.
Some workers employed in large industries or companies may still not be covered under key social security laws (e.g., EPF, ESI, Gratuity Act).
For example, temporary security guards or sanitation workers on contract in a government office who don’t receive PF/ESI benefits.
The Second Schedule of the Act lists major social security laws (like the EPF Act, ESI Act, Maternity Benefit Act, etc.). If a worker is not protected under these, they are considered unorganised for the purpose of this Act—even if employed in the formal sector.
Related
Acts and Laws:
1) Code on Social Security,
2020
2) Building and Other
Construction Workers’ (Regulation of Employment and Conditions of Service) Act,
1996
3) Beedi and Cigar Workers
(Conditions of Employment) Act, 1966
4) Beedi Workers Welfare Fund Act,
1976
5) Maternity Benefit Act,
1961
6) Employees’ Provident Funds
and Miscellaneous Provisions Act, 1952
7) Employees’ State Insurance
(ESI) Act, 1948
8) Bonded Labour System
(Abolition) Act, 1976
9) Inter-State Migrant
Workmen (Regulation of Employment and Conditions of Service) Act, 1979
10) Street Vendors (Protection
of Livelihood and Regulation of Street Vending) Act, 2014
11) Minimum Wages Act, 1948
12) Code on Wages, 2019
The Unorganised Workers’ Social Security Act, 2008 was enacted by the Parliament of India to address the socio-economic vulnerability of unorganised workers by ensuring access to social security and welfare schemes. The scope and coverage of the Act are comprehensive and aim to include the vast and diverse informal workforce of India.
F Territorial Scope
The Act
extends to the entire territory of India. This includes all states and union
territories, ensuring uniform applicability of social security measures to
unorganised workers across the country. The Act does not make any exceptions
based on regional variations, thereby establishing a national legal framework
for informal labour welfare.
F Personal Coverage (Who is
Covered)
The Act
covers a wide range of workers from different backgrounds and occupations
within the unorganised sector. This includes home-based workers, self-employed
individuals, and wage workers who are not covered under formal labour laws. It
also includes workers in the organised sector who, due to contractual or casual
employment, do not receive benefits under Acts listed in Schedule II of the
Act, such as the EPF Act or the ESI Act.
F Sectoral Coverage
The
unorganised sector encompasses a broad spectrum of economic activities in both
urban and rural India. The Act is applicable to workers in agriculture,
construction, domestic work, street vending, small-scale manufacturing, fisheries,
animal husbandry, and service-based informal trades. By covering such a wide
array of sectors, the Act aims to include the largest and most vulnerable
section of the working population.
F Functional Scope: What the Act
Provides
Functionally,
the Act empowers the Central and State Governments to design and implement
welfare schemes for unorganised workers. These schemes may address life and
disability insurance, health and maternity care, old age pensions, housing,
education for children, and skill development. The Act provides a framework but
leaves it to the governments to operationalise specific schemes. These benefits
are intended to provide minimum social protection to informal workers who
otherwise have no job security or financial safety net.
F Institutional Mechanism
To
implement and monitor the schemes under the Act, institutional bodies are
established at both national and state levels. The National Social Security Board
(Section 5) advises the Central Government on formulation and review of welfare
schemes. Similarly, State Social Security Boards (Section 6) are expected to
recommend appropriate measures at the state level. These boards also facilitate
coordination between government departments and help ensure the schemes reach
the intended beneficiaries.
F Schemes Notified Under the Act
Various
government welfare schemes have been notified under the provisions of this Act.
These include the Pradhan Mantri Shram
Yogi Maandhan Yojana
(pension), Ayushman Bharat (health insurance),
Pradhan Mantri Jeevan Jyoti
Bima Yojana (life
insurance), and Atal Pension Yojana. Although the Act
does not create these schemes directly, it legally validates the inclusion of
unorganised workers under such social protection programs.
F Exclusions and Limitations
The Act
explicitly excludes workers who are already covered under formal social
security legislations listed in Schedule II, such as the Employees' Provident
Fund Act, the Employees’ State Insurance Act, and the Maternity Benefit Act.
Another limitation is that the Act does not mandate universal social
security—it leaves much discretion to the government regarding coverage and
implementation. Moreover, enforcement mechanisms are weak, and employers are
not penalised for non-registration or non-cooperation.
