LABOUR LAW

Project topic:-

EMPLOYEES COMPENSATION ACT : OVERVIEW

SUBMITTED BY-:

YOGANAND

Roll no. 1986

2nd year 4th semester ba.llb hons.

Submitted to-:

Dr.Pallavi shankar

Faculty of labour law

Chanakya national law university , patna

March 2020

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 Acknowledgment

It’s a fact that any research work prepared, compiled or formulated in isolation is inexplicable
to an extent. This research work, although prepared by me, is a culmination of efforts of a lot
of people.

Firstly, I would like to thank our teacher for the subject of Labour law Dr.Pallavishankar for
assisting me with her prudence in accomplishment of this work which relates to LABOUR

LAW would like to thank her for he valuable suggestions towards the making of this project.

Thereafter, I would also like to express my gratitude towards our seniors who played a vital
role in the compilation of this project work.

I cannot ignore the contributions made by my classmates and friends towards the completion
of this project work. And I would also like to express my gratitude towards the library staff of
my college which assisted me in acquiring the sources necessary for the compilation of my
project.

Last, but not the least, I would like to thank the Almighty for obvious reasons.

-YOGANAND

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 TABLE OF CONTENT

 INTRODUCTION
 A BRIEF OVERVIEW
 OBJECTIVE AND KEY FEATURES
 APPLICABILITY
 MAIN PROVISION AND SCOPE
 IMPORTANT DEFINITION
 AMENDMENT MADE IN ECA 1923
 COMPENSATION AND DISABLEMENT
 EMPLOYERS LIABILITY TO PAY COMPENSATION
 WHEN EMPLOYERS LIABILITY DOES NOT ARISE
 DECIDING COMPENSATION
 WHAT IS THE BASIS OF CALCULATION OF AMOUNT OF
COMPENSATION
 COMPENSATION FOR DEATH
 COMPENSATION FOR PERMANENT TOTAL DISABLEMENT
 COMPENSATION FOR PERMANENT PARTIAL DISABLEMENT
 COMPENSATION FOR TEMPORARY DISABLEMENT
 COMPENSATION TO BE PAID WHEN DUE AND PENALTY FOR
DEFAULT
 NOTICE AND CLAIM FOR COMPENSATION
 DISTRIBUTION OF COMPENSATION
 LEGAL REMEDIES
 WHO CAN MAKE CLAIM
 WHO SHOULD CLAIM MADE BE TO
 THE PERIOD IN WHICH CLAIM SHOULD BE MADE
 CONCLUSION
 BIBLIOGRAPHY

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 INTRODUCTION

Every employee needs a secured job and wants to get compensation for the expenses he has
incurred. This is a requirement that needs to be fulfilled by the company whether it is small
scale or large scale. After all, a company’s success depends on its employees. Therefore, the
protection of employees’ and their safety is a top priority of a company. This article is all
about how much compensation is given, under what conditions, who is entitled to claim
compensation and a lot more. The Workmen Compensation Act, 1923 is an enactment that
was issued by the Central Government and was implemented by various State Governments
which gives social security to workers. This security is offered by the law for people who
work.

The Act was formed after it was noted that labourer were getting more exposed to danger
with the use of advanced and sophisticated machinery. The common law had it that the
employer would only take up the compensation responsibility if it is found that the industrial
accident was a result of his negligence.

In India, the issue of compensating workmen after fatal and major accidents hit the road in
1884. It was then in 1885 that the factory and mining inspectors realized that the Fatal
Accidents Act, 1885, was not enough to attend to the intended purposes.

The State offered a hearing ear when members of the Legislative Assembly, employers’
representatives, workers and experts in medicine and insurance formed a committee that gave
a report that led to the enacting of the Workmen’s Compensation Act in 1923.

The passing of the Act put a stop and offered a relief for workers who would have gone
through court processes that are often expensive, an effort to seek compensation whenever
they acquired an injury during employment.

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 A BRIEF OVERVIEW

The Workmens Compensation Act is the first piece of legislation towards social security. It
deals with compensation for employees who are injured in the course of duty. The scheme of
the Workmens Compensation Act is not to compensate the employee in lieu of wages. The
general principle is that a employee who suffers an injury in the course of his employment,
which results in a disablement, should be entitled to compensation and in the case of a fatal
injury his dependants should be compensated. Under the Workmens Compensation Act it is
the employer who is responsible to pay compensation (as opposed to the employees State
insurance. Establishments to which the Employees State Insurance Act applies to the liability
to pay compensation are on the ESI Corporation).

The Workmens Compensation Act, 1923 provides for payment of compensation to employee
and their dependants in case of injury and accident (including certain occupational disease)
arising out of and in the course of employment and resulting in disablement or death. The
amount of compensation to be paid depends on the nature of the injury and the average
monthly wages and age of employee. The minimum and maximum rates of compensation
payable for death (in such cases it is paid to the dependents of employee) and for disability
have been fixed and is subject to revision from time to time.

The meaning of compensation in this Act is limited to compensation granted under the Act
for employment injuries sustained during the course of work. It is also limited to specifically
monetary compensation other than a salary, travel allowance, and any other form of
remuneration that could be paid under normal circumstances of employment.

To get an overall understanding of the Act it is useful to look at the Statement of Objects and
Reasons published with the Act when it was first passed in 1923. To quote: the growing
complexity of industry in this country with the increasing use of the machinery and
consequent danger to employee, along with the comparative poverty to employee themselves
renders it advisable that they should be protected, as far as possible from hardship arising out
of accidents.

