24. Workmen's Compensation Legislation – Industrial Relations, Trade Unions, and Labour Legislation, 2nd Edition

Chapter 24

Workmen’s Compensation Legislation

Chapter Objectives

This chapter will enable students to:

  1. Understand the common defences available before the employer to escape liability and to pay compensation in the event of industrial injuries resulting in disablement and death of his workmen
  2. Explain the terms ‘arising out of employment’, ‘arising in the course of employment‘, ‘partial disablement’ and ‘total disablement‘
  3. Describe the amount of compensation payable by the employer under the Employees’ Compensation Act, 1923, in the event of disablement and death of his workmen caused by industrial injury
  4. Describe the provisions of the Employees’ Compensation Act, 1923, relating to claims and penalties
  5. Understand the shortcomings of the Employees’ Compensation Act, 1923

Employers’ Defences Under the Common Law to Escape Liability for Payment of Compensation in the Event of Disablement or Death of Their Workmen Caused by Industrial Injuries

The Workmen’s Compensation Legislation in India is patterned after the British Workmen’s Compensation Legislation. The factors and forces that led to the enactment of the legislation in Great Britain came to operate in India too. As such, it will be relevant here to make a mention of the salient features of the law and the conditions that led to its enactment in the United Kingdom.

With the advent of industrial revolution and harnessing of the massive powers of steam and electricity, the dangers in workplaces increased manifold. Accidents increased by leaps and bounds causing physical injuries and death on a large scale. Similarly, occupational diseases caused by industrial processes and handling of particular types of materials and substances also became a common feature, resulting in physical and mental incapacitation, sickness and death. Though the common law, of course, required the employers to provide safe workplace, safe plant and appliances, safe system of work, and to instruct young persons as to the dangers likely to arise from their work, in practice, there was little improvement in workplaces, which continued to be unsafe and hazardous. The safety movement itself was in infancy. Many of the methods and technology of making the workplace safe and workmen safety-minded were unknown. Even if known in some cases, making workplace safe and providing safety appliances cost money, which the employers tried to avoid most of the time. Consequently, the workplaces in many cases became virtual death traps.

The economic loss resulting from accidents caused widespread suffering among the working-class families. Accidents became one of the permanent causes of poverty, starvation and deprivation. With the wages low, as they were, workmen were not in a position to save any significant amount for such rainy days. Any attempt by the workers to obtain compensation for such losses from the employers was, most of the time, defeated by the employers’ reluctance and callous disregard for human suffering. The provisions, under the common law for damages for such losses were completely unsatisfactory and were not of much benefit to the workers.

Under the common law, an injured workman or his dependants, in case of death, could sue the employer in a civil court and claim damages from him. But in order that the courts could grant such damages, the claimant had to prove: (i) that the employer had failed in his duty to provide a safe workplace, safe plant and appliances, and a safe system of work, and (ii) that the employer’s negligence and failure to fulfil his duties had caused the accident, resulting in personal injury or death. Only when the courts were satisfied on this score, damages could be awarded. The onus of proof was on the claimant. No workman could hope to secure damages, unless he indulged in a long, costly process of litigation in which the odds heavily weighed against him all the time. With far superior financial resources and legal advice, the employers could easily defeat such claims.

The common defences available to the employer in such compensation cases under the common law were the following:

  1. Doctrine of assumed risk

  2. Doctrine of contributory negligence

  3. Doctrine of common employment and fellow servants’ responsibility

  4. Doctrine that ‘personal claim comes to an end with the death of either party’

  5. Doctrine of unknown persons’ responsibility

Doctrine of Assumed Risk: Under the doctrine of assumed risk, the employer argued that the employee took the risk upon himself (volenti non fit injuria) when he accepted employment, knowing fully well that it could involve him in accidents. However, the employer generally did not adopt this line of defence where the regular work of the employee was obviously dangerous. But where the employee was asked to undertake a dangerous operation outside his ordinary duties and he voluntarily accepted it, the employer had a good defence. The defence was not tenable where the employer was being sued for the breach of a statutory duty.

Doctrine of Contributory Negligence: Under this line of defence, the employer could say that the injury was caused entirely due to the workman’s fault. A defence of contributory negligence also arose if, in addition to the employer’s negligence, the injured employee was himself negligent and the injury was the result of both the causes. The Law Reform (Contributory Negligence) Act, 1945, empowered the court to apportion the responsibility for the injury or damage and to reduce the amount of damages to such extent as it thought fit and equitable.

Doctrine of Common Employment and Fellow Servant’s Responsibility: The doctrine of common employment was adopted by the employers in respect of accidents resulting from the negligence of fellow workmen. Under this doctrine, the employer contended that the workman knew at the time of employment that he was exposed to the risk of injury because of the negligence on the part of his fellow-workmen also, and that he was supposed to have contracted on the term that, as between himself and his master, he would run that risk. Thus the employer was not liable to pay damages in respect of injuries arising from the carelessness of fellow-workmen. The Employer’s Liability Act, 1880, was passed with a view to remedying this line of defence.

Doctrine that ‘Personal Claim Comes to an End with the Death of Either Party’: This line of defence pertained to fatal accidents. As the claim of a workman was based on the personal negligence of his employer, the employer argued that ‘personal claim comes to an end with the death of either party’ (Actio personalis moritur cum persona). The Fatal Accidents Act, 1846, indirectly dealt with this question, but later, the Law Reform (Miscellaneous Provisions) Act, 1934, abolished the maxim.

Doctrine of Unknown Person’s Responsibility: In case of accidents caused by the negligence of an unknown person, the employer contended that he was not liable to pay damages for such accidents, as his liability was confined only in respect of accidents resulting from his personal negligence. The conception of negligence as the only basis for a claim to compensation was ultimately done away with under the Workmen’s Compensation Acts.

WORKMEN’S COMPENSATION LEGISLATION IN INDIA

Prior to the enactment of the Workmen’s Compensation Act, 1923, the workman suffering a personal injury caused by an accident occurring in the course of his employment, could claim damages in a civil court under the common law. The workman, or in the case of his death, his dependent heirs, had to file a civil suit claiming damages for the losses suffered. The court would award damages if the claimant could prove that the accident was due to the negligence of the employer or lack of proper care on his part.

