UNIT - IV

CONCEPT AND IMPORTANCE OF SOCIAL SECURITY

Like other socio-economic concepts, the connotation of the term “social

security” varies from country to country with varying political ideologies. For
example, social security in the socialist countries implies complete protection to every
citizen of this country from the cradle to the grave.

In other countries which are relatively less regimented ones, social security
refers to measures of protection afforded to the needy citizens by means of schemes
evolved by democratic processes consistent with resources of the State.

In general sense, social security refers to protection provided by the society to

its members against providential mishaps over which a person has no control. The
underlying philosophy of social security is that the State shall make itself responsible
for ensuring a minimum standard of material welfare to all its citizens on a basis wide
enough to cover all the main contingencies of life. In other sense, social security is
primarily an instrument of social and economic justice.

All the industrial countries of the world have developed measures to promote
the economic security and welfare of individual and his family. These measures have
come to be called as social security. Social security is dynamic concept and an
indispensible chapter of a national programme to strike at the root of poverty,
unemployment and diseases. Social security may provide for the welfare of persons
who become incapable of working by reason of old age, sickness and invalidity and or
unable to earn anything for their livelihood.

Definition of social security:

According to a definition given in the ILO publication’, “Social security is the
security that society furnishes through appropriate organization against certain risks to
which its members are exposed. These risks are essentially contingencies of life
which the individual of small means cannot effectively provide by his own ability, or
foresight alone or even in private combination with his fellows”.
 William Beveridge has defined social security as “a means of securing an
income to take the place of earnings when they are interrupted by unemployment,
sickness or accident to provide for the retirement through old age, to provide against
loss of support by death of another person or to meet exceptional expenditure
connected with birth, death, or marriage. The purpose of social security is to provide
an income up to a minimum and also medical treatment to bring the interruption of
earnings to an end as soon as possible.”

Social Security: characteristics of the social security program

The main characteristics of the social security program are as follows:

1. Social Security Schemes are providing social assistance and social insurance
to employees who have to face challenges of life without regular earning due
to some contingencies in their life.
2. These Schemes are implemented by enactments of law of the country.
3. They generally are relief providers to employees who are exposed to the risks
of economic and social security. This protection is provided to them by
members of the society of which he is a part.
4. These Schemes have a broad perspective. They not only provide immediate
relief to the employees who have suffered on account of contingencies, but
also provide psychological security to others who may face the same problems
in times to come.
Objectives of Social Security:
The objectives of social security can be sub-summed under three, categories:
1. Compensation: Compensation ensures security of income. It is based on this
consideration that during the period of contingency of risks, the individual and
his/her family should not be subjected to a double calamity, i.e., destitution
and loss of health, limb, life or work.
2. Restoration: It connotates cure of one’s sickness, reemployment so as to
restore him/her to earlier condition. In a sense, it is an extension of
compensation.

