Construction Workers Welfare Legislation in India

India has enough Labour legislation but due to lack of political will and timely implementation, such legislation remains on the statute book without having its force. The Building and other Construction Workers (Regulation of Employment and conditions of Service) Act, 1996 and The Building and other construction workers’ Welfare Cess Act, 1996 are the glaring example. These twin Acts were passed by the Parliament in the year 1996 and subsequently “the building and other construction workers’ (Regulation of employment and conditions of service) central Rules and The Building and other construction workers welfare Cess Rules were framed. More than 15 years these two Acts are not fully implemented.

In building and other construction works more than tens of millions of workers are engaged, who are exposed to higher risk of life and limb. These workers are one of the most vulnerable segments of the unorganized labour and don’t get basic amenities and social security. These twin Acts were enacted with an object to regulate the employment and conditions of the service of building and other construction workers and to provide for their safety, health and welfare measures.

The scheme of the BOCW (Regulation of Employment and conditions of Service) Act, 1996 is that it empowers the Central Government and the State Governments to constitute Welfare Boards to provide and monitor social security schemes and welfare measures for the benefit of the building and other construction workers. As per the section 1(4) the BOCW Act applies to every establishment which employs, or had employed on any day of the preceding twelve months, ten or more building workers in any building or construction work. Section 2 (d) of the Act defines “the building and other construction works”. Section 7 of the Act requires every employer in relation to an establishment to which the BOCW Act applies to get such establishment registered. Section 10 makes this requirement mandatory and therefore, without such registration, the employer of an establishment, to which the BOCW Act applies, cannot employ building workers.

Chapter IV of the BOCW Act contains provisions stipulating the registration of building workers as beneficiaries and requires certain contributions to be made by such beneficiary at such rate per month as may be specified by the State Government. Where the worker is unable to pay his contribution due to any financial hardship, the Board can waive the payment of such contribution for a period not exceeding three months at a time.

Section 18 sets out the constitution of State Welfare board. Under the provision of the section 18 every State Govt. is required to constitute the Welfare Board. Section 22 stipulates the provisions regarding functions of the Building and Other Construction Workers’ Welfare Boards. Section 24 sets out the provision for the constitution of the Welfare Fund and its application.

Chapter VI of the BOCW Act contains provisions relating to the safety, health and welfare of the construction workers.

The Building and other construction workers’ welfare Cess Act’1996 was enacted with an object to provide for the levy and collection of a Cess on the cost of construction incurred by the employers with a view to augmenting the resources of the Building and other construction Workers’ welfare Boards constituted under the section 18 of the Building and other construction Workers’ (Regulation of Employment and Conditions of Service) Act’1996.

Section 3 of the BOCW Cess Act setout the provisions for levy and collection of Cess at such rate not exceeding two percent, but not less than one percent of the cost of the construction incurred by the Employer. Rule 4 of the Building and other construction workers’ welfare Cess Rules, 1998 makes it mandatory for deduction of Cess payable at the notified rates from the bills paid for the building and other construction work of a Government or a Public Sector Undertaking. Rule 5 prescribes the manner in which the proceeds of Cess collected under Rule 4 shall be transferred by such Government office, Public Sector Undertakings, local authority, or Cess collector, to the Board. The powers of the Assessing Officer and the Board of Assessment are enumerated in Rules 7 to 14 of the Cess Rules.

Although the twin Acts were enacted in 1996, but a majority of states failed to implement the Building and Other Construction Workers (Regulation of Employment and Condition of Service) Act, 1996, and the Building and Other Construction Workers Welfare Cess Act, 1996 untill 2002, when Government of NCT of Delhi constituted the Delhi Building and Other Construction Workers Welfare Board vide Notification No. DLC/CLA/BCW/02/596 dated 2nd September, 2002. A PIL was filed by an NGO National Campaign Committee for Central Legislation on Construction Labour’ (NCC-CL) in the Supreme Court for implementation of the Twin Acts.

On the direction of the Supreme Court issued in the matter of National Campaign Committee for Central Legislation on Construction Labour’ (NCC-CL) most of the states has constituted the Labour Welfare Board and started collecting Cess @ 1% of the Construction Cost where the construction cost is more than 10 Lacs.

The constitutional validity of the BOCW Act was also challenged by the Builders Association in the Builders Association of India vs Union of India, (2007) 139 DLT 578. The Division of the Delhi High court upheld that the BOCW Act, the Cess Act, 1998 Central Rules and the 2002 Delhi Rules were constitutionally valid.

The supreme court of India in civil appeal no. 1830 0f 2008 entitled M/S. Dewan Chand Builders Contractors versus Union of India  has also upheld the constitutional validity of the twin Acts.

Although the Supreme Court has upheld the constitutional validity of the twin Acts but the issue regarding effective date of the Cess Act is still unresolved. The Supreme Court in Dewan Chand Builder Case a view has been taken that the Cess Act and the Cess Rules are operative in the whole of NCT of Delhi w.e.f. January, 2002. But in SLP (C) 33486-33488 of 2011 Supreme Court has observed that the as per Section 1(3) of BOCW Act provides that the Act shall be deemed to have been come into force on 1st day of March’1996.

On concluding note it can be said that implementation of twin Acts has been a major concern. A critical factor impeding effective implementation is lack of political will of the state authorities and influence of builders lobby on them.

Author: Azeez Nazar Sabri (LLM Business Law). For more information write to him at/to azeezsabri@gmail.com.