Are Workers in the Informal Sector Covered Under the Workers' Compensation Laws?

Workers in India’s informal sector, including daily wage laborers, domestic workers, and contract workers, often face precarious working conditions and lack access to the same legal protections as those in the formal sector. The Employees' Compensation Act, 1923, is a key law that provides workers’ compensation for injuries or deaths caused by workplace accidents. However, the extent to which workers in the informal sector are covered under this law is a matter of legal and practical complexity.

Are Workers in the Informal Sector Covered Under Workers' Compensation Laws?

Scope of the Employees' Compensation Act, 1923:

The Employees' Compensation Act, 1923 primarily applies to workers in the organized sector and certain categories of employees working under specific terms, such as factory workers, mine workers, and those working under government contracts.

However, informal sector workers, such as daily wage laborers, domestic workers, and workers employed by small or unregistered businesses, are often excluded from the direct scope of the law unless they meet specific criteria, such as being involved in hazardous work.

Exclusion of Informal Sector Workers:

Daily wage laborers and casual workers employed in sectors such as agriculture, construction, and domestic work may not be covered under the provisions of the Act if they do not meet the legal definitions of employee or are not employed under formal contracts.

The informal sector is typically characterized by the lack of written contracts, social security benefits, and formal employer-employee relationships, which limits the coverage of compensation laws.

Eligibility of Informal Workers Under the Act:

Formal Employers and Employees: The law specifically applies to formal employers who are required to provide workers' compensation for work-related injuries. This includes employees working in factories, mines, or under government contracts.

Informal Sector Exceptions: Certain categories of informal workers may be eligible for workers’ compensation if they fall under specific categories mentioned in the Act. For instance:

• If an informal worker is engaged in hazardous or high-risk activities such as construction or mining, they may be eligible for compensation.
• If the employer is a registered entity or part of a larger contract, workers may receive compensation.
• In cases of death or permanent injury caused by a work-related accident, informal workers can sometimes claim compensation, but this often depends on the nature of the employment relationship.

Challenges Faced by Informal Workers in Claiming Compensation:

Lack of Legal Documentation: Informal workers often work without written contracts or agreements, making it difficult to prove an employer-employee relationship. Without proper documentation, workers may find it hard to prove that an injury occurred while performing work-related tasks.

Employer Resistance: In the informal sector, employers are less likely to comply with the legal requirements of the Employees' Compensation Act, as they may be unregistered or operate outside formal regulations.

Lack of Awareness: Informal workers are often unaware of their rights under workers' compensation laws, which can hinder their ability to claim compensation for workplace injuries.

Recent Developments in Extending Coverage:

Social Security Laws: In an effort to extend coverage to informal workers, the Indian government has introduced other social security schemes, such as the Unorganized Workers' Social Security Act, 2008, which aims to provide health insurance, pension, and compensation benefits to informal workers.

Policy Recommendations: Various labor rights organizations and policy experts have recommended expanding the coverage of workers' compensation laws to include informal workers, recognizing the significant risks they face, particularly in sectors like construction, domestic work, and agriculture.

Case Law and Precedents:

There have been instances where courts in India have ruled in favor of informal workers, especially in cases involving workers in hazardous occupations. These workers may be entitled to compensation under the Act even if they are not formally employed or if the employer is not a registered entity.

However, these cases are often complex, and the legal process can be slow and difficult for informal workers to navigate.

Example:

A daily wage laborer working at a construction site falls from scaffolding and sustains serious injuries. Since the construction site is considered a hazardous workplace, the worker is entitled to compensation under the Employees' Compensation Act despite being a casual worker with no formal contract. However, the worker must prove that the injury occurred during work hours and that the injury was directly related to the work they were performing. This may involve presenting medical evidence and testimony from colleagues or supervisors.

Conclusion:

Workers in the informal sector face significant challenges in being covered under India's workers' compensation laws. While the Employees' Compensation Act, 1923 provides protection for formal sector workers, informal workers often lack the legal recognition and documentation required to claim compensation. Despite this, there are exceptions, particularly for workers in high-risk occupations or those employed under hazardous conditions. Additionally, the Indian government has introduced other social security measures aimed at providing some protection for informal workers. However, the lack of awareness and employer compliance remains a key barrier for informal workers seeking workers' compensation benefits.