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Anonymous
Dear Reader,

Seeking your support for an 'Employee Salary Choice request' which will be submitted to the Central Ministry of Labour.

India’s labour laws mandate the highest salary deductions among various countries in the world; in a cost-to-company world this can mean an almost 49.8% salary deduction for low wage employees (table pasted below). Most low wage employees do not have such high savings rates and this leads to high attrition and high informal employment because they cannot live on half their salary. Yet instead of creating competition and choice recent moves have rewarded the benefit monopolies like EPFO and ESI with bigger kingdoms.

As the Ministry of Labour considers various changes to labour laws, we propose to submit a petition signed by employers making the case for a radical change in India’s benefits regime by which employees get three choices in how they are paid their salary:-

• whether to make the 12% employee contribution to Provident Fund or opt out of it

• whether to pay their 12% employer contribution to the Employee Pension Scheme (EPS) or the National Pension Scheme (NPS)

• whether to pay their ESI contribution to the ESI corporation or purchase insurance from any IRDA regulated insurance company.

We already have more than 500 companies who have signed the petition and would really appreciate if you could sign on behalf of your company as well. To ensure integrity, all companies will be contacted for a confirmation of their participation, the contact information is only for validation purposes and will not be submitted as part of the petition.

The exact format of the letter that will finally be submitted has been attached.

Click here to give petition http://teamlease.com <link updated to site home>

From India, Chennai
Harsh Kumar Mehta
923

Sir,
1. If the social security legislation like EPF & MP Act, 1948 and ESI Act, 1948 are abolished as is suggested in your thread, I hope you will indicate as to what are the alternative facilities to be made available to vast majority of working class, which has no other social security enactments.
2. To my knowledge private commercial insurance is no match for the facilities as available under ESI Act, 1948.

From India, Noida
TeamLease Services Pvt. Ltd
Dear Sir,
Would urge you to read through our note seeking this petition. No where are we suggesting any abolition to any scheme – to further clarify that the existing status quo stays under the petition i.e. all employees who want to continue with exiting EPFO and ESI structures will do so.
The only thing the petition asks for is an option for employees to make a choice. It is the first step in what we believe should be a longer term move to link benefits to employees rather than employers.
The alternate around Private Insurance can always emerge with a change in policy which current doesn’t have room for such options.
Regards
Rituparna Chakraborty
Co-founder, TeamLease Services

From India, Chennai
loginmiraclelogistics
1064

Dear friends,

The post is one of the few reforms that would be necessary to debate and second what is better in the larger interest of the employees especially the 'working class'. Here I would emphasise on the 'working class' as these are the bulk of employees who are directly involved in exercising the 'Option' mode. My considered view is- The 'Option' mode could be implemented in the case of ESI. Whereas in the case of EPF and Pension I would say NO, let it continue with few reforms like forfeiture for short service, pension benefits, refundable advances/part final withdrawals which could be made user friendly to fecilitating to meet emergencies, etc. For the simple reason all these measures are no doubt 'Social Legislations'. But the major distinction is while EPF & Pension are "Compulsory Savings" for the future without any loss to the contributors whereas ESI is an expenditure, a PAYOUT both on the part of Employer and Employees as well, the contributions paid by both of them are gone except when the leave pay is claimed and medical facilities are availed from ESI. My hunch is 30 to 40% of the contribution is spent only on the admn. of ESIC and 20 to 30% goes to the maintenance of hospitals and its facilities and the rest goes to NONE. My suggestion would be that, there should be a provision in ESIC to refund the contributions of those who never utilise the ESI facilities from year to year. Alternatively, I would suggest, we should consider totally abolish ESIC and in place abolish recovery of contribution from the employees leaving only Employer to take insurance cover under their own contribution to take care of medical requirements of employees and manage the leave payments to be dealt by the employers concerned.

From India, Bangalore
Harsh Kumar Mehta
923

Sir(s),

1. The views of one of the contributors as above that "30 to 40% of the contribution is spent only on the admn. of ESIC and 20 to 30% goes to the maintenance of hospitals and its facilities and the rest goes to NONE". are totally wrong and baseless. As per Annual Report of ESIC for the year 2012-13, the Administrative Expenditure of ESIC was restricted to 8.12% of total expenses in that year against a statutory limit of 15% as laid down under ESI Act, 1948. I hope that the members may express their views on the basis of official figures only so that there may not be any misconception about working of any organisation.

2. Further in your remarks, you have mentioned that "an almost 49.8% salary deduction for low wage employees" is being done as per existing Labour Laws. But you have not mentioned the details of such 49.8% of deductions. Whether you have also included employers' share of contributions under EPF & MPs Act, 1952 as well as under ESI Act, 1948 ? If so, I doubt, if such like contention is correct at your level.

3. Further, India is one of founding members of International Labour Office (ILO). The Social Security (Minimum Standards) Convention, 1952 of the ILO is perhaps the guidelines and basis on which the social security benefits under ESI Act, 1948 are being provided to the covered employees in India and also in other countries social security schemes draws their aims and objectives from this ILO Convention. In addition, ILO is pursuing at least minimum requirement of providing social security coverage of all population in any country and Govt. of India by enacting Unorganised Workers' Social Security Act, 2008 has expressed its interest towards providing social security even to unorganised workers.

4. As per ILO social security schemes are compulsory and contributions are financed through contributions from employers, employees and also from State participation. In case of sickness, maternity, employment injury, unemployment and death etc., the benefits are paid out of such accumulated funds to the entitled employees/dependants as laid down in such social security schemes as their legal entitlement. This is the reason that such schemes are called social insurance. If ESI Scheme (as you have proposed) is reduced to be optional or if the contributions received from healthy workers/contributors is refunded to them after some time (as suggested by one of member above), there will be hardly any element or scope of a social security scheme and the said scheme will collapse and will become bankrupt immediately. No doubt, there may be certain omissions, short-comings in ESI Scheme, but the same can be improved with participation of employees and employers. The 2nd National Commission on Labour which submitted its report in the year 2002 (after examining the working of all labour oriented organisations and labour laws) have not recommended abolition of any social security scheme, rather it has desired to extend the scope of such schemes. The employees' share of contribution in ESI Scheme is only 1.75% against total deductions of 48.5% as you have mentioned in your remarks as above.

5.Sir, at present I am not an employee, but only a student of Labour Law. I am indicating above views only for your kind information and I hope you will pursue your case and also hope that higher authorities will consider your views properly at the highest level. With best wishes.

From India, Noida
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