Designing Rights for the Invisible

**Dr. Sohini Mahapatra and Samparna Tripathy

Introduction 

In the recent past, the Covid-19 lockdowns forced millions of Indian households to come to terms with an invisible reality. With domestic workers unable to enter residential complexes, the burden of cooking, cleaning dishes, doing laundry, taking care of children and elderly without any assistance crippled families, especially women. That moment perhaps solidified the realization that domestic workers are “godsend” for smooth functioning of so many of our households. Their indispensability is at the core of the International Labour Organization’s position: “Recognizing domestic work means recognizing the people whose work makes all other work possible. Domestic workers deserve rights, protection, dignity and decent work.” But the paradox in India is that providing basic labour protections (ex: timely payment of wages, increments, weekly offs, insurance, etc.) to them is still an afterthought. This article makes an attempt to resolve this paradox by identifying the market failures and constitutional considerations that justify State intervention, analysing unique characteristics of domestic employment that have made it difficult to regulate so far, and finally proposing an alternative institutional design that embeds regulation in the domestic labour market itself. 

Market Failures & Fundamental Rights: The Justification for Regulatory Intervention

The domestic work economy is characterized by specific market failures that arguably make a case for State intervention (provided it has the capacity to enforce it). First, considering the profile of domestic workers (i.e. people belonging to socio-economically vulnerable households with low level of skilling, and few alternative employment opportunities), typically the bargaining power for negotiation of wages, leaves, and working conditions is skewed towards the employer. The economy more or less operates like a monopsony (i.e. buyer’s market) where employers have more choices than workers do. This also leads to domestic workers being employed under multiple employers in multiple households. Since they get the short end of the stick, they are more often than not compelled to derive their livelihood from multiple sources. 

Second, there is information asymmetry between both parties. Workers, largely organised through word of mouth referrals, neighbourhood networks, or placement agencies, have little information about prevailing market wage rates, statutory entitlements, or reputation of prospective employers. Employers, unaware of the track record of the domestic worker in terms of conduct, skill, and reliability, press for the bottom-most tier of wages/benefits. The result is inefficient matching and inconsistent employment terms. It is also difficult to codify these work arrangements in contracts. For example, what constitutes “deep cleaning” or “childcare” would differ across households. Also, since there is an inherent flexibility in how work evolves over time, updating terms and conditions in formal contracts could prove rather expensive as compared to the gross value of the transaction. 

Third, domestic work generates positive externalities that are not reflected in the wage bargain. For example, by taking on a share of the unpaid care work in households (ex: childcare, elderly care, daily chores), domestic workers enable the women of the household to participate in the labour market, especially in high productivity careers. This in turn lifts up economies. The care economy, especially in India where the dependency ratio is spiking, is critical for preventing the collapse of the public health system. Since these broader socio-economic benefits are outside the purview of employer-employee relationships, the market underinvests in the welfare and social protection of such workers. 

These market failures do not remain purely economic in character. They also find an expression in Fundamental Rights enshrined in our Constitution. For instance, Article 23 prohibits not just trafficking and begar (unpaid forced work) but also “other forms of forced labour”. In People’s Union of Democratic Rights vs Union of India (1982), Justice PN Bhagwati interpreted forced labour to include arrangements where workers possessed no real choice than to accept below minimum wages. The Court emphasized that even a deduction of Rs.1/- from the minimum wages of the workers amounts to forced labour because they are essentially compelled to continue in work despite not being paid minimum wages. The State is constitutionally obligated to prevent any such economic coercion, even by private parties. Similarly, Article 21’s guarantee of life and personal liberty includes the right to live with dignity, which in turn encompasses fair conditions of work and a living wage. And finally, considering the fact that domestic work is an arena where gender, caste, and class hierarchies are prominent, the burden of market failures falls disproportionately on these sections. Which is why, the promise of equality under Articles 14 and 15 in this domain demands State attention. 