It
ensures access to minimum social security benefits and provides for the
formation of Boards to oversee implementation.
Categorisation of Unorganised Workers
Unorganised workers are not a homogenous
group; they differ in terms of occupation, employment type, vulnerability, and
service roles. To effectively design welfare schemes and social protection
measures, it is essential to categorise unorganised workers into well-defined
segments. The Ministry of Labour and Employment, various committees, and the
Unorganised Workers’ Social Security Act, 2008 recognise the following four broad categories
F
Occupational Categories
This
category includes workers classified on the basis of their primary occupation.
These are the most visible and commonly recognised groups within the
unorganised sector. It comprises a wide range of jobs where individuals earn
their livelihood through manual labour, skilled or semi-skilled work, often
without formal contracts or job security. Examples include agricultural
labourers, beedi rollers, construction workers,
domestic workers, fishermen, rickshaw pullers, and street vendors. These
workers often face irregular income, lack of protective gear, and poor access
to health services and safety mechanisms.
1) Agricultural labourers
2) Construction workers
3) Beedi workers
4) Domestic workers
5) Fishermen
6) Rickshaw pullers
7) Street vendors
F
Based on Nature of Employment
Workers under this category are grouped according to the terms and conditions of their employment rather than the type of work they do. This includes casual workers, contract labourers, part-time workers, piece-rate workers, and seasonal or migrant workers. Their employment is usually insecure, informal, and unregulated. They often have no written contracts, no fixed wages, and are vulnerable to sudden dismissal or exploitation. For example, a migrant worker employed at a brick kiln or a woman working on a seasonal contract in agriculture would fall into this category.
1) Casual workers
2) Contract workers
3) Migrant workers
4) Daily wage earners
5) Piece-rate workers
6) Part-time workers
F
Specially Distressed Categories
This group includes individuals who face multiple layers of vulnerability and marginalisation due to socio-economic, caste, gender, or political factors. These workers not only operate in informal and exploitative conditions but also face systemic exclusion from mainstream economic and legal protections. Examples include bonded labourers, manual scavengers, sex workers, victims of trafficking, widows with no income source, and internally displaced persons due to natural disasters or conflict. These individuals often work under coercion, debt, or extreme poverty and require targeted, urgent welfare interventions.
1) Bonded labourers
2) Victims of human trafficking
3) Manual scavengers
4) Sex workers
5) Displaced persons (due to
conflict, disaster, etc.)
F
Service Categories
This category includes unorganised workers engaged in providing a wide range of informal services to society. These may involve personal, household, transport, or utility-based services. Some prominent examples are domestic helpers, auto-rickshaw and taxi drivers, plumbers, electricians, beauticians, garbage collectors, watchmen, security guards, and delivery workers (especially in the gig economy). Despite providing essential services, they remain outside the ambit of formal labour laws and rarely receive job benefits like paid leave, insurance, or retirement pensions.
1) Auto and taxi drivers
2) Plumbers
3) Electricians
4) Beauticians
5) Security guards
6) Delivery personnel
Social Security Benefits and Schemes
One of the central purposes of the Unorganised Workers’ Social Security Act, 2008 is to provide a framework for delivering social security benefits to workers in the unorganised sector. Since these workers typically lack formal contracts, insurance, or employer-backed welfare, the State plays a crucial role in ensuring basic protections and financial safety nets. Under Section 3(1) of the Act, the Central Government is empowered to formulate welfare schemes for unorganised workers across multiple domains.
F
Life and Disability Cover
Many
unorganised workers face high risks at work but lack insurance. To protect
them, the government introduced schemes like PM Jeevan Jyoti
Bima Yojana (PMJJBY)
and PM Suraksha Bima Yojana
(PMSBY). These provide life and accident insurance at very low premiums. In
case of death or disability, their families receive financial support.
F
Health and Maternity Benefits
Health
care is expensive for poor workers. Ayushman
Bharat (PM-JAY) gives free hospital treatment up to ₹5 lakh per
family per year. Janani Suraksha Yojana
supports pregnant women by giving money for hospital deliveries. These schemes
reduce medical expenses and promote safe childbirth.
