EMPLOYEES COMPENSATION ACT,

1923
AN OVERVIEW
(PROJECT REPORT)

SUBMITTED IN PARTIAL FULFILLMENT OF

THE REQUIREMENT AWARD OF THE
DEGREE OF MASTERS OF LAWS
IN
CORPORATE LAW AND GOVERNANCE

UNDER THE GUIDANCE OF

PROFESSOR DR. G. MALLIKARJUN

BY
PARUL PRASAD
1ST YEAR, LL.M.
ROLL NUMBER - 2012-28

DATE OF SUBMISSION
02.04.2013

AT

NALSAR UNIVERSITY OF LAW

 HYDERABAD

PREFACE

I am extremely grateful to my professor, Dr. G. Mallikarjun for his support for the
project, from initial guidance in the early stages of conceptual inception, and through
ongoing advice and encouragement to this day. He has been instrumental in
conceptualization of this study.

I would also like to extend my heartfelt regards and gratitude to the Library Staff.

I am also grateful to my friends for their huge support and encouraging words, during this
project.

PARUL PRASAD
CONTENTS
 1
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.

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

1
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.

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.

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 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.

OBJECT

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.

3
 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) 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 PROVISIONS AND SCOPE

1. 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.

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

3. 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

4
 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.

4. 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.

5. 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.

IMPORTANT DEFINATIONS

1) Commissioner [Section 2 (1) (b)]: 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) A widow, a minor, legitimate or adopted son, an unmarried legitimate or
adopted daughter or a widowed mother; and
b) 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;
c) If wholly or in part dependant on the earnings of the employee at the time
of his death:
i. A widower,
ii. A parent other than a widowed mother,

5
 iii. 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,
iv. A minor brother or an unmarried sister or a widowed sister if a
minor,
v. A widowed daughter-in-law,
vi. A minor child of a pre-deceased son,
vii. A minor child of a pre-deceased daughter where no parent of the
child is alive, or
viii. A paternal grandparent if no parent of the employee is alive.

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) 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.
a. 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.
b. 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

6
 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.

8) Qualified Medical Practitioner [Section (2) (i)]: 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)]: 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)]: Employee means any person who is -
a. 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

b. (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,

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

c. 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;

7
8
 2
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, namely:

1. Death

2. Permanent Total Disablement: disablement that incapacitates a employee from all

kinds of work.

3. 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.

4. 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.

Note: Total disability (i.e. 100% disability) has a different meaning under the Employees
Compensation Act as compared to its meaning in normal language. According to the Act,
disability is determined with reference to the work that the employee was doing
immediately before accident took place and if the resulting injury leaves him incapable of
performing any work of a similar nature then his disability is considered as 100%.

Compensation [Sec. 2 (1) (c)]: 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.

o 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.

9
 o 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
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.

10
Personal Injury:

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

11
 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
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.

Schedule III is divided into three parts, viz., A, B and C. No specific period of
employment is necessary for a claim for compensation with respect to occupational
diseases mentioned in Part A. For diseases specified in Part B the employee must be in
continuous service of the same employer for a period of six months in the employment
specified in that part. For diseases in Part C the period of employment would be such as
is specified by the Central Government for each of such employment whether in the
service of one or more employers. If an employee employed in any employment
mentioned in Part C of the Schedule II contracts any occupational disease peculiar to that
employment, the contracting whereof is deemed to be an injury by accident within the
meaning of Section 3 and such employment was under more than one employer then all
the employers shall be liable for the payment of compensation in such proportion as the
commissioner in the circumstances may deem just.

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

12
 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
a) If he has instituted a claim to compensation in respect of the injury before a
Commissioner; or
b) If 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.

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 3
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.

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.

14
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 special 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:
a) A widow, a minor, legitimate or adopted son, an unmarried legitimate or
adopted daughter or a widowed mother
b) 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;
c) If wholly or in part dependant on the earnings of the employee at the time
of his death:
i. A widower,
ii. A parent other than a widowed mother,
iii. 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,
iv. A minor brother or an unmarried sister or a widowed sister if a
minor,
v. A widowed daughter-in-law,
vi. A minor child of a pre-deceased son,
vii. A minor child of a pre-deceased daughter where no parent of the
child is alive, or
viii. 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, from time to time,
enhance the amount of compensation. [1]

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

15
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.