3. Prevention: These measures imply to avoid the loss of productive capacity

due to sickness, unemployment or invalidity to earn income. In other words,
these measures are designed with an objective to increase the material,
 intellectual and moral well-being of the community by rendering available
resources which are used up by avoidable disease and idleness.
Importance of Social Security
Social security is basically related to the high ideals of human dignity and
social justice.
The importance of social security for the employee as well as the society is
incredibly high:
a) Social Security is the main instrument of bringing about social and economic
justice and equality in the society.
b) Social Security is aimed at protecting employees in the event of contingencies.
This support makes the employees feel psychologically secured. This
enhances their ability to work.
c) Money spent on social security is the best investment which yields good
harvest. The workforce maintenance is very essential not only for the
organization but also for the country at large.
d) In a welfare state, social security is an important part of public policy. In
countries where social security is not given adequate consideration in public
policy, the government remains unsuccessful in maintaining equality and
justice.
India is a Welfare State as envisaged in her constitution. Article 41 of the
Indian Constitution lays down, “The State shall within the limits of its economic
capacity and development make effective provision securing the right to work, to
education and to public assistance in case of unemployment, old age, sickness, and
disablement and other cases of unserved wants.”
Thus, social security constitutes an important step towards the goal of Welfare
State, by improving living and working conditions and affording people protection
against the various kinds of hazards.
Social security benefits are provided in India through legislations. Workmen’s
Compensation Act, 1923 enforces the employer to provide compensation to a
workman for any personal injury caused by an accident, for loss of earnings etc. The
Employees’ State Insurance Act, 1948 enforces the employers to provide sickness
benefits, maternity benefit to women employees, disablement benefit, dependent’s
benefit, funeral benefit and medical benefits.
 The Employees Provident Fund and Miscellaneous Provisions Act, 1952
enforces the employer to provide provident fund, deposit-linked insurance etc. The
Maternity Benefit Act, 1961 provides for medical benefits, maternity leave etc. The
Payment of Gratuity Act, 1952 provides for the payment of gratuity at the time of
retirement.
Social security legislations in India suffer from the defects like duplication.
For example. Employees’ State Insurance Act and Maternity Benefit Act provide for
maternity benefits. In addition, different administrative authorities implement the law,
resulting from overlapping. Hence, the Study Group (1957-58) appointed by the
Government of India suggested an integrated social security scheme in India.
This integrated social security scheme should provide for medical care,
insurance against sickness, maternity benefits unemployment insurance, employment
injury, and old age pension. This scheme should be enforced by a single agency in
order to avoid overlapping and duplication.
India is a welfare state and social security is an essential component of
government policy.
Social security benefits in India are provided in two major way:
1. Social Insurance:
In this scheme, a common fund is established with periodical contributions
from workers, according to their nominal paying capacity. The employers and state
provide the portion of the finance. Provident fund and group insurance are example of
this type.
2. Social Assistance:
Under this, the cost of benefits provided is financed fully by the government
without any contributions from workers and employers. However, benefits are paid
after judging the financial position of the beneficiary. Old age pension is an example.
Influence of I.L.O.
United Nation and ILO have made many efforts regarding social security at
international level by number of Conventions and Recommendations. ILO takes part
in vocational training, women workers conditions and social security for improving
the working conditions of workers at international level. A number of
recommendations and conventions deal with workmen’s compensation, sickness
insurance, invalidity, old-age, and survivor’s insurance , unemployment provisions,
maternity protection and general aspects of social security.32 ILO deals with
following social security areas and activities at international level:

1. Manpower Organization and Vocational Training:

The ILO as well as the United Nations made concerted efforts in the post
second world war period in the manpower field to stimulate the most effective and
productive use of human resources in the whole process of economic and social
development. The ILO manpower experts have been made available to developing
countries seeking help in assessing their manpower needs and in organizing
vocational training programmes for meeting skill shortage.

2. Women Workers:

The ILO constitution specifically provides for the protection of women

workers. The first Session of the International Labour Conference held in Washington
in October 1919, adopted international standards protecting expectant mothers and
limiting the amount of night work by women. In 1937, the Conference laid down the
ILO’s aims in regard to women workers, namely

a) the guarantee of all civil and political rights;

b) full opportunities to improve their education;
c) better conditions for finding employment;
d) equal pay for equal work;
e) legal protection against dangerous working conditions;
f) legal maternity protection; g. the same trade union rights as that of
men.
3. Social Security:

The ILO has done the pioneering work in the field of social security. One of
the most important instruments adopted by the ILO is the Social Security (Minimum
Standards) Convention, 1952. Currently, the organization’s main object is to extend
social security to agriculture and plantation workers.33 ILO also established the
International Social Security Association (ISSA). The ILO is the UN’s agency with a
mandate to improve standards , conditions and social security of workers throughout
the world. The ILO’s most important function is to adopt Conventions and
Recommendations, which set minimum labour standards internationally. The
principles embodied in the conventions, if adopted and ratified, impose a duty to
comply on the ratifying states.

International Conventions Relating to the Social Security:

The ILO Conventions have been greatly adored by the working class all over
the world for their beneficial, humanitarian and missionary influence. The principal
means of action in the ILO is the setting up the International Labour Standards in the
form of Conventions and Recommendations. Conventions are international treaties
and are instruments, which create legally binding obligations on the countries that
ratify them.

ILO has number of Conventions relating to social security of workers Main

Conventions are given below—

Workmen’s Compensation (Accidents) Convention, 1925:

The ILO adopted Convention relating to workmen’s compensation as early as

1921 followed by other conventions on the same subject in the year 1925. It provides
for the payment of compensation for employment injury to all employees except those
employed in agriculture, ships and fishermen. Each Member of the International
Labour Organization which ratifies this Convention undertakes to ensure that
workmen who suffer personal injury due to an industrial accident, or their dependants,
shall be compensated on terms at least equal to those provided by this Convention.

Workmen’s Compensation (occupational diseases) Convention, 1925:

The list of occupational diseases established in the international and national

legal system has played important roles in both prevention and compensation for
workers’ diseases. Since the first establishment of the ILO list of occupational
diseases in 1925, the list has played a key role in harmonizing the development of
policies on occupational diseases at the international level.

