Chapter – 1

INTRODUCTIION

Labour is an important segment of general community. Being a

„human factor‟, labour is manifestly different from other factors of
production.1 History begins when men actually produce their means
of subsistence. At a minimum, this involves the production of food
and shelter. Marx argues that their first historical act is, therefore, the
production of material life. Production is a social enterprise since it
requires co-operation. Men work together to produce the goods and
services necessary for life.2 Labour is the basic creative power, next
only to nature. It leaves its imprint on everything that man makes
from the simplest to the most complex. All technology is the creation
of labour. So are the tools that labour itself uses. A shop floor labour,
a farm labour, a mason, a manager, a scientist or a computer designer
all are labourers in their own worthy ways. Quite appropriately, labour
has been honoured as „Vishwakarma, Architect of the World‟ in the
Indian tradition. It is only the nature of labour and the context in
which it operates to produce socially useful goods and services that
changes from time to time. A society‟s needs are best fulfilled, and a
nation‟s aspirations are best served by responding to such changes
with periodic revisions in laws and regulations so that labour‟s
creative power may always remain unfettered."3 Labour law as it is
known today is essentially the child of successive industrial
revolutions from the 18th century onwards. It became necessary
when customary restraints and the intimacy of employment
relationships in small communities ceased to provide adequate
protection against the abuses incidental to new forms of mining
and manufacture.4

1 Meenu Paul, Labour and Industrial Law, 1 (2011).

2 M.Harlambos and Heald R.M, Sociology, Themes and Perspective, 535 (1980).
3 Globalization and Its Impact on Labour in the Indian Economy, available at
http://drnarendrajadhav.info/drnjadhav_web_files/speeches/Labour-speech.pdf (visited on July 9,
2013).
4 Available at http://www.legalindia.in/labour-law-in-india (visited on July19,2012).

1
 The labour movement has been instrumental in the enactment
of laws protecting labour rights in the 19th and 20th centuries.
Labour rights have been integral to the social and economic
development since the industrial revolution. The workers began
demanding better conditions and the right to organize so as to
improve their standard of living. Employer‟s costs increased due to
workers demand to win higher wages and better working conditions.
This led to a chaotic situation which required the intervention of
government. In order to put an end to the disputes between the ever-
warring employer and employee, the government enacted many labour
laws. The right to organize, and the simultaneous demands of
employers to restrict the powers of workers' many organizations and
to keep labour costs low. Employer‟s costs can increase due to
workers organizing to win higher wages, or by laws imposing costly
requirements, such as health and safety or equal opportunities.5
The history of labour legislation in India can be traced back to
the history of British colonialism. The influence of British political
economy were naturally dominant in sketching some of these early
laws. In the beginning it was difficult to get enough regular Indian
workers to run British establishments and hence laws for chartering
workers became necessary. This was obviously labour legislation in
order to protect the interests of British employers. 6
Labour law seeks to regulate the relations between an employer
or a class of employers and their workmen. Most labour legislations
are not applicable to unorganized labour which constitutes about 92%
of the entire labour force. The emergence of globalization,
liberalization and privatization has brought new challenges.7 An
important distinction that is popularly made nowadays in all
discussions relating to labour legislation is between workers in the

5 Labour Law,available at http://en.wikipedia.org/wiki/labour-law (visited on September 20, 2011).

6 Available at http://www.localhistories.org/19thcent.html (visited on July 20, 2013).
7 S.C.Srivastava, Industrial Relations And Labour Laws, Preface (2008).

2
organized/formal sector and those in the unorganized/informal
sector. The move towards granting protection to the Indian workforce
continued in the post-independent India on the basis of the fact that
the worker is a weaker partner in employer-employee equation. It was
also in this background that the governments of independent India
sided with the workers that resulted in the enactment of about 100
laws which are connected to the labour at Centre and State level. 8

Industrial growth has always been cherished and expected but

it has led to some labour problems like unfavourable work
environment, working conditions and lack of good wages and
retiremental benefits. The study and implementation of different
labour welfare and social security measures became indispensable. If
these emerging problems are not being taken care of it may lead to
industrial unrest leading to labour turnover, absenteeism, industrial
accidents and inefficiencies in the production quality and
quantitywise.9
Labour law also called as employment law mediates the
relationship between workers, employers, trade unions and the
government. There are broadly two categories of labour law. First,
collective labour law which relates to the tripartite relationship
between employee, employer and union. Second, individual labour law
which concerns employees' rights at work and the contract for his
work. The government classified the labour into two parts-organized
and unorganized labour in India. Organized labour where more than
ten workers are working under the establishment and unorganized
sector is divided into four categories10 i.e., labour force by
(a) occupation
(b) nature of employment
(c) specially distressed categories and
(d) service categories.

8 Available at http://ardictionary.com/labour (visited on July 19, 2012).

9 N.K.Sahni, Social Security and Labour Welfare, Preface (2010).
10 The Report of India's Ministry of Labour and Employment, Government of India, 2008.

3
 The unorganized occupational groups include small and
marginal farmers, landless agricultural labourers, share croppers,
fishermen, those engaged in animal husbandry, beedi rolling, labeling
and packing, building and construction workers, leather workers,
weavers, artisans, salt workers, workers in brick kilns and stone
quarries, workers in saw mills, and workers in oil mills etc. A separate
category based on nature of employment includes attached
agricultural labourers, bonded labourers, migrant workers, contract
and casual labourers. Another separate category dedicated to
distressed unorganized sector includes toddy tappers, scavengers,
carriers of head loads, drivers of animal driven vehicles, loaders and
unloaders. The last unorganized labour category includes service
workers such as midwives, domestic workers, barbers, vegetable and
fruit vendors, newspaper vendors, pavement vendors, hand cart
operators, and the unorganized retail.11
Today is an era of globalization. The physical expansion of the
geographical domain of the global i.e., the increase in the scale and
volume of global flows and increasing impact of global forces of all
kinds affect on local life. Moments and forces of expansion mark the
major turning points and landmarks in the history of globalization. In
1929, the great depression hit all parts of the world, at the same time
in contrast to depression of the 19th century.12 India like any other
nation of the world could not afford itself to remain outside the
clutches of impact of globalization on its economy and industrial
relations. In the present economic order, the working class has a
dominant role to play because no system can work smoothly by
neglecting this important segment of the society.13 The global
workforce is growing rapidly. Today, over 3 billion are either working
or looking for work, a number that is expected to swell by over 430

11 V.V.Giri, Labour Problems in Indian Industry, 114 (1959).

12 Id.
13 Dr.(Mrs.) Ranbir Kaur, “Globalization vis-à-vis the emerging judicial approach towards labour in
India,” M.D.U. law journal, Vol.XI, part-II, 1, (2006).

4
million by 2015. Almost all these new entrants will come from
developing countries. 14
Most people of the world depend upon the day‟s work for a day‟s
wages. If for any reason, they are unable to work, they find themselves
in financial difficulties. In ancient and medieval times, such persons
were cared for by the village community as a whole or by the joint
family. In present times, the setting up of industries and the growing
complexity of socio-economic order, the need of social security is
necessary. Every society plays an important role in social policy
formulations. Social security is an important pillar on which the
structure of “welfare state” rests. Present time is the time of
modernization, it effects on urban areas and organized industrial
sector, which enjoy various social security schemes.15
Social security to the workers would involve providing or
framing such schemes or services or facilities and amenities, which
can enable the workers to lead a decent minimum standard of life and
having financial security to fall back upon in the event of loosing job
for whatsoever may be the reason in the circumstances beyond their
control. The workers must be given the wages and other services,
which will enable them and the members of their family to lead a
decent life. Thus social security is an instrument for social
transformation and good governance.16
Social security is essential for the well-being of people and
society. It is a basic human right (though not one of the constitutional
fundamental rights), and its fulfillment will contribute to achieving
various developmental goals of the nation. Social security measures
have far reaching benefits in the form of reducing infant and
maternity mortality rates, improving productivity and promoting sense
of pride and self-respect amongst the citizens. Such measures can

14 95th International Labour Conference new ILO analysis sees growing uncertainty, accelerated
change in the world of work.
15 Dr. N.H. Gupta, Social Security Legislation for Labour in India, 1 (1986).
16 The Report of Working Group of Social Security for Five Year 10th plan, 17, 2002-2007.

