Introduction

Employee welfare means anything done for the comfort and (intellectual or social) improvement of the
employees, over and above the wages paid.

In simple words, it means “the efforts to make life worth living for workmen.” It includes various services,
facilities and amenities provided to employees for their betterment. These facilities may be provided
voluntarily by progressive entrepreneurs, or statutory provisions may compel them to provide these
amenities; or these may be undertaken by the government or trade unions, if they have the required
funds.

Contents:

1. Meaning of Employee Welfare

2. Concept of Employee Welfare

3. Objectives of Employee Welfare

4. Types of Employee Welfare

5. Importance of Employee Welfare

6. Approaches to Employee Welfare

7. Employee Welfare Policy

8. Benefits of Employee Welfare

9. Schemes and Procedures of Employee Welfare Activities

10. Employee Welfare Programme

Employee Welfare – Meaning

Employee welfare means anything done for the comfort and (intellectual or social) improvement of the
employees, over and above the wages paid. In simple words, it means “the efforts to make life worth
living for workmen.” It includes various services, facilities and amenities provided to employees for their
betterment. These facilities may be provided voluntarily by progressive entrepreneurs, or statutory
provisions may compel them to provide these amenities; or these may be undertaken by the
government or trade unions, if they have the required funds.

The need and importance of employee welfare is being increasingly appreciated throughout the civilized
world. The concept of welfare is a dynamic one and has different connotations in different countries and
at different times in the same country, according to the prevailing value system, social institution, degree
of industrialization, and the general level of social and economic development.

According to ILO, “Employee welfare should be understood as such service, facilities and amenities
which may be established in or in the vicinity of undertakings to enable the persons employed in them to
perform their work in healthy and peaceful surroundings and to avail of facilities which improve their
health and bring high morale”.

International Labour Organization (ILO) defines welfare as:

According to the ILO, ’employees’ welfare should be understood to mean such services,
facilities, and amenities which may be established in or in the vicinity of undertakings to enable
the persons employed in them to perform their work in healthy and congenial surroundings,
and provided with amenities conducive to the good health and morale.’

Welfare work is the task to be done by the employer voluntarily for the intellectual, physical,
moral, and economic betterment of employees, over and above which is laid down by law, or
what is expected as a part of contractual benefits for which the employee may have bargained.

Employee Welfare – Concept

The terms ’employees’ welfare’ and ‘workers’ welfare’ are used interchangeably to denote
various services provided by the employers to the employees in addition to wages. According to
Arthur James Todd, “Employee welfare means anything done for the comfort and improvement,
intellectual or social of the employees over and above the wages paid which is not a necessity
of the industry”.

These are not a form of employers’ goodwill or charity to the workers, but are facilitative
services to build and maintain the morale of the workers to achieve the objectives of the
organisation. It is not only in the interest of the employees to provide them with necessary
medical benefits, recreation facilities, retirement benefits, etc., but also in the interest of the
organisation itself.
The employees feel satisfied if they are provided with such services and they also feel
committed to the organisation. Though welfare services are merely maintenance factors and
not motivators, yet they are necessary for the health of the organisation since they bear close
connection with the productivity of the employees.

The basic features of employees’ or labour welfare are as follows:

(i) Labour welfare includes various facilities, services and amenities provided to workers for
improving their health, efficiency, economic betterment and social status.

(ii) Welfare measures are in addition to regular wages and other economic benefits available to
workers due to legal provisions and collective bargaining.

(iii) Labour welfare measures are flexible and ever-changing. New welfare measures are added
to the existing ones from time to time.

(iv) Welfare measures may be introduced by the employers, government, employees or by any
social or charitable agency.

(v) The purpose of labour welfare is to bring about the development of the whole personality of
the worker to make him a good worker and a good citizen.

Employee Welfare – Objectives

(i) To enhance the level of morale of employees.

(ii) To create a loyal, contented workforce in organization.

(iii) To develop a better image of the company in the minds of the employees.

(iv) To enable the workers to live comfortably and happily.

(v) To develop efficiency of the workers.

(vi) To reduce influence of trade unions over the workers.

(vii) To expose philanthropic and benevolent activities of the company.

(viii) To make the workers know that the company takes care of them.

(ix) To develop positive attitude towards job, company and management.

(x) To reduce tax burden.

(xi) To develop a feeling of satisfaction of employees with the company.

Employee welfare can be divided into two categories
(1) Statutory
(2) Voluntary

1. Statutory:

The government has passed a number of legislations in order to set minimum standards of

safety and welfare for the employees at their workplace. Provisions have been made for the

welfare facilities such as washing, storing, first-aid appliances, hours of work, sanitation, etc.