Limits of State Intervention: The Reason Regulatory Interventions Have Been Half-Hearted

While market failures and constitutional rights do make the case for State intervention, even today domestic workers are largely unprotected under existing legislations. For example, though nearly 20 states had added domestic work as a scheduled employment under the Minimum Wages Act 1948, they had mostly taken the route of fixing task specific wages for such workers payable on an hourly basis. So, there is a possibility that the overall wage, which depends on the number of houses one works for and the wages negotiated with each of them, does not even come close to a living wage, which is a constitutional goal. The Payment of Wages Act 1936 which mandated timely payment to be made to workers (i.e. within the seventh day of the next month) did not extend protection to domestic workers. Since the Supreme Court in Bangalore Water Supply and Sewerage Board v. Rajappa (1978)  ruled that a household employing domestic workers doesn’t fall under the definition of “industry”, domestic workers were not covered under the ambit of the Industrial Disputes Act 1947 either  to rightfully raise a dispute on their wages or any other allied benefits. . Female domestic workers, forming a significant part of this pool, were not covered under the Maternity Benefits Act 1961 that would have ordinarily entitled them to 26 weeks of paid maternity leave to rest and recuperate, nursing breaks when they rejoin employment or other medical benefits. With the recently enacted new Code on Wages 2019, the Code on Social Security 2020 and the Industrial Relations Code 2020, which have subsumed the above mentioned statutes, nothing much has changed for the domestic workers. ‘Domestic workers’ are included in the definition of ‘unorganized workers’ under the Code on Social Security, which was essentially the status earlier as well. There is no separate definition for domestic workers (unlike ‘gig workers’ and ‘platform workers’ which have been added), even though the nature and sphere of work necessitates it. 

As per the Prevention of Sexual Harassment at Workplace Act 2013, on paper, female domestic workers can approach a Local Complaints Committee at the district level to file a complaint of sexual harassment by their employer. But reports reveal that such committees are either not formed, or if formed, are defunct. Placement agencies that supply domestic workers (mostly inter state migrants) to households attract no liability for their working terms and conditions. This is because the Inter State Migrant Workmen Act 1978 applied only to contractors that supply five or more migrant workers to any employer. A few states may require such placement agencies to register under their Shops & Commercial Establishment Act but such registration does not typically regulate the employment contracts of domestic workers. Under the new Labour Codes, the definition of migrant worker has been amended to include those who voluntarily migrate in search of employment as well or those who are self-employed in other destination States. This implies that domestic workers in these categories may avail the benefits for inter-state migrant workers. However, much like the erstwhile Unorganized Workers’ Social Security Act 2008, the new Codes also place the burden on the worker to register themselves on the portal (e-shram portal) created by the Central Government on the basis of self-declaration and Aadhar. 

The reasons for this legislative void are manifold. First, labour legislations often work where the contours of its operation are defined (for example, within an ‘industry’, ‘factory’, or ‘establishment’, or for a ‘contractor’). When these boundaries are defined, it is easier to provide benefits as well as pin liabilities on someone. However, in the case of domestic workers, the very nature of the work is fluid. Neither the ‘workplace’ nor the ‘employer’ may be fixed. Only in a few cases, where the domestic worker is a full-time employee residing in the residence of the employer, there may be some certainty about ‘workplace’ and ‘employer’. In most cases otherwise, an employer can be an individual person whose house is the workplace for the worker or a shopowner who hires someone to clean the establishment once a day. A worker may be employed to work in five different households each day or may reside full-time in a single household. He may have secured the work through a placement agency, a digital platform such as Snabbit, or by reference of other domestic workers. Second, work happens within a private setting where any form of labour inspection to enforce a labour legislation could be seen as an intrusion of privacy by the State. Third, there is a social tendency to refer to domestic workers as “extended family”, which in turn prevents a rights based discourse from coming to the fore. This is reinforced by the deeply entrenched capitalist separation of the workplace (where productive labour is performed by men) and home (where domestic labour is performed by women). 