With the establishment of the British rule in India, the common law became applicable to this country also. As a result, in India, too, the same policy regarding workmen’s compensation prevailed as in England. It was extremely difficult and expensive and time-consuming, and often impossible for industrial workers of India, ignorant and illiterate as they were, to secure favourable judgements from the civil courts in the face of stiff opposition from the side of the employers. All the defences which the employers in England could use to defeat the workers’ claim for a compensation, were also available to the Indian employers. The workmen had to engage in exhausting litigation which, in the end, proved ruinous to the workers themselves. Damages, if any and ever awarded, were consumed mostly in defraying legal expenses. The result was that the provisions of the common law, to all intents and purposes, were practically non-existent from the workers’ point of view.

With industrialization and mechanization when accidents became more frequent and injury to life and limbs became common, protests were raised against the callous attitude of the employers and the movement for reforms in the common law started in India also. The defences built by the employers were sought to be demolished one by one by the enactment of various statutes in England and the same trend was reflected in the developments in this country also, with the inevitable time lag.

The enactment of the Workmen’s Compensation Act, 1923, to a large extent, reversed the position obtaining under the common law. Whereas under the common law an injured workman could secure damages if he succeeded in proving his employer’s negligence, under the new enactment, payment of compensation became more or less automatic, unless the employer could succeed in proving that the injury was the result of the insured’s negligence, disregard of factory regulations or of drunkenness. In other words, it was for the workers to prove the employer’s negligence and responsibility for the happening of the accident in order to be entitled to compensation under the common law; it is for the employers now to prove the worker’s negligence and responsibility for an accident in order to escape the liability for the payment of compensation under the Workmen’s Compensation Legislation.

The position today is that an injured workman, or his heir in case of his death, can utilize either the remedies available under the common law or those under the Workmen’s Compensation Act, but action under the one debars action under the other. The enactment of the Workmen’s Compensation Act, 1923, has not extinguished his right to claim damages under the common law. The workman concerned can choose his remedy but cannot claim both. The British practice under the Workmen’s Compensation Act, 1906, was more favourable to the workman. The workman could elect to exercise his rights either under the common law or the Workmen’s Compensation Act. In the event he failed to secure damages from the court under the common law, he could still claim compensation under the Workmen’s Compensation Act, but the legal expenses incurred by the employer were to be deducted from the total amount of compensation under the Workmen’s Compensation Act.

Thus, laws concerning compensation for work injuries in India have followed a pattern similar to that of Great Britain. The rights of injured workmen for damages under the English Common Law have also been retained in India. Besides, in line with the practices in Great Britain, special statutes were adopted in India to remedy the grievances of injured workmen or their dependants at the common law. The Indian Fatal Accidents Act, 1855, which was patterned after the British Fatal Accidents Act, 1846, was intended to do away with the maxim, ‘a personal action dies with the person injured’ (Actio personalis mortiur cum persona). The Act enabled certain heirs of the deceased person to sue for damages when death was caused by an actionable wrong.

Similarly, in line with the British Employers’ Liability Act, 1880, the Indian Employers’ Liability Act, 1938, aimed at abrogating the doctrines of ‘common employment’ and ‘assumed risk’. An Act of the same name passed in 1951 sought to remove certain ambiguities in the Act of 1938.

Workmen’s Compensation Legislation

The principle of workmen’s compensation was formally adopted in India in 1923, that is, about 25 years after the adoption of the principle in Great Britain. The Workmen’s Compensation Act, 1923, which is the first social security legislation in India, makes the employer liable to pay compensation for personal injury caused by accident ‘arising out of’ and ‘in the course of’ employment. The Act has been amended several times since it came into force on 1 July 1924.

A significant amendment was made in the Act in 2009 under which the name of the Act was changed to Employees’ Compensation Act, 1923. This was done in view of the Recommendations of the National Commission on Labour (2002), which had suggested the use of the word ‘employee’ in place of ‘workman’ in order to ensure gender neutrality. Thus, wherever the word ‘workman’ or ‘workmen’ occurs, it will be treated as ‘employee’ or ‘employees’, respectively. The amending Act has enhanced the amount of compensation in cases of both disablement and death, has sought to modify the definition of ‘employee’ with a view to removing ambiguity and has laid down the eligibility criteria for the appointment of commissioners.

The provisions of the Employees’ Compensation Act, 1923, as they stand amended till date, are described below.

EMPLOYEES’ COMPENSATION ACT, 1923 (MAIN PROVISIONS)

In general, the protection of the Act has been given to non-casual workmen employed for employer’s trade or business irrespective of their wages. Schedule II of the Act specifies in detail the operations, industries or employments covered by the Act. Although the industries or employments mentioned in the schedule have a very wide coverage (including factories, mines, plantations, agriculture, transport by land, water and air, etc.), there are certain limitations in respect of the categories of persons covered. Notable operations mentioned in the schedule include: manufacturing, mining, loading or unloading, fuelling, constructing, repairing, demolishing, excavating, driving, handling, blasting and others. Persons employed in the clerical capacity have generally been excluded. In addition to the workmen employed in capacities enumerated in Schedule II, the Act also applies to railway servants not employed in offices or in capacities specified in the schedule. The Act does not apply to members of the armed forces. The exercise and performance of the powers and duties of a local authority or government are to be deemed to be the trade or business of the authority concerned. The amendment of 1995 added a number of hazardous employments in Schedule II, for example, certain operations in the sea, handling of snakes and certain animals, cleaning sewer lines, handling of pesticides, and agriculture and forestry operations. The state government is empowered to add to Schedule II any class of persons employed in any other hazardous occupation, and while doing so, it may direct that the provisions of the Act be applied to such classes of persons in respect of specified injuries only [Sec. 2 (1) (n), (2) (3), Schedule II].

The injured workmen or their dependants do not have the right to compensation under the Act where they are covered under the Employees’ State Insurance Act, 1948.

SOME IMPORTANT DEFINITIONS

Some important definitions under the Act are reproduced in Box 24.1.

Box 24.1

SOME IMPORTANT DEFINITIONS UNDER THE EMPLOYEES’ COMPENSATION ACT, 1923

Partial Disablement: ‘Partial disablement’ means: (i) where the disablement is of temporary nature, such disablement as reduces the earning capacity of an employee in the employment in which he was engaged at the time of accident resulting in the disablement, and (ii) where the disablement is of a permanent nature, such disablement as reduces his earning capacity in every employment which he was capable of undertaking at that time. The Act specifies certain injuries which are deemed to result in permanent partial disablement. The list of such injuries, which has been mentioned in Part II of Schedule I of the Act, is given in Appendix 1 of this book. [Sec. 2 (1) (g)]

Total Disablement: ‘Total disablement’ 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. The Act also specifies certain injuries which are to be deemed to result in permanent total disablement. These include: (i) Loss of both hands or amputation at higher sites; (ii) Loss of a hand and a foot; (iii) Double amputation through leg or thigh, or amputation through leg or thigh on one side and loss of other foot; (iv) Loss of sight to such an extent as to render the claimant unable to perform any work for which eyesight is essential; (v) Very severe facial disfigurement; and (vi) Absolute deafness.

