“The laws we have reflect the times we live in”

Hari Parmeshwar

Till January 2010 it was known as the Workmen’s Compensation Act.

Employees Compensation Act 1923 (ECA)

Why ECA firstOldest and basic act ( ILO (1919) joined UN

only in 1946).Applicable to large work areasFrequently amended

So what does ECA provideEmployer’s liability for compensation.3. (1) If personal injury is caused to an

employee by accident arising out of and in the course of his employment, his employer shall be liable to pay compensation in accordance with the provisions of this Chapter

Sec 3(1) linkages

• personal injury by• accident

event

Sec 3(1) Exclusionsemployer not liable for any injury not exceeding three days of

disablement ; for any injury ( not leading to death or

Permanent total disablement) where the worker is under the influence of drugs or alcohol ; or there is willful disobedience and disregard of safety rules ; removal of safety guards /devices…

Some obvious questionsWho …. EmployeeBy whom…. EmployerWhat is the compensation or how

is it calculated..When does it arise

Employee - 1(1)Employee means a person employed

in any such capacity as mentioned in Schedule 2 to be read along with the state amendments. The list is vast and has 32 sub parts detailing different types of employments. State amendments add to this list. The contract of employment may be oral or in writing; express or implied. In case of death of workman the dependant can apply the provisions of this act on his behalf.

(2) Employees of the railways other than those permanently employed in the administrative and district offices.

Employee -2 (3) Employees working on the crew

(including Captain) of a ship/aircraft in any capacity on a motor vehicle.

(4) employees outside India in any capacity mentioned in Schedule 2 and the ship, aircraft, motor vehicle or company is registered in India.

contd…

Employee - 3(5) Excludes the Armed Forces because

they are covered by their own Acts and the nature of their injuries is in combat and compensation is also determined according to the provisions of the Act.

(6) exercise and performance of the powers and duties of a local authority or government department will be deemed to be the trade or business of such authority.

Employee - 4IMP: Both central and State

Government can add to the list of Sch 2 where it believes they are subject to hazardous tasks.

Pose Q : Is domestic employee covered ? Why ?

Employer- 1Employer includes body or persons

whether incorporated or not ; their managing agent; their legal representative in case of death of employer . When the services of a workman are lent by one employer to another employer then the employer with whom the workman is working becomes the employer.

cont..

Employer -2 Employees engaged through contractor.

Where employees are engaged through a contractor in the trade and business of the employer (principal), then the Act in terms of Section 12 places the liability of compensation on the principal employer and the principal employer in turn can be indemnified by the contractor. Of course the employee is not prevented from claiming from the contractor directly.

cont..

Employer -3 Also in case a liability for damages

lies on a person (other than the employer) then the employer can be indemnified from such person after having paid (as per Section 12) the employee the compensation.

Section 17 makes any contract null and void which removes or reduces the liability of the employee under the provisions of this Act.

Calculation of Compensation

What would be the factors that would go into this calculation?

Naturally the extent of the loss which in turn would be dependent on the injury. Loss of one hand as compared to both hands. Loss of fingers as compared to an arm. Death as compared to loss of both eyes.

The nature of the injury. Temporary or permanent or death.

Monetization of physical loss (as determined from (1) and (2)). That is linkage to earnings. Higher earnings will mean more loss.

Period of loss. Age factor. Younger person loses more than a person about to retire.

Nature and Extent of injury-1Death

Permanent Total Disablement(PTD)

Incapacitates the

employee for all work which he was capable of performing at the time of the accident

Further provided injuries mentioned in Part 1 of Schedule 1 are PTD and combination of injuries mentioned in Part 2 of Schedule 1 totaling 100 % is also PTD.

Part 1 Sch 1 - Loss of both hands; loss of both legs; both eyes ; hearing loss in both ears ; severe disfigurement of face.

Permanent Partial Disablement(PPD)

Reduces his earning

capacity in every employment which he was capable of doing at that time

Injuries mentioned in Part 2 of Schedule 1 .

Part 2 Sch 1 – loss of finger(s) ; loss of toes ; Part of arm or part of leg etc..

Nature and Extent of injury-2Temporary Total disablement(TTD)

Incapacitates the employee from all work which he was capable of performing at the time of the accident but temporarily

Example: fracture of both legs or hands. Total yet temporary.

Temporary Partial Disablement(TPD)

Reduces his earning capacity in any employment which he was engaged

Example: Say fracture of one hand or leg.

Occupational Diseases treated as injury by accident

Schedule 3 – list of industries and occupational diseases .

Separate box item on Occupational diseases placed below.

Infectious diseases contracted in an occupation. Diseases caused by chemicals.