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An additional advantage of a legislation of this type is that by increasing the importance for
employers of adequate safety devises, it reduces the number of accidents to employees in a
manner that cannot be achieved by official inspection. Further, the encouragement given to
employers to provide adequate medical treatment for their employees should mitigate the
effects of such accidents as does occur. The benefits so conferred added to the increased
sense of security, which he will enjoy, should render industrial life more attractive and thus
increase the available supply of labour. At the same time a corresponding increase in the
efficiency of the average employees may be expected.

While these were the official objects and reason, Indian reality today, is that the protection
offered by the Act does not act as an incentive for employees, most of whom are unaware of
it and who simply join work to earn a livelihood.

At the time the framing of the bill two criteria were followed in determining whom the Act
would apply to:

1. Those industries which were more or less organized

2. Employee whose occupations were hazardous.

Nowadays the government (State of Central) may extend the application of this Act to other
establishments of an industry that may not be organised.

It is obligatory for the employers to pay compensation to their employees for injury caused to
a employee by accident, arising out of and in the course of employment, resulting in death or
in total/partial disablement under the Workmens Compensation Act. Compensation is also
payable for some occupational diseases contracted by employees during the course of their
employment.

In the year 2010 the Act had been amended to make it gender neutral and will now be called
the Employees Compensation Act, 1923.

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 OBJECTIVE AND KEY FEATURES OF ECA, 1923

OBJECTIVE:-

 Provide employees and/or their dependents some relief or to consider compensation

payable by an employer to his employee in case of accidents arising out of and in the
course of employment and causing either death or disablement of employee as a
measure of relief and social security.
 Provide for payment by certain classes of employers to their employees compensation
for injury by accident.
 To enable an employee to get compensation irrespective of his negligence.
 It lays down the various amounts payable in case of an accident, depending upon the
type and extent of injury. The employer now knows the amount of compensation he
has to pay and is saved of many uncertainties to which he was subject before the Act
came into force.

FEATURES:-

 Act provides for cheaper and quicker mode of disposal of disputes through special
proceedings than possible under Civil Laws.
 Act provides compensation to employees for injury caused by accident and
occupational disease arising out of and in the course of employment.
 The Act is applicable to apprentices also.
 Procedure for settlement of claim is through Commissioners.

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 APPLICABILITY

The Act extends to the whole of India and applies to certain categories of railway servants
and employees employed in any capacity specified in Schedule II of the Act which includes
Factories, Mines, and Plantations, Mechanically Propelled Vehicle, Construction Work and
certain other hazardous occupations.

Every employee including those employed through a contractor who is engaged for the
purposes of employers business and who suffers an injury in any accident rising out of and in
the course of his employment, shall be entitled for compensation under this Act.

The Act does not, however, apply to

(i) Persons whose employment is of a casual nature and who are employed for purposes other
than the employers trade or business;

(ii) Persons serving in Armed Forces and

(iii) Employees covered by the Employees State Insurance Act.

Under Section 3(3)1 of the Act, the State Governments are empowered to extend the scope of
the Act to any class of persons whose occupations are considered hazardous after giving three
months notice in the Official Gazette.

MAIN PROVISION AND SCOPE

The Act extends to the whole of India and applies to employees employed in any capacity
specified in Schedule II of the Act which includes Factories, Mines, Plantations,
Mechanically Propelled Vehicles, Construction Work and certain other hazardous
occupations and specified categories of Railway Servants. There is no wage limit for
coverage of employees under the Act. It does not, however, apply to (i) persons serving in
Armed Forces and (ii) employees covered by the Employees State Insurance Act, 1948.

The State Governments administer the provisions of this Act through the Commissioners
appointed for specified areas. The Commissioners thus appointed are empowered for (i)

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Employees compensation Act 1923

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settlement of disputed claims, (ii) disposal of cases of injuries involving death, and (iii)
revision of periodical payments. They are also empowered to impose penalty on employers
who fail to pay compensation due to the injured employees within one month.

Sub-section (3) of Section 2 of the Act, empowers the State Governments to extend the scope
of the Act to any class of persons whose occupations are considered hazardous after giving
three months notice, to be published in the Official Gazette. Similarly, under Section 3(3) of
the Act, the State Governments are also empowered to add any other disease to the list
mentioned in Parts A and B of Schedule-II, and the Central Government, in case of
employments specified in Part C of Schedule III of the Act. Besides, the State Governments
also make rules for ensuring that the provisions of the Act are complied with.

The amount of compensation payable to an employee depends on the nature of injury caused
by accident, the monthly wages of the employee, and the age of the employee concerned. In
case of death the minimum amount of compensation fixed is Rs.1,20,000 whereas it is
Rs.1,40,000 in case of permanent total disablement. The maximum amount of compensation
payable is Rs.4.56 lakh in the case of death and Rs.5.48 lakh in the case of permanent total
disablement. Under the maximum compensation limit, the monthly wage limit of Rs. 4,000
has been increased to Rs. 8,000. These enhanced rates of compensation have come into force
w.e.f. 31.05.2010.

Compensation is payable under Sub-section (i) of Section 3 of the Act by the employers in
the case of injury, caused by an accident arising out of and in the course of employment,
exceeding 3 days. In cases where the disablement prolongs for 28 days or more,
compensation is payable from the date of disablement. No compensation is, however, payable
if the injury, not resulting in death, is caused by the fault of the employee, arising from
factors such as influence of alcoholic drinks and drugs, wilful disobedience of the employee
to an order or rule, wilful removal or disregard by the employee of any safety guard or other
device, etc. Besides, under Sub-section (2) of Section 3 of the Act, compensation is also
payable to such employees who contract occupational diseases in the course of their
employment as specified in Schedule-III of the Act.