Besides, permanent total disablement is also to be deemed to result from any combination of injuries where the aggregate percentage of the loss of earning capacity (see Appendix 1) amounts to one hundred per cent or more [Sec. 2 (1) (1), Schedule I].

Dependant: ‘Dependant’ means any of the following relatives of a deceased employee:

  1. A widow, a minor legitimate son, an unmarried legitimate daughter, or a widowed mother.

  2. An infirm son or daughter who has attained the age of 18 years and who was wholly dependent on the earning of the employee at the time of his death.

  3. If wholly or partly dependent on the earnings of the employees at the time of his death:

    1. A widower

    2. A parent other than a widowed mother

    3. A minor illegitimate son, an unmarried illegitimate daughter or a daughter legitimate or illegitimate if married and minor or if widowed and a minor

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

    5. A widowed daughter-in-law, (f) a minor child of a predeceased son, (g) a minor child of a predeceased daughter where no parent of the child is alive, or (h) a parental grandparent if no parent of the employee is alive [Sec. 2 (1) (d)].

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 of 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 [Sec. 2 (1) (m)].

EMPLOYER’S LIABILITY FOR COMPENSATION

In case a personal injury is caused to an employee by accident arising ‘out of’ and ‘in the course of’ employment, his employer is liable to pay compensation at the prescribed rate. However, the employer is not liable to pay compensation except in the event of the death of the injured employee, if the injury is directly attributable to any of the following:

  1. The employee having been at the time of accident under the influence of drink or drugs.
  2. The wilful disobedience of the employee to an order expressly given, or to a rule expressly framed, for the purpose of securing safety of employees.
  3. The 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 employees.

It is to be carefully observed that the employer is liable to pay compensation in the event of death caused by the accident even if the accident could be attributed to the negligence on the part of the deceased.

The employer is also not liable to pay compensation in respect of any injury which does not result in total or partial disablement of the employee for a period exceeding three days [Sec. 3].

ARISING ‘OUT OF’ AND ‘IN THE COURSE OF’ EMPLOYMENT

The terms arising ‘out of’ and ‘in the course of’ employment have proved to be most controversial in determining claims for compensation for work injuries. An employee is entitled to compensation only when two conditions are satisfied. Firstly, the accident should be arising ‘out of’ employment and secondly, it must occur ‘in the course of’ employment. The first refers to a causal connection between accident and employment, and the second refers to the time of occurrence of the accident. It is possible that an accident may arise out of employment but may not occur during the course of employment, or that it may occur in the course of employment but does not arise out of employment. If only one of the conditions is satisfied, the claim for compensation is not maintainable. If the employer can prove this, he escapes the liability to pay compensation. Hence this has been the commonest plea resorted to by the employers in contesting claims for compensation. Therefore, the implications of these two terms need further explanation.

In most cases, the conditions under which an accident takes place leave little room for questioning whether these two conditions are satisfied. It is the marginal cases where the determination becomes difficult.

Arising ‘in the Course of’ Employment

Taking the second conditions first, that is, ‘arising in the course of employment’ there are two or three circumstances under which it becomes difficult to prove whether the accident arose in the course of employment. The circumstances relate mainly to: (i) interruptions in the course of employment, for example, power failure, (ii) the gap between the arrival time and scheduled time for the commencement of work, as also between the departure time and the scheduled time for ending work, and (iii) time spent in travelling to and from work.

The question arises whether an accident occurring under the three circumstances mentioned above can be said to be arising in the course of employment or not. One thing is clear here: if during these periods the employee concerned is acting under the orders of his employer or his agent and meets with an accident, the accident is said to be arising in the course of employment. But what is the position when there is no such order and the employee is acting on his own?

In general, the periods of temporary interruption of employment during the contracted hours are not included, except in cases where the interruption was reasonably necessary or incidental to the employment. If an employee has broken off his work in order to do something for his own purpose and he sustains an injury caused by accident during this period, the accident does not arise in the course of employment. The intervals for recognized breaks in employment, like rest pauses or mealtimes, are covered under the course of employment, if the employee remains in his employer’s premises.

If an employee arrives at his work within a reasonable time for starting work, the interval is in the course of employment, so long as he is in that part of the employer’s premises which he has to pass through to reach his work. Similarly, if the employee comes to his place of work before the contracted time for starting work in order to prepare or equip himself for his job, the interval is included in the course of employment. Again, the interval involved in leaving the premises after the contracted time of finishing work is included in the course of employment if the worker leaves by the usual route and does not loiter.

The periods of travelling to and from work are normally not included in the course of employment. Exceptions to this normal rule are the cases where the employee concerned is under an obligation to his employer to use a vehicle and under certain conditions where the employee uses a vehicle with the express or implied permission of his employer even when he is under no obligation to his employer to travel by that vehicle.

Arising ‘out of’ Employment

An accident arises out of employment if it occurs by reason of the nature or conditions or obligations of employment or by reason of anything which is necessarily incidental to the employment. In general, if it is shown that an accident has arisen in the course of employment, it also presumably arises out of employment unless, the evidence is to the contrary. An accident does not arise out of employment in the following cases:

  1. If the employee does something different from the work actually assigned to him. This is commonly known as performing ‘arrogated duties’. However, the accident is said to arise out of employment if he does another person’s work on the orders of a superior whose orders he is required to obey.
  2. If the employee is doing something which is not required by or incidental to his normal duties and which is done for his own personal purposes.
  3. If the employee indulges in rashness as distinct from mere carelessness.
  4. If the employee meets an accident from a danger which he shares in common with persons not in the same employment for instance injury by lightning, frost-bite and so on, unless he is exposed to danger by the nature of employment.
  5. If the employee is injured as a result of his state of health like an injury sustained by an epileptic during his fit. If, however, the fit is caused by strain of work, or if the injury results from dangers at the place of work, or is aggravated by the nature of workplace, the accident arises out of employment.
  6. If the employee receives an injury entirely due to his drunken condition, except in cases of fatal accidents.
  7. If the employee sustains an injury at a place where his employment does not require his presence.
  8. If the employee is injured on being assaulted while he is at work.
OCCUPATIONAL DISEASES

The Act specifies a number of occupational diseases, the contracting of which, is to be regarded as an injury caused by accident arising out of and in the course of employment, thus making the employer liable to pay compensation in respect of these diseases also. There are three classes of occupational diseases which are to be considered injuries by accident under three different sets of prescribed circumstances.

