by Umaima Reshi
SRINAGAR: The implementation of the Centre’s four new labour codes could leave the Jammu and Kashmir Government facing substantial new and recurring financial liabilities for its contractual, casual and scheme-based workforce. The administration has yet to determine the precise cost of extending statutory social security benefits to these workers.
The four codes: the Code on Wages, 2019; the Industrial Relations Code, 2020; the Code on Social Security, 2020; and the Occupational Safety, Health and Working Conditions Code, 2020; consolidate 29 existing labour laws into four statutes. These introduce sweeping changes to wage protection, provident fund, Employees’ State Insurance, gratuity, and employment conditions.
The potential exposure of the J&K Government is particularly significant because the new framework could cover large sections of the workforce engaged outside the regular government cadre, including daily wagers, casual and contractual employees and workers engaged under government schemes.
Among the categories whose status and entitlements are being examined are Anganwadi workers and helpers, ASHA workers and facilitators, contractual NHM doctors, nurses, pharmacists and specialists, AAYAs, mid-day meal workers, Rehbar-e-Taleem and Rehbar-e-Khel teachers, Special Police Officers and Home Guards.
The administration has, however, not yet been able to quantify its overall liability because of unresolved questions over the legal status of several categories of workers, particularly whether payments made to scheme-based personnel constitute “wages” or “honorarium”.
Under the Code on Social Security, the employer contribution towards provident fund is 12 per cent of wages, matched by a 12 per cent employee contribution, subject to the applicable statutory wage ceiling. For eligible employees earning up to Rs 21,000 a month, the employer’s contribution towards ESI is 3.25 per cent of gross wages, while the employee contribution is 0.75 per cent. The ESI threshold rises to Rs 25,000 for persons with disabilities.
Gratuity could constitute another significant liability. Fixed-term employees would become eligible for pro-rata gratuity after one year of continuous service, calculated at 15 days’ wages for every completed year, subject to a ceiling of Rs 20 lakh.
The new framework could also enlarge the contribution base by bringing allowances into the definition of wages where such allowances exceed half of total remuneration.
The government would additionally be required to issue appointment letters to employees and factor Building and Other Construction Workers cess into its construction expenditure, with the cess ranging between 1 and 2 per cent of government construction spending.
The financial burden is complicated by the fact that many departments do not currently have dedicated budget heads for PF, ESI or gratuity liabilities relating to contractual and scheme-based workers.
The uncertainty extends beyond the question of how much the government may have to pay to who is legally responsible for paying it.
In schemes financed by the government but implemented through societies, missions, corporations or autonomous bodies, government funding or administrative oversight does not automatically make the government the legal employer. The determination would depend on factors including who exercises ultimate control over the establishment and its workers, the manner of appointment and any applicable statutory provisions.
The issue has prompted the compilation of 451 questions from 24 departments and sectors seeking clarification on the applicability of the four codes.
The departments and sectors covered include Labour and Employment, Social Welfare, Health and Family Welfare, Home, Industries, Panchayati Raj, Rural Development, Urban Development, Revenue, Water Resources, School Education, Public Works, Transport, Technical Education, Police, General Administration, Agriculture, Animal Husbandry, Backward Classes and Minorities, Cooperation and Food Supplies, among others.
The list of institutions and programmes potentially affected is extensive and includes the Anganwadi and ICDS network, Poshan Abhiyaan, Mission Shakti, Mission Vatsalya, the J&K Women Development Corporation, Child Welfare Committees, NHM, SKIMS, the J&K Red Cross Society, J&K AIDS Control Society, Rehbar-e-Taleem and Rehbar-e-Khel, IUST, BGSBU, the Waqf Board, MGNREGA, JKRLM/UMEED, HIMAYAT, PMKVY, JKTDC, the Cable Car Corporation, JKSRTC, JKHPMC, the Forest Corporation, Srinagar Municipal Corporation, Srinagar Smart City, Jal Shakti, KPDCL, JKSPDC, JAKFED, J&K Bank, JKOECL, the BOCW Welfare Board, JaKeGA and Fair Price Shop dealers.
The new labour regime also seeks to extend minimum-wage protection across all employments, replacing the earlier “scheduled employment” approach. It envisages a National Floor Wage below which States and Union Territories cannot fix minimum wages.
Another major change is the formal recognition of gig and platform workers within the social-security framework. Workers engaged through platforms such as Ola, Uber, Swiggy and Zomato are specifically recognised, with a broader institutional architecture proposed for unorganised and building workers.
The codes also formally recognise fixed-term employment and provide for statutory benefits at par with permanent employees for the period of employment, including the applicable gratuity benefit after one year.
For employers, the framework promises simplified compliance through a single electronic registration, a single licence and unified annual returns. The inspection regime is also to move towards a risk-based, digital and facilitation-oriented system.
For the J&K Government, however, the immediate challenge is not simply implementation but determining the extent of its own exposure as an employer.
Departments would have to map their contractual workforce, establish which categories fall within the statutory definition of an employee, register eligible workers on the e-Shram, EPFO and ESIC platforms, calculate their annual PF, ESI and gratuity liabilities and make corresponding budgetary provisions.
Until the outstanding questions over wages, honorarium, employer status and coverage of scheme-based workers are resolved, the government cannot put a definitive figure on the additional burden.
What is already evident is that implementation of the four codes could substantially widen statutory obligations towards workers outside the regular government establishment — potentially creating a significant new recurring liability for the J&K exchequer while simultaneously extending social-security protection to thousands of workers.