5
also help in eradicating poverty to some extent. Starting from the
minimal level of providing protection against health and life hazards in
work situations, it can progressively be extended to social security
welfare measures involving provision of better health care, maternity
care, old age provisions, etc. Such social security can and, perhaps be
extended to one and all.17
Social protection refers to a set of benefits available (or not
available) from the state, market, civil society and households, or
through a combination of these agencies, to the
individual/households to reduce multi-dimensional deprivation. This
multi-dimensional deprivation could be affecting less active poor
persons (e.g. the elderly, disabled) and active poor persons (e.g.
unemployed).This broad framework makes this concept more
acceptable in developing countries than the concept of social security.
Social security is more applicable in the conditions, where large
number of citizens depend on the formal economy for their livelihood.
Through a defined contribution, this social security may be managed.
But, in the context of wide spread informal economy, formal social
security arrangements are almost absent for the vast majority of the
working population. Besides, in developing countries, the state's
capacity to reach the vast majority of the poor people may be limited
because of its limited resources. In such a context, multiple agencies
that could provide social protection is important for policy
consideration. The framework of social protection is thus capable of
holding the state responsible to provide for the poorest sections by
regulating non-state agencies.18
The idea of social security was born with the concept of the
modern welfare State, which enjoins on the State to undertake and
perform responsibilities of general well-being of the society. In social
democracies the State is called upon to prevent all varieties of ex-

17 The Report of Working Group of Social Security for Five Year 12th plan, 4, 2012-17.
18 Social Protection, available at http://en.wikipedia.org/wiki/Social_security#Social_protection,
visited on (March 17, 2012).

6
ploitation, social and economic, and also to make provision for such
amenities as are necessary for the welfare of the citizens.19
India has always had a joint family system that took care of the
social security needs of all the members provided it had
access/ownership of material assets like land. In keeping with its
cultural traditions, family members and relatives have always
discharged a sense of shared responsibility towards one another. To
the extent that the family has resources to draw upon, this is often
the best relief for the special needs and care required by the aged and
those in poor health. However, with increasing migration,
urbanization and demographic changes there has been a decrease in
large family units. This is where the formal system of social security
gains importance. 20

I. MEANING OF SOCIAL SECURITY

The basic concept of social security is directly related to
addressing absolute poverty as a manifestation of the problem of
deficiency. Social security means “public provision for the economic
security and social welfare of all individuals and their families,
especially in the case of income losses due to unemployment, work
injury, maternity, sickness, old age, and death.”21 Columbia
Encyclopedia defines social security as, “government program
designed to provide for the basic economic security and welfare of
individuals and their dependents.”22
Modern forms of social security, defined by the International
Labour Organization (ILO) is “the protection which society provides for
its members through a series of public measures against the economic
and social distress that otherwise would be caused by the stoppage or

19 Social Security in India, available at http://essaysandarticles.com/education-essays/social-security-

in-india/visited on (August 7, 2012).
20 Social Security, General Overview, Issued by Ministry of Labour and Employment, Government
of India, 2012.
21 Britannica Concise Encyclopedia, 86-87, Vol.9, 2005.
22 Social Security, available at www.answers.com/topic/socialsecurity (visited on February 18,
2011).

7
substantial reduction of earnings resulting from sickness, maternity,
employment injury, disability and death, the provision of medical care
and the provision of subsidies for families with children”.23
Social security must provide for all contingencies including:
sickness, maternity, disability, old age, accidents at work and
industrial diseases; complete or partial unemployment, death etc. It
must provide assistance to all children in order to ensure their
education and maintenance. It must also provide paid holidays for

workers and for family allowances. Social security must provide cash

benefits guaranteeing a proper standard of living for the whole

population.24
According to Prof. Nural Hasan, “The term social security is a
misleading one since it seems to imply national defence, but the
concept has acquired a standard connotation in course of time. The
social security now, is used to mean the security that the society
furnishes through appropriate organization against certain risk to
which its members are exposed.”25
According to Cassidy, “social security is a scheme that connotes
particularly measures of income maintenance or income security”.26

Lord Beveridge in his Report on Social Insurance and Allied

Services used the term social security meaning thereby the security of
an income to take the place of earning when they are interrupted by

unemployment, sickness or accident, to provide for retirement

through age, to provide against loss of support by the death of another

23 Social Security in Developing Countries: Myth or Necessity? Available at www.sussex.ac.uk

visited on (February 18, 2011).
24 The Problem of Social Security in India, available on www.indialabour archives.org visited on
(February 27, 2011).
25 International Labour Organization, Approaches to Social Security, 83 (1942).
26 Id.

8
person, and to meet exceptional expenditures, such as, those

connected with birth and death.27

Dr. Marsh‟s Report on Canadian Social Security indicates three
contingencies to be covered by social security: (1) Interruptions of
earnings, due to unemployment, sickness, permanent disability,
premature death. (2) Occasions requiring expenditure which strains
family budget, such as, medical care and funeral costs. (3)
Insufficiency of income to meet the cost of child maintenance.28
According to V. George, “the social security has meant not
merely a system of preventing people from dying of starvation, but a
system which will assure people a full life ; a system which will
embrace health, education, leisure and culture, all those things, as
well as what we have always fought for food, shelter and a medical
service”.29
The term "social security" means any scheme or programme
established by legislation, or any other mandatory arrangement,
which provides protection, whether in cash or in kind, in the event of
employment accidents, occupational diseases, unemployment,
maternity, sickness, invalidity, old age, retirement, survivorship, or
death, and encompasses, among others, benefits for children and
other family members, health care benefits, prevention, rehabilitation,
and long-term care. It can include social insurance, social assistance,
mutual benefit schemes, provident funds, and other arrangements
which, in accordance with national law or practice, form part of a
country's social security system.30
According to Sh. V.V. Giri, “Social security, is that security
where state furnishes against the risk which individuals of small
means cannot, today standup to by himself or even in private
combination with his fellow countrymen”.31

27 Dr. V.G. Goswami, Labour And Industrial Laws , 4 (1999).

28 Id.
29 Social Security in Canada, International Labour Review, 6 (1943).
30 International Social Security Association Constitution.
31 Supra note 11 at 269.

9
 According to Kautilya32, “State itself should provide support to
poor, pregnant women, to their new born offspring, to orphans, to the
aged, the infirm, the afflicted and the helpless.”33 Social security
programmes vary from country to country. The philosophy of social
security was well known in ancient India. Kautilya‟s Arthashatra and
Manusmriti bear testimony to the fact that the social structure in
those days was so evolved and codes so designed as to provide
security to all people.34
Social security is a concept which states that, “everyone, as a
member of society, has the right to social security and is entitled to
realization, through national effort and international co-operation and
in accordance with the organization and resources of each State, of
the economic, social and cultural rights indispensable for his dignity
and the free development of his personality.”35 In simple term, this
means that the signatories agree that society in which a person lives
should help them to develop and to make the most of all the
advantages (cultural, work, social welfare) which are offered to them in
the country.36
The social security laws in India at present can be broadly
divided into two categories, namely, the contributory and the non-
contributory. The contributory laws are those which provide for
financing of the social security programmes by contributions paid by
workers and employers. The important contributory schemes include
the Employees State Insurance Act, 1948 and the scheme there
under etc. In some cases non contributory supplemented by
contributions/grants from the government e.g. the Employees

32 Chanakya is traditionally identified as Kautilya or Vishnu Gupta, who authored the ancient Indian
political treatise called Arthasastra (Economics).
33 N.C. Bandhopadhyaya, Kautilya, 173 (1925).
34 B.D.Singh, Industrial Relations and Labour Laws, 383 (2008).
35 Universal Declaration of Human Rights, 1948, Article 22.
36 Supra note 11.

10
Compensation Act, 1923, the Maternity Benefit Act, 1961 and the
Payment of Gratuity Act, 1972.37

II. CHARACTERISTICS OF SOCIAL SECURITY

Social security is defined as “the security that society furnishes,
through appropriate organization, against certain risks to which its
members are exposed”. Social security programmes vary from country
to country, their three major characteristics are:
a) they are established by law,
b) they provide some kind of cash payment to individuals to
replace atleast a part of their lost income that is due to such
contingencies as unemployment, maternity, work injury,
invalidism, sickness, old age and death;
c) they provide the benefits or services which are provided in
three major ways38:
i. Social insurance
ii. Social assistance
iii. Public services
i) Social Insurance
The investigations into extent and causes of poverty made
between the close of the 19th century and the Second World War
showed that it had two main causes, namely failure to relate income
during earning to the size of the family and interruption or loss of
earning power.39 Social insurance is for the class of persons who are
well organized and relatively better off, such as wage earners. It is
based on compulsory mutual aid and entails contributions by those
covered.40 A nationwide scheme of social insurance covering the whole
population and providing maternity, widowhood, sickness,

37 Supra note 17 at 18.

38 Social Security and Labour Welfare of India-A Review, available at
www.socialsecurity/finalproject/ social security and labour welfare of India (visited on February
15, 2013).
39 M.Penelope Hall, Social Services of Moderen England, 27 (1960).
40 K.D.Gangrade, Social Legislation In India, 220, Vol.2 (1978).