Contracting of an occupational disease in the first group is to be regarded as an injury by accident arising out of and in the course of employment if it is contracted by an employee in any specified employment to which the disease is peculiar. Occupational diseases in this group and employments to which they are peculiar, as mentioned in Schedule III of the Act, are given in Part A of Appendix 2 of this book.

Contracting an occupational disease in the second group (mentioned in Part B of Appendix 2 of this book) is to be considered an injury by accident rising out of and in the course of employment, if an employee, while in service of an employer for a continuous period of six months (not including the period of service under any other employer in the same kind of employment), contracts it in any specified employment likely to generate the disease. Besides, if an employee employed in any employment in this group for the specified continuous period has contracted an occupational disease after the cessation of service, the contracting of the disease is also deemed to be an injury by accident. The list of the occupational diseases in this group and the employments to which they are peculiar is given in Part B of Appendix 2 of this book.

The Act specifies still another class of occupational diseases given in Part C of Appendix 2 of this book. If an employee, while in the service of one or more employers in any specified employment (likely to generate a disease under this class) for such continuous period as prescribed by the central government, contracts it, contracting of the disease is an injury by accident arising out of and in the course of employment. Contracting a disease under this group is also to be considered an injury by accident even when his continuous period of employment under one or more employers is less than the specified minimum, if it is proved that the disease has arisen out of and in the course of employment. Besides, if it is shown that an employee, who having served one or more employers and employed in this class for the specified continuous period, has contracted the disease after the cessation of service, the contracting of the disease is also an injury by accident provided the disease arose out of employment. In case an employee contracts such an occupational disease which has been deemed to be an injury by accident, and the employment was under more than one employer, all his employers are liable for the payment of compensation in a proportion decided by the Workmen’s Compensation Commissioner.

The central and state governments are empowered to add any occupational diseases peculiar to any specified employment in Schedule III of the Act.

As regards diseases not covered above, no compensation is payable unless the disease is directly attributable to specific injury by accident arising out of and in the course of employment.

AMOUNT OF COMPENSATION

As the name of the Act indicates, it seeks to compensate the employees for the loss of earnings and earning capacity due to an accident. Therefore, the amount of compensation payable under the Act is based on the extent of the loss of earnings of injured employee. Compensation for death and permanent disablement is to be paid in lump sum, whereas a half-monthly payment is to be made in the case of temporary disablement. Prior to 1984, employees were divided into specified wage-groups.for the purpose of the calculation of compensation. The amount of compensation in respect of death, total permanent disablement and temporary disablement was specified in the Act itself. An important amendment of the Act in 1984 completely changed the procedure for calculating the amount of compensation. The rates were again extensively modified in 1995 and 2009. The existing amount and rates of compensation under the Act are shown below.

For Death

The amount of compensation in the event of death resulting from the injury is an amount equal to 50 per cent of the monthly wages of the deceased employee multiplied by the relevant factor (see Table 24.1) or an amount of 1,20,000 (earlier 80,000) whichever is more. If the monthly wages of the employee exceed 4,000, the amount of compensation will be calculated on the monthly wage of 4,000 only [Sec. 4 (1) (a)].

 

Table 24.1 Factors for Working Out Lump Sum Equivalent of Compensation Amount in Cases of Permanent Disablement and Death

 

Schedule IV of the Act

For Permanent Total Disablement

The amount of compensation in the case of permanent total disablement is an amount equal to 60 per cent of the monthly wages of the injured employee multiplied by the relevant factor (see Table 24.1) or an amount of 1,40,000 (earlier 90,000) whichever is more. If the monthly wages of the employee exceed 4,000, the amount of compensation will be calculated on the monthly wage of 4,000 only [Sec. 4 (1) (b)].

The amendment 2009 has empowered the central government to enhance the minimum rates of compensation from time to time.

For Permanent Partial Disablement

The amount of compensation for permanent partial disablement as specified in Part II of the Schedule I of the Act (see Appendix 1 of this book) is such percentage of the compensation which would have been payable in the case of permanent total disablement as specified therein as being the percentage of the loss of earning capacity caused by that injury. In the case of an injury not specified in Schedule I, the amount of compensation is such percentage of the compensation payable in the case of permanent total disablement as is proportionate to the loss of earning capacity permanently caused by the injury as assessed by the qualified medical practitioner. Where more than one injury are caused by the same accident, the amount of compensation payable is to be aggregated but in no case it is to exceed the amount which would have been payable for permanent total disablement [Sec. 4 (c)].

For Temporary Disablement

In case of temporary disablement, whether total or partial, the amount of compensation is a half-monthly payment of the sum equivalent to 25 per cent of monthly wages of the employee.

Where temporary disablement lasts for a period of 28 days or more, the half-monthly payment is to begin from the sixteenth day from the date of disablement. In case a disablement lasts for less than 28 days, payment is to begin from the sixteenth day after the expiry of the waiting period of three days from the date of disablement. Half-monthly payment is to continue during the period of disablement or for a period of five years, whichever is shorter. Where the disablement ceases before the date on which any half-monthly payment falls due, a sum proportionate to the duration of disablement during the period is to be paid. If an injured employee earns something during the period of temporary disablement, the amount of half-monthly payment is not to exceed the difference between half of his monthly wages earned by him prior to and after the accident.

In every case of disablement, where an injured employee has already received any amount from his employer by way of compensation, the same is to be deducted from the amount of compensation (whether lump sum or half-monthly payment), to which he is entitled under the Act. However, the amount received by the employee for medical treatment in respect of an injury is not to be treated as compensation received by him [Sec. 4 (d)].

In case an accident occurs outside India, the Workmen’s Compensation Commissioner, while fixing the amount of compensation, will take into account the amount of compensation awarded to the employee in accordance with the law of that country and will reduce the amount fixed by him by the amount of compensation awarded to him in that country [Sec. 2 (1 A)].

Payment for Funeral Expenses

If the injury of the employee results in his death, the employer is also required to deposit with the Commissioner a sum of 5,000 for payment to the eldest surviving dependant of the employee towards the funeral expenses of the deceased employee. The central government is now empowered to review and revise it from time-to-time. If the employee did not have a dependant, the payment is to be made to the person who actually incurred the expenditure [Sec. 4 (4)].

Review and Commutation of Half-monthly Payments

The Employees’ Compensation Commissioner may review a half-monthly payment on the application of either the employer or the employee if the application is accompanied by a certificate of qualified medical practitioner to the effect that there has been a change in the condition of the employee. On the basis of the review, the half-monthly payment may be continued, increased, decreased or ended, depending on the nature of the case.