Migration for Employment Convention (Revised), 1949:

This Convention was revision of the Migration for Employment Convention,

1939 and was held on June 8, 1949. Each Member of the International Labour
Organization for which this Convention is in force undertakes to make available on
request to the International Labour Office and to other Members information on
national policies, laws and regulations relating to emigration and immigration;
information on special provisions concerning migration for employment and the
conditions of work and livelihood of migrants for employment information
concerning general agreements and special arrangements on these questions
concluded by the Member. Members are required to establish, an adequate and free
service to assist migrants for employment, and in particular to provide them with
accurate information.

Equal Remuneration Convention, 1951:

This Convention was held on June 6, 1951 at Geneva and decided upon the
adoption of certain proposals with regard to the principle of equal remuneration for
men and women workers for work of equal value. The purpose of this Convention is
that the ordinary, basic or minimum wage or salary and any additional emoluments
whatsoever payable directly or indirectly, whether in cash or in kind, by the employer
to the worker and arising out of the worker's employment and rates of remuneration
established without discrimination based on sex. Where such action will assist in
giving effect to the provisions of this Convention measures shall be taken to promote
objective appraisal of jobs on the basis of the work to be performed. The methods to
be followed in this appraisal may be decided upon by the authorities responsible for
the determination of rates of remuneration, or, where such rates are determined by
collective agreements, by the parties thereto. Differential rates between workers
which correspond, without regard to sex, to differences, as determined by such
objective appraisal, in the work to be performed shall not be considered as being
contrary to the principle of equal remuneration for men and women workers for work
of equal value.

The Social Security (Minimum Standards) Convention, 1952:

It covers all nine branches54 of social security and sets minimum standards for
these nine branches. It is considered as a tool for the extension of social security
coverage and provides ratifying countries with an incentive for doing so by offering
flexibility in its application, depending on their socio-economic level. It came into
force on April 27, 1955. By May 2009, 44 countries had ratified the Convention. The
Convention has been ratified by India in 1964. The 1952 ILO Convention on Social
Security (Minimum Standard) has divided social security into nine components:

a) Medical care: It covers pregnancy, confinement, and its consequences and any
disease which may lead to a morbid condition. The need for pre-natal and post-natal
care, in addition to hospitalization, was emphasized. A morbid condition may require
general practitioner care, provision of essential pharmaceuticals and hospitalization.

(b) Sickness benefit: It includes incapacity to work following morbid condition

resulting in loss of earnings. This calls for periodical payments based on the
convention specification. The worker need not be paid for the first three days of
suspension of earnings and the payment of benefit may be limited to 26 weeks in a
year.

(c) Unemployment benefit: It covers the loss of earning during a worker’s

unemployment period. When he is capable and available for work but remains
unemployed because of lack of suitable employment. This benefit may be limited to
13 weeks payment in a year, excluding the first seven days of the waiting period.

(d) Old-age benefit: This benefit provides for the payment-the quantum depending
upon an individual’s working capacity during the period before retirement of a certain
amount beyond a prescribed age and continues till death.

(e) Employment injury benefit: It covers the following contingencies resulting from
accident or disease during employment:

i. Inability to work following a morbid condition, leading to suspension of

earning;
ii. Total or partial loss of earning capacity which may become permanent;
iii. Death of the breadwinner in the family, as a result of which family is deprived
of financial support. Medical care and periodical payment corresponding to an
individual’s need should be available.

(f) Family benefit: It means responsibility for the maintenance of children during an
entire period of contingency. Periodical payment, provision of food, housing,
clothing, holidays or domestic help in respect of children should be provided to a
needy family.
(g) Maternity benefit: This benefit includes pregnancy, confinement and their
consequences resulting in the suspension of earnings. Provision should be for medical
care, including pre-natal confinement, post-natal care and hospitalization if necessary.
Periodical payment limited to 12 weeks should be made during the period of
suspension of earnings.

(h) Invalidism benefit: This benefit, in the form of periodical payments should cover
the needs of workers who suffer from any, disability arising out of sickness or
accident and who are unable to engage in any gainful activity. This benefit should
continue till invalidism changes into old age, when old age benefits would become
payable.

(i) Survivor’s benefit: It means periodical payments to the family following the death
of its breadwinner and should continue till the entire period of contingency. The role
of the International Labour Organization in creating international standards of social
insurance and in the promotion of social security has been significant. Through its
Conventions and Recommendations, the ILO has exerted its influence to extend the
range and classes of persons protected and the contingencies covered, and has
improved the efficacy of the benefits assured.