11
unemployment and industrial injury benefits, retirement pensions and
a death grant, supplemented by a State scheme of social assistance
providing for those whose needs cannot be met, or are inadequately
met, by social insurance. Social insurance is that all persons within
its scope contribute at an agreed rate to an insurance fund, to which
employers and the State also contribute, on the understanding that if
certain contingencies befall them, they can claim benefits from the
fund at standard rates, without any test of need. The benefits are
claimed as a right provided that the requisite number of contributions
have been paid.41 The features of social insurance are:
a. It is financed entirely by or mainly from the common monetary
contributions of workers, employers and the State.
b. The State and the employers make major contribution to this
fund, while the employees pay only a nominal amount.
c. When there is a total or partial loss of income, these benefits,
within limits, ensure the maintenance of the beneficiary‟s
minimum standard of living.
d. Social insurance benefits are granted without an examination
of an individual‟s need and without any means test42, without
affecting the sense of self respect of the beneficiary.
e. These benefits are so planned as to cover, on a compulsory
basis, all those who are sought to be covered.
f. Social insurance reduces the suffering arising out of the
contingencies faced by an individual contingency which he
cannot prevent.
Social insurance is different from commercial insurance, as the
latter is voluntary and is meant for the better paid section of the
population, and its benefits are in proportion to the premiums paid; it

41 Supra note 39 at 27.

42 Means testing "refers generally to the eligibility for relief for debtors who have sufficient
financial means to pay a portion of their debts.

12
offers protection only against individual risks and does not aim at
providing a minimum standard of living.43
Social insurance is “giving” in return for contribution for
meeting different contingencies of life. Social Insurance Schemes are
funded entirely by central government or from common finance
contribution made regularly by an employer as well as an employee.44
Social insurance is an insurance programme carried out or mandated
by a government to provide economic assistance to the unemployed,
the elderly or the disabled. Social insurance is any government-
sponsored program with the following four characteristics45:
The benefits, eligibility requirements and other aspects of the
programme are defined by statue.
Explicit provision is made to account for
the income and expenses (often through a trust fund);
It is funded by taxes or premiums paid by (or on behalf of)
participants (although additional sources of funding may be
provided as wel); and
The program serves a defined population, and participation is
either compulsory or the program is subsidized heavily enough
that most eligible individuals choose to participate.
Social insurance has also been defined as a program where
risks are transferred to and pooled by an organization, often
governmental, that is legally required to provide certain benefits.
Social insurance is insurance first because the beneficiary has to pay
contribution before he is entitled to secure benefit and it is social
because it involves the collective effort of beneficiaries, their
employers, if any and the State. The benefits through social insurance
are not paid gratis, they are systematically financed, since the scheme

43 Supra note 39.

44 Supra note 9 at 3.4.
45 Dr.S.R.Myneni, Labour Laws-2, 242 (2013).

13
is subsidized, a device is evolved to exclude the cases which do not
deserve any subsidy from the State.46
ii) Social Assistance
Social assistance is for the class of persons too poor to
contribute and too scattered. Its beneficiaries are non-contributors. It
is a recognition of the unilateral obligation of the community towards
its dependent groups.47 Social assistance is provided as a supplement
to social insurance for those needy persons who cannot get social
insurance payments, and is offered after a test. The general revenues
of the government provide the finance for social assistance payments,
which is made available as a legal right to those workers who fulfill
given conditions. Social assistance and social insurance go side by
side. Social assistance programmes cover such programmes as
unemployment assistance, old-age assistance, public assistance and
national assistance.48
Social security is the combination of social assistance and social
insurance. Social insurance, however, falls midway between the two,
for it is financed by the State as well as by the insured and their
employers, whereas social assistance is given gratis to the needy by
the state or the community. Lord Beveridge wrote at the beginning of
his Report that “provision for many of the varieties of need through
interruption of earnings and other causes that may arise in modern
industrial communities has already been made on a scale not
surpassed and hardly rivaled in any other country in the world.”49
Social Assistance Scheme is a benevolent and welfare scheme
sponsored by government to provide assistance to the poor/destitute
and weaker section of the society. Social assistance is a device
organized by the State for providing cash assistance and medical

46 Ibid at 243.
47 Supra note 40.
48 Supra note 9 at 3.7-3.8.
49 Supra note 39 at 29.

14
relief, to such members of the society who cannot get them from their
own resources.50
The National Social Assistance Scheme (NSAS) or National
Social Assistance Programme (NSAP) is a flagship welfare program of
the Government of India initiated on 15 August 1995. The State is to
provide public assistance to its citizens in case of unemployment, old
age, sickness and disablement and in other cases of undeserved want
within the limit of its economic capacity and development.51 The
scheme is a "giant step" towards achieving the Directive Principles in
the Constitution.
In 1995, the Government of India introduced for the first time
an all-India protective type social security scheme, the National Social
Assistance Programme (NSAP). It encompasses a national policy for
social assistance benefits to poor households in the case of old age,
death of breadwinner and maternity. The programme has, so far, three
main components: the National Old Age Pension Scheme, the National
Family Benefit Scheme, and the National Maternity Benefit Scheme.
Under the Union Budget for the financial year of 2011-12, an
allocation of 6,158 crore was made to implement this scheme under
the union budget 2012-2013 raising the allocation under the National
Social Assistance Programme (NSAP) by 37 per cent from 6,158 crore
in 2011-12 to 8,447 crore in 2012-13.52
iii) Public Service
Public service programmes constitute the third main type of
social security. They are financed directly by the government from
their general revenues in the form of cash payment and services to
every member of the community falling within the defined category.
This kind of public service is currently available in a number of
countries in the form of national health service providing medical care

50 Supra note 13 at 244.

51 The Constitution of India, Article 41.
52 Available at http://en.wikipedia.org/wiki/National_Social_Assistance_Scheme (visited on
December 21, 2013).

15
for every person in the country, old-age pension, pension for
invalidism53, survivor‟s pension to every widow or orphan, and a
family allowance to every family having a given number of children.54
There has been a large discussion in India on the need for
systems of social assistance and social insurance. This awareness has
been a direct consequence of the structural reforms implemented in
India since 1991, under the supervision of the International Monetary
Fund, which has unveiled some important weaknesses in India‟s
socio-economic development strategy.55 However, these expenditures
tend to be concentrated in higher income countries, so this average
does not reflect the situation for most of the world‟s population, who
live in lower income countries where much less is invested in social
security.56

III. HISTORICAL DEVELOPMENT OF THE CONCEPT OF

SOCIAL SECURITY
The history of social security can be traced to the history of man
in the society. In ancient days, the protection against misfortune
resultant deprivation was given by the members of the family, whether
it was the migratory and nomadic community or the civilized society
under organized governments. With industrialization, man‟s
expectations from society, social institutions and the government
changed. Industrialization carried with it the attendant health hazards
and accidental injuries and consequent privations to individuals and
families. As a result, compensation payment was sought to be
introduced in almost all mature legal systems for industrial accidents
including occupational diseases.57

53 Invalid means same as who is so ill that they have to be looked after by other people.
54 Supra note 9 at 3.9.
55 Supra note 23.
56 Supra note 9 at 3.9.
57 S.N. Singh, Law and Social Change, 4 (1990).

16
 a. International Level

The workmen of Deir-el-Medina58 worked for the State, they

built the tombs in the Valley of the Kings near Thebes.59 A limestone
ostracon lists the quantities of grain that served as basic wages. Four
women are also named. They are not noted herein as slaves, though
female slaves are appropriately noted as such in other lists. Perhaps
these were widows of workmen and were thus being included in
compensation. Even if this is true, however, it is not clear if these
women were elderly. The older men of the village, explicitly noted as
"old", received a monthly grain-ration as well, though theirs was lower
than that of the ordinary workmen.60

The reign of „Umar ibn al-Khattãb61 is considered to be the

brightest period in the history of the Islamic system of social security.
Social and economic justice prevailed and every citizen of the state
was given his due share. „Umar ibn al-Khattãb was the first ruler in
the world who introduced the system of social security in his
government. A department of social security was established. A careful
census and registration of the citizens was done to ensure the
provision of the basic necessities of the life to the destitute citizens of
the State. During the rule of „Umar ibn al-Khattãb, the social security

58 Deir el-Medina is a community of workmen and their families, supervisors and foremen and their
families, all dedicated to building the great tombs of the Egyptian Kings. The image of hundreds,
perhaps thousands of toiling slaves, whipped by overseers, seems seared into the modern
consciousness, and "everyone" is convinced that the despots who ruled Egypt with iron greedy
fists must have built their wealth and glory on the bleeding backs of this tortured labour.
59 The ancient name for the city the Greeks called Thebai was Waset, the Scepter nome, and it was
the main city of the fourth Upper Egyptian nome.
60 Old Age in Ancient Egypt, available at
http://www.touregypt.net/featurestories/oldage.htm#ixzz2gGHxj2aX (visited on April 4,2013).
61 Caliph ,(634-644 A.H) A.H. means After Hijra (Arabic hijra=migration), this lunar calendar stated
marking its beggining from the evet of migration of Muhammad, the Prophet of Islam, from
Makkah to Madina in 620 AD. But Islamic calendar of Hijra did not begin during the life of the
Prophet Muhammad. It actually was introduced by the second Caliph Umar in 637 AD counting
back from the year of migration 620 AD available at http://www.irfi.org / articles /
articles_251_300/ social_security_in_islam.htm (visited on March 17, 2013).

