UPSC Prelims 2021 Q2: Casual Workers, EPF and Wage Rules — Explained

With reference to casual workers employed in India, consider the following statements:

1. All casual workers are entitled for Employees Provident Fund coverage.

2. All casual workers are entitled for regular working hours and overtime payment.

3. The government can by a notification specify that an establishment or industry shall pay wages only through its bank account.

Which of the above statements are correct?

  1. 1 and 2 only
  2. 2 and 3 only
  3. 1 and 3 only
  4. 1, 2 and 3

Answer: (b) 2 and 3 only

Statement-wise explanation

  • 1: incorrect — The Employees' Provident Funds and Miscellaneous Provisions Act, 1952 covers only certain workplaces. It applies to factories in Schedule I industries and to notified establishments that employ 20 or more persons. Coverage is mandatory only up to a wage ceiling, which has been ₹15,000 a month since September 2014. A casual labourer on a farm, on a small construction site, or in a shop with 19 or fewer workers is outside EPF, so 'all casual workers' is wrong.
  • 2: correct — Wage law fixes working hours and overtime for every employee, whatever the type of employment. Under the Minimum Wages Act, 1948, and now Sections 13–14 of the Code on Wages, 2019, the government fixes the hours that make a normal working day. Work beyond those hours must be paid at no less than twice the normal rate. The Code applies to all employees, organised or unorganised, so casual workers are covered too.
  • 3: correct — The Payment of Wages (Amendment) Act, 2017, effective from 28 December 2016, amended Section 6 of the 1936 Act. Employers can now pay in cash, by cheque or by crediting the employee's bank account. A proviso lets the appropriate government, by notification, name industrial or other establishments that must pay wages only by cheque or bank credit. Section 43 of the Code on Wages, 2019 keeps the same power.

How to eliminate

The word 'All' in Statements 1 and 2 is the trap, but you have to test it against the law, not drop both on sight. For Statement 1, the basic fact to recall is that EPF has a threshold: 20 or more employees, plus a wage ceiling. Any worker in a tiny shop or on a farm falls outside it, so 'all' fails. Statement 2 sounds just as absolute, but working hours and overtime are basic labour standards, and wage law gives them to every employee. Here 'all' is accurate. Statement 3 is a cautious enabling power ('the government can, by notification…'). UPSC statements framed this way are usually true, and this one matches the 2017 amendment that pushed cashless wage payment after demonetisation. Once Statement 1 is out, only the option with 2 and 3 is left. Fact to remember: EPF depends on the size of the establishment (20+) and a wage ceiling. Hours and overtime rules apply to all employees.

Know more

Which labour protection reaches which worker

Indian labour law splits into two kinds of protection:

  • Standards for every employee: minimum wage, working hours, overtime, and timely payment of wages. The Code on Wages, 2019 combined four laws (Minimum Wages Act, Payment of Wages Act, Payment of Bonus Act, Equal Remuneration Act). It made minimum wages apply in every employment, not only the 'scheduled employments' of the 1948 Act. The Centre fixes a floor wage, and state minimum wages cannot be set below it.
  • Social-security schemes with thresholds: EPF, ESI and gratuity depend on the size of the establishment and on wage limits.
Protection Law Who is covered
Provident fund EPF & MP Act, 1952 (now Code on Social Security, 2020) Establishments with 20+ employees; mandatory up to a wage ceiling (₹15,000/month from 2014)
Normal working day, overtime at least 2× Minimum Wages Act, 1948 → Code on Wages, 2019 All employees
Mode of wage payment Payment of Wages Act, 1936 (amended 2017) → Code on Wages, s. 43 Cash, cheque, bank credit or electronic; government can require cheque or bank only by notification

Casual workers are hired only when there is work and paid for the work done. NCERT classifies them alongside self-employed and regular salaried workers. Most casual workers are in the informal sector, so they usually miss threshold-based schemes like EPF. They still get the universal wage standards. This gap is why the government has pushed formalisation: bringing workers into registered, regulated payrolls through bank-paid wages, EPFO enrolment drives and the four Labour Codes. The four Labour Codes are on Wages (2019), Industrial Relations, Social Security, and Occupational Safety, Health and Working Conditions (all 2020).

In the news

Parliament passed the Code on Wages in 2019 and the other three Labour Codes in 2020. In 2021, the Centre and the states were still framing rules to bring them into force. Coverage of informal and casual workers, wage payment rules and EPF reach were all under debate that year.

NCERT Concepts to Revise

  • Casual workers: The question is about casual workers. Knowing who they are and where they work tells you which laws can reach them.
  • Regular salaried employees: Comparing casual workers with regular salaried employees helps you judge which benefits depend on steady, registered employment.
  • Floor wage: The floor wage comes from the Code on Wages, 2019, the same law that governs working hours, overtime and wage payment modes.
  • Formalisation of the economy: Paying wages into bank accounts and widening EPF coverage are tools of formalisation, which sits behind Statements 1 and 3.

Read more