In case the accident has resulted in permanent disablement, the half-monthly payment may be converted into lump sum and the amount paid to the employee after making necessary deductions in respect of the amount already received by him.

A half-monthly payment may be redeemed by the payment of a lump sum agreed to by the parties. The Commissioner may also determine the lump sum in lieu of the half-monthly payment, if an application has been made by either party and payments have continued for not less than six months [Secs. 6, 7].

Compensation to Be Paid in Time

The employer is required to pay compensation as soon as it falls due. However, in case the employer does not accept the liability for compensation to the extent claimed, he may make provisional payment based on the extent of liability accepted by him. The amount of compensation in such a case is to be either deposited with the Compensation Commissioner or paid to the employee concerned. Where the employer is found in default of paying compensation within one month from the date it fell due, the Commissioner may direct the payment of interest at the rate of 12 per cent per annum or at such higher rate not exceeding the maximum of lending rates of any scheduled bank as specified by the central government in addition to the amount of arrears. If the Commissioner does not find any justification for the delay, he may also direct the payment of penalty not exceeding 50 per cent of the amount payable [Sec. 4 A].

Distribution of Compensation in Certain Cases

Payment of compensation in respect of an employee sustaining fatal injury or a lump sum as compensation to a woman or a person under legal disability is to be made by deposit with the Commissioner. In such cases, payment made directly by the employer is not to be considered as payment of compensation.

However, an employer may make advances to a dependant of the deceased employee on account of compensation, but the aggregate of the advances made is not to exceed three months’ wages of the deceased employee and not exceeding the total amount of compensation. The amount, thus, advanced is to be deducted by the Commissioner from the amount of compensation payable to the dependant and repaid to the employer.

The amount of compensation deposited with the Commissioner is to be paid to the person (not a woman or a person under legal disability) who is entitled to it. Where any lump sum deposited with the Commissioner is payable to a woman or a person under legal disability, the sum may be ‘invested, applied, or otherwise dealt with’ for the benefit of the person in accordance with the directions of the Commissioner. In case of a half-monthly payment to a person under legal disability, the Commissioner may order its payment during the period of disability to any dependant or other person considered by him to be best fitted to provide for the welfare of the employee.

In case of a deceased employee, the amount of compensation (payable after necessary deductions) is to be apportioned among the dependants in a proportion decided by the Commissioner or paid at his discretion to any one dependant. If there is no dependant, the amount is to be repaid to the employer by whom it was paid.

The Commissioner may vary his former order concerning the distribution of any sum or manner of investing and applying it in certain cases, that is, neglect of children on the part of a parent, variation in the circumstances of a dependant, or other sufficient cause. In such a case, the person whose interest is likely to be prejudicially affected is to be given an opportunity of explaining his case. If it is discovered that the payment of compensation has been obtained by fraud, impersonation or other improper means, the amount so paid may be recovered from the person concerned [Sec. 8].

MEDICAL EXAMINATION

An employee who has given a notice of accident to his employer is required to submit himself for examination by a qualified medical practitioner appointed by the employer within three days of the notice. The medical examination is to be free of charge. Similarly, an employee in receipt of half-monthly payment may be required to submit himself for medical examination from time to time. His right to compensation may be suspended if he refuses to be medically examined without sufficient cause. If an employee voluntarily leaves the vicinity of his workplace before the expiry of three days from the date of notice, his right to compensation may also be suspended until he returns and offers himself for the examination. No compensation is payable in respect of the period for which his right to compensation has been suspended. In the event of the death of an employee, whose right to compensation has been suspended, the Commissioner may direct the payment of compensation to his dependants.

In case the injury of an employee has been aggravated subsequent upon his refusal to be examined medically or his failure to comply with the instructions of the medical practitioner, he is not entitled to compensation more than what has been previously determined [Sec. 11]. The amendment of 2009 provides for reimbursement of actual medical expenditure incurred for treatment of injuries during the course of employment.

CLAIMS BEFORE COMMISSIONER

A claim for compensation before a Commissioner is maintainable only when a notice of accident has been given to the employer as soon as it has occurred, and the claim is preferred within two years of the occurrence of the accident, or in the case of death, within two years from the date of death. The Act specifies the particulars to be furnished in the notice. The state government may require the employers to maintain a notice-book in the prescribed form which is to be readily available to employees.

Where an accident results from contracting of an occupational disease, it is deemed to have occurred on the first day after the period during which the employee was continuously absent from work in consequence of the disablement. In case of a partial disablement resulting from contracting of an occupational disease not forcing the employee to absent from work, the period of two years is to be counted from the day the employee gave a notice of disablement. If an employee has contracted an occupational disease after the cessation of service, the period of two years is to be counted from the date on which symptoms of the disease were first detected.

A notice of accident is not necessary: (i) in case of a fatal injury sustained by the employee on the employer’s premises or any other place under the employer’s control, or (ii) if the employer or any other person responsible to him had knowledge of the accident at the time it occurred.

Even where no notice has been given or the claim not preferred in time, the Commissioner may entertain and decide any claims to compensation if he is satisfied that the failure to do so was due to sufficient cause [Sec. 10].

OTHER PROVISIONS

Remedies of Employer against Contractor and Stranger

The principal employer is liable to pay compensation in case of an injury sustained by an employee employed under his contractor. However, the principal employer is entitled to be indemnified by the contractor or any other person from whom the employee could have recovered compensation. All questions as to the right and amount of such indemnity are to be, in default of the agreement, settled by the Commissioner [Sec. 12].

Where an employee has recorded compensation in respect of any injury creating a legal liability of some person other than one who paid the compensation, the person paying the compensation or a person called to pay indemnity is entitled to be indemnified by the person liable to pay damages [Sec. 13].

Insolvency of Employer

Where an employer has entered into a contract with an insurer in respect of liability under the Act to an employer then, in the event of the insolvency of the employer or winding up of his company, the right of the employer against the insurer with respect to the liability is to be transferred to and vested in the employee. In such a case, the insurer has the same rights, remedies and liabilities as those of the employer. If the insurer’s liability is less than the liability of the employer to the employee, the employee may prove for balance in the insolvency proceedings or liquidation. The amount is to be paid to the employee even in case where the contract between the employer and the insurer is void or voidable on account of the employer’s non-compliance with any terms and conditions of the contract, but the insurer has a right to prove the same in the insolvency proceedings of liquidation. The failure of the employee to give notice to the insurer deprives him of the claim. Payment of compensation under the Act is to be given priority in the distribution of the property of an insolvent employer or the assets of the company being wound up [Sec. 14].

