Professional Documents
Culture Documents
INDEX
1. Introduction 2
2. Social Security Legislation 2
3. The Employees’ State Insurance (Esi) Act, 1948 3
4. Workplace Injury Compensation in India 4
5. Applicability Of Act 5-6
10. Conclusion 13
12. Bibliography 15
2
Five main laws have been enacted to provide social security benefits to workers in India, viz., the
Employees’ Compensation Act, 1923; Employees’ State Insurance (ESI) Act, 1948; Employees’
Provident Funds and Miscellaneous Provisions Act, 1952; Maternity Benefit Act, 1961; and
Payment of Gratuity Act, 1972. We describe below the principal provisions of these Acts, and
the schemes in force under them. We also include a brief outline of the National Pension System
(NPS), which has been an important addition to the social security framework in the country.
This legislation is the most comprehensive social security legislation in the country, covering
medical care, sickness, maternity, employment injury, disablement, dependants and
1
Dreze, Jean and Amartya Sen (1991), Public Action for Social Security: Foundation and Strategy, in Ethisham
Ahmad et al (eds.), Social Security in Developing Countries, Oxford University Press, New Delhi.
3
The central and state governments have made separate arrangements for the social security of
their employees. Although the ESIS is not universal and has important exclusions even within
the organised sector, it still has substantial coverage. As on March 31, 2015, there were 17.9
million employees covered by the ESIS and about 1.3 million coverable employees in
geographical areas to which the scheme has not been extended. To implement the Employees’
State Insurance scheme, the Government of India has established a corporate body, known as the
Employees’ State Insurance Corporation (ESIC). Employees of covered establishments are
referred to as insured persons. The ESI scheme is financed by contributions mainly from
employers and employees, with the former paying 4.75 per cent and the latter 1.75 per cent of the
wages. Expenditure on medical care is shared between the ESIC and state governments in the
ratio of 7:1, with a ceiling of Rs 2000 per insured family (as on April 1, 2014). State
2
Pension Fund Regulatory Development Authority (2016), Pension Bulletin, Volume V, Issue III, March, New
Delhi.
4
governments are expected to share expenditure outside the ceiling to purchase equipment and
vehicles for ambulances, to provide training for nurses and dispose of biomedical waste. The
annual reports of the ESIC show that the programmes are well funded and savings from
contributions are utilised to make capital investments. The ESIC has set up a network of
hospitals, including super-specialty hospitals, and is in the process of setting up new ones. The
Corporation also has tie-up arrangements with private hospitals for investigation and treatment.
The following are the main benefits available to insured persons from the ESI scheme:
Medical benefit Medical care under the ESIS includes preventive, curative and rehabilitative
services, and is provided in clinics for outpatients and in hospitals for in-patients. For in-patient
services, tieup arrangements have been made with reputed institutions, which also provide
sophisticated diagnostic services. Medical care is also provided in lieu of a small charge to
retired persons as well as to permanently disabled persons3.
Sickness benefit Sickness benefit is paid @ 70 per cent of the daily wage, provided qualifying
contribution has been paid for a minimum period of 78 days. The maximum duration of sickness
benefit is 91 days spread over two benefit periods. Persons suffering from diseases like
tuberculosis or mental diseases can get extended sickness benefit for a period of two years at a
higher rate of 80 per cent of the average daily wage, provided they have been employed for a
period of two years and paid contribution for 156 days in four contribution periods.
Maternity benefit Maternity benefit is payable @ 100 per cent of the daily wage for a maximum
period of 12 weeks for confinement, six weeks for miscarriage, and another one month for
sickness arising 5 from pregnancy. In places where necessary medical facilities are not available
under the ESIS, a medical bonus of Rs 5,000 becomes payable for meeting confinement
expenses, subject to a maximum number of two confinements.
Disablement benefit When the disability is temporary, cash benefit is payable @ 90 per cent of
the average daily wage for the period of such disability, after the initial period of three days.
When the employment injury is permanent, whether partial or total, a periodic cash payment is
made for the whole life, on the loss of earning capacity as certified by a medical board
3
Aggarwal, S.L. Labour Relations Law in India, Atma Ram and Co, Delhi, 1970
5
constituted for the purpose. The payment is revised from time to time to take inflation into
account.
