Central Vista redevelopment is one of the biggest revamp projects taken in Lutyens’ Delhi area around Rajpath.
NEW DELHI: The Delhi High Court has issued notice to the Central Public Works Department regarding the Central Vista redevelopment project directing it to follow the guidelines of the Building and Other Construction Workers (BOCW) Act.The notice has been issued directing the agencies to follow the norms of the Act and other rules concerning the rights of construction workers. In the same order, India Trade Promotion Organisation has also been issued notice for the same concerns at the Pragati Maidan redevelopment project.
It has also directed the secretary of Delhi’s labour department to convene a meeting with the CPWD, ITPO and the petitioners to resolve any other issues. A petition filed by social worker Sunil Kumar Aledia has sought directions to all contractors and sub-contractors of the Central Vista and Pragati Maidan redevelopment project to duly comply with their obligations under the BOCW Act and ensure that all relevant provisions regarding filing of returns, details of construction workers etc. are duly filed by the contractors with the concerned authorities.
Central Vista redevelopment is one of the biggest revamp projects taken in Lutyens’ Delhi area around Rajpath. The project aims to revamp the area between Rashtrapati Bhavan and India Gate, and convert North and South Blocks to publicly accessible museums by creating a new common Central Secretariat to house all ministries. According to the petitioner, almost 5,000-6,000 construction workers are employed at this project.
The Delhi government has been pulled by the court on many occasions in the past over lack of registration of construction workers with the BOCW Act, which makes them eligible for many welfare schemes and protect them from construction agencies harassment, after which the government had even launched two special construction worker registration campaigns in the national capital.
Madhya Pradesh government is seeking a Rs 1000-crore loan from a Rs 1,985-crore corpus that is meant to fund welfare schemes for construction workers.
New Delhi: The central government has opposed Madhya Pradesh government’s application seeking a loan from a fund that finances welfare schemes for construction workers, saying it would amount to diversion of funds.
In an affidavit filed before the Supreme Court last week, the Ministry of Labour opposed the BJP-ruled MP government’s application that sought a modification of an earlier SC order, passed in August 2017, that prohibited states from utilising the funds collected under the Building and Other Construction Workers’ Welfare Cess Act, 1996.
In 2017, a bench led by Justice M.B. Lokur (now retired) had directed the central government and states to implement two 20-year-old laws to augment the living conditions of construction workers and their families.
The two laws — the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 (BOCW Act) and the Building and Other Construction Workers Welfare Cess Act, 1996 — are meant to regulate employment service conditions of building and construction workers, and provide for safety, health and welfare measures.
However, the Madhya Pradesh government has now sought the apex court’s permission to take a loan of Rs 1,000 crore from the state welfare board that presently has around Rs 1,985 crore in its bank account.
According to the MP government, the state suffered financial losses due to the Covid-19 pandemic with its revenue collection falling by 50 per cent.
The matter was taken up by a bench led by Chief Justice S.A. Bobde Monday.
During the hearing, Additional Solicitor General Madhavi Divan said the central government had reservations “over diversion of funds.”
“These funds are specifically for vulnerable construction workers,” the ASG told the bench, which then said that it wanted to hear the statutory board, in-charge of the funds, before deciding the plea.
Funds important to sustain welfare schemes — Centre The central government’s affidavit detailed the mitigating measures it had undertaken to protect the construction workers against economic disruption caused due to the pandemic.
It noted that, among other things, it had issued guidelines to all states to frame a scheme for the transfer of adequate funds to the bank accounts of construction workers through direct benefit transfer from the cess funds collected under the BOCW Act.
According to the affidavit, all state boards have cumulatively disbursed over Rs 5,000 crore to the bank accounts of 1.83 crore building and construction workers (BOC) during the lockdown and thereafter.
“It is submitted that in order to financially sustain these welfare schemes in the long run, with every increasing base of the BOC beneficiaries, the state boards need significant cess fund corpus,” noted the affidavit.
