Labour benefits portability on cards, say officials

The labour ministry is developing a mechanism to allow portability of social security benefits when a worker shifts from formal to informal sector.

The ministry has kick-started discussions on integrating the Employees’ Provident Fund Organisation (EPFO), the Employees’ State Insurance Corporation (ESIC) and the recently launched e-Shram portal for unorganised workers so that workers moving from informal to formal sector or vice-versa can continue to get social security benefits, a senior government official told ET. “There will be several informal or unorganised workers who would at one point in time become formal and move on to either ESIC or EPFO while some would move out from the formal sector and start their own venture. Hence the need for portability of benefits,” said the official, who did not wish to be identified.

The move will benefit 400 million workers including the ones who move from informal to formal jobs, those moving from small to bigger establishments and even those who may have now become self-employed.

Once this portability is in place, employers will no longer be required to register new employees for social security benefits under their establishments if the workers have been part of India’s workforce earlier.

The government is banking on Aadhaar-linked Universal Account Number to integrate the social security system across different organisations and e-Shram portal databases. However, they will have to ensure the employee does not lose on the accumulated benefits under the earlier system and the same gets either transferred to the new system or disbursed as and when it is due.

“Aadhaar seeded and bank-linked labour citizenship card with a universal account number is what will enable mobility and portability within the system. This will not only allow portability of social security benefits but also any kind of social assistance, as and when needed in future,” said labour expert KR Shyam Sundar.