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 IMPORTANT DEFINITION

1) Commissioner [Section 2 (1) (b)]2: Commissioner means a Commissioner for Employees

Compensation appointed under Section 20.

2) Compensation [Section 2(1) (c)]: Compensation means compensation as provided for by

this Act.

3) Dependent [Section 2(1) (d)]: Dependent means any of the following relatives of a
deceased employee, namely:

A widow, a minor, legitimate or adopted son, an unmarried legitimate or adopted daughter or

a widowed mother; and

If wholly dependent on the earnings of the employee at the time of his death a son or a
daughter who has attained the age of 18 years and who is infirm;

If wholly or in part dependant on the earnings of the employee at the time of his death:

A widower,

A parent other than a widowed mother,

A minor, illegitimate son, an unmarried illegitimate daughter, or a daughter legitimate or

illegitimate or adopted if married and a minor or if widowed and minor,

A minor brother or an unmarried sister or a widowed sister if a minor,

A widowed daughter-in-law,

A minor child of a pre-deceased son,

A minor child of a pre-deceased daughter where no parent of the child is alive, or

A paternal grandparent if no parent of the employee is alive.

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Bare act Employees compensation act 1923

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4) Employer [Section 2(1) (e)]: Employer includes any body or persons whether
incorporated or not and any managing agent of an employer and the legal representative of a
deceased employer and when the services of an employee are temporarily lent or let on hire
to another person by the person with whom the employee has entered into a contract of
service or apprenticeship means such other person while the employee is working for him;

5) Managing Agent [Section 2(1) (f)]: Managing agent means any person appointed or
acting as the representative of another person for the purpose of carrying on such other
persons trade or business but does not include an individual manager subordinate to an
employer;

6) Minor [Section 2(1) (ff)]: Minor means a person who has not attained the age of 18 years;

7) Disablement3: Disablement means loss of capacity to work or to move. Disablement of a

employee may result in loss or reduction of his earning capacity. In the latter case, he is not
able to earn as much as he used to earn before his disablement. Disablement may be partial,
or total. Further Partial disablement may be permanent, or temporary.

Partial Disablement [Section 2 (1) (g)]: This means any disablement as reduces the earning
capacity of a employee as a result of some accident. Partial disablement may be temporary or
permanent.

Temporary partial disablement means any disablement as reduces the earning capacity of a
employee in any employment in which he was engaged at the time of accident which resulted
in such disablement.

Permanent partial disablement is one which reduces the earning capacity of a employee in
every employment which he was capable of undertaking at the time of injury.

Total Disablement [Section 2 (1) (L)]: It means such disablement, whether of a temporary or
permanent nature, as incapacitates an employee for all work which he was capable of
performing at the time of the accident resulting in such disablement. It refers to that condition
where a employee becomes unfit for every type of work and is not able to get job anywhere
due to that disablement. Total disablement is deemed to result from every injury specified in
Part I of Schedule I or from any combination of injuries specified in Part II thereof where the
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Compliances under labour law by HL kumar

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aggregate percentage of the loss of earning capacity, as specified in Part II against those
injuries, amounts to 100 per cent or more. Where an employee becomes unfit for a particular
class of job but is fit for another class which is offered to him by the employer, the employee
is entitled to claim compensation only on the basis of partial disablement and not total
disablement.

8) Qualified Medical Practitioner [Section (2) (i)]4: Qualified medical practitioner means
any person registered under any Central Act, Provincial Act or an Act of the Legislature of a
State providing for the maintenance of a register of medical practitioners or in any area where
no such last-mentioned Act is in force, any person declared by the State Government by
notification in the Official Gazette to be a qualified medical practitioner for the purpose of
this Act;

9) Wages [Section 2(1) (m)]5: Wages includes any privilege or benefit which is capable of
being estimated in money other than a travelling allowance or the value of any travelling
concession or a contribution paid by the employer of a employee towards any pension or
provident fund or a sum paid to an employee to cover any special expenses entailed on him
by the nature of his employment.

10) Employee [Section 2(1) (n)]6: Employee means any person who is -

a railway servant not permanently employed in any administrative, district or sub-divisional

office of a railway and or not employed in any such capacity as specified in Schedule II, or

(i) a master, seamen or other member of the crew or a ship,

(ii) a captain or other member of the crew of an aircraft,

(iii) a person recruited as driver, helper, mechanic, cleaner or in any other capacity in
connection with a motor vehicle.

(iv) a person recruited for work abroad by a company,

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Employees compensation act 1923
5
Supra note 3
6
Supra note 3

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and who is employed outside India in any such capacity as is specified in Schedule II and the
ship, aircraft or motor vehicle, or company, as the case may be, is registered in India; or

Employed in any such capacity as is specified in Schedule II whether the contract of

employment was made before or after the passing of this Act and whether such contract is
expressed or implied, oral or in writing; but does not include any person working in the
capacity of the member of the Armed forces of the Union; and any reference to any employee
who has been injured shall, where the employee is dead, include a reference to his dependants
or any of them;

AMMENDMENT MADE IN ECA, 1923

LATEST AMENDMENT (EFFECTIVE FROM 18.01.2010)