Discrimination (Employment and Occupation) Convention, 1958:

The General Convention of ILO convened this Convention on June 4, 1958 at

Geneva. The main objective of this convention is that there shall be no discrimination
in the field of employment and occupation, and Considering that the Declaration of
Philadelphia affirms that all human beings, irrespective of race, creed or sex, have the
right to pursue both their material well-being and their spiritual development in
conditions of freedom and dignity, of economic security and equal opportunity,
discrimination constitutes a violation of rights enunciated by the Universal
Declaration of Human Rights. Each Member for which this Convention is in force
shall undertake and practice the following by methods appropriate to national
conditions –

a. to seek the co-operation of employers' and workers' organisations and

other appropriate bodies in promoting the acceptance and observance
of this policy;
 b. to enact such legislation and to promote such educational programmes
as may be calculated to secure the acceptance and observance of the
policy;
c. to repeal any statutory provisions and modify any administrative
instructions or practices which are inconsistent with the policy;
d. to pursue the policy in respect of employment under the direct control
of a national authority;
e. (e) to ensure observance of the policy in the activities of vocational
guidance, vocational training and placement services under the
direction of a national authority;
f. to indicate in its annual reports on the application of the Convention
the action taken in pursuance of the policy and the results secured by
such action.

The Equality of Treatment (Social Security) Convention, 1962:

It has decided upon the adoption of certain proposals with regard to equality of
treatment of nationals and non-nationals in social security. The General Conference of
the International Labour Organization, having been convened at Geneva by the
Governing Body of the International Labour Office, and having met in its Forty-sixth
Session on 6 June 1962, and decided upon the adoption of certain proposals with
regard to equality of treatment of nationals and non-nationals in social security. By
May 2009, 37 countries had ratified the Convention.

The Employment Injury Benefits Convention, 1964:

It applies to employment injury benefits to the workers. This Convention

provides for payment of cash and medical benefits in cases of employment injury and
at least 75% of expenses involved for all employees. The General Conference of the
International Labour Organization, convened at Geneva by the Governing Body of the
International Labour Office, had decided upon the adoption of certain proposals with
regard to benefits in the case of industrial accidents and occupational diseases, By
May 2009, 24 countries had ratified this Convention. A Member State whose
economic and medical facilities are insufficiently developed may avail itself by a
declaration accompanying its ratification of the temporary exceptions provided for in
the Articles.
The Invalidity, Old-Age and Survivors' Benefits Convention, 1967 and the
Invalidity, Old-Age and Survivors' Benefits Recommendation, 1967

It covers old-age benefit, invalidity benefit and survivor's benefit. The

coverage for payment of compensation in case of invalidity, death or old age is 50%
for industrial employees, 25% for all employees including agriculture. This
Convention has got parts namely; General provisions, invalidity benefit, old-age
benefit, survivals benefit, standards to be complied with by periodical payments,
common provisions, miscellaneous and final provisions. It has total 54 Articles. Each
Member which has ratified this Convention may subsequently notify the Director-
General of the International Labour Office that it accepts the obligations of the
Convention in respect of one or more of Parts II to IV not already specified in its
ratification.

Occupational Safety and Health Convention, 1981

The General Conference of the International Labour Organisation,

convened this Convention at Geneva on June 3, 1981 and decided certain proposals
with regard to safety and health and the working environment for the workers. This
Convention applies to all branches of economic activity. It covers all branches in
which workers are employed, including the public service. The term workers covers
all employed persons, including public employees.

Vocational Rehabilitation and Employment (Disabled Persons) Convention,

1983:

The General Conference of the International Labour Organization, convened

at Geneva by the Governing Body of the International Labour Office on June 1, 1983,
and noting the existing international standards contained in the Vocational
Rehabilitation (Disabled) Recommendation, 1955, and the Human Resources
Development Recommendation, 1975, and since after the adoption of the Vocational
Rehabilitation (Disabled) Recommendation, 1955, significant developments have
occurred in the understanding of rehabilitation needs. The scope and organization of
rehabilitation services, and the law and practice of many Members on the questions
covered that Recommendation. The year 1981 was declared by the United Nations
General Assembly, the International Year of Disabled Persons, with the theme "full
participation and equality" and that a comprehensive World Programme of Action
concerning Disabled Persons is to provide effective measures at the international and
national levels for the realization of the goals of "full participation" of disabled
persons in social life and development. These developments made it appropriate to
adopt new international standards on the subject which take account, in particular, of
the need to ensure equality of opportunity and treatment to all categories of disabled
persons, in both rural and urban areas, for employment and integration into the
community.