Dependants’ benefit As in the Employees Compensation Act, 1923, the ESI Act has a very
inclusive definition of dependants, and besides the spouse and minor children, a widowed
mother, unmarried daughters, sons below 25 years in age, a widowed daughter-in-law, a parent
other than widowed mother, a minor child of a predeceased son, and a paternal grand-parent are
also covered. In the event of death as a result of employment injury, dependants’ benefit
becomes payable @ 90 per cent of the average daily wage of the employee at the time of death
and is divided among the dependants in the ratio prescribed in law. It is provided that the
minimum amount of monthly payment to eligible dependants shall not be less than Rs
1200.Further, as in the case of disablement, the rate of monthly payment is revised from time to
time to neutralise the effect of inflation4.
Unemployment Allowance Under the ESI Act, 1948, the Government of India has also
introduced an unemployment insurance scheme known as the Rajiv Gandhi Shramik Kalyan
Yojana (RGSKY) with effect from April 1, 2005. This scheme entitles the insured persons to
receive an unemployment allowance equal to 50 per cent of the average daily wages for a
maximum period of twelve months if the concerned person loses employment involuntarily as a
result of retrenchment from or closure of the factory or establishment. Insured persons who have
become invalids (to the extent of more than 40 per cent) as a result of injury not related to
employment are also entitled to unemployment allowance. A condition of eligibility for
unemployment allowance is that the ESIS contribution in respect of the insured person should
have been paid for a minimum of three years prior to the loss of employment.
Laws govern compensation for workplace injuries -Compensation for workers in India varies
depending on the size of the company. If the business employees more than 20 employees,
the Employees’ State Insurance Act, 1948 applies.
Under this act, employees and the company pay toward an insurance benefit in case of injury.
When a workplace injury occurs, the injured employee is able to avail of both medical and
4
Singh, R.C.P., Labour Welfare Administration in India, Deep & Deep Publication, New Delhi, 1989.
6
financial support. If the business employs less than 20 people, the company must refer to the
Employee’s Compensation Act, 1923 (Previously, Workmen’s Compensation Act, 1923). This
act outlines methods for providing compensation to employees injured on the job. The Act is
particularly pertinent to small office places and small-scale manufacturing operations.
The 2017 amendment in the Employee’s Compensation Act, 1923, makes it mandatory for
employers/companies to inform its employees of their rights to compensation under the Act,
either in writing or electronically, in a language understood by the employee. Failing to do this,
the employer is liable to a penalty of INR 50,000.
Applicability Of Act
The Act requires employers to compensate an employee who has suffered an accident while
performing his/her duties during work hours, resulting into
Permanent Total Disability-Permanent total disability is relevant when a worker can no longer
perform any of their previous duties due to an on-the-job injury. This injury must be assessed to
permanently affect the employee’s ability to perform their duties. In this case, the worker is
entitled to a minimum compensation of INR 140,000 (US$2,004) or 60 percent of his/her
monthly wage multiplied by a factor based on the employee’s potential future earnings. The total
payment can be significantly larger based on the age of the injured employee.
Permanent Partial Disability-When an employee has sustained an injury that renders them
unable to perform their role at the same capacity for the rest of their career, the employee is
entitled to permanent partial disablement compensation. For partial permanent disability,
compensation is dependent upon the nature of the injury5 and the employee’s loss of earning
capacity. The Act includes a schedule of possible permanent disability injuries and lists the loss
of earning capacity. For example, an arm amputated at the shoulder is assessed as a 90 percent
loss of earning capacity, while the loss of an entire index finger is considered a 14 percent loss of
earning capacity.
5
Srivastava, S.C., Social Security and Labour Law, Messrs Eastern Book Company, Lucknow, 1985.
7
In cases that the worker’s injury is not included in the given schedule, employers must provide a
medical doctor to perform an evaluation of the injured employee and calculate the loss of earning
capacity. The compensation for the injured worker is then established based on the percent of
lost earning capacity multiplied by the monthly wage multiplied by a factor based on the
employee’s potential future earnings.
Temporary Disability-Employees that sustain injuries that render them disabled, permanently
or partially, for a temporary period are compensated through temporary disability.In cases of
temporary disability, an injured worker will be paid 25 percent of their salary every two weeks,
making monthly compensation fifty percent of total earned wages. In cases of temporary injury,
a medical doctor is required to examine the injured employee and determine necessary leave. A
worker on temporary disability leave must undergo a physical examination twice in the month
following the injury and once during the following months if they are still claiming disability.
The Word ‘Accident’ And ‘Personal Injury’ Section 3 Of The Employees Compensation
Act,1923 Provides For Employer’s Liability In Cases Of Personal Injury. For An Employer To
Be Liable
6
(2009) 13 SCC 405
8
7
LARSEN’S WORKMENS’ COMPENSATION LAW, 2009, VOL I, 613
9
physical hurt to the body of the employee. It may include a stress and strain. It may also include
nervous shock caused by an excitement and alarm resulting from a fatal accident to a fellow
workman.