The two laws — BOCW and the Welfare Cess Act, 1996 — provide social security and welfare benefits to construction workers registered as beneficiaries and utilisation of the fund, by way of loan or any other means, for purposes other than those mentioned in the legislations, may not be permissible and tantamount to diversion of funds, the affidavit added.
Even the 2017 judgment came down heavily on states and warned them to ensure there is no diversion of funds, it noted.
Madhya Pradesh to return loan amount once state exchequer replenished Meanwhile, according to the Madhya Pradesh government, the Covid-19 pandemic and the subsequent lockdown, which halted all economic activity, led to an acute decline in the state’s revenue.
“Due to the lockdown and spread of Covid pandemic, the revenue collection of the state in the months from April to June 2020 was only Rs 6,551 crore compared to Rs 12,992 crore in the same months in 2019,” noted the state’s application.
Even mining activity remained suspended, leading to sharp reduction in royalties and other taxes.
The decline in revenue receipts in stamps and registration has been 45 per cent, in state excise it is 57 per cent, while reduction of 20 per cent was seen in revenues and taxes on sale and trade, the MP government said.
“This is resulting in financial resource crunch for the state government, specifically for implementation of welfare schemes and completion of ongoing capital infrastructure projects,” read the application.
It added that since the state welfare board had spent around Rs 376 crore on construction workers in 2019-20, hence a loan of Rs 1,000 crore out of the Rs 1,985-crore corpus would not hinder its functioning.
The state also noted that it will return the loan amount to the corpus once its exchequer is replenished within a year.
On the state’s claim that it had to look after interests of a large number of migrant labourers who returned to MP due to Covid-19, Diwan submitted Monday before the CJI-led bench that such persons will be eligible for the schemes in states where they are registered as construction workers.
It marks a break with legal tradition in the construction sector, wherein till now an assessing officer was authorised to indicate the cess amount payable by the employer.
New Delhi: The amount to be collected as cess towards welfare of the construction workers will be self-calculated by employers, the Centre has proposed in the new draft labour rules. The move, say trade unions, will serve to empower construction companies to further shirk their responsibilities towards labour.
A cess that is not less than 1% of the cost of construction, “shall be paid by an employer in advance, on the basis of his self-assessment duly certified by Chartered Engineer at the time of approval or before the commencement of the work,” stated the draft rules of the Code on Social Security, 2020, notified by Union Ministry of Labour and Employment on Sunday, November 15.
The draft labour rules have been notified by the Centre just days ahead of a general strike call by 10 central trade unions and several federations and associations of workers, including those in the unorganised sector, on November 26.
For the purpose of self-assessment, the employer shall calculate the cost of construction as per the rates specified by the State Public Works Department or Central Public Works Department or on the basis of return or documents submitted to the Real Estate Regulatory Authority, according to the draft rules made public by the Central government for inviting stakeholders’ suggestions within a period of 45 days.
The draft rules, which elaborate the procedure for self-calculation and payment of cess, mark a break with the legal tradition in the construction sector, wherein earlier, under The Building and Other Construction Workers’ Welfare (BOCW) Cess Rules, 1998, an assessing officer was authorised to indicate the cess amount payable by the employer, after scrutinising the information furnished by the latter.
The 1998 rules provided for operationalisation of provisions in the 1996 welfare Act for building and other construction workers, that is now subsumed, along with other eight Central labour enactments, under the social security code – passed by Parliament in September this year.
The Act provided for setting up of a welfare board by each state government for utilising the funds collected through the cess for the welfare of construction workers. The benefits for a registered worker with the board included pension, accident insurance, medical aid, scholarship for children among others.
The unions representing construction workers have flayed the ‘codification’ of the 1996 Act that has led to the “dilution” of its already neglected provisions. “The changes will bred corruption that will result in underestimation of the cess amount,” said Thaneshwar Dayal Adigaur, convenor, Nirman Mazdoor Adhikar Abhiyan, a Delhi-based umbrella body of over 40 registered unions in the city.