Compensation in the Event of Transfer of Assets

Where an employer transfers his assets, before paying compensation to which he was liable before the transfer, the amount is to be the first charge on the part of the assets so transferred as consist of immovable property [Sec. 14 A].

Special Provisions Relating to Masters and Seaman, Captains and Crew of Aircrafts, Workmen Abroad of Companies and Motor Vehicles

The Act contains special provisions relating to masters and seamen, captains and other members of crew of aircrafts, employees abroad of companies and motor vehicles [Sec. 15, 15 A, 15 B].

Contracting Out

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

Commissioner

The state government is empowered to appoint Commissioner for a specified area by notification in the official gazette. The amending Act of 2009 has specified the eligibility criteria for the appointment of Commissioner. These include: (i) a member of state judicial service with 5 years’ experience, or (ii) an advocate or a pleader with 5 years’ experience, or (iii) a person who has been gazetted officer for not less than 5 years’ having educational qualification and experience in personnel management, human resource development and industrial relations. Where more than one Commissioner has been appointed for the same area, the state government is required to regulate the distribution of business between them. Any Commissioner may choose one or more persons possessing special knowledge to assist him in holding the injury [Sec. 20].

A Commissioner thus appointed is empowered to decide any question pertaining to liability of a person to pay compensation including any question as to whether a person injured is an employee or not or as to the amount or duration of compensation (including any question relating to the nature or extent of disablement) if the parties have failed to settle it by agreement. The Commissioner is required to dispose of the matter relating to compensation under the Act within a period of 3 months from the date of reference and intimate the decision to the employee within this period. A civil court does not have the jurisdiction to settle, decide or deal with any question which is required to be settled, decided or dealt with by the Commissioner nor is it authorized to enforce any liability under the Act [Sec. 19].

An application for settlement of any matter by a commissioner, except that by dependants, is to be made only when some question has arisen between the parties which they were unable to resolve by agreement. The application is to be in the prescribed form and should contain the prescribed particulars [Sec. 22].

The Commissioner is deemed to be a public servant within the meaning of the Indian Penal Code. He has the powers of a civil court under the Code of Civil Procedure, 1908, for the purpose of taking evidence on oath, enforcing the attendance of witnesses and compelling the productions of documents and material objects. The Commissioner is also deemed to be a civil court for all purposes of Section 195 of the Code of Criminal Procedure, 1898. The Commissioner may submit any question of law for decision of the High Court [Secs. 20, 23, 27].

Appearance of the Parties

The Act authorizes the appearance of a party before the commissioner by a legal practitioner, an official of an insurance company or a registered trade union, an Inspector appointed under the Factories Act, 1948, or Mines Act, 1952, or by an officer specified by the state government. In each case, a written authorization of the party is necessary. The Commissioner may also permit any other person to appear on behalf of a party [Sec. 24].

Registration of Agreements

In case of agreement has been arrived at between the parties with respect to the amount of lump sum or half-monthly payment payable to the employee or to a woman or a person under legal disability, the employer may send a memorandum of the agreement to the Commissioner for registration. If the Commissioner is satisfied as to its genuineness, he is required to register the same. He may refuse to record the agreement if he is of the view that it has been obtained by fraud or undue influence or other improper means.

In case the registration of an agreement has been refused, the employer is required to pay compensation in accordance with the provisions of the Act. In case the memorandum of agreement as required under the Act is not sent to the commissioner, the employer is liable to pay the full amount of compensation which he is liable to pay under the Act. A registered agreement is enforceable under the Act [Sec. 28–29].

Reports and Statements Regarding Fatal Accidents

On receiving information of a fatal accident from any source, the Commissioner may require an employer to submit statement in the prescribed form, giving the circumstances attending the death of an employee as a result of an injury and indicating whether in his opinion he is liable to deposit compensation. If the employer accepts his liability, he is required to deposit compensation within thirty days of the service of the notice. If he does not accept the liability, he is required to indicate the grounds on which he disclaims the liability; and the Commissioner may inform the dependants that it is open to them to prefer a claim for compensation [Sec. 10 A].

When a legal obligation is placed on the employers, they are required to report cases of fatal accidents or serious bodily injuries and to give notice of the same to the Commissioner. The notice may also be sent to another authority if the state government so prescribes. Reporting of fatal accidents is not necessary in case of factories to which the Employees’ State Insurance Act, 1948 applies. In case of a fatal injury, the Commissioner may require the employer to deposit a further sum if the amount deposited by him is insufficient [Secs. 10 B, 22 A].

Appeals

Except in certain cases, an appeal against an order of the Commissioner lies with the High Court [Sec. 30].

Returns

The state government may, by notification in the official gazette, direct the employers to send a correct return specifying the number of injuries in respect of which compensation has been paid by them and the amount of such compensation, together with prescribed particulars [Sec. 16].

Penalties

Penalties under the Act are described in Box 24.2.

Box 24.2

PENALTIES FOR OFFENCES UNDER THE E.C. Act, 1923

  1. Failure to maintain the required notice-board [Sec. 10 (3)] or to send to the E.C. Commissioner statement of fatal accidents [Sec. 10 A (1)] or to send a report of fatal accidents and serious bodily injuries [Sec. 10 B] or to file return relating to compensation [Sec. 16] is punishable with fine which may extend to 5,000 [18 A].

  2. Unjustified delay in the payment of compensation [Sec. 4 A (3)] may involve a penalty up to 50 per cent of the amount of compensation. Prosecution under the Act can be instituted by or with the previous sanction of the commissioner. A court can take cognizance of an offence only when the complaint is made within 6 months of the date on which the offence came to knowledge.

Power to Make Rules

The state government is empowered to make rules for carrying out the purposes of the Act. The Act specifies the matters on which rules may be framed. The central government may make rules for giving effect to arrangements with countries for the transfer of money paid as compensation [Secs. 32–36].

Right to Compensation where Employees’ State Insurance Act Is in Force

Where the Employees’ State Insurance Act, 1948, is in force, the injured employees or their dependants do not have the right to compensation under the Employees’ Compensation Act. The Employees’ State Insurance Act, 1948, provides benefits in the event both of disablement and death resulting from injury [Sec. 61 of the ESI Act].

