Building and Other Construction Workers: Cess and Welfare

Construction workers move from site to site and employer to employer, so welfare tied to a single employer rarely reaches them. The 1996 scheme solved this by levying a cess on construction itself and using it, through State Welfare Boards, to fund benefits for registered workers. Chapter VIII of the Code on Social Security carries this scheme forward, while their working conditions are now governed by the OSH Code. This note covers the cess, the Boards and Fund, registration, and the leading cases.

1. The Cess

Levy, collection and use of the cess

Figure 1: Levy, collection and use of the cess

Basis. The cess falls on the employer undertaking the work, measured by the cost of construction, not on wages.
Exemption, s.102. The Government may exempt certain employers or classes of construction work from cess.
Uniform rates. The Government may fix uniform rates based on the quantum of construction for collection in advance.

2. Boards, Registration and Benefits

Registering building workers

Figure 2: Registering building workers

State Welfare Boards, s.7. Constituted by each State Government, with representatives of employers, workers and the Government.
Benefits. Funded from the Welfare Fund: accident and death assistance, pension, housing loans, education of children, medical expenses, maternity benefit and other prescribed welfare measures.
Working conditions. Hours, safety and welfare on construction sites are regulated by the OSH Code (Topic 34)

3. Leading Cases

Dewan Chand Builders v Union of India (2012). The Supreme Court upheld the validity of the cess levied on the cost of construction for the welfare of building workers.
Lanco Anpara Power v State of UP (2016). Construction work in a factory under construction is covered by the building workers' law; workers are excluded only once covered by the Factories Act as workers of the factory.
National Campaign Committee v Union of India (2018). Finding large sums of cess unspent or diverted, the Court issued directions for registration, model schemes and proper use of the Fund.

⚠ Exam trap

The cess is 1% to 2% of the cost of construction, paid by the employer, and goes to the State Building Workers' Welfare Board. A building worker aged 18 to 60 with 90 days of construction work in the preceding twelve months is registered as a beneficiary. Board administrative expenses cannot exceed 5% of its total expenses in a year. Working conditions on sites now fall under the OSH Code, not the Social Security Code.

4. Frequently Asked Questions

Who pays the building workers' cess and at what rate?

Every employer undertaking building or other construction work pays cess under section 100 at a rate between 1% and 2% of the cost of construction, as notified. It may be deducted at source from bills for Government or public sector works, or collected in advance through the local authority, and is credited to the State Building Workers' Welfare Board.

Who can register as a beneficiary?

Under section 106, a building worker who is at least 18 and below 60 years of age, and who has been engaged in building or other construction work for at least ninety days in the preceding twelve months, is registered as a beneficiary by the officer authorised by the Welfare Board.

5. Related Topics

Topic 26: Gig, Platform and Unorganised Workers. Other workers outside conventional employment.
Topic 34: Special Provisions for Particular Sectors. Construction under the OSH Code.