17
system became so strong, that the people wanted to pay Zakah62 but
there was no one to receive it. Expenses of nursing and breeding of
the newborn were paid from the treasury, and parents were given
allowance for the newborn child. In the beginning a child was given
100dirhams63 per annum, which was increased later on. For the
unclaimed children a stipend of 100dirhams was fixed.64
The social mechanism which kept the villages passive also
lowered labour productivity, and provided little incentive to technical
progress or productive investment. In order to cater for their needs, a
number of handicraft industries produced high quality cotton textiles,
silks, jewellery, decorative swords and weapons. These luxury
industries grew up in urban centres. The urban population was bigger
in the Muslim period than it had been under Hindu rulers, for caste
restrictions had previously kept artisans out of towns. Most urban
workers were Muslims. The main market for these urban products
was domestic, but a significant portion of textile output was exported
to Europe and South-East Asia.65
Germany was the first European country to pass labour laws
Chancellor Bismarck's main goal being to undermine the Social
Democratic Party of Germany (SPD). In 1878, Bismarck instituted a
variety of anti-socialist measures, but despite this, socialists
continued gaining seats in the Reichstag. The Chancellor, then,
adopted a different approach to tackling socialism. To appease the
working class, he enacted a variety of paternalistic social reforms,
which became the first type of social security. The year 1883 saw the
passage of the Health Insurance Act, which entitled workers to health

62 Islam has its own economic principles. Zakah is one of the basic principles of the Islamic
economy, based on social welfare and fair distribution of wealth. In addition to the compulsory
payment of Zakah, Muslims are encouraged in the Qur'an to make voluntary contributions to help
the poor and needy, and for other social welfare purposes.
63 Dirham is a unit of currency in several Arab states.
64 Social Security in Islam available at
http://www.irfi.org/articles/articles_251_300/social_security_in_islam.htm (visited on April 17,
2013).
65 Available at http://www.ggdc.net/Maddison/articles/moghul_2.pdf (visited on April 17, 2013).

18
insurance; the worker paid two-thirds, and the employer one-third, of
the premiums. Accident insurance was provided in 1884, while old
age pensions and disability insurance were established in 1889. Other
laws restricted the employment of women and children. These efforts,
however, were not entirely successful; the working class largely
remained unreconciled with Bismarck's conservative government.66
This term originated in the United States has spread throughout
the world. Social security is the aim of all social welfare activities of all
countries following different ideologies, different social and political
structures and different economic policies. Abraham Epstein, the
executive secretary of the American Association of Social Security is
credited with originating the term „social security‟.67 The most
influential example was the United States‟ Social Security Act, 1935,
passed by the Roosevelt administration, was the first official use of the
term “social security”. This Act provided federal grants to the States
for three forms of public assistance to the needy aged, blind and
dependent children. Second, it enabled States to enact unemployment
insurance laws and expand their employment services. Thirdly, it set
up a federal system of old age insurance for persons working in
industry and commerce. Fourthly, it provides additional federal funds
for the extension of state public health and rehabilitation.68
The social security program implemented in the UK, was
summarized in the 1942 Beveridge Report.69 In England a committee
under the Chairmanship of Sir William (now Lord) Beveridge was
setup “to undertake, with special reference to the inter-relation of
schemes, a survey of existing national schemes of social insurance
and the allied services including workmen‟s compensation, and to
make recommendations.”70

66 Labour Law ,available at http://en.wikipedia.org/wiki/Labour_law (visited on September 15,

2013).
67 Haber and Cohen, Readings in Social Security, 39 (1960).
68 Supra note 13 at 223.
69 K.C.Lalwani, Economics of Industrial Labour, 151 (1965).
70 Supra note 39 at 30.

19
 In Great Britain the laws were enacted to provide minimal food
and shelter in a workhouse to the poor. Private savings, compensation
by employers, medieval guilds, mutual aid or mutual benefit societies,
private insurance and life insurance were some of the evolutionary
forms of social security efforts.71
Systems of socio-economic security were introduced in Europe.
These were slowly implemented in most countries during the early
20th century and consolidated after the Second World War72. These
programmes were established as a means of improving the well-being
of the poor, reduce inequality within society and conciliate different
social demands, thus avoiding the social and political conflicts, which
necessarily arose as capitalist forms of production evolved in the
industrialized countries.73 Industrial revolution in the Europe has
seen the growth of urban and industrial centres that affected the rural
joint families thereby disturbing the institution of social security in
the joint family system. When individual was unable to take care of
his own needs, the society realized the importance of protecting the
individual and his family.74
The Universal Declaration of Human Rights is a general
expression of these fundamental principles adopted in 1948 by the
General Assembly of the United Nations Organization. The U.N.
Commission on Human Rights drafted the more specific International
Covenant on Economic, Social and Cultural Rights. 75 Its Articles 6 to
15 are related to the social security. Article 9 of the Covenant
recognizes "the right of everyone to social security, including social
insurance." 76 It requires parties to provide some form of social
insurance scheme to protect people against the risks of sickness,

71 P.Madhava Rao, Social Security for Persons With Disabilities in India, available at
www.pmadhavarao.blogspot.com/2006/12/social-security-for-persons-with.htm. (visited on
February 22, 2011).
72 Period of World War II was (1939-1944).
73 Report of the Inter-Departmental Committee on Social Insurance and Allied Services Chaired by
William Beveridge an Economist.
74 Supra note 71.
75 Thomas R.Van Dervort, International Law and Organization: An Introduction, 214 (1998).
76 The International Covenant on Economic, Social and Cultural Rights, 1966.

20
disability, maternity, employment injury, unemployment or old age; to
provide for survivors, orphans, and those who cannot afford health
care; and to ensure that families are adequately supported. Benefits
from such a scheme must be adequate, accessible to all, and provided
without discrimination. The Covenant does not restrict the form of the
scheme, and both contributory and non-contributory schemes are
permissible (as are community-based and mutual schemes).
The ILO concept of social security is based on the recognition of
the fundamental social right guaranteed by law to all human beings
who live from their own labour and who find themselves unable to
work temporarily or permanently for reasons beyond their control. At
the international level, the preamble of the Constitution of ILO also
referred to the need and protection of workers against sickness,
disease and injury arising out of their employment, pension for old
age, protection of the interests of the workers who were employed in
countries other than their own. Thus, the right to Social Security was
recognized officially for the first time.77
According to the International Labour Organization World
Labour Report, 2000, the total security expenditure in India as
percentage of GDP in 1996 was 1.8 whereas for the corresponding
period the social security expenditure in Sri Lanka was 4.7, Malaysia
2.9 and China 3.6. In Argentina, the social security expenditure for
the same period as a percentage of GDP reached the level of 12.4 and
in case of Brazil 12.2. In comparison to Argentina and Brazil, the
expenditure on social security in India is much less. The expenditure
on social security cannot be directly related alone to the economic
development. Intervention of the State would be essential and a co-
relationship may have to be established for faster economic
development.78 The decline in the wage share is especially strong for
low-skilled workers. In advanced economies for which data are

77 Supra note 18 at16.

78 Supra note 17 at 17.

21
available, the wage share among low-skilled workers fell by 12%
points between the early 1980s and 2005, while it increased by 7%
points for their high-skilled counterparts.79
Since 2007, there has been a sharp increase in the importance
of social contributions to government revenue in advanced and
emerging countries. However, the importance relative to GDP, in the
advanced countries, remained at 8.9% of GDP in 1995 and in 2007.
Owing to the financial crisis, it sharply increased to 9.3% in 2009. As
for the emerging and developing countries, it increased steadily from
2.8% of GDP in 1995 to reach 4.8% in 2009. Between 2004 and 2006,
the financing gap declined or remained stable in the vast majority of
countries. But due to the financial crisis, the gap increased from 8.6%
of GDP in 2006 to over 10% in 2009.80
b. National Level
The philosophy of social security was well-known in ancient
India. The structure of Hindu society in ancient India was by itself a
great security against economic calamities. “Vedas” mentioned that
village officials used to attend and solve all the local problems. They
had judicial as well as executive authority for maintaining good
relations, emphasis was on good treatment of employees and to
condone their minor fault.81 The structure of Hindu society in ancient
India was by itself a great security against economic calamities. In 8th
century Sukracharya makes special provisions for social security
particularly regarding sickness benefits, pensions and the old age
benefits, family pensions and maintenance allowance. In ancient
times,if a person was unable to work on a particular day,he was cared
for by the members of his family or by the village community.82

79 World of Work Report, ILO, 58, 2011.

80 Ibid at 106-107.
81 N. K. Sahni, Amandeep, Punam Aggarwal, Industrial Relations and Labour Laws, 80, (2010).
82 Supra note 68.