The Employment Promotion and Protection against Unemployment Convention,

1988 and the Employment Promotion and Protection against Unemployment
Recommendation, 1988:

It relates to unemployment benefit. It is a revision of the Unemployment

Provision Convention of 1934. It provides standards in the field of employment and
unemployment protection, notably for the promotion of full, productive and freely
chosen employment, the principles of equality of treatment and non-discrimination,
the methods of providing unemployment benefit.

Safety and Health in Mines Convention, 1995:

According to this Convention workers have a need for, and a right to,
information, training and genuine consultation on and participation in the preparation
and implementation of safety and health measures concerning the hazards and risks
they face in the mining industry, and recognizing that it is desirable to prevent any
fatalities, injuries or ill health affecting workers or members of the public, or damage
to the environment arising from mining operations, and the need for co-operation
between the International Labour Organization, the World Health Organization, the
International Atomic Energy Agency and other relevant institutions and noting the
relevant instruments, codes of practice, codes and guidelines issued by these
organizations and Having decided upon the adoption of certain proposals with regard
to safety and health in mines.
The Maternity Protection Convention, 2000 and the Maternity Protection
Recommendation, 2000

This Convention revised a 1952 ILO Convention (C103), which in turn was a
revision of the original 1919 ILO Convention (C3). The revision was aimed at gaining
more ratification by easing the requirements of the 1952 convention. It covers
maternity benefit to women workers. This Convention provides comprehensive
protection to pregnant working women in case unemployment is due to child birth. By
May 2009, 17 countries had ratified the Convention.

Safety and Health in Agriculture Convention, 2001:

The purpose of this Convention was to wider the term agriculture. According
to this Convention agriculture covers agricultural and forestry activities carried out in
agricultural undertakings including crop production, forestry activities, animal
husbandry and insect raising, the primary processing of agricultural and animal
products by or on behalf of the operator of the undertaking as well as the use and
maintenance of machinery, equipment, appliances, tools, and agricultural
installations, including any process, storage, operation or transportation in an
agricultural undertaking, which are directly related to agricultural production. The
term agriculture does not cover subsistence farming; industrial processes that use
agricultural products as raw material and the related services; and the industrial
exploitation of forests.

The Maritime Labour Convention, 2006:

The Maritime Labour Convention, 2006 is an international labour Convention

adopted by the International Labour Organization (ILO). It provides international
standards for the world’s first genuinely global industry. Widely known as the
“Seafarers’ Bill of Rights,” was adopted by government, employer and workers
representatives at a special ILO International Labour Conference in February 2006. It
is a unique feature of this Convention as it aims both to achieve decent work for
seafarers and to secure economic interests through fair competition for quality ship
owners.
Work in Fishing Convention, 2007:
This Convention addresses such matters as minimum age for work on a fishing
vessel, medical standards, work agreements, occupational safety and health, and
social security.
Domestic Workers Convention, 2011:

Recognizing and considering the significant contribution of domestic workers

to the global economy, which includes increasing paid job opportunities for women
and men workers with family responsibilities, greater scope for caring for ageing
populations, children and persons with a disability, and substantial income transfers
within and between countries, and considering that domestic work continues to be
undervalued and invisible is mainly carried out by women and girls, many of whom
are migrants or members of disadvantaged communities and who are particularly
vulnerable to discrimination in respect of conditions of employment and of work, and
to other abuses of human rights.

EMPLOYEES COMPENSATION ACT, 1923

Every employee needs a secured job and wants to get compensation for the
expenses he has incurred. This is a requirement that needs to be fulfilled by the
company whether it is small scale or large scale. After all, a company’s success
depends on its employees. Therefore, the protection of employees’ and their safety is
a top priority of a company. This article is all about how much compensation is given,
under what conditions, who is entitled to claim compensation and a lot more.

