Pitching for ‘Self-Assessment’ of Welfare Cess, Draft Labour Rules to Hurt Construction Workers

News Click | Nov 16, 2020

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.