22
 Kautilya‟s Arathshastra states that the government believed in
social co-operation and enforced social duties on its subjects.83
Kautilya‟s Arthshastra is a guiding example of the introduction of the
philosophy of social security in ancient India. Kautilya has mentioned
a number of pension schemes in his work. The workers were enjoying
many privileges e.g. they were getting good wages, sick leave and even
old age pension. The state was recognizing the organizations of
workers and the rules were there deciding the cases relating to wage
disputes etc.84 With the gradual break-up of the joint family system,
the ancient institution of social security in India and with the onward
march of industrialization and urbanization and the consequent
emergence of money economy85, the need for new mechanisms
became urgent.86
Muslim rulers hardly took any positive action in this regard.
Social security was considered as necessary input for internal
harmony and international peace. Originally each grade carried a
definite rate of pay, out of which the holders were required to maintain
a quota of horses, elephants, beasts of burden, and carts. But even in
Akbar's days and in spite of safeguards introduced by him, the
number of men actually supplied by the mansabdars87 rarely
corresponded to the number indicated by his rank, and under Akbar's
successors greater latitude was allowed. The mansabdars were paid
either in cash or by temporary grant of jagirs. Theoretically, the
mansabdars received enormous salaries, which appear all the more
excessive when it is realized that they did not normally maintain all
the troops expected of them.88

83 Pushpa Thakur and Priyadarshni, Judicial Framework of Social Security in India, “The Indian
Society of Labour Economics”, 47th Conference 99 (2005).
84 Supra note 13 at 80.
85 It means any money that is available. That is money laundering, and spending money. Anywhere
that you would spend it and receive it.
86 Supra note 41.
87 The mansabdars governed the empire and commanded its armies in the emperor's name in Mugal
Empire.
88 S.M.Edwards and H.L.O. Garrett, Mugal Rule in India, 265 (1956).

23
 Shah Jahan introduced the practice of paying salaries to the
mansabdars for only four months of the year instead of twelve, the
implication being that the actual income for part of the year was
equivalent to what the emperor had originally intended for the whole
year. Even with this reduction, the mansabdars lived extravagantly.
The tendency to luxurious expenditure was undoubtedly heightened
by the mansabdar's knowledge that on his death, his whole property
would be taken over by the state, pending satisfaction of any
outstanding claims by the treasury. But while there may have been
little incentive to save within the system, the high scale of salaries
enabled the state to attract the ablest and most ambitious individuals
from almost the whole of southern and western Asia.89
Jahangir states in his autobiography that on his accession to
the throne he ordered the establishment, at government expense, of
hospitals in large cities. That this order was actually made effective is
shown by the records of salaries paid by the government and of grants
for the distribution of medicine.90 The lower class consisted of
cultivators, artisans, small traders, slaves, shopkeepers, etc. They led
a hard and unattractive life. Their life was simple and their belongings
were limited.91 The Bengal region was especially prosperous from the
time of its takeover by the Mughals in 1590 to the seizure of control by
the British East India Company in 1757. In a system where most
wealth was hoarded by the elites, wages were low for manual labour.
Slavery was limited largely to household servants. However some
religious cults proudly asserted a high status for manual labour. 92

During the period of 1605-1658, in the reign of Jahangir and Shah

Jahan the economic position of peasants and artisans did not improve

89 Ibn Hasan, The Central Structure of the Mugal Empire,138-139(1936).

90 Mughal Administration, available at
http://www.columbia.edu/itc/mealac/pritchett/00islamlinks/ikram/part2_16.html (visited on May
18, 2012).
91 Introduction to Society and Economy under The Mughals, available at
http://www.kkhsou.in/main/history/economy_mughal.html (visited on April 18, 2012)
92 Shireen Moosvi, "The World of Labour in Mughal India (c.1500–1750)," International Review of
Social History, 245–261, Vol. 56, Dec.2011.

24
because the administration failed to produce any lasting change in the
existing social structure. There was no incentive for the revenue
officials, whose concerns primarily were personal or familial gain, to
generate resources independent of dominant Hindu zamindars and
village leaders, whose self-interest and local dominance prevented
them from handing over the full amount of revenue to the imperial
treasury. 93 In Muslim rule if the work was found to be inadequently
done the wages were proportionately reduced and the decision
regarding employment disputes were solved and deeded by the
Emperor himself.94
In 19th century, the alien rulers tried to look into the problem of
social security, but it was mainly restricted to the factory workers.95 In
British period the working conditions of the workers were not good.
There was lot of exploitation by the British officials.96 Labour welfare
legislation was initiated in India by the British rulers in 1881. After
the First World War, labour movement started in our country with the
establishment of the Madras labour union in 1918 to redress the
distress caused by post-war rise in prices not followed by rise in
wages. There was a series of strikes in the jute mills in Calcutta and
Jamshedpur.97 The Employees Compensation Act came in 1923 as the
first set of social security laws.98
1930‟s period is important in the evolution of social security.
The government social policies in all the advanced societies
guaranteeing to all citizens a decent standard of living, social services
providing financial benefits of one form or another, had an effect on
those covering the population and economic risks of the industrial
system. All democratic governments were under constant pressure

93 Mughal Empire, available at https://www.newworldencyclopedia.org/entry/Mughal_Empire

(visited on April15, 2012).
94 Supra note 13 at 80.
95 Supra note 83.
96 Supra note 13 at 80.
97 Supra note 28 at14.
98 Supra note 57 at7.

25
from the electorate to extend the scope of their services but its
response can vary according to their political philosophy.99 The Royal
Commission on Labour, in its report in 1931, recommended that a
tentative scheme be tried on an experimental basis for single
establishment. The response of provincial governments was, however,
lukewarm. Several labour enquiry committees meanwhile also
recommended introduction of health insurance for workers. The
mention of social security in the Atlantic Charter of 1941100 gave a
fillip to the concept of social insurance in India relating to
establishment of UNO.101
In India the term social security is generally used in its broadest
sense, it may consist of all types of measures i.e. preventive,
promotional and protective as the case may be. The measures may be
statutory, public or private. The term includes social insurance,
assistance, protection, safety and other steps involved. Under the
colonial regime social security remained an issue grossly neglected by
the government and society. The hardships of the disadvantaged and
vulnerable sections of the population, especially in rural areas,
steadily grew. After the country achieved independence in 1947, the
states showed some concern about social security.102
Prior to 1947, institutionalized social security in India was
available to only a handful of Government employees who had the
benefit of retirement pension or contributory provident fund together
with other complementary support for them and their family
members. A few industrial establishments had extended certain
measures in this regard on voluntary basis for their employees. The

99 Supra note 30 at1.

100 The Atlantic Charter was drafted at the Atlantic Conference by British Prime Minister Winston
Churchill and U.S. President Franklin D. Roosevelt in Newfoundland. It was issued as a joint
declaration on 14 August 1941, The Charter stated the global cooperation to secure better
economic and social conditions for all.
101 Supra note 41 at 221.
102 A.S. Oberai, A Sivananthiran, C.S. Venkata Ratnam, Perspectives On Unorganised Labour, 99
(2001).