Example: Shankar, a employee aged 35 meets with an accident and dies while at work
(i.e. in the course of employment). At the time he drew a monthly wage of Rs.2,500. As
per Schedule IV of the Act the relevant factor applicable to his case would be Rs. 197.06.
As such, the amount of compensation payable to his dependants will be arrived at in the
following way:

50% of Rs. 2,500 = 1,250

1,250 x relevant factor (i.e.197.06) = Rs.2,46,325.00/- (total compensation

payable)

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

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 Gazette, 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)

16
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 -

i. 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.

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.

Examples:

Description of injury: % loss of earning capacity

Amputation through Shoulder joint ..................................... 90

Loss of all toes of one foot through a

metatorso-phalangeal joint .................................................. 20

Loss of one eye, without complications,

the other being normal ........................................................ 40

ii. In the case of an injury not specified in Schedule I such percentage of the
compensation payable in the case of permanent total disablement as is
proportionate to the loss of earning capacity (as assessed by the qualified medical
practitioner) permanently caused by the injury.

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).

17
Section 4 (2): The half monthly payment shall be payable on sixteenth day
i. from the date of disablement where such disablement lasts for a period of 28 days
or more, or
ii. 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.

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

18
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 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.

19
 4
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 commissioner [2] 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.

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

2
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

20
Provided that

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

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:

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.

The want of or any defect or irregularity in a notice shall not be a bar to the
entertainment of a claim
a) 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

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

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

21
 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.

COMMISSIONERS POWERS IN CASE OF ACCIDENT RESULTING IN

DEATH
(Section 10-A)

Anyone can report to the Labour Commissioner in case of an employee being killed in an
accident.

In case, the commissioner is aware of a fatal accident, he has the power to send a notice
to the employer (i.e. without receiving any application), requiring him to submit a
statement within a months time.

Within thirty days of such notice being served, the employer should reply as to the
circumstances of such death, and whether, in his opinion, he is to deposit compensation
to the commissioner.

If the employer feels that he is responsible to do so, then he must deposit the
compensation with the commissioner within thirty days after the notice is served. If he
feels in the contrary, he must inform the commissioner of the grounds under which he
claims such exemption.

On claiming such exemption, the commissioner may inform the dependants of the
deceased employee, leaving it open to them, whether they would want to claim
compensation or not.

PENALTIES
(ON EMPLOYER FOR NOT DISCHARGING DUTIES UNDER THE ACT)

If an employer fails to

22
 send the commissioner a statement; or report as required in case of fatal accidents
fails to do so, or

maintain a notice book.

S/he shall be liable to pay a fine, which may extend to five thousand rupees. Such a
proceeding cannot be made without the previous permission of the commissioner, and the
court shall not take cognizance of any offence, if such matter is not brought before the
court at least within six months from the time that the commissioner becomes aware of
such offence.

MEDICAL EXAMINATION
(Section 11)

In cases of injury not amounting to death, on serving notice of accident to the

employer, the employer may require the employee to undergo a medical
examination free of charge. The injured employee should submit himself to such
medical examination.

The time of the examination shall not be between 7 p.m. and 6 a.m. unless the
employee specifically agrees.

If the employees condition is so bad that it is either impossible or in advisable for

him to leave his residence then the employer cannot force him to get examined at
any other place other than his residence.

A women employee has a right to ask for the presence of another women if a male
doctor is examining her. (Rule 19)

If the employee does not agree to submit himself for a medical examination, by a
qualified medical practitioner, then he shall lose his right to claim compensation
from his employer, and this right shall be suspended for so long as he refuses to
appear for the examination.

In case the employee does not submit himself for the examination and dies before
doing so, the commissioner may, if he thinks fit, make an order to pay
compensation to the dependants of the deceased [employee].