According to him, the ‘self-assessment’ provision doesn’t address the issues that are plaguing the cess collection process, which is “grossly delayed or not paid”, especially when it comes to the private construction activities.
“Already, not many private firms are registered with the board. Hence, no cess is collected on construction activities that are carried out by them. When it comes to the ones that are registered, they usually have a history of being not completely honest with the authorities. Allowing them to calculate the cess amount on their own may further give rise to instances of under-collection or ill-calculation of the welfare cess,” said Adigaur, a member of the advisory committee to the Delhi government that oversees matters relating to the construction workers’ welfare board.
Even as an assessing officer retains the authority to issue notices to an employer in case of any discrepancies in the calculation of construction cost and the cess amount, much of their other powers in keeping a check on construction activities have been taken away, as per the draft rules.
The draft rules propose that an assessing officer should visit the construction site only with prior approval from the Secretary of the BOCW concerned. Also, the power to stop construction work – for a period deemed necessary for the purpose of any examination – is now proposed to be withdrawn.
Furthermore, the rate of interest for delayed payment of cess has been reduced from 2% every month or part of a month to 1%, thereby giving a “breather” to the offenders.
A press note by the Labour Ministry on Sunday, however, claimed that the new code entitles even those workers to benefits under BOCW, who have migrated from one state to another. The responsibility to provide benefits in such cases shall lie with the board of the state in which a worker is currently working, it says.
It may be noted that the 2020 Code on Social Security already reduces the coverage of the legal provisions under it by not including any construction work that employs less than 10 workers or any project for residential purposes that is worth up to Rs. 50 lakh. Such a threshold amount was Rs. 10 lakh under the earlier BOCW Act, which also required all the establishments – irrespective of the number of workers employed – to get registered under it.
Subhash Bhatnagar, coordinator, National Campaign Committee for Construction Labour (NCC-CL), rued how the labour codes rob vulnerable construction workers of the legal shield that was meant to protect them. “As many as 64 clauses of the 1996 BOCW Act have now been reduced to only seven (this number is actually nine) under the social security code; while 15 of those under the 1998 rules are now down to only six (which is actually seven),” he told NewsClick.
Bhatnagar admitted that this could be so because “90% of the BOCW Act was related to the safety of construction workers,” who were supposed to find space under The Occupational Safety, Health and Working Conditions (OSH&WC) Code, 2020 –one among the total four labour codes.
Is that the case? Not really, said Bhatnagar, adding that “in fact, what the Centre has done is to compromise the occupational safety provisions for construction workers by clubbing it with other industries.”
He said relaxing the threshold limit for cess collection on residential projects would also put “negative pressure” on the registration of construction workers employed for such activities with the welfare board.
In March, as the country was going through a sudden COVID-triggered lockdown, the Centre issued an advisory asking all state governments to distribute the Rs. 52,000 crore – a cumulative amount collected as cess by the respective BOCW boards – among the 3.5 crore construction workers.
Trade unions had then reportedly pegged the total number of labourers engaged in the sector, and in need of an assistance, to be nearly six crore.
The draft rules, in a bid to provide app-based workers and those within the unorganised sector with benefits under the social security schemes, has provided for an Aadhaar-based self-registration system on the portal of the Central government.
Here again, app-based firms (colloquially known as the gig economy) will be contributing towards the fund for welfare of their workers after self-assessment.
Gig economy companies are required to make contributions to the fund that “shall not exceed five per cent of the amount paid or payable” to its platform workers, the Code on Social Security had stated earlier. As for the funding towards the welfare of unorganised workers, the draft rules have reportedly failed to provide any clarity, say unions.
Kerala was the first State to set up a welfare board for construction workers in 1989, becoming a model for the Central Act in 1996
The Central Government’s proposed move to repeal 15 existing laws on social security, including the Building and Other Construction Workers Act 1996 (BOCW), and replace them with a single Labour Code on Social Security and Welfare, has led to much concern among construction workers.