26
majority of workers remained uncovered and were left to fend for
themselves.103
In March 1943, the Government of India appointed Professor
B.P. Adarker, assisted by a panel of advisors, to prepare a scheme of
health insurance for industrial workers. In the Sixth Labour
Conference in which the Adarker Scheme was discussed, there was a
general agreement that the central government should go ahead with
the preparation of a scheme of health insurance applicable to all
perennial factories covering employment injuries and maternity
benefits. As a result of these exercises, the Employees State Insurance
Act, 1948104 was enforced.105
There have been some periodical investigations regarding
enforcement of labour welfare schemes by government. First
investigation106 was under the Chairmanship of Shri V.K.R.Menon to
find out how the various schemes of social security and other benefits
could be combined in a comprehensive social security system.107 The
scheme there under was brought into effect as the major enactment in
the field of social security. Employees Provident Fund and
Miscellaneous Provisions Act 1952108 was enforced. It added a family
pension scheme and deposit linked insurance scheme in 1971 by the
Provident Fund Act, 1971.109
The second principal investigation was done by a tripartite ESI
Review Committee110 under the chairmanship of Shri C.R.Pattabhi
Raman. It made 176 recommendations, most of which have been since
implemented. The third major investigating body which was asked to
report, inter alia, on the working and reorganization of social security
schemes in India was the National Commission on Labour, 1969

103 K. Mariappan, Employment Policy and Labour Welfare in India, 91 (2011).

104 Act No.34 of 1948.
105 Supra note 28 at 11-13.
106 1957-1958.
107 Supra note 41 at 222.
108 Act No.9 of 1952.
109 Act No. 19 of 1971.
110 1963-66

27
under the chairmanship of Dr. P.B.Gajendragadkar. The Commission
reviewed the progress in the enforcement of the ESI scheme in view of
ESI Review Committee‟s recommendations. It further made a general
statement that, “an ideal arrangement will be to gradually work
towards a comprehensive social security plan by pooling all the social
security collection in a single fund which different agencies can draw
upon for disbursing various benefits according to needs.”111
The provision of social security for the poorest sections of
society was included in the 2000-2001 budget as an area of priority
within India‟s social sector, together with other areas such as the
empowerment of women, population policy and health, which extends
the system of social security in India beyond the objectives of
standard programmes implemented in more advanced economies.112
The Planning Commission had set up a Tenth Working Group
on Social Security under the chairmanship of Secretary113, Ministry of
Labour, Government of India. It was decided with approval of the
Chairman that the subworking group on gender concerns need not
submit a separate report. The gender concerns will be taken care of in
the recommendations of the working group cutting across all the
sectors as social security is gender neutral. Social security is
increasingly seen as an integral part of the development process. It
helps to create a more positive attitude not just to structural and
technological change but also the challenge of globalization and to its
potential benefits in terms of greater efficiency and higher
productivity. The work-force in the country stands close to 400
million.114 The existing arrangements for social arrangements for
social security cover only 35 million. A prime concern is the challenge
of closing the existing coverage gap. This is about 90% of the

111 Supra note 41 at 222.

112 Supra note 57 at 36.
113 Shri Vinod Vaish, Secretary, Ministry of Labour, Govt. of India, 2002-07.
114 Supra note 17.

28
workforce. The obvious strategy for the Tenth Five Year Plan was built
around the goal of closing the coverage gap to a significant extent. The
impact of globalization and the national economic reform agenda have
accelerated and forced the pace of change in the methods of
production and distribution. A clearly visible trend is
contractualization and casualization of labour. Relocating
manufacturing bases, out-sourcing, non-core components of
businesses have radically changed the way businesses have
traditionally been run.115 It was recommended that an approach to the
challenge of closing the coverage gap in social security provisions has
to be developed at two levels. The first level is the re-pooling of the
existing institutional arrangements for the organized sector in order to
remove existing inefficiencies, redundancies and for greatly improving
service turn around times and responsiveness to customer needs and
the expectations. This can be achieved by introducing re-engineering
and radical change in business processes i.e. to improve functions of
contribution collection, record-keeping and benefit delivery. The
second level is to create a legislative and administrative framework for
significant penetration of social security in the unorganized sector.116

IV. NATURE OF SOCIAL SECURITY LAWS IN INDIA

At all times in every form of society and at every stage of
development, there have been sick people needing care, handicapped
and old people unable to work for the living , and children to be
brought up and educated. Human societies of this kind and in doing
so, they have naturally been guided at all times by the prevailing
ideology and social order. The concept of social security has developed
all over the world over the last years. It has now been universally
recognised that all persons in society need protection against loss of
income due to unemployment arising out of incapacity to work due to

115 Supra note 17.

116 Id.

29
invalidity, old age etc. For the wage earning population, security of
income, when the worker becomes old or infirm, is of consequential
importance. The benefits available under these conditions are known
as retiral benefits. Retiral benefits form an integral part of social
security.117
There are many Indian laws which deal with the concept of
social security in India directly or indirectly. Social security is
increasingly viewed as an integral part of the development process
because it helps to create a more positive attitude to the challenge of
globalization and the consequent structural and technological
changes. It envisages that the employees shall be protected against all
types of social risks that may cause undue hardships to them in
fulfilling their basic needs. The workers do not have enough financial
resources to face such risks arising due to sickness, accidents, old
age, diseases, unemployment, etc. and also do not have alternative
source of livelihood to help them in the period of adversity. Hence, it
becomes the obligation of the State to help the workers by providing
them the social safety cover. This fact has been recognized by our
policymakers and accordingly, the matters relating to social security
are listed in the various labour welfare legislations.

V. SOCIAL SECURITY UNDER INDIAN CONSTITUTION

India, being a welfare State, has taken upon itself the
responsibilities of extending various benefits of social security and
social assistance to its citizens. The social security legislations in
India derive their strength and spirit from the Directive Principles of
the State Policy under part IV as contained in the Constitution of
India. In India, the Constitution levies responsibility of social security
of citizens on the State. Our Constitutional framers manifest that
Indian people have to achieve economic independence and adopt

117 Report of Committee on Labour Welfare, 255,1969.

30
democracy as a way of life through welfarism and positive action of the
State. Social security is discussed in the Concurrent List.118
Although the Constitution of India is yet to recognize social
security as a fundamental right, it does require that the State should
strive to promote the welfare of the people by securing and protecting,
as effectively as it may, a social order in which justice social, economic
and political shall encompass all the institutions of national life. The
State, here, discharges duty as an agent of the society in order to help
those who are in adverse situations or otherwise need protection. Also,
the Concurrent List of the Constitution of India mentions issues like
social security and insurance, employment and unemployment and
welfare of labour including conditions of work, provident funds,
employers' liability, workmen's compensation, invalidity and old age
pension and maternity benefits etc.119
Article38 fixes responsibility on State to secure social order for
the promotion of welfare of the citizens.
State has to ensure for its people adequate means of
livelihood fair distribution of wealth, equal pay for equal work and
protection of children and labour.120
The State is directed to ensure to the people within the
limits of its economic capacity and development in employment,
education and public assistance in cases of unemployment, old age,
sickness and disablement etc.121
Article42 relates to economic rights. It provides that State is
required to make provisions for just and humane conditions of work
and for maternity relief.

118 Sch.VII List III Entry 23. Social Security and social insurance; employment and unemployment.
Entry 24. Welfare of Labour including conditions of work, provident funds, employers’
Liability, workmen’s compensation, invalidity and old age pensions and maternity benefits.
119 V.N.Shukla, Constitution of India, 298 (2001).
120 Ibid at Art.39.
121 Ibid at Art. 41.

31
 Article43 requires the State to strive to secure to the workers

work, a living wage, conditions of work ensuring a decent standard of

life and full enjoyment of leisure and social and cultural opportunities.

Article47 provides that the State should raise the level of

nutrition and the standard of living of its people and improvement of

public health as among its primary duties. The obligations cast on the
State in the above Articles constitute social security.

VI. POSITION OF SOCIAL SECURITY IN DIFFERENT

COUNTRIES
a. United Kingdom
The most important and comprehensive Social Security Scheme
Known as 'Beveridge Plan' was introduced in this country. An inter-
departmental Committee on Social Insurance and Allied Services was
set up there in June, 1941 with Sir William Beveridge as its
Chairman. The Committee covered a wide range of subject and traced
the development of social security measures in the United Kingdom
right from the days of meaning of it.122 The Committee laid down three
guiding principles of its recommendation. It was stated that
organisation of social insurance should be treated as one part only of
a comprehensive policy of social progress. The Committee
recommended Social insurance, fully developed, may provide security;
it is an attack upon wants. But want is only one of five giants on the
road of reconstruction and in some ways the easiest to attack. The
other are disease, ignorance, squalor and idleness. Social security
must be achieved by co-operation between the State and the
individual. The State should offer security for services and
contribution. In organising security the State should not stifle
incentive, opportunity responsibility in establishing a national
minimum programme it should leave room and encouragement for
voluntary action by each individual to provide more than that