Where an injured employee has refused to be attended by a qualified medical

practitioner whose services have been offered to him by the employer free of
charge or having accepted such offer has deliberately disregarded the instructions
of such medical practitioner, then, if it is proved that the employee has not
thereafter been regularly attended by a qualified medical practitioner or having
been so attended has deliberately failed to follow his instructions and that such
refusal, disregard or failure was unreasonable] in the circumstances of the case

23
 and that the injury has been aggravated thereby, the injury and resulting
disablement shall be deemed to be of the same nature and duration as they might
reasonably have been expected to be if the employee had been regularly attended
by a qualified medical practitioner, whose instructions he had followed, and
compensation, if any, shall be payable accordingly.

REGISTRATION OF AGREEMENTS AND EFFECT OF FAILURE TO

REGISTER AGREEMENT

(SECTION 28)

The employer and employee, have the choice of entering into an agreement. The
provision relating to agreements under the Employees Compensation Act, relate to cases
where the parties have arrived at an agreement prior to any hearing before the court. It
does not refer to any agreement reached by parties between whom there is an existing
dispute before the court regarding the quantum of compensation. These agreements may
be for:

The settlement of any lump sum payable as compensation, (i.e., payment of a

lump sum (one-time) payment to convert the employers liability for half monthly
payments, or otherwise) or; any compensation payable to a woman or a person
under any legal disability. In such a case a memorandum is to be sent to the
commissioner, who, after examining the genuineness of such a memorandum,
must register it in the manner prescribed.

If in the agreement the employer states that the amount is an ex gratia payment and the
language of the receipt does not show that the money given was in settlement of
compensation, then the employers liability to pay compensation still exists. [3]

However:

No memorandum can be registered by the commissioner before the lapse of seven

days from the time he had received the notice of such accident.15

The commissioner may at any time alter the registration. And if he has reason to
believe that the agreement has been reached due to fraud or undue influence, he
may refuse the memorandum sent by the employer, and can pass an appropriate
order, including an order to pay the compensation.

(SECTION 29)

3
Held by the Gujarat High Court in Bai Chanchalben v. Burorji Dinshaw Sethna (1969)
2 LLJ 357

24
The Law requires that the employer registers such agreements with the Commissioner.
Failing which, the employer will be responsible to pay the full amount and not the
reduced amount if any under the settlement/ agreement. If the employer fails to register
such a memorandum, the commissioner may order the employer to pay the entire amount
of compensation that the provisions of the Act provide for.

In the agreement entered into the employer cannot pay less than the principle sum due as
per the provisions of the Act. If s/he does the agreement will not be registered. A
compromise can only be made in terms of the interest and penalty due from the employer.

Note: This provision for registration and depositing payment with the commissioner is to
safeguard the interests of the women and dependants from fraud or force. An
unscrupulous employer may pay a lesser amount to the deceaseds dependents. Similarly
an unscrupulous dependent may collude with the employer to deny other dependents of
their share. Therefore, in the case of payments to women and dependents of deceased, an
employer can enter into agreement with them, however:
Such agreement should be registered, and;
The money should not be given directly, but deposited with the commissioner.

DISTRIBUTION OF COMPENSATION
(Section 8)

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

2. 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.

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

compensation deposited with him.

4. 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

25
 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.

5. 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.

6. 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.

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

8. 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.

9. 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.

26
 COMPENSATION NOT TO BE ASSIGNED, ATTACHED OR CHARGED

No lump sum or half-monthly payment payable under this Act shall in any way be
capable of being assigned or charged or be liable to attachment or pass to any person
other than the employee by operation of law, nor shall any claim be set off against the
same.

WHAT IF THE EMPLOYER DOES NOT ACCEPT THE EXTENT OF

COMPENSATION

Essentially, compensation is to be paid as soon as it falls due, i.e., when the accident
occurs - at the latest within 30 days. In case the employer does not accept the extent to
which compensation is being claimed, then the employer is to pay the amount of
compensation to the extent of responsibility he accepts, at the earliest. He is to do so by
depositing the amount at the office of the commissioner or with the employee.

By doing so, the employee, however, is not prevented from making a further claim before
the Labour commissioner for the remaining amount of compensation.

CONTRACTING OUT

Section 17: Any contract or agreement whether made before or after the commencement
of this Act, whereby an employee relinquishes any right of compensation from the
employer for personal injury arising out of or in the course of the employment, shall be
null and void in so far as it purports to remove or reduce the liability of any person to pay
compensation under this Act.