Kerala was the first State to set up a welfare board for construction workers in 1989, becoming a model for the Central Act in 1996. It is also one state where the system has wide reach, with 20 lakh construction workers as members, and regular disbursal of various benefits. Across the country, around 3.5 crore workers are registered under such state-level boards for construction workers.
The funds for the running of the welfare board is raised from the 1% building cess levied during construction of buildings. The benefits provided included pension, accident insurance of ₹4 lakhs, medical aid, scholarship for children and around 15 other benefits. In Kerala, the board even runs an old age home for ‘retired’ construction workers in Thiruvananthapuram, perhaps the only such initiative in the country.
During the COVID-19 pandemic, an amount of ₹1,000 was released to all the 20 lakh registered members in Kerala, in addition to monthly pension of ₹1,300 to 3.5 lakh members.
“Once the board stops to have an independent existence, and is merged with other welfare funds, the construction workers stand to lose out, because it is one of the better managed compared to other funds. The Central Government will also get complete control over the fund, and steps like investment of these funds in the stock market, as it happened with PF fund could happen. The welfare fund is one of the biggest sources of support for existing as well as retired workers. We should only strengthen it, not weaken it,” said V.Sasikumar, Secretary of the Construction Workers’ Federation of India.
On Monday, the Centre of Indian Trade Unions(CITU) organised nationwide protests with five workers in each centre, against the move.
CPI(M) Rajya Sabha MP Elamaram Kareem, a member of the Parliamentary Standing Committee on Labour, says that the Central Act was enacted in 1996 after more than a decade of struggle by workers, and hence the repealing is unjust.
“This is part of the BJP Government’s plans to repeal all existing labour laws and merge them into four separate codes. One of the codes has already been passed in the Parliament without referring to the labour standing committee. The remaining three are in front of the standing committee. Due to the pandemic, the discussions have been held up. Now, under the centre’s pressure the meeting has been fixed on July 17, but many of us would be unable to make it to Delhi. The Speaker has also denied permission for an online meeting,” said Mr.Kareem.
Over 91.3 million people engaged as workers in the construction sector or those with small businesses (mostly in the informal sector) stand jobless as of date.
Covid-19 has taken a serious toll over the employment status, with small traders and labourers being the worst hit. Over 91.3 million people engaged as workers in the construction sector or those with small businesses (mostly in the informal sector) stand jobless as of date. While this brings to the front a series of overlapping themes such as the informal sector, registered versus unregistered enterprises, construction workers, etc., the scope of this article is limited to covering the problems of building and other construction workers, and efforts taken by government institutions at various levels to address these.
In 2015-16, roughly 53 million (11 per cent) of all workers were employed in the construction sector; the workers employed in this sector nearly doubled between 2004-05 and 2015-16. Precisely, over the last three decades (1980‐81 to 2011‐12), there has been a rise to the tune of 1.2 per cent to 9.4 per cent in the construction sector’s workforce, the rate of which is faster than the sector’s contribution to the domestic output.
The rise in the construction sector workforce was propelled by many factors like urbanisation and growth in the number of million-plus cities, prices of cement, and the availability of housing credit. With the rampant rise in employment in the construction sector, migration ensued, to the sites demanding construction labourers. In order to regulate the employment and conditions of service of the construction workers, provision for their safety, health and welfare, and social security measures, the government had enacted the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 (BOCW Act) and the BOCW Cess Act, 1996..
The BOCW Act is applicable to every establishment which employs or had employed 10 workers or more, either directly or through a contractor/sub-contractor, with an exception to those buildings/construction work to which Factories Act, 1948 and Mines Act, 1952 applies. While the BOCW Act lays down the provisions for a safe working environment to be complied by every employer towards the employed construction workers, BOCW Cess Act mandates the levy of cess on a list of construction activities at the rate 1-2 per cent of the cost of construction incurred by the employer. The Cess Act enables the state governments and union territory administrations to collect cess from the eligible group of population and utilise the collected money in the welfare of the registered construction workers. States have come up with a bouquet of schemes for the construction workers, for which money is routed to them through the cess funds. Some of the major schemes matched by the cess funds are:
Social Security — like Pradhan Mantri Jeevan Jyoti Bima Yojna, Pradhan Mantri Suraksha Bima Yojna, Pradhan Mantri Shram Yogi Maan-Dhan Scheme, providing safety kits, etc.