 Change of name of the Act. WORKMEN COMPENSATION ACT, 1923 now

changed as EMPLOYEES COMPENSATION ACT, 1923
 The words workman or workmen in the Act have been substituted by the words
employee or employees wherever they occur.
 The Explanation II to clauses (a) & (b) of Sec.4 was omitted and a new sub-section
(IB) has been added after Sub-section IA of sec. 4 whereby the maximum wage limit
has been revised to Rs. 8000/-p.m.
 Clerks were not covered for compensation under the Act However post amendment
position Clerks are now covered for compensation. (Schedule II)
 Enhancement in minimum compensation payable from Rs.80,000 to Rs.1,20,000 (in
case of death) and from Rs.90,000 to Rs.1,40,000 (in case of permanent disability)
and funeral expenses from Rs.2,500 to Rs.5,000.
 Reimbursement of actual medical expenses incurred during treatment of injury caused
during course of employment. [sub-Sec.2A of Sec. 4]
 Increase in coverage by omission of restrictive clause in Schedule-II and inclusion of
additional hazardous activities
 A new section has been added Section 25A which fixes 3 months time limit for
disposal of claims from the date of reference.
 Empower Central Govt. to specify monthly wages for the purpose of compensation
and enhance minimum rates of compensation from time to time.

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 COMPENSATION AND DISABLEMENT

The definition of disablement is very important in this Act, as it determines the extent of
compensation that can be claimed by the employee injured in the course of his employment.
Under the Act, there are four types of eventualities, which can be compensated, namely7:

 Death
 Permanent Total Disablement: disablement that incapacitates a employee from all
kinds of work.
 Permanent partial disablement: disablement that reduces the capacity to work in any
employment similar to that the employee was performing at the time of the accident.
 Temporary disablement: This may be total or partial disablement, which is of
temporary nature, which reduces the earning capacity of the employee in any similar
employment for the period of disablement

Compensation [Sec. 2 (1) (c)]8: means compensation as provided for by this Act

Disablement: Disablement means loss of capacity to work or to move. Disablement of a

employee may result in loss or reduction of his earning capacity. In the latter case, he is not
able to earn as much as he used to earn before his disablement. Disablement may be partial,
or total. Further Partial disablement may be permanent, or temporary.

 Partial Disablement [Section 2 (1) (g)]: This means any disablement as reduces the
earning capacity of a employee as a result of some accident. Partial disablement may
be temporary or permanent.
 Temporary partial disablement means any disablement as reduces the earning capacity
of a employee in any employment in which he was engaged at the time of accident
which resulted in such disablement.
 Permanent partial disablement is one which reduces the earning capacity of a
employee in every employment which he was capable of undertaking at the time of
injury.
 Total Disablement [Section 2 (1) (L)]: It means such disablement, whether of a
temporary or permanent nature, as incapacitates an employee for all work which he

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Compliances under labour law by HL kumar
8
Employees compensation act 1923

14
 was capable of performing at the time of the accident resulting in such disablement. It
refers to that condition where a employee becomes unfit for every type of work and is
not able to get job anywhere due to that disablement. Total disablement is deemed to
result from every injury specified in Part I of Schedule I or from any combination of
injuries specified in Part II thereof where the aggregate percentage of the loss of
earning capacity, as specified in Part II against those injuries, amounts to 100 per cent
or more. Where an employee becomes unfit for a particular class of job but is fit for
another class which is offered to him by the employer, the employee is entitled to
claim compensation only on the basis of partial disablement and not total disablement.

EMPLOYERS LIABILITY TO PAY COMPENSATION

In case a personal injury is caused to a employee by accident arising out of and in the course
of his employment, his employer is liable to pay compensation in accordance with the
provision of the Act within 30 days from the date when it fell due otherwise he would also be
liable to pay interest and penalty.

As per Section 3 (1) of the Act, the employer is liable to pay compensation if the employee is
injured by accident -

that arises out of (i.e. while engaged in work), and;

in the course of his employment (i.e. during work hours),and;

Such an injury results in temporary or permanent disablement of the employee.

If these three conditions are met, the employer of an establishment covered by the Act shall
be liable to pay compensation in accordance with the provisions of this Act. An accident
alone does not give an employee a right to compensation. To entitle him to compensation at
the hands of the employers the accident must arise out of and in the course of his
employment. The language in Section 3 shows that injury is caused by accident and not by an
accident. So the injury should be caused by accident by some mishap, unexpected or
unforeseen.

Personal Injury:

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Not defined but not confined to physical injury but it may include a mental strain or mental
imbalance. Includes sun stroke, nervous collapse ,traumatic neuorisis, hysterical paralysis and
neurasthenia.

In Indian News Chronicle Ltd vs Luis Lazarus an electrician had to frequently go to a heating
room and thereafter a cooling room fell ill and contracted pneumonia and died. Injury may
include a strain.

There must be a causal link between the employment and the injury.

Accident: Means some unexpected event happening without design i.e. an unlooked or
mishap or untoward event.

It includes not only such occurrences such as collision, tripping, falls of roofs but also less
obvious ones causing injury e.g. strain which causes rupture , exposure to a draught causing
chill, shock causing neurasthenia.

Out of and In The Course of Employment:

Out of employment i.e.due to

In the course i.e. during To and fro to employment considered as notional extension of
employment and so far mostly compensation has been given by courts because it is perceived
as socially beneficial.

According to Section 3 (2) the employers liability for occupational disease arises under three
circumstances:

If an employee, employed in any employment specified in Part A of Schedule III contracts

any occupational disease peculiar to that employment, or

If an employee, who has been employed for a continuous period of not less than six months
in any employment specified in Part B of Schedule III contracts any occupational disease
peculiar to that employment, or

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If an employee, whilst in the service of one or more employers, in respect of any employment
specified in Part C of Schedule III contracts any occupational disease peculiar to that
employment

-the contracting of the disease shall be deemed to be an injury by accident within the meaning
of this section and, the contrary is proved, the accident shall be deemed to have arisen out of,
and in the course of, the employment.