2. Voluntary:

The employers voluntarily have provided welfare amenities to the employees besides the
statutory facilities. They are more concerned with the welfare of their employees.
Organizations such as Godrej and L & T provide adequate transport and similar other facilities
to their employees. Facilities for recreation, medical treatment, free meals or subsidized meals,
schooling facilities for children, and sports and games are provided by many organizations.

The voluntary welfare facilities may also classified into those provided within and outside the
factory premises.

(i) Welfare and amenities within the factory premises.

Welfare and amenities within the factory premises include – (i) provision for latrine and urinals,
(ii) washing and bathing, (iii) creches, (iv) rest shelters and canteens, (v) arrangement of
drinking water, (vi) arrangement for prevention of fatigue, (vii) administrative arrangement
within the plant to look after welfare, (viii) uniforms and protective clothing, and (ix) shift
allowance.

(ii) Welfare and facilities outside the factory premises.

Welfare and amenities outside the factory premises include – (i) maternity benefit, (ii) social
insurance, (iii) benevolent fund, (iv) medical facilities, (v) education facilities, (vi) housing
facilities, (vii) recreational facilities, (viii) holiday/leave and travel facilities, (ix) workers’
cooperatives, (x) other programme for the welfare of women, youth, and children, and (xi)
transport to and from the place of work.

Why is Employee Welfare Important?

1. Lack of strong trade union movement – In the absence of strong trade unions and effective
leaders, welfare work helps the workers in the industry to stand on their own feet, think
properly and systematically of their interests, progress hand in hand and participate in the
nation’s development.

2. Poverty – Poverty is one of the main reasons behind the provisions of labour welfare
activities. Indian workers in majority are poor, and are, therefore, unable to provide a healthy
living for their families and good education for their children.

3. Illiteracy – In India, the number of educated workers is low. Being illiterate, they are unable
to receive advanced industrial training, understand the problems in industries, and understand
their own interests and those of nations.

4. Low level of health and nutrition – Due to poverty and illiteracy, the Indian workers remain
unhealthy and ill fed. This reduces their productivity and efficiency.

5. Lack of healthy recreation – Due to lack of healthy recreation, the workers indulge in crime
and other wrong activities. The employer should provide means of healthy recreation in order
to maintain their efficiency.

6. Lack of training – The number of trained workers in India is very low. Thus, it is necessary to
have training facilities for such a vast workforce.

Employee Welfare – Approaches

Policing Approach, Religion Approach, Philanthropic Approach, Paternalistic

Approach and a Few Other Approaches.

A brief description of the various approaches to employee

welfare is as follows:

1. Policing Approach:

According to this theory, the factory owners exploit the employee in an unfair manner.
Instances of exploitation are making the employees work for long hours, paying low wages,
neglecting health and safety provisions, providing unhygienic conditions of work, etc. A welfare
state enacts legislation under which managements are compelled to provide basic amenities to
the workers. Thus, the state assumes the role of a policeman and compels the employers to
provide welfare facilities and punishes the non-complier.

2. Religion Approach:

The religion theory has two aspects namely, the investment aspect and atonement aspect. The
investment aspect implies that the fruit of today’s deeds will be reaped tomorrow. Any action,
whether positive or negative, is thus, treated as an investment. Inspired by this belief, some
employers plan and organize welfare facilities for the employees. The atonement aspect of the
religion theory implies that the present disabilities of a person are the result of the sins
committed by him previously. He should undertake to do good deeds on how to atone or
compensate for his sins.

3. Philanthropic Approach:

Affection for mankind is the basis of philanthropic theory. This theory refers to the provision of
good working conditions, creches and canteens out of pity on the part of the employers who
want to remove the disabilities of the employees. The philanthropic theory is more common in
social welfare rather than in industrial enterprises.

4. Paternalistic Approach:

According to the paternalistic theory, the industrialist holds the entire industrial estate,
properties and the profits accruing from them in trust. This trust is not actual and legal but it is
moral. The employers provide for the well-being of their employees out of funds under their
control. As, the whole enterprise is held in trust for the benefit of the employees, this theory is
also called trusteeship theory.

5. Placating Approach:

When workers are organized and unions are strong, management has to appease them. As
crying children are pacified by sweets, workers are pleased by welfare works. This theory is
based on the assumption that management can bring peace in the organization by welfare
measures.

6. Public Relations Approach:

According to this theory, welfare facilities provided by the employers to the employees, create
a good image of the employer in the mind of the general public. Some employers proudly take
their visitors around the plant to show how well they have organized their welfare activities.