27
 5
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 rules provide that few provisions of the Civil
Procedure Code may be used to empower the Commissioner to dispose of the cases. [4]

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
4
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.

28
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?

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 case [5] 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.

FORM OF APPLICATION
(Section 22)

The commissioner shall not be liable to entertain an application for compensation

unless it is given in the prescribed format, i.e. it must be made with the following
details being Furnished [6]:

a. A statement in ordinary language with regards to the circumstances under

which the application is being forwarded and the relief or order which the
applicant claims

b. In case the claim for compensation is made against the employer, the
application should mention the date when the notice of such accident was
made to the employer, and if there was any delay in doing so, the reason
for the delay;

c. The name and address of the parties.

5
Laxmi and others vs. Deputy commissioner of Labour of Madras and Another 1998 I
LLJ158(Mad) (DB)
6
Sample form of Application for Compensation by employee see ANNEXURE 1

29
 All applications for claims for compensation must be made to the commissioner
with the appropriate accompanying fee. The fee is Rs. 2 for every Rs. 1000 of
compensation claimed. If the employee is unable to pay this amount an
application can be filed for exemption till the final order is passed;

In case of application made by/on behalf of dependants of the deceased employee,

the photographs of the dependants should be fixed on the application.

The norm in most employments covered by ECA is for appointments to be made orally.
In such situations, employees should try to seek documentary evidence by way of
registrar of wages. If the employer is not maintaining the register, then according to the
Karnataka High Court, an adverse inference should be suffered by the employer.
Therefore, in such cases of absence of maintenance of a wages register, the co-
employees statement would be sufficient evidence. [7]

Sometimes co-employees are not willing to give evidence for fear of losing their jobs. In
such cases, other documentary evidence should be looked for. This could be for e.g., the
employees bank passbook, or a letter sent to the employee at the office address (can
happen in the case of migrant employees or other employees living in slums). [8]

In case the employee making the application dies before the final outcome of the case,
there is nothing to prevent his legal heirs from continuing the application. There is no
time fixed within which such legal heirs must come on record to continue such
application originally filed by the deceased applicant.

APPEARANCE AND RECORD OF EVIDENCE

(Section 24 and 25)

The parties must make their appearance before or to the commissioner. A

registered legal practitioner/ trade union member/ inspector or other person
appointed by the Government for this purpose can represent the employee or can
represent the parties if the necessary.

Note: Sometimes the employer absconds, and successfully evades the summons to appear
before the Commissioner and submit his written statement (proving that he is not liable to
pay compensation). Then the practice is for the Commissioner to print the summons in
the State gazette publication and paper publication (a widely circulated local newspaper),
OR paste a copy of the summons on the employers premises. Even after this, if the
employer refuses to appear, the case will proceed without him and s/he will have to suffer
the possible consequence of an adverse order.
7
As per Muralidhara, Labour Advocate and State secretary AITUC, and S. Bajaj , V.V.
Giri Institute, respectively speaking at a workshop on Role of Department officers
and their powers and functions for disposing of cases under the Workmens
Compensation Act. Payment of Gratuity Act and Minimum wages claims under the
Minimum Wages Act on 18 Feb 2005.
8
Ibid 4

30
 The commissioner must make a memorandum, recording the substance of the
evidence given by each of the witnesses. This must be written in his own hand
and must be signed by him, and this memorandum would be a part of the official
record.

Note: In this connection, if neither the employee nor the employer is able to produce any
documents supporting their respective claims as to how much wages was paid to the
employee, the Labour Officer will support the employees claim.

Arguments will be presented by both parties after which an order is issued by the
commissioner

The commissioner may, if he thinks it being fit, refer such a matter to the High
Court.