F Old Age Protection (Pension)
Unorganised
workers rarely have pensions. To help them after retirement, the government
runs Atal Pension Yojana (APY) and PM Shram Yogi Maandhan Yojana (PM-SYM). These schemes allow workers to save
small amounts during their working years and get a monthly pension
(₹3,000) after 60 years of age.
F
Housing Benefits
Many
informal workers live in unsafe houses. The PM Awas
Yojana (PMAY) helps them build or improve homes
by giving financial support and interest subsidies. It ensures that poor
families have a safe and permanent shelter
F
Skill Upgradation and Employment
Skill
training helps workers get better jobs. The PM Kaushal Vikas
Yojana (PMKVY) offers free short-term training in
various skills like driving, tailoring, plumbing, etc. It increases their
chances of getting steady work and income.
F
Education for Children
To stop
child labour and promote education, the government provides free food and
scholarships. Schemes like the Mid-Day Meal Scheme and National
Scholarship Portal encourage school attendance and help unorganised
workers’ children complete their studies.
F
Financial Assistance and Welfare Funds
Special
welfare funds exist for workers in sectors like construction and beedi-making. These funds give money for health checkups, marriage of children, schooling, and funerals.
Examples include the Beedi Workers Welfare
Fund and BOCW Welfare Fund.
|
Type of Benefit |
Examples of Schemes |
|
1) Life and Disability Cover |
1) Pradhan Mantri
Jeevan Jyoti Bima Yojana |
|
2) Health and Maternity |
2) Ayushman Bharat, Janani Suraksha Yojana |
|
3) Old Age Protection |
3) Atal Pension Yojana, Indira Gandhi Old Age Pension |
|
4) Other Benefits |
4) Housing, Skill Upgradation,
Education for children |
These
schemes are implemented either directly by the Central Government or through
State Governments.
Institutional Framework Under
the Act
The Unorganised
Workers’ Social Security Act, 2008 establishes a two-tier institutional
structure to ensure that welfare schemes for unorganised workers are
properly planned, monitored, and implemented. These bodies are responsible for
advising the government and facilitating coordination among various
stakeholders.
Ø National Social Security Board
(Section 5)
The National
Social Security Board is constituted by the Central Government under
Section 5 of the Act. It includes representatives from various ministries,
state governments, employers, workers, civil society, and professionals. The
Board's main role is to recommend suitable social security schemes for
different sections of unorganised workers, review existing schemes, and
suggest ways to improve implementation. It also advises the central government
on policy formulation and monitors the progress of welfare programs.
Ø State Social Security Board
(Section 6)
At the state
level, each government is required to set up a State Social Security
Board under Section 6. This board performs a similar role as the national
board but within the context of the respective state. It recommends
state-specific welfare schemes, supervises the delivery of benefits, and helps
coordinate between district authorities and implementing agencies. The board
includes state government officials, worker representatives, employers, and
social sector experts.
Ø Role of District Administration
While the
Act doesn’t formally establish a district-level board, it expects district
collectors and local authorities to play a key role in registering
unorganised workers, maintaining data (such as through the e-Shram portal), and ensuring that benefits reach the
right people. Many states have used labour departments, panchayats, and
urban local bodies to implement schemes at the grassroots level.
Ø Registration of Workers
The
institutional framework also involves worker registration, which is
essential to ensure proper targeting of benefits. Workers must submit their
details to authorities and may receive a smart card or e-Shram
card with a unique identification number. This helps the government track
workers, deliver benefits, and design schemes based on actual field data.
Powers Under the
Unorganised Workers’ Social Security Act, 2008
The Unorganised
Workers’ Social Security Act, 2008 provides specific powers to the Central
Government, State Governments, and related authorities to ensure
effective implementation, coordination, and supervision of social security
schemes for unorganised workers. These powers help in policy framing,
administrative rule-making, and ensuring the smooth functioning of welfare
boards and schemes.
Ø Power of the Central Government
to Give Directions (Section 8)
Under Section
8 of the Act, the Central Government has the authority to issue directions
to State Governments for carrying out the provisions of the Act. These
directions may include policy matters, coordination of schemes, fund
allocations, or procedural guidelines. This ensures uniformity and
consistency in the implementation of welfare measures across the country.