WHEN EMPLOYERS LIABILITY DOES NOT ARISE

In case the disablement of employee is three or less days; except in case of death when the
injury is caused due to influence of drink or drug taken by the employee or upon his wilful
disobedience to obey safety rules or removal of safety guards by him.

As per Section 3 (1) (a) any injury which does not result in the total or partial disablement of
the employee for a period exceeding 3 days subsequent to the accident.

Section 3 (1) (b) any injury not resulting in death or permanent total disablement caused by
an accident which is directly attributable to -

the employee having been at the time thereof under the influence of drinks or drugs, or

Wilful disobedience of the employee to an order expressly given, or to a rule expressly

framed, for the purpose of securing the safety of the employees, or

Wilful removal or disregard by the employee of any safety guard or other device which he
knew to have been provided for the purpose of securing the safety of the employees.

Section 3 (4) states that save as provide by Section 3 sub-sections (2), (2A) and (3), no
compensation shall be payable to an employee in respect of any disease unless the disease is
directly attributable to a specific injury by accident arising out of and in the course of his
employment.

Section 3 (5) nothing herein contained shall be deemed to confer any right to compensation
on an employee in respect of any injury if he has instituted in a Civil Court a suit for damages
in respect of the injury against the employer or any other person; and no suit for damages
shall be maintainable by an employee in any Court of law in respect of any injury

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If he has instituted a claim to compensation in respect of the injury before a Commissioner;
orIf an agreement has been come to between the employee and his employer providing for
the payment of compensation in respect of the injury in accordance with the provisions of this
Act.

DECIDING COMPENSATION

AMOUNT OF COMPENSATION

The amount of compensation payable to an employee depends on:

1) The nature of the injury caused by accident.

2) The monthly wages of the employee concerned, and

3) The relevant factor for working out lump-sum equivalent of compensation amount as
specified in Schedule IV.

There is no distinction between an adult and a minor employee with respect to the amount of
compensation.

Section 4 provides for the circumstances under which compensation is to be paid by the
employer for injuries caused to the employee. This has been categorised as follows:

Compensation is payable in case of:

1. Death;
2. Disablement -

a. Permanent total disablement;

b. Permanent partial Disablement;
c. Temporary disablement -

I. Temporary total disablement;

II. Temporary partial disablement.

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In addition, the guiding principle is the higher the age of the injured employee, the lower the
compensation [as per Schedule IV]

WHAT IS THE BASIS OF CALCULATING THE AMOUNT OF

COMPENSATION

Wages are the basis for amount of compensation paid. Two employees earning different
salaries therefore will get different amounts of compensation even though the injury they
suffered might be identical. Compensation under this Act is calculated on the basis of the
monthly wage received by the employee. According to this Act, it is the amount of wages
which would be payable for a months service - i.e. irrespective of whether the employee is
paid on a daily, weekly or piece rate basis.

Where an employee received a monthly wage less than what is prescribed under the
Minimum Wages Act, 1948, s/he would be deemed to be drawing the monthly wages as
prescribed by the Act for the purposes of calculating compensation.

Wages [Section 2 (1) (m)]: Wages includes any privilege or benefit which is capable of being
estimated in money other than a travelling allowance or the value of any travelling
concession or a contribution paid by the employer of a employee towards any pension or
provident fund or a sum paid to an employee to cover any 9special expenses entailed on him
by the nature of his employment.

.COMPENSATION FOR DEATH

Section 4 (1) (a): Where death results, from an injury the compensation is payable to the
employees dependants.

Dependent [Section 2(1) (d)]: Dependent means any of the following relatives of a deceased
employee, namely:

1. A widow, a minor, legitimate or adopted son, an unmarried legitimate or adopted

daughter or a widowed mother

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Bareact of employees compensation act 1923

19
 2. If wholly dependent on the earnings of the employee at the time of his death a son or a
daughter who has attained the age of 18 years and who is infirm;
3. If wholly or in part dependant on the earnings of the employee at the time of his
death:-

 A widower,
 A parent other than a widowed mother,
 A minor, illegitimate son, an unmarried illegitimate daughter, or a daughter
legitimate or illegitimate or adopted if married and a minor or if widowed and
minor,
 A minor brother or an unmarried sister or a widowed sister if a minor,
 A widowed daughter-in-law,
 A minor child of a pre-deceased son,
 A minor child of a pre-deceased daughter where no parent of the child is alive,
or
 A paternal grandparent if no parent of the employee is alive.

The compensation due to the dependants is an amount equal to fifty percent of the monthly
salary of the deceased employee multiplied by the relevant factor or an amount of one lakh
and twenty thousand rupees, whichever is more. The minimum compensation in the case of
death in no circumstances can be less than Rs. 1,20,000/-. Although the Central Government
may, by notification in the Official Gazette 10 , from time to time, enhance the amount of
compensation.

The relevant factor is mentioned in the schedule IV of the Act. The factor depends on the age
of the person deceased, i.e., the number of years the person could have worked for, if he did
not die on the job.

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Inserted by the Workmens Compensation (Amendment) Act, 2009, w.e.f. 18-1-2010

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 COMPENSATION FOR PERMANENT TOTAL DISABLEMENT

Section 4 (1) (b): Where there is total permanent disablement resulting from the injury
suffered, the employee is entitled to be paid an amount equal to sixty percent of his monthly
salary, multiplied by the relevant factor, or an amount of one lakh and forty thousand rupees,
whichever is more.

