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  • Writer's pictureIshaan Vats

Protecting the Rights of the Unorganised Sector

Shruti Upadhyay, Nyayshastram


India has its Constitution to regulate the nation in a proper and synchronised manner. Equality before the law is one of the rights granted to all individuals. It is a well-established fact that ‘unequal cannot be treated as equal’ due to which the Indian Constitution also grants equal protection of the law, which gives some privileges to the backward sections of the society. Thus, the unorganised sector, which is a backwards sector of our economy, has been given certain rights and privileges by the Indian Parliament, as discussed below.

What comprises the Unorganised Sector?

As per the Unorganized Worker’s Social Security Act,2008, an Unorganised sector means an enterprise owned by individuals or self-employed workers and engaged in the production or sale of goods or providing service of any kind whatsoever, and where the enterprise employs workers, the number of such workers is less than ten. This sector comprises labourers who do not have recognised employment, for example, small landless workers, vulnerable smallholder farmers. They are also called “Migrant Workers”.

This sector is the set of economic activities characterised by the relative ease of entry, reliance on indigenous resources, small scale of operations, labour-intensive operations, reliance on skills acquired outside the formal educational system and unregulated competitive market. As per a report of the National Commission for Enterprises in the unorganised sector, in 2007, 50% of Indian GDP comes from the unorganised sector in terms of activities.[1]

Law and statutes related to the unorganised sector

a) The Unorganised Worker’s Social Security Act, 2008

This Act was enacted to provide social security and welfare to the unorganised sector.[2] It was an essential statute for India as, for the first time, the term unorganised sector was defined, thereby identifying them in the eyes of the law.

This legislation enabled the Central Government to provide specific welfare schemes related to health, life and disability cover, maternity benefits, old age protection, and other benefits. Not only this, even the State Governments were to formulate welfare schemes related to provident fund, employment injury benefits, educational schemes for children, skill up-gradation of workers and funeral and nursing home assistance.

Apart from this, the Act provides for the establishment of National Social Security Advisory Boards, which shall consist of 33 members, including the chairperson and a member secretary. This board recommends the formation and execution of different schemes for the unorganised sector. Moreover, to perform the same function at the state and district level, there are state-level Social Security Advisory Boards consisting of 28 members, including the chairperson and a member secretary.

Finally, this Act provides for mandatory registration of an unorganised worker with the district administration to avail the benefits of the schemes given by the Central or the State Government.

b) The Minimum Wages Act, 1948

This legislation had come into force when India had recently gained its independence. This legislation was necessary because, during the colonial period, the laws present were exploitive. There was no such concept of minimum wages, and the salary was differently distributed in the different parts of the country. This Act was enacted to make the central government and state government fix individual employee wages to prevent the exploitation of the labours.

Main Objectives of the Act:

Ensuring employee’s vital somatic requirement, sound mind and sound body, comfort zone, fixing the least amount of wages to the scheduled employments, ensuring that the labours get just wages to ignore the exploitation of the workers, was the first and foremost objective.

The minimum wage rate is decided based on four factors which are – Need for workers and their families (Demand for a living wage, cost of living, improvement in the standard of living), Capacity to pay (productivity), Comparable wage and income (prevailing wage levels) and Requirements of Socio and Economic Development (effect on employment generation etc.).[3]

c) The Bonded Labour (Abolition) Act, 1976

The Indian Parliament enacted this Act in order to abolish bonded labour in every form, as mentioned in Article 23 of the Indian Constitution, which makes any forced or bonded labour a punishable offence. As per Section 4 and 5 of this Act, bonded labour is strictly abolished, and any custom or agreement related to the same has been made void and inoperative, and every bonded labour detained under the system had to be released.[4] Apart from this, the Act discharges the labourer from any liability and under section 10 of this Act, the State Government has been given the power to impose a duty on the district's magistrate to assess the Act.

d) The Maternity Benefit Act, 1961

The Indian Parliament enacted this Act to provide women with monetary support for a certain period before and after the birth of her child. In simple words, this Act includes maternity benefits to women.

This Act provides that the employer shall pay the average pay (as per the day) of the women six weeks before the delivery and six weeks after the delivery of the child. Apart from this, the employer shall also provide a medical bonus if he fails to provide free medical care. If there is a miscarriage, the women shall be given six weeks of leave with average pay from the date of miscarriage. The Act also provides for two nursing breaks in daily work until the child becomes 15 months old and forbids the dismissal of women while she is on maternity leave.

e) The Workmen Compensation Act, 1923

This Act was enacted to provide the workmen with compensation if there is any injury caused during employment.

The Act provides that if a workman gets injured or die due to an accident or suffers occupational diseases (as mentioned in Schedule III of the Act) while on duty and during the course of employment, he shall be liable for compensation. If the workmen die, the compensation given to his descendants shall be either 40% of his monthly wages or an amount of twenty thousand rupees, whichever is higher. In case of injury, it shall be checked whether disablement caused is temporary or permanent. In case of temporary disablement, the amount of compensation given shall be twenty-five per cent of the monthly wage of the workmen and in case of permanent disablement, as mentioned in Schedule 1 of the Act, the compensation granted shall be fifty per cent of the monthly wage multiplied by the relevant factors or a sum of twenty – four thousand rupees whichever is higher.

In case the employer fails to grant compensation to an injured workman or the family of the workmen (in case of death), a notice of claim can be filed in the labour court for the settlement of the claim if the court feels like to impose interest on the amount of compensation or impose a penalty on the employer, as per the Act it has been given the power to do so.

f) The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979

This Act is applicable only to those establishments with five or more than five interstate migrant workers or only on those contractors who have employed five or more than five interstate migrant workers.

This Act provides that the wages of the interstate migrant workers cannot be more or less than other workers (mainly those who belong to the same state where they work), and their wages cannot be less than as prescribed in the Minimum Wages Act, 1948. The contractor must provide equal pay for equal work to ensure suitable working conditions and regular wages. The contractor shall also provide the workers with allowances to the workers for their travel, free of charge medical facilities and in case of any fatal or non - fatal accident, it is the duty of the contractor to report to appropriate authorities.

Problems faced by the unorganised sector

The Unorganised and the organised sector are different from one another. There is a vast gap between them. The unorganised sector faces turmoil in their lives, and on top of that, there is no certainty of their job or incomes. They are one of the most underprivileged sectors in the nation. They continuously have to move from one place to another in search of work. They also have to switch their job from one to another as there is no certainty regarding their job.. Most of the women in the unorganised sector, get harassed, but they get no justice, and no one pays heed to them. Child labours are also part of the unorganised sector and instead of getting a proper education, they either work with their parents or are sent to work somewhere else to get more money.


A person gets fundamental rights if the nation recognises that person. By calling them “Migrant” in their own country, these labourers have been deprived of this. We often talk about the right to equality, protection against discrimination, the right to education and various other fundamental rights, but this sector is deprived of all this. They face many problems like low wage rate, exploitation (sexually and mentally), poor living conditions, and low literacy rate. Although this sector is the hidden part of our economy, it plays a vital role in its growth. Thus, it is vital to take care of the workers to ensure the sector flourishes.


[1] The Challenge of Employment in India An Informal Economy Perspective, Volume I - Main Report, National Commission For Enterprises in the Unorganised Sector. last accessed on 03/03/2021, at 12:12 [2] Available at:,with%20regard%20to%20unorganised%20sector. last accessed on 12/10/2020, at 23:55. [3] Available at: last accessed on 13/10/2020, at 14:25. [4] Available at:,effect%20and%20shall%20be%20abolished.

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