Workmen's Compensation Act, 1923
A beginning was made in social security with the passing of the Workmen's Compensation Act in 1923. The Act provides for payment of compensation to workmen and their dependent in case of injury and accident (including certain occupational disease) arising out of and in the course of employment and resulting in disablement or death. The Act applies to railway servants and persons employed in any such capacity as is specified in Schedule II of the Act. Schedule II includes persons employed in factories, mines, plantations, mechanically propelled vehicles, construction works and certain other hazardous occupations. Minimum rates of compensation for permanent total disablement and death which were earlier at Rs 24,000 and Rs 20,000 respectively have since been enhanced to Rs 60,000 and Rs 50,000 respectively. Maximum amount for death and permanent total disablement can go upto Rs 2.28 lakh and Rs 2.74 lakh respectively depending on age and wages of workmen.
The Payment of Gratuity Act, 1972 is applicable, to factories, mines, oil fields, plantations, ports, railways, motor transport undertakings, companies, shops and other establishments. The Act provides for payment of gratuity at the rate of 15 days wages for each completed year of service subject to a maximum of Rs one lakh. In the case of seasonal establishment, gratuity is payable at the rate of seven days wages for each season. The Act does not affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer.
Employees State Insurance Scheme
The Employees State Insurance Act is applicable, in the first instance, to non-essential factories using power and employing 10 or more persons and non-power using factories employing 20 or more persons. Under the enabling provisions contained in the Act the Act is being extended by state governments to new classes of establishments, namely, shops, hotels, restaurants, cinemas including preview theatres, road motor transport undertaking and newspaper establishments employing 20 or more persons. I
The Act provides medical care in kind and cash benefits in the contingency of sickness, maternity, employment, injury and pension for dependants in the event of the death of a worker because of employment injury. Full medical care including hospitalisation is also being progressively made available to members of the family of the insured persons.
Employees Deposit-Linked Insurance Scheme
Retirement benefits in the form of provident fund, family pension and deposit linked insurance are available to employees under the Employees Provident Fund and Miscellaneous Provisions Act, 1952. Minimum rate of contribution under the Act is 8.33 per ent. However, rate of contribution in respect of 99 industries establishments employing 50 or more persons has been enhanced to 10 per cent from June 1989. Under the Act, employers are required to make a matching contribution.
Employees Deposit-Linked Insurance Scheme
Another important social security measure, Employees Deposit Insurance Scheme, 1976 was introduced for members of the Employees Provident Fund and exempted provident funds with effect from 1 August 1976. On the death of a member, the person entitled to receive provident fund accumulation would be paid an additional amount equal to average balance in provident fund account of the deceased during the preceding twelve months.
To provide long-term financial security to families of industrial employees in the event of their premature death, the Employees Family Pension Scheme was introduced from 1 March 1971 by diverting a portion of employers and employees contribution on the employees provided fund with an additional contribution by the Government. This Family Pensions Scheme has since been repealed and with effect from 16 November 1995 a new Pension Scheme known as Employees Pension Scheme 1995 has come into force.
Employees' Pension Scheme, 1995
The Employees' Pension Scheme is compulsory for all the persons who were members of the Family Pension Scheme, 1971. It is also compulsory for the persons who become members of the Provident Fund from 16 November 1995 i.e. the date of introduction of the Scheme. The PF subscriber who were not members of the Family Pension Scheme, have an option to join this pension Scheme. The Scheme came into operation with effect from 16 November 1995 but the employees including those covered under the Voluntary Retirement Scheme have an option to join the scheme with effect from 1 April 1993.
Minimum 10 years contributory service is required for entitlement to pension. Normal superannuation pension is payable on attaining the age of 58 years. Pensions on a discounted rate is also payable on attaining the age of 50 years. Where pensionable service is less than 10 years, the member has an option to remain covered for pensionary benefits till 58 years of age or claim return of contribution/withdrawal benefits.
The Scheme provides for payment of monthly pension in the following contingencies: superannuation on attaining the age of 58 years; retirement; permanent total disablement; death during service; death after retirement/superannuation/permanent total disablement; children pension; and orphan pension. The amount of monthly pension will vary from member to member depending upon his pensionable salary and pensionable service.
Under the Pensions Scheme, the employees have an option to accept the admissible pension or reduced pension with return of capital. In the case of the employee opting for 10 per cent less pension than the actual entitlement, the Scheme provides for return of capital equivalent to 100 times of the original pension in the vent of death of the pensioner.