The long-awaited social security scheme for formal sector workers will be officially announced by Prime Minister KP Sharma Oli on Tuesday. Envisioned by the then Prime Minister Dr Baburam Bhattarai, it took almost a decade to start the ambitious social security scheme that is going to protect and secure employees working in the formal private sector.
"The scheme will be compulsorily applied for formal sector workers," according to Ministry of Labour, Employment and Social Security that also informed that it will soon launch the scheme for informal sector workers too.
The scheme – a historic step for workers’ safety and rights – based on the Contribution-based Social Security Regulation is expected to cover some 500,000 employees in the formal sector, informed labour secretary Mahesh Prasad Dahal. "In the first phase the scheme will cover medical treatment, health and maternity security scheme," he said, adding that it will also cover accident and disability security scheme, dependent family security scheme and old age security scheme. "We will release the individual contributor code for easy identification but there is still some work left regarding data integration."
Every employee will have social security code number and the fund will be deposited in the number. The private sector employees will have to mandatorily contribute 10 per cent of worker's salary to the fund, while employers will have to contribute another 21 per cent of – making it to a total of 31 per cent – the employees’ salary. Once these contributions are made, the employees will be entitled to compensation, if they lose a job or cannot attend the workplace because of pregnancy, illness or accident.
"Workers can directly access support from the fund whenever they need it while employers will also not face any hassles while providing financial support to workers in case of tragedies, as they will have a fund to turn to," Dahal said, adding that the unique social security number and an identity card will work even, if the employee switches job and his/her contribution will be recorded with the same social security number.
The employee will now have neither provident fund nor gratuity but only deposit the social security amount in the Fund and the rest will be the responsibility of the government.
According to the Contribution-based Social Security Regulation, to avail medical treatment scheme the contributor must have deposited their installment regularly in the Social Security Fund for at least six months. Similarly, to avail health and maternity service the contributor most have worked for 18 months and regularly deposited their installments for at least 12 months.
Meanwhile, the accident and disability security scheme can be availed by workers from immediately the next day after they deposit their first installment. Moreover, workers can also receive compensation, if they are injured in the workplace or develop medical complications due to their work conditions, however the worker must have worked for a minimum of two years and deposited all installments on a regular basis.
According to the ministry, a worker who has fulfilled the above mentioned criteria will be eligible to receive a maximum of Rs 700,000 from the fund if they are affected by any aforementioned cause.
However, workers will not be eligible to receive any compensation if they lose their lives due to a natural disaster, or a road accident not related to the job, or if the worker is eligible to receive compensation through any other insurance scheme.
Employees working in the formal private sector will be entitled to these benefits based on the contribution made by them and their employers. It is mandatory for private formal sector employees to enrol themselves in this scheme. They may be penalised if they fail to make the contribution. The contributions they make will go to the Social Security Fund, which is operated by the ministry.
Likewise, if the worker dies, then the fund will provide 60 per cent of the respective worker’s basic salary as pension to the family members who were dependent on the worker on a monthly basis. It will also provide 40 per cent educational scholarship every month for children below 18 years of age. "If the worker does not have a spouse or an offspring then the pension amount will be given to the worker’s parents. Also, if a worker retires from his/her work, then the fund will provide the worker the 60 per cent pension amount till they are alive."
The government has been levying one per cent social security tax on basic salaries of all private sector employees to raise the money required to operate the Social Security Fund from almost a decade. At present, the fund already has deposit worth Rs 20 billion.
The ministry will start collecting data of formal sector workers in Province 3 from December 1, in Province 1 from December 16 and in Province 2 from December 30. Likewise, data collection for Gandaki Province and Province 5 will start from January 15 and for Karnali Province and Province 7 it will start from January 29.
However, the government has already started collecting data of Kathmandu Valley from November 22.
"The scheme will be compulsorily applied for formal sector workers," according to Ministry of Labour, Employment and Social Security that also informed that it will soon launch the scheme for informal sector workers too.
The scheme – a historic step for workers’ safety and rights – based on the Contribution-based Social Security Regulation is expected to cover some 500,000 employees in the formal sector, informed labour secretary Mahesh Prasad Dahal. "In the first phase the scheme will cover medical treatment, health and maternity security scheme," he said, adding that it will also cover accident and disability security scheme, dependent family security scheme and old age security scheme. "We will release the individual contributor code for easy identification but there is still some work left regarding data integration."
Every employee will have social security code number and the fund will be deposited in the number. The private sector employees will have to mandatorily contribute 10 per cent of worker's salary to the fund, while employers will have to contribute another 21 per cent of – making it to a total of 31 per cent – the employees’ salary. Once these contributions are made, the employees will be entitled to compensation, if they lose a job or cannot attend the workplace because of pregnancy, illness or accident.
"Workers can directly access support from the fund whenever they need it while employers will also not face any hassles while providing financial support to workers in case of tragedies, as they will have a fund to turn to," Dahal said, adding that the unique social security number and an identity card will work even, if the employee switches job and his/her contribution will be recorded with the same social security number.
The employee will now have neither provident fund nor gratuity but only deposit the social security amount in the Fund and the rest will be the responsibility of the government.
According to the Contribution-based Social Security Regulation, to avail medical treatment scheme the contributor must have deposited their installment regularly in the Social Security Fund for at least six months. Similarly, to avail health and maternity service the contributor most have worked for 18 months and regularly deposited their installments for at least 12 months.
Meanwhile, the accident and disability security scheme can be availed by workers from immediately the next day after they deposit their first installment. Moreover, workers can also receive compensation, if they are injured in the workplace or develop medical complications due to their work conditions, however the worker must have worked for a minimum of two years and deposited all installments on a regular basis.
According to the ministry, a worker who has fulfilled the above mentioned criteria will be eligible to receive a maximum of Rs 700,000 from the fund if they are affected by any aforementioned cause.
However, workers will not be eligible to receive any compensation if they lose their lives due to a natural disaster, or a road accident not related to the job, or if the worker is eligible to receive compensation through any other insurance scheme.
Employees working in the formal private sector will be entitled to these benefits based on the contribution made by them and their employers. It is mandatory for private formal sector employees to enrol themselves in this scheme. They may be penalised if they fail to make the contribution. The contributions they make will go to the Social Security Fund, which is operated by the ministry.
Likewise, if the worker dies, then the fund will provide 60 per cent of the respective worker’s basic salary as pension to the family members who were dependent on the worker on a monthly basis. It will also provide 40 per cent educational scholarship every month for children below 18 years of age. "If the worker does not have a spouse or an offspring then the pension amount will be given to the worker’s parents. Also, if a worker retires from his/her work, then the fund will provide the worker the 60 per cent pension amount till they are alive."
The government has been levying one per cent social security tax on basic salaries of all private sector employees to raise the money required to operate the Social Security Fund from almost a decade. At present, the fund already has deposit worth Rs 20 billion.
The ministry will start collecting data of formal sector workers in Province 3 from December 1, in Province 1 from December 16 and in Province 2 from December 30. Likewise, data collection for Gandaki Province and Province 5 will start from January 15 and for Karnali Province and Province 7 it will start from January 29.
However, the government has already started collecting data of Kathmandu Valley from November 22.
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