Ø Power to Make Rules by the
Central Government (Section 10)
According
to Section 10, the Central Government has the power to make
rules to carry out the provisions of the Act. These rules may relate to the
functioning of the National Social Security Board, procedures for registering
workers, monitoring welfare schemes, and any other matter required for
implementation. Such rules are published in the Official Gazette and have the
force of law.
Ø Power to Make Rules by the State
Government (Section 11)
Similarly,
Section 11 allows the State Governments to frame rules for their
respective states. These rules help in the operation of the State Social
Security Boards, local worker registration systems, and state-specific schemes.
The State rules must be consistent with the central guidelines and also
published in the Official Gazette.
Ø Proceedings Not Affected by
Vacancies (Section 9)
Section 9 of the Act states that the
functioning or validity of the proceedings of the National or State Social
Security Board shall not be affected by any vacancy or defect in the
constitution of the Board. This ensures continuity in governance and
prevents delays in decision-making due to administrative gaps.
Implementation Challenges
Implementation Challenges of the Unorganised
Workers’ Social Security Act, 2008
Ø Lack of Awareness
Most
unorganised workers are unaware of the Act and available welfare schemes.
Ø Low Registration Rates
A large
number of workers remain unregistered due to lack of documents, awareness, or digital
access.
Ø Data Gaps
Inadequate
and outdated data makes it hard to identify and reach beneficiaries
effectively.
Ø Limited Outreach
The e-Shram portal is useful, but many workers, especially in
rural areas, do not have access or support to register.
Ø Inadequate Funding
Welfare
schemes under the Act often suffer from insufficient and irregular funding.
Ø Fragmented Schemes
Multiple
schemes overlap without proper coordination, leading to duplication and
confusion.
Ø Weak Institutional Mechanism
Some
State Social Security Boards are inactive or have not been fully set up.
Ø Lack of Employer Accountability
Informal
employers are not legally bound to ensure worker registration or benefits.
Ø Poor Monitoring
There is
a lack of strong monitoring systems to track the delivery and impact of
schemes.
Ø No Effective Grievance Redressal
Workers
have limited access to complaint or support systems when issues arise.
Recent Developments
F e-Shram Portal (2021): A national database for unorganised workers with
a unique 12-digit UAN (Universal Account Number).
F Labour Code on Social Security,
2020:
Consolidates multiple labour laws and aims to provide more comprehensive
coverage.
Suggestions and Way Forward
Ø Increase Awareness
Organise
awareness campaigns to educate unorganised workers about their rights, welfare
schemes, and how to register.
Ø Strengthen Registration Mechanism
Make
registration easier through local help desks, mobile apps, and by linking with
voter ID or Aadhaar. Promote the use of the e-Shram portal widely.
Ø Improve Funding
Allocate
more funds for welfare schemes and ensure timely disbursement to avoid delays
in benefit delivery.
Ø Integrate Welfare Schemes
Merge
overlapping schemes and create a single-window platform for all
unorganised worker benefits.
Ø Activate State Boards
Ensure
that State Social Security Boards are formed, fully functional, and
actively involved in planning and supervision.
Ø Involve Local Bodies
Empower panchayats,
municipalities, and labour officers to help with worker
registration, verification, and grievance redressal.
Ø Enforce Employer Responsibility
Frame
rules to make informal employers accountable for helping workers register and
access social security.
Ø Build Strong Monitoring Systems
Use
digital tools to monitor scheme delivery, track benefits, and assess the impact
of welfare programs in real time.
Ø Establish Grievance Redressal
Mechanism
Set up helplines,
online portals, and offline offices where workers can lodge
complaints and seek help.
Ø Focus on Vulnerable Groups
Give
special attention to women workers, migrant labourers, and specially distressed categories through
targeted schemes.
Conclusion
The Unorganised Workers’ Social Security
Act, 2008 is an important law that aims to protect workers who don’t
have formal jobs like street vendors, domestic helpers, and daily wage
labourers. It provides a legal way for the government to give them social
security benefits like health care, pensions, insurance, and housing help. But
many workers are still unaware of these schemes, and registration levels are
low. The government has started new steps like the e-Shram portal to fix this, but
more needs to be done. To make the law truly helpful, the government, local
bodies, and NGOs must work together to spread awareness, improve registration,
and make sure benefits actually reach the workers. This will help give safety
and dignity to India’s largest group of workers.