Monetization- 1Type of Injury Compensation

calculationLimits Additional points

Death 50 % of wages * Relevant Factor +a sum of Rs 5000/- for funeral expenses.

UPPER: Limit on maximum wages that can be considered to be decided by Central Government.LOWER: Compensation cannot be lesser than Rs 1,20,000 in any case.

Relevant Factor is based on age (completed years) of the employee at the time of the accident. It is provide age wise in Schedule 4 of the act.

Permanent Total Disablement

60% of wages * Relevant Factor

UPPER: Limit on maximum wages that can be considered to be decided by Central Government.LOWER: Compensation cannot be lesser than Rs 1,40,000 in any case.

PTD gets higher compensation than death as the employee has to sustain himself too.

Monetization- 2Permanent Partial Disablement

% of injury * (compensation as if it is PTD i.e 100%)

Limits as in PTD will apply.

In other words we first calculate compensation as if it is 100 % disablement and then depending on the percentage of injury reduce it proportionately.

Temporary 25 % wages payable fortnightly till recovery

Upper limit of wages as prescribed by CG from time to time would apply.

It must be noted that full wages is based on some value addition. It would be a miscarriage of justice if there is full wages without any work done. Also should not be seen as an incentive.

Monetization- 3Occupational Diseases

Depending on extent of injury viz death/PTD etc..

Medical Expenditure

Reimbursement of actual expenditure by the employer.

Forum for claim

Employee prohibited from approaching civil court once he is claiming/claimed from ECA.

To prevent dual compensation.

Also if he chooses to approach civil court then he cannot claim from ECA.

Note on Wages :

“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 an 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;

Upper limit of Wages(1B) The Central Government may, by notification

in the Official Gazette, specify, for the purposes of sub-section (1), such monthly wages in relation to an employee as it may consider necessary.

Occupational Diseases

Occupational Diseases-1Section 4 places liability on the employer to

compensate the employee in case of injury caused by the employee’s exposure to occupational hazards. Such occupational diseases are mentioned in Schedule 3 and it is divided into three parts:

Occupational Diseases-2Part A • no minimum time period of employee engagement in

the industry specified

• example poisoning by nitrous fumes ; diseases caused by lead and toxic compounds

Part B employee must have worked with the employer for a continuous period of not less than 6 months to make the employer liable

example diseases caused by phosphorous ; mercury; benzene or their toxic compounds respectively

Occupational Diseases-3Part C where the employee has worked for several

employers for such periods specified by the Central Government compensation will be in proportion as determined.

in case the disease is contracted in a lesser period and yet it is proved that it has arisen from such employment then it is a disease arising out of employment .

external allergic alveetis caused by inhalation of organic dusts; acute pulmonary oedema of higher altitude.

Occupational Diseases-4Note: If disease is caused post

employment but employee has served periods specified in Part B and Part C then too it is a disease arising out of employment.

Some intricate issues

Personal Injury – meaning and scope; what is included and what is not.

Accident –Arising out of and in the course of

employment

Personal injury Not defined but not confined to physical

injury but it may include a mental strain or mental imbalance. Includes sunstroke, 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 for 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 employmentOut of employment ….due toIn course … duringTo 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.

Numerous case laws : each varies based on facts of the case.

Authority under this ActCommissioner : State government by notification

in the Official Gazette, appoint any person who is or has been a member of a State Judicial Service for a period of not less than five years or is or has been for not less than five years an advocate or a pleader or is or has been a Gazetted Officer for not less than five years having educational qualifications and experience in personnel management, human resource development and industrial relations to be a Commissioner for employees’ Compensation for such area as may be specified in the notification.

Appeal lies with High Court

CommissionerEvery Commissioner shall be deemed to be

a public servant within the meaning of the Indian Penal Code (45 of 1860).

The Commissioner shall have all the powers of a Civil Court under the Code of Civil Procedure, 1908 (5 of 1908) for the purpose of taking evidence on oath (which such Commissioner is hereby empowered to impose) and of enforcing the attendance of witnesses and compelling the production of documents and material objects and the Commissioner shall be deemed to be a Civil Court for all the purposes of section 195 and of Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974).

CommissionerIf any question arises in any proceedings

under this Act as to the liability of any person to pay compensation (including any question as to whether a person injured is or is not an employee) or as to the amount or duration of compensation (including any question as to the nature or extent of disablement), the question shall, in default of agreement, be settled by a Commissioner.

(2) No Civil Court shall have jurisdiction to settle, decide or deal with any question which is by or under this Act required to be settled, decided or dealt with by a Commissioner or to enforce any liability incurred under this Act.