Education — Conditional Cash Transfer Schemes to school-going children of the construction workers, keeping a certain level of school attendance as the eligibility criteria
Healthcare — Providing financial packages to pregnant women workers for delivery, providing INR 1 lakh for treatment of critical illness to the construction worker and his/her family, Mahatma Jyotiba Phule Jan Arogya Yojna, etc.
Few important institutional and regulatory aspects touched upon by the BOCW Act, 1996 & the BOCW Cess Act, 1996 are:
Registration of every employer whose construction cost is more than INR 10 lakh (excluding the cost of land). Every employer has to mandatorily submit a Cess Return Form to the Cess Collecting Authority, 30 days before commencement or completion of the works, faltering which he is liable to be imposed with a fine/imprisonment.
Registration of construction workers with the Welfare Board. This ensures streamlining the cess funds to the targeted group of construction workers. Many state governments have initiated the process of online registration/registration renewal for construction workers.
Constitution of Welfare Boards in every State, which will be a nodal agency for provisioning due assistance & welfare support to the construction employers. While the cess is collected by the various departments of the state governments, it is transferred to the Welfare Board Account within 30 days of collection, post which, penalty is levied to the collecting authority.
Decoding the construction spectrum
Taking a closer snapshot of the construction industry in India, it can be categorised across three major segments — infrastructure construction (like roads, highways, power plants, railway lines, dams, bridges, etc.); industrial construction (like pipelines, refineries, boilers, paper-mill/textile plants, etc.); and real-estate construction (like townships, housing projects, residential/non-residential facilities, commercial buildings, etc.).
NSDC Data from 2016 highlighted the structure of the Indian construction industry.
Due to a large number of unorganised players who work on a sub-contracting basis, the construction industry in India becomes highly fragmented. Among the major reasons for the fragmented industry is diseconomies of scale, implying lesser overhead costs and hence, better operational efficiency for small contractors.
All the firms falling in the unorganised sector do not register themselves with the government, and hence falter on the provisioning of social security benefits and a safe working environment to the workers engaged with them. Firms in the unorganised industry segment operate by hiring short term contract labourers and hence save on the cess to the tune of 1-2 per cent of the total worth of construction activity undertaken by them. However, firms in the small, medium and large industry segments that are assigned with big projects may choose to hire only specialised and skilled personnel on regular roles while undertaking a large number of construction activities through the workers on contract labour system. Such firms typically own machinery, with operators employed on a permanent basis. Parallelly, they also appoint unskilled labour or helpers on a daily basis that do not come under the Factory Act and therefore fall outside the safety and social security cover.
Rural/Urban Share: Between the years 2000 and 2012, NSSO Survey data shows that rural construction employment has grown by 2.5 per cent more times than urban construction employment. While the construction activity boomed in urban areas during this period, on the contrary, employment growth was seen in rural areas. This was attributed to the fact that in rural areas, construction workers accorded the construction work as their principal status work, while the same construction work in urban areas was reported as subsidiary status work by the construction workers. This indicated towards the short-term (circulatory, seasonal, or commuting) migration for urban construction workers who were largely employed in short tenure works on a labour-contract system, hence they reported construction as their subsidiary status work, implying their primary engagement in some other activity other than construction.
Number of workers registered state-wise and cess collected: Various state governments have initiated the process of registering the contractors/developers and construction workers for effective cess collection and efficient distribution to the eligible construction workers respectively. Still, there is a state-wide disparity in terms of the amount of cess collected, versus the percentage of the collected amount spent on labour welfare (refer to the maps below). While Uttar Pradesh accounted for the greatest number of construction workers registered with the board till December 2018, the amount spent on construction workers’ welfare remained very low. Similarly, while Maharashtra had the highest cess collected until December 2018, the amount spent was significantly low. The states of Karnataka and Kerala marked the maximum amount of collected cess spent on the welfare of workers registered with the Board.