Characteristic features of the Act

The “Employees Compensation Act, 1923” is an Act to provide payment in the

form of compensation by the employers to the employees for any injuries they have
suffered during an accident. Earlier this Act was known as the Workmen
Compensation Act, 1923. When the employer is not liable to pay compensation-

1. If the injury does not end in the entire or partial disablement of the
employee for a period exceeding three days.
 2. If the injury, not leading in death or permanent total disablement, is caused
by an accident which is directly attributable to:
The employee having at the time of the accident is under the influence of
drink or drugs;
The willful disobedience of the employee to an order if the rule is expressly
given or expressly framed, for the purpose of securing the safety of
employees; or
The willful removal or disregard by the employee of any safety guard or
other device which has been provided for the purpose of securing the safety
of employees.
Nature of Liability
Imagine what will happen if an employee who is working putting in great
benefits gets to know that he/she will not be getting any benefits. After all, people
tend to do something to get something in return. When the principle of vicarious
liability is applied, the employer is liable to pay compensation irrespective of his/her
negligence. Employer anticipates it as damages payable to the employees but it is
actually a relief for them. An Employer becomes liable when employees have
sustained injuries by any accident or unavoidable situations during the course of
employment. The question arises: Will an employee who is a part-time worker would
still be entitled to the benefits of the Act? Yes, the employer will still get the benefits
of the Act.
Who may get the compensation? To what extent the employers are liable?
To be eligible for the Employees’ Compensation Act’s benefits there are some
requirements which need to be fulfilled:

1. You must be an employee of the Company or Organization.

2. You must have been injured at the workplace or the job was as such that
you have been injured.

Doctrine of added peril

When an employee performs something which is not required in his duty, and
which involves extra danger, the employer cannot be held liable to pay compensation
for the injuries caused. In Devidayal Ralyaram v. Secretary of State it was ruled that
the doctrine of added peril was used as defense and the employer was not liable for
the compensation.

Adjudication of Compensation
The adjudication is done by the commissioner in calculation of the amount of
compensation. The quantum of compensation is calculated from the date of the
accident.
Self-inflicted Injury
If a worker inflicts an injury to himself or herself it is a self-inflicted injury.
The injury may be intentional or accidental but the employer is not liable for such
injuries. There are some types of jobs that have a high risk for self-inflicted injuries
which include-

Law enforcement
Medical employees
Farmers
Teachers
Salespeople
Contributory negligence
Employees owe a duty to their employers to carry out their work with
reasonable care so as to avoid accidents and injury. Employers are vicariously liable
for the negligence of their employees but are entitled to claim a contribution or
indemnity from their negligent employee in appropriate circumstances. So if there is
negligence on the part of both employee and the employer then the employer will be
liable to pay compensation to the extent of his own negligence, not of the employee.
Hence, the compensation amount may reduce as the employer will not be liable for
the negligence of the employee.
Employer’s liability for Compensation Section 3:
There are certain occupations which expose employees to particular diseases
that are inherent-
Infra-red radiations;
Skin diseases due to chemical or leather processing units;
Hearing impairment caused by noise;
 Lung cancer caused by asbestos dust and Diseases due to effect of extreme
climatic conditions.
For Example in Miners are at a risk of developing a disease called silicosis.
Sometimes miners also develop lung diseases due to exposure to dust. The people
who work in agricultural lands, develop diseases through spraying of pesticides.
These pesticides are toxic in nature and are health hazards to many farmers.
There are thousands of workplaces where occupation itself is dangerous in
nature. Provided that the employer shall not be liable:
a. if any injury does not result in the total or partial disablement of the employee
for a period exceeding three days;
b. if any injury does not result in death or permanent total disablement caused by
an accident which is directly attributable to-
i. if the employee is under the influence of drink or drugs at that time,
ii. the willful disobedience of the employee to an order expressly given,
or to a rule expressly framed, for the purpose of securing the safety of
employees,
iii. the willful removal by the employee of any safety guard or other
devices which he knew to have been provided for the purpose of
securing the safety of employees.

Part A of Schedule III

If an employee contracts any disease that is mentioned in occupational

diseases or the employee is employed for a continuous period of six months (this does
not include the service period) and not less than that, the employer shall not be liable
to pay the compensation as the disease will be deemed to be injury and it shall be
considered as out of course of employment.

Part B of Schedule III

1. Diseases caused by phosphorus or the toxic substance present, all include

exposure to risk concerned.
2. Diseases caused by mercury or toxic substances found exposure to the risk
concerned.
 3. Diseases caused by benzene or the toxic substances found which pose risk
to the concerned.
4. Diseases caused by nitro and amino toxic substances of benzene involve
risk to the concerned.

These diseases are considered occupational diseases, and they are deemed to
be out of the course of employment and therefore the employer will not be liable to
pay the compensation.

Part C of Schedule III

If an employee contracts a disease that is mentioned as an occupational disease

which is specific to that employment, during a continuous period that is less than the
period mentioned under this part of Schedule 3 is known as occupational diseases. It
will be deemed that the disease has arisen out of and in the course of the employment,
the contracting of such disease will be deemed to be an injury by accident within the
meaning of this Section:

Pneumoconiosis is a disease caused by sclerogenic mineral dust (silicosis,

anthracosilicosis, asbestosis) and silico-tuberculosis if silicosis is an essential factor in
causing the resultant incapacity or death, such diseases are considered as occupational
diseases.