Fourth, from Deputy Labour Minister Abid Ali on the Domestic Workers (Conditions of Service) Bill 1959 to CJI Suryakant on the writ petition for minimum wage protection for domestic workers in Penn Thozhilalargal Sangam v Union of India (2026), a common presumption made by lawmakers is that enforcement of statutory minimum wages for domestic workers will discourage the hiring of such labour. Empirical evidence suggests otherwise. Studies measuring impact of minimum wage legislations in Karnataka, Bihar, Andhra Pradesh, and Rajasthan have established that such legislation didn’t impact probability of being employed in the short or long term. On the contrary, in the initial months, a voluntary upward adjustment of wages by employers – a phenomenon termed as the “announcement effect” – leading to 30% rise in earnings was noted in test states. But that momentum fizzled out in due course due to lack of enforcement. 

Towards Enforceable Protection: Embedding Law into the Architecture of Labour Market

The challenge in front of us is to figure out an institutional design that reconciles meaningful domestic worker protection with practical enforceability. To do that, law has to embed itself into the labour market. For starters, let’s look at the architecture that we already have and build on it. For example, e-Shram already gives every unorganised worker a Universal Account Number (UAN) (Aadhaar linked, self registered via CSC or mobile). The gap is that it serves today just as a registry and not a transaction ledger – hence beyond the elusive promise of scheme based welfare benefits which may or may not come to fruition, there is no immediate incentive for the worker to register. But if a transaction layer could be built on top of this UAN that gathers and stores employment records/wage history, activates portable insurance etc.  – domestic workers are likely to jump onboard. 

One way of doing this is building a simple “Domestic Worker Payment Tag (DWPT)” (akin to utility payment tag) on UPI, which would allow any payer (ex: household or Resident Welfare Association, a placement agency, or a digital aggregator) to route wages to the UAN linked worker account. The payment itself becomes the record. Statutory compliance to wage floors could be tracked based on aggregate data at a UAN level, rather than on a per household or per task basis. For every payment received via the DWPT, the State could credit a fixed percentage (say 5-10%) into the worker’s Social Security fund sub account (linked to UAN). For households/ RWAs, these records could enable fast track access to police verification of domestic workers and lower premiums on insurance products (ex: on theft, property damage, or accidents). If digital aggregators (ex: Snabbit and Urban Company Insta Help) are added in the definition of “aggregators” under the Code on Social Security, routing payments through a tagged channel could reduce compliance burden (ex: of proving cess payout). Similarly for placement agencies, adoption of tagged payment could be a precondition for  continued licensing under Shops & Commercial Establishment Act. Moreover, for both digital aggregators and placement agencies, such adoption could add to their market credibility as suppliers of verified labour. 

On the flip side, there are some concerns with this proposed design which need consideration. First, a large share of domestic work is still paid in cash. This is either because most of them do not have bank accounts, or if they do, they are not well-versed with the banking process of withdrawal of money or other transactions. Hence, to reduce dependability on other members of the family, most domestic workers, especially female workers, prefer to be paid in cash instead. Since the architecture provides no bridge from cash to DWPT, an option for self reported cash transactions will have to be added in the e-Shram portal. While such transactions could feed into the cumulative wage calculations, in the absence of any method to verify cash transactions, they would not attract any matching contributions by the State. Probably that difference would nudge workers to insist on digital payments instead. Second, workers may themselves stay away from a formal income trail if it jeopardises other benefits such as BPL status and welfare schemes linked to prior declared income. To bring them into the DWPT fold, exemption for income tagged via DWPT for such means testing purposes will have to be introduced for at least a few years. 

A way forward could be not to force domestic work into definitions it was never designed for, but to let the transactions itself carry the record, the protection, and the incentive to comply. If the payment becomes the proof, enforceability no longer depends on a worker’s courage to complain, an inspector’s license to enter, or an employer’s willingness to be fair. It simply becomes how the wage is paid. And in that quiet shift may lie more protection than sixty years of statutes have managed to deliver. 

 **Dr. Sohini Mahapatra is an Assistant Professor of Law at National Law University Odisha.

**Samparna Tripathy is a final year LLB Hons. student at the National Law University Odisha.

**Disclaimer: The views expressed in this blog do not necessarily align with the views of the Vidhi Centre for Legal Policy.