By Shivani Singh, PRIA

India has over 40 labour laws but the irony is that the majority of labour force is in the informal sector and is deprived of legal rights. Though there are Labour Legislations that have provisions within the laws for the informal sector workers but majority of labour force is outside the purview of the Labour Legislations and hence are deprived of rights and protections. The write up elaborates the situation of informal sector in India and the limitation of Unorganized Workers Social Security Act, 2008 to do justice to the informal sector workers.

I. Unorganized Sector in India

Majority of the workforce in India are in the informal economy, also referred to as the unorganized sector in the country. In 2004, the Government of India set up the National Commission for Enterprises in the Unorganised Sector (NCEUS) to examine the issues of the informal economy. The NCEUS adopted the following definition of the “unorganized sector.” “The unorganized sector consists of all unincorporated private enterprises owned by individuals or households engaged in the sale and production of goods and services operated on a proprietary or partnership basis and with less than 10 total workers.” (NCEUS)

According to data available in 2005, the unorganized sector accounted for 395 million persons or 86 per cent of the work force. Most of these workers (253 million) were engaged in agriculture and who are mainly self-employed. Together with the 29 million in unorganized employment in the formal sector, there were 422.6 million persons in the unorganized economy (sector plus employment) who comprise 92.4 per cent of the work force. (NCEUS)

The lack of a comprehensive legislation to provide for a minimum condition of work is a severe lacuna, sought to be addressed unsuccessfully over several decades. Nearly every commission set up by the Government to study the unorganised sector has recommended it. The First National Commission for Labour (1991) proposed a comprehensive legislation for agricultural workers and the Ministry of Labour drafted a bill for regulation of employment, conditions of service and for the provision of welfare measures for agricultural workers in 1997. Likewise, the Second National Commission for Labour (2002) proposed an Act to consolidate and amend the laws relating to the regulation of employment and workers’ welfare in the unorganised sector in India and provided for social security cover and welfare, regulation of employment and conditions of work, as well as promotion of livelihoods. The legislation intended to cover employments, both in the agricultural and non-agricultural sectors, which were listed in the Schedule appended to the proposed Act. (Ministry of Labour and Employment)

More recently, the National Commission for Enterprises in the Unorganised Sector (NCEUS) in a bid to extend decent work to all in the unorganised sector recommended two comprehensive legislations for unorganised agricultural and non-agricultural workers, combining all aspects of the conditions of work, including social security. The draft bills recommended several minimum conditions of work for unorganized workers, thus prescribing minimum standards, including: (i) an eight-hour working day with at least a half-hour break, (ii) one paid day of rest per week, (iii) a statutory national minimum wage for all wage workers and home workers, (iv) penal interest on delayed payment of wages, (v) no deductions from wages in payment of fines, (vi) the right to organize, (vii) non-discrimination on the basis of sex, caste, religion, HIV/AIDs status and place of origin, (viii) adequate safety equipment at the workplace and compensation for accidents, and (ix) protection from sexual harassment, provision of childcare, and provision of basic amenities at the workplace. (NCEUS)
More recently, the first step to provide comprehensive social security cover to all workers was facilitated through enacting the Unorganised Workers Social Security Act, 2008. This Act has the potential to cover all “workers” including the self-employed for the purposes of ensuring access to basic social security although working hours, safety and employment relations continue to be unregulated for these workers.

One one hand the Act is respite but it comes with certain limitations. That are mentioned below:

II. Limitation of Unorganized Workers Social Security Act, 2008 (Sankaran T. S.)

i. Neither agricultural labourers have been brought under the purview of the Act nor a separate bill for agricultural labourers tabled. But, the minister claims that they are also covered.
ii. NCEUS had prepared two Bills, one on social security and the other on working conditions. The latter has been dumped and the Bill passed confines itself only to social security in its most diluted/truncated form.
iii. The 2008 Act appears to have excluded vast sections of unorganized workers like agricultural labourers, the unorganized labourers in the organised sector including contract labourers and the informal labourers in the formal sector, the anganwadi workers, para workers like ASHAs and parateachers, and those the cooperative sector.
iv. The Act is applicable only to a small section of unorganized labourers whose income limit is expected to be notified by the government. There is every possibility that the subsequent notification will include parameters to exclude good number of unorganised workers from the applicability of the law and the schemes.
v. The passage of the Act is not accompanied by any legally stipulated guarantee for the establishment of a Central Welfare fund.
vi. There is no provision for penalties in the Act to punish those employers who violate it.
vii. “Social Security” to the unorganized workers has been narrowed down to ten paltry social security schemes. Most of these schemes like old age pension or maternity benefit (or even the meagre Bima Yojana, for that matter) is already existing/ongoing schemes and there is nothing new in them.
viii. As a result of dropping the Bill on conditions of work prepared by the Arjun Sengupta Commission, working conditions of unorganised workers including hours of work, mandatory holidays, industrial safety, job security, industrial relations and trade union rights, guaranteeing minimum wages, bonus etc., would remain unregulated and unenforced.
ix. The national and state boards for unorganised workers provided for in the Act are advisory bodies and like the National Labour Commission they are toothless bodies. While implementation is left to the district bureaucracy, there is no independent enforcement or watchdog/oversight body with representation from unions and there is no appellate authority even.
x. Not only there is no penalty against the defaulting employers, there would be no action against the bureaucrats who refuse to register any unorganised worker under any of the twin scheduled schemes.
xi. The special problems of migrant workers, especially inter-State migrants, among unorganised workers, especially the problem of security, has been totally ignored by the Act.
xii. The special problem of women unorganised workers do not figure in the Bill. The problems of security, sexual harassment, proper accommodation for migrant women workers, issues relating to nature of work and industrial safety, gender wage gap, non-payment of wages, childcare facilities at work spot etc., have been totally neglected.


Ministry of Labour and Employment. (n.d.). Retrieved from
NCEUS. (n.d.). Retrieved from
Sankaran, K. (2014). WIEGO Law Pilot Project on the Informal Econom. WEIGO.
Sankaran, T. S. (n.d.). South Asia Citizen Web. Retrieved from


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