The minimum compensation in the case of total permanent disablement, in no circumstances

can be less than Rs. 1, 40,000/-. Although the Central Government may, by notification in the
Official Gazette11, from time to time, enhance the amount of compensation.

The formula for calculating the amount of compensation in case of permanent total
disablement resulting from an injury will be as follows:

60% of monthly wages x Relevant factor or Rs. 1,40,000 whichever is more

Example: Ravi, an employee aged 35 meets with an accident and suffers permanent total
disablement while at work (i.e. in the course of employment) At the time he drew a monthly
wage of Rs.2,500/- The amount of compensation payable will be arrived at as follows:

60% of Rs. 2,500 = 1,500

1,500 x relevant factor (i.e. 197.06) = 2,95,590.00/- (total compensation payable)

Note - Where the monthly wages of an employee exceeds Rs. 4000, his monthly wages for
the purpose of Section 4 (b) shall be deemed to be four thousand rupees only.

COMPENSATION FOR PERMANENT PARTIAL DISABLEMENT

Section 4 (1) (c): Where permanent partial disablement results from the injury -

In the case of an injury specified in Part II of Schedule I, such percentage of the

compensation which would have been payable in the case of permanent total disablement as
is specified therein as being the percentage of the loss of earning capacity caused by the
injury.

11
Supra note 10

21
Explanation: In other words, the percentage of compensation payable is proportionate to the
loss of earning capacity permanently caused by the scheduled injury. Thus, if the loss of
earning capacity caused by an injury specified in Part II of Schedule I is 30 percent, the
amount of compensation shall be 30 percent of compensation payable in case of permanent
total disablement.

COMPENSATION FOR TEMPORARY DISABLEMENT (WHETHER

TOTAL OR PARTIAL)

Section 4 (1) (d): In case of temporary disablement, a monthly payment of the sum equivalent
to twenty-five per cent (25%) of the monthly wages of the employee, to be paid in
accordance with the provisions of Section 4 (2) to Section 4(4).

Section 4 (2): The half monthly payment shall be payable on sixteenth day

from the date of disablement where such disablement lasts for a period of 28 days or more, or

after the expiry of a waiting period of three days from the date of disablement where such
disablement lasts for a period of less than twenty-eight days; and thereafter half-monthly
during the disablement or during a period of five years, whichever period is shorter

Provided that--

(a) There shall be deducted from any lump sum or half-monthly payments to which the
employee is entitled the amount of any payment or allowance which the employee has
received from the employer by way of compensation during the period of disablement prior
to the receipt of such lump sum or of the first half-monthly payment, as the case may be; and

(b) No half-monthly payment shall in any case exceed the amount, if any, by which half the
amount of the monthly wages of the employee before the accident exceeds half the amount of
such wages which he is earning after the accident.

Section 4 (2A): The employee shall be reimbursed the actual medical expenditure incurred by
him for treatment of injuries caused during course of employment.

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Section 4 (3): On the ceasing of the disablement before the date on which any half-monthly
payment falls due, there shall be payable in respect of that half-month a sum proportionate to
the duration of the disablement in that half-month.

Section 4 (4): If the injury of the employee results in his death, the employer shall, in addition
to the compensation under sub-section 1 , deposit with the commissioner a sum of not less
than 5 thousand rupees for payment of the same to the eldest surviving dependant of the
employee towards the expenditure of the funeral of such employee or where the employee did
not have a dependant or was not living with his dependant at the time of his death to the
person who actually incurred such expenditure. The Central Government may by notification
in the official Gazette, from time to time, enhance the amount specified in this sub-section.

COMPENSATION TO BE PAID WHEN DUE AND PENALTY FOR

DEFAULT

Section 4A (1): Mandates employer to pay compensation amount as soon as it falls due to
victim or his or her legal heirs.

Section 4A (2): In cases where the employer does not accept the liability for compensation to
the extent claimed, he shall be bound to make provisional payment based on the extent of
liability which he accepts, and such payment shall be deposited with the Commissioner or
made to the employee, as the case may be, without prejudice to the right of employee to make
any further claim.

Section 4A (3): Where any employer is in default in paying the compensation due under this
Act within one month from the date it fell due, the Commissioner shall

–direct that the employer shall, in addition to the amount of the arrears, pay simple interest
thereon at the rate of twelve per cent per annum or at such higher rate not exceeding the
maximum of the lending rates of any scheduled bank as may be specified by the Central
Government, by notification in the Official Gazette, on the amount due; and

if, in his opinion, there is no justification for the delay, direct that the employer shall, in
addition to the amount of the arrears and interest thereon, pay a further sum not exceeding
fifty per cent of such amount by way of penalty: Provided that an order for the payment of

23
penalty shall not be passed under clause (b) without giving a reasonable opportunity to the
employer to show cause why it should not be passed.

Section 4A (3A): The interest and the penalty payable under sub-section (3) shall be paid to
the employee or his dependant, as the case may be.

PROCEDURE TO BE FOLLOWED FOR RECEIVING

COMPENSATION

NOTICE OF ACCIDENT TO THE EMPLOYER

In the case of an accident or an accident leading to death, a notice must be sent to the
employer or any other person who is employed to supervise work in the same establishment
as soon as is practicable after the occurrence of the accident.

The notice from the aggrieved party can be served to the employers either by sending the
notice by registered post to the residence or the office of the employer, or by entering such
notice into the notice book, maintained at the premises of the office.

The state government may require that a certain class of establishments must maintain a
notice book which must be accessible to all the employees at all times.

The notice must contain:

 The name and address of the person who died or was injured, and
 In normal language must state the cause of the injury, and
 The date on which it occurred.

