The bill, for now, has identified six core schemes that will be rolled out over the years, including unemployment, disability, maternity, medical, dependent and old-age benefits. Other schemes can be introduced by the Fund based on the need, according to the draft bill, a copy of which has been obtained by Republica.[break]
To launch these schemes, the Social Security Fund can instruct employers to make contributions on behalf of employees on a monthly basis.
"Self-employed people and those working in informal sectors can also enjoy these benefits, but on condition they make contributions every month," the draft bill says. These contribution rates will be fixed by the Fund´s board of directors, which will be headed by the MoLTM secretary and will include central bank deputy governor, three joint secretaries from various ministries, executive director of the Insurance Board, three members each from employers´ and employees´ organizations and executive director of the Fund.
"Those who do not make contribution will not be eligible for benefits offered under social security schemes," the bill explicitly says.
Currently, the government has been mobilizing financial resources for the Fund by slapping one percent social security tax on employees´ salaries. This practice started in the fiscal year 2009/10. But the government does not have records of funds collected in that year, as the entire amount raised was diverted to other government accounts.
This was because the government´s account book that year "did not have a separate heading for social security tax", according to officials of the Ministry of Finance. To compensate, the government has offered Rs 100 million and has also formed a committee to track the money. But, so far, it has not been successful.
The sour experience of the first year was superseded by fairly astounding result, with the Fund collecting Rs 742.46 million in the last fiscal year. However, government officials said this is way too low considering contributions made by almost 2 million of those working in formal and government sectors.
"The shortfall has made us suspect whether employers are complying with the mandatory provision of contributing one percent of the basic salary to the fund," Mahesh Baral, director of the Social Security Fund, told Republica.
Once the draft bill is signed into a law, employers who are found flouting this rule may be fined up to Rs 100,000 and jailed for up to six months. "Similar fine and jail sentence will be slapped on employers who fail to enroll employees in social security schemes within six months of enforcement of the law or within three months of bringing a firm into operation," the draft bill says.
It also says employers who fail to deposit social security tax amount at the Fund within first 15 days of Nepali monthly calendar will be asked to pay a 10-percent interest on the amount as fine. If the amount is not deposited within three months, the Fund can slap a fine equivalent to 20 percent of the total amount.
But if the calls of the Fund are not heeded for six months, it can "block bank accounts, freeze assets, terminate business operating license or even seize the passport of employers", the draft bill states.
To settle disputes that may arise in the course of operating the Fund, a Social Security Tribunal will intervene based on complaints filed by victims, according to the bill, which will now be forwarded to a committee headed by the secretary of the MoLTM for approval.
"Once the bill is enforced, it will make it easier for the government to introduce controversial labor provisions like hire-and-fire and no work, no pay, as social security schemes will provide cushion to workers that will let them absorb shocks," Baral said.
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