122 Which was enacted at the time of Queen Elizabeth I.

32
minimum for himself and his family". It was further stated by this
committee that a plan for social security is built upon these
principles. It uses experience but is not tied by experience123...
As a result of the recommendations of this Committee in the
field of insurance and allied services, a number of schemes operate
now in UK. These include work injury, unemployment, invalidity, old
age, survivor's benefits and family allowances have been provided by
legislation, not only to employees or workmen but to self-employed
persons as well. Some of the benefits are paid out of the joint
contribution of workers and employers whereas the Government
meets the whole cost in the case of Family Allowances. The scheme of
retiral benefits covers all residents. Options have, however, been given
to married women, self-employed and non-employed persons whose
income is below £250 a year. Work injury benefits are available to all
employees, self-employed persons, and public employees have equal
protection. Universal pensions are given to all resident citizens and
aliens covered by reciprocity agreements in the case of old age,
invalidity and death. The contribution by employees in the case of old
age, invalidity and death benefit is made according to a prescribed
rate which is about 10 2 1/2d (for men) per week.124
b. Japan.
The Social security system in Japan consists of (i) the Welfare
Pension Insurance Scheme covering manual and non-manual workers
in private establishments employing not less than 5 workers (ii)
various pensions and mutual aid associations schemes for national
and local Government staff employees (iii) mutual aid association
schemes separately organised for public corporation employees,
private school teachers and employees, the staff of agricultural,
forestry and fishery co-operatives and allied societies (iv) the Seamen
Insurance Scheme and (v) The National Pension Scheme, covering all

123 Report of Committee on Labour Welfare, 256, 1969.

124 Id.

33
persons not protected under any one of the pension scheme
mentioned above In the first four categories, more than 75% of paid
employees in all industries are covered. On the other hand, about
2,46,50,000 persons were covered under the scope of the Contributory
National Pension Scheme and about 2,50,00,000 persons received
non-contributory benefits under the same Scheme Besides these, a
Public Assistance Scheme was set up in 1946 as a second line of
defence against poverty to provide benefits of persons whose need is
clearly established. Persons protected by the public assistance scheme
fall into 3 categories : (i) those who are incapable of earning their
living, such as the aged, the permanently disabled, the weak-minded
and widowed mothers (ii) those who need assistance, due to the
results from prolonged sickness or invalidity and (iii) those whose
income is too low to maintain themselves and their families although
they are gainfully occupied in many cases as casual workers or self-
employed with small means.125
c. U.S.S.R
According to the Constitution of U.S.S.R., social security
benefits are available to all citizens without exception regardless of
place, sex, religion, creed and caste. Foreigners also, who work in the
Soviet Union, and their families are entitled to these benefits subject
to certain conditions. Under Sickness and Medical Benefits Scheme,
medical care extended to students but cash benefits are payable to the
persons and students only. Under the Injury Benefits Scheme,
medical care is provided to all residents but cash benefits are provided
to a category of persons.
Beneficiaries are not required to pay any contribution.
Generally, the State pays total cost of social security measures. in
some cases and for certain types of the employers are required to

125 Ibid at 257.

34
make a small ranging from 4.4 per cent to 9 per cent the pay-roll,
which differs from industry. There are special care programmes for old
age, is made to keep old persons in comfort. Average, pension in the
U.S.S.R. amounts to 70% of one's wages or salary but many people
receive pension equal to their wages. All pensions are tax-free. In
certain special categories of workers, special rules exist which provide
for even cent percent pension, particularly if the workers are in
noxious hazardous work. In 1967, the State allocated 11,200 million
roubles. On the whole, 10% of the national income is spent on social
security measures.126
d. Czechoslovakia

In Czechoslovakia127, under social insurance system benefits

are available against old age, invalidity and death and these are
applicable to all, employees, members of industrial production co-
operatives, advanced students and artists. The Sickness and
Maternity Benefit Scheme under Dual Social Insurance (Cash
Benefits) and Public Service (Medical Care) system covers all the above
categories except a few. The insured persons are not required to
contribute anything. Employees contribute 10% and 15% of pay roll in
nationalized and private enterprises respectively. The Government
bears the whole cost of medical services.128
Work injury benefits are available to all employees including
members of industrial production co-operative. There are special
systems for members of agricultural co-operative and for farmers and
other self-employed persons. The insured persons are not required to
bear any expenditure on this account. In the case of temporary
incapacity, the employers are required to bear the total cost, but

126 Id.
127 In 1990–1992 the federal democratic republic consisted of the Czech Republic and the Slovak
Republic.
128 Id.

35
Government meets all the expenses in the case of permanent
disability, survivors' pension and of medical care.129
e. Poland.
The Poland social insurance system in respect of old age,
invalidity and death cover all the employees, apprentices, members
of handicraft co-operatives and home workers. Special system
exists to cover miners, rail-road employees, members of agricultural
co-operatives and sefl-employed artisans.
The Sickness and Maternity Benefits Scheme covers all these
categories of workers. Similar is the position with regard to Work
Injury Scheme. The insured persons are not required to pay
contribution to the Social Security Fund. Employers contribute 30% of
pay-roll if it is private agricultural non undertaking, 18% if private
agricultural undertaking, 15.5% if nationalised non-agricultural
undertaking, and 10% if nationalised agricultural undertaking.130
f. United States of America
The United States Social Security Administration (SSA) is
an independent agency of the United States federal government that
administers social security, a social insurance program consisting
of retirement, disability, and survivors' benefits. To qualify for these
benefits, most American workers pay social security taxes on their
earnings; future benefits are based on the employees' contributions.
The SSA administers the retirement, survivors, and disabled social
insurance programs, which can provide monthly benefits to aged or
disabled workers, their spouses and children, and to the survivors of
insured workers. In 2010, more than 54 million Americans received
approximately US$712 billion in social security benefits. The
programs are primarily financed by taxes which employers,
employees, and the self-insured pay annually. These revenues are

129 Ibid at 258.

130 Id.

36
placed into a special trust fund also known as Retirement, Survivors,
Disability Insurance.131
The foundations for social security were laid down in U.S.A. in
the New Deal Policy of the late President Roosevelt. The present day
legislation based on social security system in that country owes its
existence to the social security Act of 1934 as amended form time to
time. This Act sets out the provisions of Old Age and Survivors
Insurance Programmer. The Act has been amended a number of times
to make the provision of social security system more extensive in
character and content. This Programmer includes Old Age and
Survivors benefits, retirement benefits, disability benefits, lump sum
death payments etc.132
g. Sweden.
All workers citizens and aliens covered by reciprocity
agreements as well as all employed and self-employed persons earning
over base amount are covered for supplementary pensions. However,
self-employed persons may opt not to be covered under the scheme.
The insured persons for the purposes of universal pensions are
required to contribute 4% of income payable by all tax-payers subject
to a maximum tax of 1200 crowns a year. For supplementary
pensions employees are not required to pay anything. The
contribution by employers for universal pensions is nil. In the case of
supplementary pensions the employees are required to pay 8.5%
wages of each employee between the base amount (crown 5600) and
7
1 times of the base amount 42,000 crowns a year. The Government
2

meets about 70% of the cost of universal pensions.133

h. Australia.
Australia‟s social security system forms part of a wider
structure that presumes a strong commitment by government to high
levels of employment and includes social protections provided outside
the social security system—such as a mandatory system of private

131 Available at http://en.wikipedia.org/wiki/Social_Security_Administration (visited on December

25, 2011).
132 Supra note 123 at 256.
133 Id.

37
superannuation, workers‟ compensation, a national health care
system, paid sick leave and other cash and in-kind welfare benefits
and services such as personal tax concessions. Several principles
underpin the social security framework in Australia the responsibility
to assist those in need; the concept of „mutual obligations‟ and a
person‟s relationship status and residence. Following are the main
characteristics of Australian social security system for labourers:
First, the Australian social security system is based on the
recognition of government and community responsibility to assist
those in need—measured by reference to the income and assets of the
applicant. Accordingly, an entitlement to social security is viewed as a
right based on need, rather than as something to be „bought‟ by
paying a financial contribution akin to social insurance.
Secondly, the concept of „mutual obligations‟ refers to the
general principle that it is fair and reasonable to expect unemployed
people receiving income support to do their best to find work,
undertake activities that will improve their skills and increase their
employment prospects and in some circumstances, contribute
something to their community in return for receiving social security
payments and entitlements. This concept builds upon the notion that
unemployed people have an obligation to seek work in return for
social security payments—an enduring aspect of the Australian social
security system.134
Thirdly, despite welfare reform that has focused on „mutual
obligations‟ of the individual, it remains the bedrock of Australian
social security law that a client‟s relationship status determines
eligibility and rates of payment. This is reflected, for example, in the
relevance of the concept of „member of a couple‟ and that a person
who is a member of a couple receives a lower social security payment
than one who is single. The rationale behind this principle was

134 Available at http://www.alrc.gov.au/publications/5-social-security%E2%80%94overview-and-

overarching-issues/australia%E2%80%99s-social-security-framework (visited on December 25,
2011).