7. Functional Approach:

According to the functional theory, welfare work is a means of securing, preserving and
increasing the efficiency of labour. Welfare facilities are provided by the employers to the
employees to make them more efficient.

8. Social Approach:

The social responsibility of business has been assuming great significance these days. The social
theory implies that an industrial establishment is morally bound to improve the conditions of
society in addition to improving the condition of the employees. Labour welfare is gradually
taking the shape of social welfare.
Employee Welfare – Policy

The first step in employee welfare administration is, to have a dearly defined policy towards it.

The policy must cover:

1. Willingness of the management

2. Objectives sought to be achieved

3. Range of facilities to be provided, and

4. Timing of the facilities

Presently, there is no question of willingness of the employer. The employer is now compelled
to provide welfare either by a statue or precedence already established by rivals. Objectives of
welfare must be to enhance efficiency of employees and not merely to comply with the
provisions of Factories Act / Mines Act / Plantation Labour Act / Motor Transport Workers Act,
or Merchant & Shipping Act, 1958.

Employee Welfare – Benefits

1) Employees would start working sincerely and honestly.

2) It would improve the productivity and efficiency of the employees.

3J The attachment and belongingness among the employees would be developed.

4) Employees would be healthy and they would be mentally and physically fit to perform in the
best manner. Thus; it promotes a healthy work environment.

5) Employees can enjoy stable, developed, dedicated employees, moreover, employees will
work with interest and with full involvement.

6) Higher Productivity, higher efficiency, promotes health industrial relations, ultimately in-
dustrial peace can be achieved.

7) Absenteeism, labour turnover such problems of the employees would not arise in the
organisation.

8) Employees would come forward to share additional responsibilities of the company.

9) It will improve the standard of living of the employees.

10) Work environment, work culture will be developed in the organisation.

11) It enhances the goodwill and reputation and thereby image of the company.

12) No chance for industrial dispute in the company. Healthy, harmonious relation between
employer and employees will be developed.

Employee Welfare Activities under Various Schemes and

its Procedures

Employee Welfare activities are provided under various schemes by central government/state
government / trade unions / voluntary agencies etc.

Those are provided as stated below:

Central Government has enacted various laws, to provide certain welfare facilities by the
employers to their employee’s viz.:

1. Canteen facility if employing more than 250 workers, creche, if employing more than 30
women, welfare officer if employing 500 or more workers.

2. Provision of shelters for taking food and rest if 150 or more persons are employed, first aid
rooms, in mines employing more than 150 workers

3. Educational facilities, in the estate for the children of workers where there are 25 workers
children, between the age of 6 and 12, housing facilities to every worker and his / her family
residing in the plantation.

4. Uniforms, raincoats to drivers, conductors and line checking staff, for protection against rain
and cold, medical facilities, to the motor transport worker

5. Ensure regular payment of minimum wages / equal pay for equal work irrespective of sex /
provide suitable residential accommodation to workers / to provide such protective clothing to
the workmen, as may be prescribed.

Employee Welfare Programme and its Principles

The following are generally given as the principles to be followed in setting up a employee
welfare programme:

1. The programme should satisfy real needs of the workers:

This means that the manager must first determine what the employees’ real needs are.
Extreme care and serious research should go into the decision of whether or not to offer a
particular employee service. More evidence is required than a mere unfounded bias of the
manager.

2. The programme should be such as can be handled best by a

group approach:

For example, life insurance purchased as a group can be obtained at a significantly lower price
than some insurance purchased by the individual. But it is argued that depending upon the
differences in sex, age, marital status, number of children, type of job and the income level of
employees, there are large differences in their choice of a particular benefit.

As a result, it is suggested that a package total value of benefits should be determined and the
selection of the mix of benefits should be left to the choice of each individual employee. This is
known as the ‘cafeteria approach’. Such an approach individualizes the benefit system though it
may be difficult to operate and administer.

3. The employer should not assume a benevolent posture:

Some employers foster dependency on employees which is counter-productive. The

paternalistic and benevolent approach has fallen in disrepute as a result of the employee’s
desire to gain independence and dignity.

4. The cost of the programme should be calculable and its financing

established on a sound basis:

There are several employee services such as pension, provident fund, insurance, etc., which are
not cheap to administer. The cost of such benefits can hardly be termed a fringe. It is,
therefore, essential that before conceding any such service over the collective bargaining table
sound actuarial estimates of costs are made and adequate provisions for financing it are
established.

5. The management should ensure cooperation and active participation of unions and workers
in formulating and implementing the programme.

6. There should be a periodical assessment or evaluation of the programme and necessary

timely improvement on the basis of feedback.