For instance, an office of KLM Consultant was located in a new place. The
new place had large areas, and a new wallpaper was also placed, the area painted, and
a new carpet was also laid. Employees worked in cubicles. However, within a month
of shifting, one of the employees, Rahul Sharma complained of skin allergy. At the
new workplace, there were no windows in the cubicle where Rahul had shifted. A
photocopy machine was near to his cubicle. Since his shifting, he started complaining
of unpleasant odors, a feeling of excessive tiredness and irritation in eyes, nose, and
throat. Also, some paint boxes were kept at the office which was still not removed
even after his complaining. He also complained about the increasing noise and
distraction there. The rashes which started a week ago with itching and redness now
turned more grievous and had spread from the initial location of the hand to surfaces
of the wrists. Due to his allergic condition, Rahul had to visit a doctor who advised
him to avoid going out. As Rahul had to incur expenses on visiting the doctor and
medicines, he approached his employer for compensation.

The company had bought a workplace compensation insurance policy from the
insurance company. The Company KLM Consultant considered it as an occupational
disease and approached the employee’s compensation insurance company to recover
its legal liability and hence pay the compensation to Rahul.
After checking all the documents submitted by Rahul, the insurer considered it
as an occupational disease and agreed to settle the claim. The insurer covered medical
expenses incurred by Rahul on his treatment.

Under Section 3(3) The Central Government or the State Government gives a
notification in the Official Gazette which species the diseases which will be deemed
to be occupational diseases under the provisions of sub-section(2) and in the case of
notification by the state government, these diseases are declared by the Act. Section
3(4) No compensation will be payable to an employee unless the disease is directly
attributable to a specific injury that arises out of or in the course of employment.

Employment
Underemployment, an employee is one who works under the employer and
has to work as per the terms of the company or the employer.

Personal injury
A personal injury can be compensated only in some circumstances. Injury
sustained by the employee must be a physical injury. In the case of Richmond Adult
Community College v McDougall (2008), M has suffered injuries mentally,
psychological disorders as he was offered a job as a database assistant in a college.
But when it learned about the medical history and the psychological disability M was
suffering from, the college withdrew the offer. M brought a disability discrimination
claim from the college. The tribunal accepted that m was suffering from mental
impairment but she was not disabled within the meaning of Section 1 of the Disability
Discrimination Act, 1995.
Accident
The Act provides that compensation is provided to employees and their
dependants only if the injuries from the accident includes occupational diseases. The
accident must occur in the course of employment the Act also applies to railway
servants and persons employed in any such capacity as specified in Schedule 2 of the
Employees Compensation Act. The people employed in factories, mines, plantations,
vehicles, construction works, and certain other hazardous occupations come under
Schedule II.
A fatal accident is one where there is death or a high risk of loss of life of the
employee. In the case of a fatal accident, the employee might die or suffer severe
disablements and injuries. On the other hand, non-fatal accidents are those accidents
that do not have a high probability of death. In the case of non-fatal accidents, the
employee or the workman might suffer disabilities or any type of personal injury.

Both fatal and non-fatal accidents are covered by the Employees

Compensation Policy, provided such accidents result in the mentioned contingencies
in the act. Fatal accidents are taken as those which result in death, or permanent total
disablement, permanent partial disablement or fatal injuries. If any of these
contingencies occur, the employees’ compensation policy would pay the claim faced
by the company. In the case of non-fatal accidents though, the covered contingencies
might not occur. The employee or worker might not face any type of disablement or
injury from such accidents. If the employee or workman suffers from a type of
disablement and the disablement does not last for more than 3 days, the claim would
not be paid. As a result, in several employees’ compensation policies, non-fatal
accidents are usually not covered unless they cause a disablement which lasts for
more than 3 days.

In Lister v Romford Ice and Cold Storage Company Limited, House of Lords
upheld the decision of the Court of Appeal that an employee owed a duty in contract
to his employer to take reasonable care in the use of a vehicle at work. In the event
that the employer was liable to pay damages arising from the employee’s negligence,
the employer could bring a claim to recover that loss from his employee.

Arising out of and in the course of employment

Three factors determine whether the act is arising out of or in the course of
employment:
 1. When the injury occurred, the employee must have been engaged in the
business of the employer. Also, he must not be doing something for his
personal benefit.
2. The accident must occur where the employer was performing his
duties.
3. The injuries occurred because of the risk incidental to the duties of the
work or services or if the nature or condition of employment is
inherent.