Divisional Personal Officer, Southern Railway v Kartiyani 8 There was a polluted water body
at the place of employment as a result of which the employees drinking the same died. Kerala
High Court held it to be a personal injury and made the employer liable on the ground that it was
a part of duty of employer to provide safe drinking water to the employees.
Regional Director, ESI Corporation v Francis De Costa8 Francis de Costa 9 met with an
accident while he was on his way to his place of employment. The accident occurred at a place
which was about 1 km to the north of the factory at 4:15pm and the duty shift of Francis de Costa
was to commence only at 4:30om. Francis was going to the factory and was hit by a lorry
belonging to his employers and sustained fracture in the collar bone. His claim for disablement
benefit was allowed by the ESI Court but was rejected by High Court and finally the case went to
Supreme Court. Supreme Court rejecting the appeal held that since there
Further, the Supreme Court also laid down the following guidelines for determining what
constitutes personal injury:-
i. There must be causal connection between the injury and the accident and the work done
should be performed in the course of employment. ii. The onus is upon the applicant to
show that it was the work and its resulting strain which contributed or aggravated the
injury.
ii. iii. If the evidence brought on record establishes a greater probability which satisfies a
reasonable man then the work contributed to the causing of the personal injury, it would
be enough for the workman to succeed, but the same would depend upon the fact of each
case
Personal Injury :- Judiciary’s Verdict
DEATH –
8
ShriSankarKal, Vs.Sri Sunil Kumar Saha (2012)IV LLJ629 Gau
9
(1997) 1 LLJ 34
10
Nisbet vs. Rayne & Burn10 -In this case, Nisbet was a cashier employed by the appellants and in
the course of his duty he was carrying large sum of money to pay the wages of the colliers and
while travelling in the train in the discharge of his duty, the bag of money was stolen and he was
also killed. Though it was a criminal act, the claim of compensation by the widow of Nisbet was
allowed considering that it was an accident arising out of and in the course of the employment.
Agra Road Service Centre v Commissioner 11 In this case, the deceased was a driver of
employer’s vehicle. His duty was to fill petrol in the petrol tank of the vehicles coming for the
purpose, it is alleged that some dacoits came there and stabbed Nand Ram and Nanda succumbed
to fatal blows. Finally, the person died and the Court ordered the employer to pay compensation
under Sec 4A of the Workmen’s Compensation Act,1923.
Board of Management of Trim Joint District School vs. Kelly 12. In this case, John Kelly was
employed by the appellants as an Assistant Master of Trim School and he was the
Superintendent of the boys in the School and in the play ground. The boys were angry with Kelly
because he had stopped them playing hurley, or hockey, in the school. On the evening of
February 12, 1912, the boys collected in a shed adjoining the school, armed with hurley sticks,
etc. and when Kelly came out from the School and went to the shed, the boys struck on him and
he received fracture injury on his head and consequently died. The claim of compensation was
13
allowed in the case of Kelly considering that the death was arisen out of and in the course of
employment.
In Raj Kumar v. Ajay Kumar14, the Court considered some of the precedents and held: The
object of awarding damages is to make good the loss suffered as a result of wrong done as far as
money can do so, in a fair, reasonable and equitable manner. The court or the Tribunal shall have
10
(1910) 2 KB 689 CA
11
S. B. Civil Misc. Appeal No. 1257 of 2003, S. B. Civil Misc. Stay Application No. 1762 of 2003 with S. B. Civil Cross
Objection No. 39 of 2007
12
(2011) 1 SCC 343
13
(1914) AC 667
14
(2011) 1 SCC 343
11
to assess the damages objectively and exclude from consideration any speculation or fancy,
though some conjecture with reference to the nature of disability and its consequences, is
inevitable. A person is not only to be compensated for the physical injury, but also for the loss
which he suffered as a result of such injury. This means that he is to be compensated for his
inability to lead a full life, his inability to enjoy those normal amenities which he would have
enjoyed but for the injuries, and his inability to earn as much as he used to earn or could have
earned.
The heads under which compensation is awarded in personal injury cases are the following:
Pecuniary damages (Special Damages)
Pecuniary damages are those which the victim has actually incurred and which are capable
of being calculated in terms of money; whereas non- pecuniary damages are those which are
incapable of being assessed by arithmetical calculations.