If there is any law in force requiring the employer to give notice regarding the death or
serious bodily injury of an employee, the employer shall do so, by giving the notice to the
labour commissioner12 within seven days of such event, describing the circumstances of the
injury or death. This law is in force in Karnataka. All references to Commissioner in this
booklet refers to the Labour Officer who handles Employees Compensation cases.

12
Under this Act, the commissioner is a public servant as per the Indian Penal Code, and is appointed by the
state government by notification in the official gazette. In practice, Labour officers are appointed under the
Industrial Disputes

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 NOTICE AND CLAIM FOR COMPENSATION

(Section 10)

1. No claim for compensation shall be entertained by a Commissioner unless notice of the

accident has been given in the manner hereinafter provided as soon as practicable after the
happening thereof and unless the claim is preferred before him within two years of the
occurrence of the accident or, in case of death, within two years from the date of death

Provided that -:

a) Where the accident is the contracting of a disease in respect of which the provisions
of sub-section (2) of section 3 are applicable, the accident shall be deemed to have
occurred on the first of the days during which the employee was continuously absent
from work in consequence of the disablement caused by the disease
b) In case of partial disablement due to the contracting of any such disease and which
does not force the employee to absent himself from work, the period of two years
shall be counted from the day the employee gives notice of the disablement to his
employer:
c) If a employee who, having been employed in an employment for a continuous period,
specified under sub-section (2) of section 3 in respect of that employment, ceases to
be so employed and develops symptoms of an occupational disease peculiar to that
employment within two years of the cessation of employment, the accident shall be
deemed to have occurred on the day on which the symptoms were first detected.
d) The want of or any defect or irregularity in a notice shall not be a bar to the
entertainment of a claim-:

 If the claim is referred in respect of the death of a employee resulting from an

accident which occurred on the premises of the employer, or at any place where the
employee at the time of the accident was working under the control of the employer
or of any person employed by him, and the employee died on such premises or at such
place, or on any premises belonging to the employer, or died without having left the
vicinity of the premises or place where the accident occurred, or
 If the employer or any one of several employers or any person responsible to the
employer for the management of any branch of the trade or business in which the

25
 injured employee was employed] had knowledge of the accident from any other
source at or about the time when it occurred:

e) The Commissioner may entertain and decide any claim to compensation in any case
notwithstanding that the notice has not been given, or the claim has not been preferred in due
time as provided in this sub-section, if he is satisfied that the failure so to give the notice or
prefer the claim, as the case may be, was due to sufficient cause.

2. Every such notice shall give the name and address of the person injured and shall state in
ordinary language the cause of the injury and the date on which the accident happened, and
shall be served on the employer or upon any one of several employers, or upon any person
responsible to the employer for the management of any branch of the trade or business in
which the injured employee was employed.

3. The State Government may require that any prescribed class of employers shall maintain at
their premises at which employee are employed a notice-book, in the prescribed form, which
shall be readily accessible at all reasonable times to any injured employee employed on the
premises and to any person acting bond fide on his behalf.

4. A notice under this section may be served by delivering it at, or sending it by registered
post addressed to, the residence or any office or place of business of the person on whom it is
to be served, or, where a notice-book is maintained, by entry in the notice book.

DISTRIBUTION OF COMPENSATION

(Section 8)

No payment of compensation in respect of an employee whose injury has resulted in death,

and no payment of a lump sum as compensation to a woman or a person under a legal
disability, shall be made otherwise than by deposit with the Commissioner, and no such
payment made directly by an employer shall be deemed to be a payment of compensation:

Provided that, in the case of a deceased employee, an employer may make to any dependant
advances on account of compensation of an amount equal to three months wages of such
employee and so much of such amount as does not exceed the compensation payable to that

26
dependant shall be deducted by the Commissioner from such compensation and repaid to the
employer.

Any other sum amounting to not less than ten rupees which is payable as compensation may
be deposited with the Commissioner on behalf of the person entitled thereto.

The receipt of the Commissioner shall be a sufficient discharge in respect of any

compensation deposited with him.

On the deposit of any money under sub-section (1), as compensation in respect of a deceased
employee the Commissioner shall, if he thinks necessary, cause notice to be published or to
be served on each dependant in such manner as he thinks fit, calling upon the dependants to
appear before him on such date as he may fix for determining the distribution of the
compensation. If the Commissioner is satisfied after any inquiry which he may deem
necessary, that no dependant exists, he shall repay the balance of the money to the employer
by whom it was paid. The Commissioner shall, on application by the employer, furnish a
statement showing in detail all disbursements made.

Compensation deposited in respect of a deceased employee shall, subject to any deduction

made under sub-section (4), be apportioned among the dependants of the deceased employee
or any of them in such proportion as the Commissioner thinks fit, or may, in the discretion of
the Commissioner, be allotted to any one dependant.

Where any compensation deposited with the Commissioner is payable to any person, the
Commissioner shall, if the person to whom the compensation is payable is not a woman or a
person under a legal disability, and may, in other cases, pay the money to the person entitled
thereto.

Where any lump sum deposited with the Commissioner is payable to a woman or a person
under a legal disability, such sum may be invested, applied or otherwise dealt with for the
benefit of the woman, or of such person during his disability, in such manner as the
Commissioner may direct; and where a half-monthly payment is payable to any person under
a legal disability, the Commissioner may, of his own motion or on an application made to
him in this behalf, order that the payment be made during the disability to any dependant of

27
the employee or to any other person, whom the Commissioner thinks best fitted to provide for
the welfare of the employee.