WORKING

Table 24.2 contains figures of the number of accidents resulting in death, permanent and temporary disablement, and amount of compensation paid per case under the Employees’ Compensation Act, 1923, during 1971–2006. These figures give only a rough idea about the incidence of death and disablement caused by industrial accidents and the amount of compensation paid as these are based mainly on the returns furnished by the employers of the establishments covered, many of whom fail to submit returns in time, and also because a number of establishments have increasingly been covered under the ESI Act, 1948, in which the provisions of Employees’ Compensation Act, 1923, cease to be applicable.

 

Table 24.2 Compensated Accidents and Amount of Compensation Paid per Case in Establishments Submitting Returns Under the E.C. Act, 1923 (1971–2006)

 

Source: Compiled on the basis of data published in Government of India, Ministry of Labour, Various issues of Indian Labour Year Book and Pocket Book of Labour Statistics.

 

CHART 24.A: Average Amount Paid per Case of Death and Total Permanent Disablement Under Employees’ Compensation Act, 1923 (1971–2006), (See Table 24.2)

 

Table 24.2 shows that the amount paid per case of death varied between 7,000 and 15,000 during 1971–83, between 22,000 and 54,000 during 1984–94 and it substantially increased to more than 1 lakh per year from 1997 onwards, when it varied between 1.2 lakh (1987) and 3.8 lakh (2006). A similar trend is observed in the amount of compensation paid per case of permanent disablement. The amount paid per case of permanent disablement stood between 1,200 and 4,500 during 1971–83, between 3,200 and 48,000 during 1984–97 and between 50,000 and 1.3 lakh during 1998–2006. The amount of compensation per case of temporary disablement generally stood below 1,000 in most of the years prior to 1996. Since then, it has recorded an increase varying between 4,000 and 12,000 per case.

Although the amount of compensation in cases of death and total permanent disablement has been raised from time-to-time by introducing amendments in the Act, it cannot be said to be adequate to cover the needs of the disabled employee or his dependants. If the employee becomes totally and permanently disabled at an early age, his hardships in time to come can very well be imagined. A similar situation can be apprehended if the deceased employee has a number of dependants. As such, there is a strong case for replacing lump sum payments by periodic payments in both the cases as is provided under the ESI Scheme. The amending Act of 2009 has, however, adopted a bold measure: empowering the central government to review and revise the amount of compensation from time-to-time. This clause is expected to minimize the time lag that was involved in amending the Act for revising the amount of compensation. The amount of compensation in the event of death may go up to 2.28 lakh and for permanent total disablement up to 2.74 lakh as against the admissibility of 91,000 and 1.14 lakh respectively prior to the amendment of the Act.

AN ASSESSMENT

The Employees’ Compensation Act, 1923, has been an important social security measure providing for payment of compensation in the event of disablement and death resulting from accidents arising in the course of and out of employment. The Act has been amended several times since its enactment more than 85 years ago. Glaring shortcomings of the Act have come to light during the course of its operation, notable among which, are explained below.

  1. As explained in the beginning of the chapter, the Act imposes a liability on the employer to pay compensation in the event of disablement and death caused by accidents ‘arising out of’ and ‘in the course of’ of employment. It has also been shown that the Act applies to employees employed in a number of establishments and operations and the government is extensively empowered to apply the Act also to work and operations not mentioned in the schedule of the Act. The Act applies to big and small establishments alike. The amount of compensation has substantially increased after the amendments of 1984, 1995 and 2009. Moreover, the ESI Act, 1948, which replaces the Employees’ Compensation Act where in operation, has so far been applied mainly to factories. Many employments, particularly mines and plantations, are outside the purview of the ESI Act. Under these conditions, many employers have to face severe financial pressure as a result of the operation of the Act. ‘A small employer in many cases finds it difficult to pay compensation in the event of a heavy liability arising out of a fatal accident.’1 As many accidents occur due to the negligence or carelessness of the workers, it is not fair to place the entire liability to pay compensation on to the employers. As such, there is a strong justification to replace the Act by an insurance scheme, as has been done under the ESI Act, 1948.
  2. So long as the ESI Act, 1948, is not extended to employments and establishments to which the Employees’ Compensation Act, 1923, applies, there is the need to evolve a scheme of ‘Central Fund for Workmen’s Compensation’2 as suggested by the first National Commission on Labour. The commission also recommended, ‘All employers should pay to this Fund a percentage of total wages as monthly contributions to cover the cost of the benefit and of administration.’3. However, it is not fair to require the employers to bear the entire financial burden. The ultimate aim should be to replace it by an industrial injury insurance scheme as in operation in many countries of world and as partially provided for under the ESI scheme.
  3. The Act does not provide for the medical care of the employees disabled due to industrial injuries or contracting of occupational diseases. The employees covered under the ESI Act, 1948. are entitled to ‘medical benefit’ in addition to the ‘disablement benefit’. The medical benefit under the Act is generally substantial. In this regard the National Commission on Labour recommended the provision of medical care by the ESI Corporation or Welfare Commissioners appointed by the Government of India for various categories of mines.4 A working arrangement in this regard may be of substantial help to the injured employees.
  4. The Act provides for payment of lump sum in the event of death and permanent disablement. In certain cases, periodic payments for temporary disablement may also be converted into lump sum payment. This method of payment of compensation is based not so much on the ‘needs’ of workmen than on their wages. If an employee is disabled permanently at an early age, the lump sum amount may not prove adequate to meet his needs on a continuing basis. Similarly, lump sum payment in the event of the death of the employee may not meet the needs of his dependants on a regular basis. In many cases, an injured or handicapped employee is ‘thrown out without adequate payment because accident or disease has incapacitated him.’5
  5. The operation of the Act reveals that there are often delays and difficulties in getting compensation under the Act. It has been experienced that the number of commissioners has been insufficient to ensure expeditious settlement of compensation cases. In many cases, the employees and their dependants find it very difficult to get the amount deposited with the Commissioners, and in many others, the employers also deliberately delay the payment.
  6. The amount of compensation payable in respect of workmen getting more than 4,000 per month is the same as that payable to workmen getting 4,000 per month. The workmen in higher wage-groups resent this ceiling.

Time has now come to review the working of the Act in detail and to coordinate the schemes of benefits for disablement and death based on the principle of insurance, rather than on employer’s liability.

The second NCL (2002) has also suggested conversion of the Employees’ Compensation Act, 1923, from an employer’s liability scheme to a social insurance scheme and extension of its coverage progressively to more employments and classes of employees6 (see also Chapter 23).