WHAT HAPPENS IF THE EMPLOYER DELAYS IN PAYING OF

COMPENSATION
[Section 4 (a)]

Compensation is to be paid as soon as the injury is caused to the employee. If the

employer does not pay the compensation amount to the disabled employee within a
month from when the compensation fell due, then the commissioner on application can
give relief to the employee in the following way:

(a) The commissioner can direct the employer to pay the compensation to the employee,
plus simple interest at the rate of 12%, or any other rate, not exceeding the rate of a
scheduled bank, or as published in an official gazette; and

(b) If the commissioner feels that there was no justification for the delay in payment to
the employee, he may order the employer, in addition to the simple interest, to pay a
penalty of not greater than 50% of the compensation to be paid. Interest and penalty can
be levied by the commissioner only on application by the employee after a claims
proceeding has been completed and the employees compensation commissioner has
passed an order awarding compensation to the employee. In consonance with principles
of natural justice [9], the employer has to be given the opportunity of being heard by the
commissioner before he passes such an order directing the payment of penalty.

APPEAL

9
Natural Justice refers to conventions evolved by the law courts to ensure justice
and to prevent the miscarriage of justice.

31
Section 30: A employee can appeal against any decision can be made in the high court,
this can only be done so under certain circumstances, and only if the commissioner
allows the appeal, which is determined by his certificate allowing so, attached along with
the appeal. The conditions to make an appeal are mentioned as below:

An order awarding as compensation a lump sum whether by way of redemption of

a half-monthly payment or otherwise or disallowing a claim in full or in part for a
lump sum;

An order awarding interest or penalty;

An order refusing to allow redemption of a half-monthly payment;

An order providing for the distribution of compensation among the dependents of

a deceased employee, or disallowing any claim of a person alleging himself to be
such dependent; or

An order refusing to register a memorandum of agreement, registering the same,

or providing for the registration of the same subject to conditions:

Such an appeal should be filed within sixty (60) days.

BAR AGAINST DOUBLE REMEDIES

Section 3 (5): Once an injured employee, initiates action against, or reaches an

agreement with, an employer the said employee cannot initiate a simultaneous proceeding
in a civil court in respect of the same injury (but s/he can in a criminal court). Similarly if
the employee institutes a suit for compensation, for injury sustained during the course of
work, in a civil court, then s/he cannot then apply to the labour commissioner under this
Act. Therefore the employee can chose the type of remedy s/he wants i.e. either under the
ECA, or civil court or Motor Vehicles Act ( in case of a motor accident), but s/he cannot
apply for more than one remedy.

32
 6
CONCLUSION AND SUGGESTIONS

33
 ANNEXURE 1
_____________________________________________________
_

FORM 8
[See Rule 21]
Format of Application for Compensation by Employee
__________________________________________________________

To,
The Commissioner for Employees Compensation.

.............................................................................................................................................
.............................................................................................................................................
Residing at..................applicant

Versus

.............................................................................................................................................
.............................................................................................................................................
Residing at...........................................................Opposite Party

It is hereby submitted that

(1) The applicant, an employee employed by the opposite party on the ............. day
of ...............20...........received personal injury by accident arising out of an in the course
of his employment.

The cause of the injury was (here insert briefly in ordinary language the cause of the
injury)
......................................................................................................................................
.............................................................................................................................................

(2) The applicant sustained the following injuries,

namely.................................................................................................................................
.............................................................................................................................................

(3)The monthly wages of the applicant amounted to Rs..................the applicant is over/

under the age of 15 years..............................

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(4) *(a) Notice of the accident was served on the................... day of .................................
(b) Notice was served as soon as practicable.
(c) Notice of the accident was not served (in due time by reason of
.....................................................................

(5) The applicant is accordingly entitled to receive

(a) half monthly payment of Rs.......................from the........... day of ....... 20.....
to............
(b) a lumpsum payment of Rs. ..........................

(6) The applicant has taken the following steps to secure a settlement by agreement,
namely ............................................................................but it was proved impossible to
settle the questions in dispute because
.................. ....................................................................
.........................................................................

* You are therefore requested to determine the following questions in dispute namely

(a) Whether the applicant is an employee within the meaning of the Act.
(b) Whether accident arose out of and in the course of the applicants employment
(c) Whether the amount of compensation claimed is due, or any part of that amount.
(d) Whether the opposite party is liable to pay such compensation as is due.
(e) etc., (as required).

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________________
__________________
DATE APPLICANT

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