S/o Late Narayan Kal. V Sri Sunil Kumar Saha, S/O Late Nishi KantaSaha 15 In this
case, the deceased was employed as a Helper-cum cleaner five months before his death. The
deceased had consumed excessive quantity of alcohol due to which he died although there
was no accident that had taken place. Appellant, who was the brother of the deceased filed
application before Commissioner for granting him adequate compensation for death of his
brother who died in course of his employment. The doctrine of added peril may be relevant
for work undertakes to do something, which he is not ordinarily called upon to do and it
involves extra danger, he cannot hold his master liable for the risks arising there-from. The
doctrine, therefore, comes into play when the workman is, at the time of meeting the
accident, performing his duty. It appeared that deceased voluntarily consumed heavy quantity
of ethyl alcohol as result of which he died due to myocardial heart failure. Therefore doctrine
of added peril was not applicable to case of deceased. Further a person could not be
permitted to take advantage of his own wrong, he would not be allowed to found a claim
upon his own iniquity. In the case at hand, the deceased voluntarily consumed heavy quantity
of ethyl alcohol as a result of which he died due to myocardial heart failure. The doctrine of
added peril, therefore, is applicable to the case of the deceased.
Further, the maxim "Nemo ex proprio dolo Consequitur actionem", which means that a
person cannot be permitted to take advantage of his own wrong, he will not be allowed to
found a claim upon his own iniquity. The maxim is applicable in the case of the deceased
workman. Maxim was applicable in case of deceased workman. Therefore Appeal was found
without merit and hence dismissed.
Conclusion
15
2012 LLR 1060
13
Our review on the evolution of Labour, Welfare and Social Security Legislation in the
country reflects that the powerful Indian Bourgeoisie resisted the enactment of labour laws at
every stage. The earliest legislation to protect workers interest was the Workmen's
Compensation Act. This provided for lump sum compensation for Occupational Diseases and
Injuries, and the employer was solely held responsible for paying the same. However, this
Act was criticised on the grounds interalia, that long procedural delays prevented workers
from getting timely and adequate compensation. The employers lobby too wanted that the
responsibility for compensation should be "shared" by all parties. As a result, at around
Independence, the ESI Act replaced the Workmen's Compensation Act primarily in the
organised sector. This led to the creation of an autonomous ESI Corporation, which became a
tripartite body run and financed by the Government, the employers and the employees.
Though on paper, all the three parties have equal power, but the history of labour legislation
has shown that the employers by virtue of their capital' very often forced Governments' to
accept their conditions. Thus, the power equation in this tripartite body is not necessarily in a
state of equilibrium conducive to workers welfare. The ESI Corporation made rules and
regulations for compensation to employees sustaining Occupational Diseases and Injuries, in
the form of periodic payments. Another 'glamorous' benefit of free medical care to workers
and their families was also provided by this autonomous corporation. the expansion of the
health care system within the ESIS covered up quantitatively the failure of this system to
build an adequate occupational diseases component. As a result its prevention, treatment and
compensation were neglected. In a way the States intervention, not only provided monetary
relief to the industrialists but also protected him from investing heavily into control of
occupational diseases and injuries. Our attempt to evaluate the efficiency of the ESIS in
providing comprehensive health services to the working class in Faridabad district, has not
only provided insights into the working of the System and its correlates but has brought to
fore some serious issues for discussion. For analytical purposes it is important to first
highlight the features of the context in which the ESI System is located.
pension fund) schemes for employees in the organized sector, there is no employers’
contribution whatsoever in the APY. This creates a big deficit in social security for the
unorganised sector and it is here that the central government needs to step in.
For the establishments covered by the Employees State Insurance Act, 1948 health care
benefits are indeed remarkable. In return for employers’ contribution of 4.75 per cent and
employees’ share of 1.75 per cent of gross salary, employees get medical treatment
without any per capita limit. To provide treatment to insured persons, ESIC has a vast
network of dispensaries, hospitals and panel clinics, diagnostic centres and super
speciality hospitals, which can undertake open heart surgery, neuro surgery, bone marrow
transplant and kidney transplant.
One other gap in the services provided by the ESIC to insured persons to which we have
referred earlier is that benefits are not available in non-implemented areas and this
shortcoming needs to be redressed first. No doubt action is being taken by the central
government to expand the coverage to non-implemented areas. In the meantime,
alternatives should be explored in these areas for empanelling existing private and public
hospitals, dispensaries and clinics to deliver the full range of health care services to the
insured persons.
Bibliography