38
provided by the Minister of Social Security in 1974. Finally, because
payments are not contributory, coverage of the system is universal,
subject to a range of residence requirements.135
In Australia, all residents with limited income are eligible for old
age and invalidity pensions. The whole cost is met by the Government
For purposes of work injury, all employed persons excluding
employees earning above 4,000 dollars a year are provided with
benefits. Also casual employees, outworkers and share fishermen are
usually excluded. The insured persons are neither required to
contribute anything nor the Government. The whole cost is met by the
employers through insurance premiums varying with risks.136
i. New Zealand
Subsidies are provided for persons using health care. Free
services include in patient care in public hospitals, general
practitioner care for children up to age of 6, maternity services, and
most laboratory services. Partial subsidies are granted for general
practice visits. Costs for care in a private hospital are not subsidized.
Cost sharing Partial subsidy for approved prescribed medicines is
made according to a patient's number of co-payments income, and
frequency of use. After a patient or family makes 20 co-payments
of NZ$3 per item a year, subsequent items are fully subsidized.
Families with low income have access to a Community Services Card
(CSC) that reduces prescription charges, visits to non regular doctors,
eye glasses for children under 16, emergency dental care, travel and
accommodation support for certain hospitalization circumstances and
home help. Individuals who do not qualify for a CSC can obtain a High
Use Health Card (HUHC) if they have made 12 or more doctor's visits
in the last 12 months. The HUHC is for individual use only and is not
income-tested. If a cardholder is not enrolled at a practice or accesses
care after-hours, visits are subsidized at NZ$15 a visit for adults

135 Ibid.
136 Supra note 123 at 157.

39
aged 18 or older, and NZ$20 a visit for children aged 6 to 17. No
reimbursement is provided for dental treatment, physical therapy,
treatment for work-related injuries, or eyeglasses for children aged 5
or younger. Treatment for accident-related injuries is subsidized by
the Accident Compensation Corporation (ACC).137

VII. RELEVANCE OF THE STUDY

The present study deals with development of labour laws and
impact of globalization on Indian labour laws specially social security
laws. Science and technology have made the world smaller. Due to
globalization whole world has become a global village. Consequently,
there arose cross-border problems relating to social security of
workers under labour laws. The study includes understanding the
concept of social security and laws those affected the organized and
unorganized sectors of the labour. The research has also a tool at the
relevance of labour laws in India and role of ILO, ISSA and other
organizations, in there.

VIII. BROAD OBJECTIVES OF THE STUDY

The main objective of the present study are:
1. To trace the origin and evolution of labour laws in India and at
international level.
2. To examine the origin of social security at national and
international level.
3. To critically analyse various provisions of Constitution relating
to protections to the labourers and social security.
4. To examine various Indian labour legislations dealing with the
concept of social security and to find out how far they have
been effective in the era of globalization.

137 Available at http://www.ssa.gov/policy/docs/progdesc/ssptw/2010-2011/asia/newzealand.html

(visited on December 26, 2013).

40
 5. To evaluate the role of ILO and other international
organizations in the development of labour laws and social
security laws.
6. To scretunise various efforts made by ILO from time to time to
make labour protective laws.
7. To examine various International Conventions on social
security.
8. To examine existing laws relating to social security of
organized and unorganized labour in India.
9. To find out effective ways for enforcement of the existing laws
by concerned authorities.
10. Effect of globalization on Indian labour law and social security.
11. To trace various lacunae in the existing labour laws relating to
social security.
12. To make suggestions for improvement of Indian laws to cope
up with international labour standards.

IX. RESEARCH METHODOLOGY

The research methodology involves study of labour laws dealing
with the concept of social security regarding organized and
unorganized sector. The study and analysis of international
documents and developments has been made in social security field.
In addition to this study material regarding impact of globalization on
labour laws is also an essential part of study. Material has been
collected from different sources. The tools were used by informal
method. The present study has also taken an account of labour laws
in India, besides that efforts have also been made to study ILO
documents, international Conventions and various reports of Labour
Commissions, Committees and Plans before reaching to final
conclusion. The data available in the publications of the government
departments, Planning Commission, Ministry of Labour and
Employment, the journals, the magazines, periodicals and books have
also been used for the study.

41
 The present study has been divided into following chapters.
1) Introduction.
2) Historical Development of Indian Labour Welfare Laws.
3) Social Security Under International Legal Regime.
4) Social Security for Organized Sector Workers in India.
5) Social Security for Unorganized Sector Workers in India.
6) Globalization vis-a-vis Social Security of Workers in India.
7) Judicial Attitude Towards Labour Welfare Laws
8) Conclusion and Suggestions.

X. CHAPTER SCHEME

The First Chapter of the thesis entitled Introduction, explains

the meaning of labour and labour laws. The concept of social security,
its meaning, types, characteristics under national and international
law has been discussed. Labour is broadly divided into two parts i.e.
organized and unorganized. Organized sector or formal sector in India
refers to licensed organisations, that is, those who are registered and
pay sales tax, income tax, etc. These include the publicly traded
companies, incorporated or formally registered entities, corporations,
factories, shopping malls, hotels, and large business etc. The
unorganized sector is also known as informal sector or own account
enterprises, refers to all unlicensed, self-employed or unregistered
economic activity such as owner manned general stores, handicrafts
and handloom workers, rural traders, farmers, etc.138
The Second Chapter is titled as Historical Development of
Indian Labour Welfare Laws. The efforts for the development of
labour law started from the Neolithic Period139 and Industrial
Revolution.140 Labour is an ability to work. Labour is a broad concept
because it includes both physical and mental labour. Labour is

138 M Swaminathan, Understanding the Informal Sector: A Survey, (1991).

139 When early human beings started to cultivate crops and domesticate animals. This is known as
Neolithic Period.
140 Industrial Revolution was transition of new manufacturing process in the period of about 1760 to
1830.

42
primarily a human factor of production. It indicates human resource.
Labourer is a person who owns labour. So labourer means worker. He
is a person engaged in some work.141 The guilds and apprenticeship
systems of the medieval world have identified labour standards
as far back as the laws of Hammurabi.142 The researcher has
divided this chapter in four sub-parts i.e. Ancient period, Medieval
period, British period and Post Independence era. The plantation
industry of Assam was first to attract legislative control and number of
labour laws were passed from 1863 onwards.
The Third Chapter Social Security Under International Legal
Regime deals with the development of social security at international
level and role played by international organizations viz International
Labour Organization (ILO) and International Social Security
Association, Permanent International Committee on Social Insurance,
Association of South East Asian Nations Social Security Association,
Social Security Alumni Association, European Union Social Security
Association and other organizations. Number of other International
instrument dealing with all facets of labour issues have been critically
evaluated.
The Fourth Chapter Social Security for Organized Sector
Workers in India explains the social security as a new concept
relating to the economic insecurity. India enforced number of labour
legislations dealing with social security. The organized sector includes
primarily those establishments which are covered by the Factories
Act, 1948, the Shops and Commerical Establishments Acts of the
States, Industrial Employment Standing Orders Act, 1946 etc. This
sector already has a structure through which social security benefits
are extended to its workers. The researcher has discussed five Central
Acts dealing with social security of organized sector workers in India.
The Fifth Chapter of the thesis is entitled Social Security for
Unorganized Sector Workers in India has focus of the discussion on

141 Britannica Concise Encyclopedia, 3 Vol.Vi.

142 Sixth Babylonion king, he made the law code.

43
unorganized workers. Indian legislature has passed certain labour
welfare legislations providing social security to the workers of
unorganized sector viz. The Mica Mines Labour Welfare Fund Act,
1946, The Beedi Workers Welfare Fund Act, 1976, the Unorganized
Sector Workers Social Security Act, 2008, The Domestic Workers
(Registration, Social Security and Welfare) Act, 2008 etc. The
researcher has discussed other legislations dealing with social
security of workers of unorganized sector.
The Sixth Chapter of the thesis is Globalization vis-a-vis Social
Security of Workers in India, deals with the meaning of
globalization, its advantages, disadvantages and impact on labour
laws. This chapter analyses the effect of Globalization on the rights of
workers, as due to liberalization many foreign investors have
employed Indian workers. Globalization is the process of international
integration arising from the interchange of world views, products,
ideas, and other aspects of culture. The impact of globalization on
working conditions, employment practices such as labour and social
security depends on the bargaining power of the workers and the state
of the labour market as well as the legal frame work within which
labour operates.
The Seventh Chapter is Judicial Attitude Towards Labour
Welfare Laws. It explains the role of the Indian judiciary in the growth
of industrial jurisprudence, which can the judged by analyzing its
trends in decided labour related issues and thereby giving a clear
picture of its contribution towards the evolution of the particular
branch of law in the country. An effort has been made to analyze the
role of Indian Supreme Court and various High Courts in interpreting
and enforcing labour welfare laws.
Last chapter the “Conclusion and Suggestions”. In this
chapter the study has been concluded and on the basis of it certain
suggestions have been submitted.

44