SUMMARY
  1. Prior to the enactment of Workmen’s Compensation Acts, whether in Great Britain or India, the employers tried to escape the liability to pay for damages under the common law in the event of disablement and death of their employees resulting from industrial injuries. The common defences available to employers under the common law were: (i) doctrine of assumed risk, (ii) doctrine of contributory negligence, (iii) doctrine of common employment and fellow servants’ responsibility, (iv) doctrine that personal claim comes to an end with the death of either party, and (v) doctrine of unknown persons’ responsibility. The enactment of the Workmen’s Compensation Acts did away with all these defences and established the principle of employer’s liability to pay Compensation in the event of disablement and death of his employees resulting from accidents arising out of and in the course of employment.
  2. The Employees’ Compensation Act, 1923 (known as Workmen’s Compensation Act, 1923, prior to an amendment of 2009) is based on the principle of employer’s liability in the event of disablement and death caused by industrial injury ‘arising out of’ and ‘in the course’ of employment. The Act also specifies the conditions under which compensation is not payable.
  3. The amount of compensation is linked to the wages. The rates of compensation and the manner of its calculation have been prescribed in detail under the Act. The compensation in the cases of permanent disablement and death are payable in lump sum, whereas there is the provision of periodic payments in the event of temporary disablement. The existing minimum amount of compensation for death is 1.20 lakh and for total permanent disablement 1.40 lakh.
  4. The Act provides for the appointment of Commissioners by the state government. The Employees’ Compensation (Amendment) Act, 2009, has laid down the eligibility criteria for the appointment of Commissioners. The Act has also specified in detail the powers and functions of the Commissioners.
  5. Other provisions of the Act relate to registration of agreements, penalties for offences, requirement for reporting of fatal accidents, remedies of employer against contractor and contracting out.
  6. Some of the deficiencies of the Act and those experienced during the course of its working include: (i) making employer liable to pay compensation, (ii) compensation being based on wages rather than on the needs of the employee or his dependants, (iii) absence of provision for medical care, (iv) delays and difficulties involved in disposal of claims, and (v) ambiguities involved in the determination of employees to be covered.
QUESTIONS FOR REVIEW
  1. Explain the various defences available to employers under the common law to refute claims for damages in the event of industrial injuries sustained by their employees. What has been the status of these defences with the enactment of Workmen’s Compensation Acts?
  2. Explain the terms ‘arising out of’ and ‘in the course of employment’ and describe the conditions under which the employer is not liable to pay compensation to injured employees.
  3. Explain the terms ‘partial disablement’ and ‘total disablement’ and discuss the provisions of the Employees’ Compensation Act, 1923, relating to payment of compensation in the event of disablement and death of employees caused by industrial injuries.
  4. Discuss the provisions of the Employees’ Compensation Act, 1923, relating to powers and functions of commissioners. Also specify the penalties for the offences committed under the Act.
  5. Present an assessment of the effectiveness and working of the Employees’ Compensation Act, 1923, and suggest measures for improvement.
KEY TERMS

 

Total permanent disablement

Partial permanent disablement

Total temporary disablement

Partial temporary disablement

Arising out of employment

Arising in the course of employment

Case Study 1

Is proceeding to work covered under the term ‘in the course of employment’?

An employee employed in Mettur Thermal Power Station, a unit of the Tamil Nadu Electricity Board, died in the way to his work. The commissioner for Workmen’s Compensation of the area held that when the employee met with the accident while proceeding to work, it should be taken as having occurred in the course of employment and hence the employer was liable to pay compensation. The employer challenged the decision of the Workmen’s Compensation Commissioner before the Madras High Court.

The Division Bench of the High Court upheld the order of the commissioner making the following comments:

  1. The words ‘arising out of’ and ‘in the course of’ employment are keywords in the Act and the courts have interpreted these elaborately. The phrase ‘in the course of employment’ suggests the point of time, that is, the injury must be caused during the currency of employment, whereas the other expression ‘out of employment’ means that there must be some sort of connection between the employment and injury caused to the employee as a result of the accident. There is no difficulty in accepting such interpretation of the two phrases, but to the modern methods of working of industrial undertakings, such narrow interpretation does not satisfy their requirements, as it is a difficult task to determine the exact place of employment of an employee.
  2. The courts have, therefore, applied the ‘principles of notional extension of employer’s premises’. Applying these principles, the Supreme Court has held that the place of accident has to be construed as the place of duty of the employee concerned, even if he had not reached the actual place of work [B.E.S.T. Undertaking v. Ms. Agnes, AIR 1964 SC 193, 1963 II LLJ 615]. Various High Courts have followed the decision of the Supreme Court in their judgements [Superintending Engineer, Mechanical II Mettur Thermal Power Station, Tamil Nadu Electricity Board v. Sankupathy 2005 I LLJ 763].

Questions

What do you understand by ‘in the course of employment’ in the context of industrial injury?

What does ‘arising out of employment’ mean in the context of industrial injury caused by accident?

Is an accident met by an employee doing something different from the work actually assigned to him covered under the phrase ‘arising out of employment’?

Is fulfilment of both the conditions ‘arising out of’ and ‘in the course of’ employment necessary for establishing the employer’s liability to pay compensation under the Employees’ Compensation Act, 1923?

Case Study 2

Is workmen’s compensation commissioner empowered to impose penalty on employer for delayed payment of compensation?

An employee of the N.E. Railway, Samastipur (Bihar), died as a result of an accident while on duty on 28 August 2000. A claim for compensation was made in 2001, but the payment of the compensation amounting to 1,42,680 was made on 18 May 2002 and 6 June 2002. On account of the delayed payment, the Deputy Labour Commissioner-cum-Workmen’s Compensation Commissioner directed the Treasurer, N.E. Railway, Samastipur, to deposit 50 per cent of the amount of compensation, that is, 71,340 as penalty for delayed payment.

Aggrieved by the order of the Workmen’s Compensation Commissioner, the railways filed an appeal before the Patna High Court. The High Court observed that it was the duty of the employer for payment of compensation as soon as it has fallen due. In the present case, the payment was delayed and was paid only after the authority concerned directed the employer to pay the same. Besides, the employer did not produce any explanation for the delay caused in the payment of compensation. The High Court thus upheld the decision of the Workmen’s Compensation Commissioner requiring the employer to deposit the amount of penalty [The Divisional Treasurer, N.E. Railway and Others v. Devikala Devi, 2007, LLR 1027].

Questions

Can the Workmen’s Compensation Commissioner appointed by the state government entertain claims of compensation of an employee of the central government undertaking?

Can the state government appoint a Deputy Labour Commissioner as Workmen’s Compensation Commissioner?

Is Workmen’s Compensation Commissioner empowered to direct the defaulting employer to pay interest in case of delayed payment of compensation?

Within what period is the employer required to pay compensation from the date it fell due?