Where, on application made to him in this behalf or otherwise, the Commissioner is satisfied
that, on account of neglect of children on the part of a parent or on account of the variation of
the circumstances of any dependant or for any other sufficient cause, an order of the
Commissioner as to the distribution of any sum paid as compensation or as to the manner in
which any sum payable to any such dependant is to be invested, applied or otherwise dealt
with, ought to be varied, the Commissioner may make such orders for the variation of the
former order as he thinks just in the circumstances of the case:

Provided that no such order prejudicial to any person shall be made unless such person has
been given an opportunity of showing cause why the order should not be made, or shall be
made in any case in which it would involve the repayment by a dependant of any sum already
paid to him.

Where the Commissioner varies any order under sub-section (8) by reason of the fact that
payment of compensation to any person has been obtained by fraud, impersonation or other
improper means, any amount so paid to or on behalf of such person may be recovered in the
manner hereinafter provided in section 31.

LEGAL REMEDIES

In cases where the employer does not pay compensation after notice has been issued and after
the lapse of 30 days from the date of the accident, or where the employee and employer fail
to arrive at an agreement, an application can be made to the labour officer by the employee.
The proceedings before the Labour officer are quasi-judicial in nature.

In case of employees injuries, the government has the responsibility of disposing employees
claims, in a speedy way. No technical procedure is followed in employees compensation
cases. However, as the employer has to be heard, and the matter may need to be investigated,
there is some minimum procedure followed. As it will take away from the governments time,
a Labour Commissioner is appointed to discharge this responsibility. To enable him/her, the

28
rules provide that few provisions of the Civil Procedure Code may be used to empower the
Commissioner to dispose of the cases13

WHO CAN MAKE THE CLAIM

Section 10(1): The injured employee or someone on his behalf can file a claim before the
commissioner for employees compensation. In reality mostly a lawyer files the claim.

Note: While a matter is pending for settlement before the commissioner, the employers
liability to pay compensation is not suspended. It is the duty of the employer to pay the
compensation at the rate prescribed under this Act as soon as injury is caused to the
employee.

WHO SHOULD THE CLAIM BE MADE TO

Section 19: In the event that the employer does not pay compensation for accidents sustained
by his employees while at work, a claim can be made to the labour commissioner, of the area
where the accident took place. In case of a fatal accident the claim can be made where the
claimant ordinarily resides, or where the employer has his registered office.

TIME PERIOD WITHIN WHICH THE CLAIM SHOULD BE MADE

Section 10: All such claims have to be made within two years of the occurrence of the
accident, or death of the employee. The commissioner can refuse to hear the matter if no
notice was issued to the employer on the occurrence of the accident and no claim made to the
commissioner within two years. If there is a delay in making such a claim it is possible for
the delay to be excused by the commissioner, but the employee should give sufficient reason.
As the Act is a Beneficial Act, delays and technical short comings are not given importance
unlike criminal and civil cases.

What is Sufficient Reason?

13
These provisions are: to take evidence on oath; enforce attendance of witnesses; and compel production of
documents and other required objects may be used by the Commissioner to dispose of his/her cases.

29
Example # 1: As a result of an accident arising out of work, a employee sustained multiple
fractures on both his legs and had to be operated upon twice. He remained under treatment
for three and-a-half years. The court held that there was sufficient cause to condone the delay.

Example # 2: In a Madras High Court case14 it was held that ... the cause for the delay i.e.,
illiteracy, minority of children, nature of employment in its totality is sufficient reason to
condone the delay. In this case the widow of the deceased employee filed the application after
a delay of 8 years.

In case the accident is the contraction of an occupational disease, the first few days of the
employee being continuously absent due to the disease, shall be considered as the day of
occurrence of the accident. In case, the disease does not force the employee to take leave,
then the period of limitation shall be from the date that the employee gives notice to his
employer of his condition.

14
Laxmi and others vs. Deputy commissioner of Labour of Madras and Another 1998 I LLJ158(Mad) (DB)

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 CONCLUSION

The Act is basically made for the employees so that when they incur expenses for the injury
suffered during an accident, they can get compensation from the employers. The basic rule of
Vicarious liability applies in the act. The Act has it that employers should have duties and
obligations that include the welfare of workers after an injury resulting from employment in
the same way they have reserved the right to make profits. The Act aims to see workmen
have a sustainable life after an employment-related accident. The employer is the master and
the employee is the servant. The employee gets compensation only when the injury takes
place in the course of employment and in the workplace. In a democratic government like
India this is a long process which requires clearance from the Cabinet. The most important
pointer the government should take by this disaster is toavoid such hazardous enterprises to
enter into India and if it cannot, it should take every precaution to avoid such catastrophic
disaster! Life cannot be valued. Similarly no human being can put any monetary value of his
limb or of any other human being. How does one assess the value of the loss of all faculties
when some victim of an accident loses his mental faculties and lives in vegetative state. The
courts can only grant compensation for the pecuniary and monetary loss caused and some
other expenses, but no court can even attempt to grant compensation for loss of life or limb.
Mainly pecuniary loss has to be assessed. Nominal damages for funeral expenses, loss of
consortium and conventional damages. Long expectation of life is connected with earning
capacity. In its very nature whenever a Tribunal or a Court is required to fix the amount of
compensation in cases of accident, it involves some guess work, some hypothetical
consideration, some amount of sympathy linked with the nature of the disability caused.

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 BIBLIOGRAPHY

 H.L. KUMAR , labour and industrial law

 Indiankanoon.org
 Labour.govt.in
 http://www.legalserviceindia.com
 Bare act

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