Source: Ministry of Labour, 2019
Addressing issues with cess collection and disbursement process
Cess collection potential vs actual collection: Cess collection from all the state governments as of December 31, 2018, stood at approximately Rs 46,000 crore. However, based on the discrepancy highlighted by the CAG in the reporting of the cess collection figures, the Supreme Court had raised an alarm towards the understated cess collections as compared to the actual potential. This has made all the state governments undertake a host of actions in the direction of registering establishments and workers.
Governments of Maharashtra, Rajasthan & Haryana, for instance, have developed a dedicated portal for registering eligible establishments under the BOCW Cess Act. However, many establishments have stated limited information regarding the BOCW Cess Act and linked initiatives by the state governments. This results in weak compliance and poor collection of cess amount.
Second, the multiple organisations and institutions involved in the cess collection make it difficult for putting accountability on anyone. With departments of housing, industries, infrastructure, energy, irrigation, etc., appointed as nodal authorities for collecting cess, and thereafter directing the collections to the Labour Welfare Board’s account within 30 days of receipt of cess, there have been instances of delayed payments from the departments. This is primarily because of the lack of penal provisions to these departments, even though the establishments are fined on the account of late cess payment.
Third, government officials across the states have raised the concerns of under-reporting of the construction value of any particular project that registered establishments tend to do, making them pay less cess based on lesser quoted construction value. This calls for a detailed process flow by the state governments, fixing the timelines and accountability on concerned departments entrusted with the cess collection activities and penalising the delay, if any.
Beneficiary Identification & Registration: Every construction worker within the age limit of 18 to 60 years, and who has worked for minimum 90 days during the preceding 12 months, is eligible for registration as beneficiary. In this line, state governments ask for a set of documents like age proof, 90-day work certificate, residence proof, identity proof, and passport size photographs, along with a nominal registration fee of Rs 25.
The primary issues in registering construction workers are:
a) State governments ask workers for the 90-day work certificate from employers stating that they had been hired. However, the contractors who engage them refuse to provide the document.
b) Information asymmetry among the construction workers regarding the registration process. To fix this, some state governments like Maharashtra have established Workers’ Facilitation Centres at the district level to increase registrations and speed up the process.
The rise in construction sector workforce was propelled by factors like urbanisation and growth in the number of million-plus cities, prices of cement, and the availability of housing credit. (Photo: Reuters)
Cess Utilisation in Welfare Activities of Construction Workers: According to the 2018 judgement of Supreme Court regarding the judicial review of the implementation of the two labour welfare laws (BOCW Act, 1996 & BOCW Cess Act, 1996), it was observed that hardly 10 per cent of the collected amount of the cess was utilised for the benefits accruing to the beneficiaries.
While some state governments have taken initiatives like announcing schemes dedicated to labour welfare, supervision of the implementation process, monitoring and evaluation of the intended benefits of these schemes have still to be carried out. Also, the Supreme Court in its 2018 ruling had noted that instead of too many schemes being run by the states as populist policies, under the directions of Ministry of Labour and Employment, one composite Model Welfare Scheme for construction workers has to come in place, after due consultations from all stakeholders.
Further, the 38th report by the Standing Committee on Labour recommends that labour identity cards should be linked with Aadhaar cards to avoid duplication in labour registration. This will enable the Governments to seamlessly transfer the welfare amounts in the account of beneficiaries.
Hence, it becomes imperative for all the state governments to devise guidelines for all contractors to register their establishments as well as construction workers working for them, with the BOCW Board.
By defining the nodal agencies and assigning them with responsibilities, the labour department in each state government must also fix the accountability with these agencies, along with penalty in case of non-compliance/delay.
Lastly, the Ministry of Labour and Employment should in collaboration with the states, initiate an audit of the entire process of fund flow and processes-mapping, so as to evaluate the efficiency and impact of the BOCW Act.