The government is planning to ask the EPFO to formulate provident fund and pension schemes for self-employed people and gig workers following the implementation of the Code on Social Security.
Last week, the ministry of labour and employment (MoLE) notified the four new labour codes, including the Code on Social Security. Section 15 (1)(d) of the code says the Centre may “frame any other scheme or schemes for the purposes of providing social security benefits under this Code to self-employed workers or any other class of persons”.
The Employees’ Provident Fund Organisation (EPFO) provides social security coverage, including a pension for employees with a monthly salary of less than ₹15,000 in establishments with over 20 workers. Currently, the EPFO has no scheme for self-employed people.
A government source said the EPFO would be asked to formulate a scheme for the self-employed people, giving them the flexibility to contribute.
“The self-employed people are unlikely to pay regularly as they do not have a fixed income. The scheme may allow the workers to pay at their convenience. Based on the deposited amount and accrual, the beneficiary’s pension or provident funds would be fixed,” said the source.
The source said the proposed scheme would be better than any similar scheme available for ordinary citizens. At present, the government has PPF and contributory pension schemes.
Section 114(4) of the Code on Social Security provides for social security for gig and platform workers. It says the aggregators will have to pay between 1-2 per cent of their turnover to create a social security fund to support pension, insurance and provident fund schemes for these workers. The source said the EPFO would devise the scheme.
Labour economist Shyam Sundar, an adjunct professor at MDI Gurgaon, said aggregators might not be able to contribute enough to provide proper social security to the growing number of gig and platform workers.
“The problem with the social security code is that it does not clarify how much money would be contributed by the Centre, state governments and the workers. If the aggregators alone have to contribute, the available funds will be insufficient to provide proper social security to these workers. First of all, the code has to identify and define the sources and contribution mechanism from the government, aggregators and workers,” Sundar said.
Sukumar Damle from the CPI-backed All India Trade Union Congress said the government must ensure that the aggregators shared correct data on their turnover.
Eligibility criteria
At present, employees with a salary and dearness allowance up to ₹15,000 per month are mandatorily enrolled in the EPF scheme. Those earning more can voluntarily opt in, provided their employers give an undertaking in writing that they will pay their share with respect to such employees.
The Employees’ State Insurance Corporation (ESIC) allows employees with a salary up to ₹21,000 to get membership. The trade unions have been demanding that the eligibility criteria for the EPF and the ESIC be doubled.
The government source said the ministry was actively examining a proposal to enhance the eligibility criteria, but it might not be doubled.