‘Erosion by design’: Draft labour rules 'undermine' cess, wages and maternity rights

By A Representative 

The advocacy group, Centre for Financial Accountability (CFA), has criticised the proposed Draft Social Security Rules, 2025 and the Draft Code on Wages, alleging that they significantly dilute workers’ rights and weaken state accountability in labour welfare.

In a detailed analysis shared with stakeholders, the CFA said the proposed changes mark a shift “from inspection to facilitation, from rights to paperwork, and from welfare to accounting,” with serious consequences for construction workers, women workers, and low-wage earners.

On the Building and Other Construction Workers (BOCW) cess, the CFA flagged Rule 42 of the Draft Social Security Rules, which allows contractors to self-assess their cess liability and have it certified by a chartered engineer hired by them. “When private professionals paid by builders decide what builders owe, under-reporting is not a risk. It is the business model,” the CFA said.

The organisation noted that projects with self-assessed cess liabilities below ₹10 lakh would face no scrutiny, covering construction projects worth up to approximately ₹10 crore. “A huge part of India’s construction economy lives right there—medium projects, apartment blocks, commercial buildings,” the CFA observed, warning that a 180-day deadline after which assessments become final by default effectively rewards delay and inaction. In contrast, the rules mandate that refunds to employers be cleared within 30 days, which the CFA described as “fast lanes for capital, slow queues for workers.”

The Draft Code on Wages has also come under criticism for redefining the standard working family. While it assumes a family of four, it counts only three adult consumption units, excluding dependent parents and other realities of Indian households. “In speeches, the joint family is praised. In wage law, it disappears,” the CFA said, adding that the formula reduces food and consumption needs, particularly for women and children.

Maternity protections, according to the CFA, are further weakened under the proposed rules. The analysis points to provisions allowing crèches to be located farther away in industrial zones, capping nursing breaks based on travel time, and permitting childcare to be replaced with a ₹500 allowance. “That is not support. It barely buys milk powder,” the CFA said. It also raised concerns over clauses allowing maternity benefits to be withdrawn for vaguely defined misconduct, including “moral turpitude,” calling it a move that turns survival into a disciplinary tool.

“Taken together, these rules represent erosion by design,” the CFA stated. “The State collects less, checks less, and forgives more. Workers remain invisible unless registered by employers who gain nothing by doing so.”

Urging wider public scrutiny and support for accountability efforts, the CFA warned that the long-term cost of these changes would be borne by workers who build the country’s infrastructure but remain “unseen once the building is complete.”