Notional extension of Employer’s Premises

When there is a causal connection between the accident and the place where
the employee is working, compensation is payable for the disability or death of the
person according to the Employees Compensation Act. This is the Doctrine of
Notional Extension of the workplace. The theory of this doctrine was executed in
some cases:

Moondra & Co. V/s Mst. Bhawani there was a truck driver who was told by
his employer to drive a petrol tanker. The driver found a leak in the tank and sought
permission from the employer to look for the source of the leakage. While searching
he lit a matchstick and the tank caught fire. The driver received burn injuries and died.
It was held by the court that the family members of the deceased would be entitled to
compensation since the accident took place at the workplace and in the course of
employment.

Willful disobedience of orders or safety devices, etc.

If the employee disobeys the order expressly given or denies to obey any rules.
The rules are made for the safety of the workmen but if they disobey the accident
might happen. The accident can take place if the employee willfully disregards the
safety guards or any other device. If the employee knew that he has been provided
safety for the purpose of securing employees and still disregards it is said to be done
willfully.
Compensation under Agreement

A compensation agreement ensures that an individual will get paid for the
services he or she has provided to a company as an employee. A compensation
agreement ensures that an individual will get paid for the services he or she provides
to a company as an employee.

The question of compensation and negligence of employee

The question of compensation and negligence of employees is explained

above in contributory negligence. When there is negligence on the part of the
employer and employee, the employer is liable to pay compensation only to the extent
of his negligence. He will not be liable to pay the full amount of compensation. So in
the case of negligence of the employee, he will get only a part of compensation.

Alternative Remedy under Section 3(5)

Any right to compensation cannot be conferred by an employee in respect of

injuries,if he has instituted a suit for damages in a civil court, in respect of any injury
against any employer. No suit for damages shall be maintainable by an employee in
any court of law.

Liability of Insurance Company

If any claim is due to the insurance company, the company cannot escape
liability arising out of claim simply because notice was not issued to the company.
For instance, if a notice is issued to the owner of the vehicle it is sufficient to get
insurance from the company. In the case of Ram Karan v. Vijayanand the petition was
filed by Ram Karan under section 482 of the code of criminal procedure because he
had been illegally deprived of the benefits of the premature release. It was a violation
of Articles 14, 19 and 21 of the Constitution of India. It was held that he was entitled
to be released as per the rules.
Liability of Insurance Company or owner of vehicle

The question is whether the insurance coverage is available to the insured

employer-owners? The owner of motor vehicles, in relation to their liabilities under
the Employment Compensation Act on account of motor accident injuries caused to
their employees would include additional statutory liability foisted on the insured
employers under Section 40 of the Compensation Act.

Amount of compensation Section 4

1. Where death results from the injury-In case the employee dies, an amount
equal to fifty percent of the monthly wages multiplied by a factor as per given
in the Schedule 4 of the act or rupees eighty thousand is given whichever is
more.
2. Where permanent total disablement results from the injury- In case the
employee has total disablement the amount given is sixty percent or rupees
ninety thousand whichever is more.
3. Where permanent partial disablement results from injury- In the case of
permanent partial disablement, the compensation provided is equal to
disability as sixty percent or rupees ninety thousand.

Compensation to be paid when due and penalty for default Section 4-A

When the employer does not accept liability for compensation to the extent
claimed, he shall be bound to make a payment may be provisional and such payment
shall be deposited to the employee or the commissioner. The commissioner can direct
the employer to pay interest in addition to the amount at the rate of twelve percent per
annum. The rate of interest can also increase which may be specified by the Central
Government.

Method of calculating Wages Section 5:

The basis for the calculation of compensation is the monthly wage system. It
means the amount of wages deemed to be payable for a month. A case dealing with
the method of calculating wages was Zubeda Bano v. Maharashtra Road Transport
Corporation, 1990. Batta does not amount to wages for computing compensation. It is
paid to workman per day to cover special expenses incurred by him due to the nature
of his work.

Another case was New ‘India Assurance Co. Ltd., Hyderabad v. Kotam Appa
Rao, 1995, when the employer has been giving service to the employer during a
continuous period of not less than twelve months preceding the accident, and when
the employer is liable to pay compensation, the employee will be liable one-twelfth of
the total wages. The employer is required to pay the compensation which is due for
payment to employees in the last twelve months of that period.

Review Section 6:

1. Any half monthly payment can be reviewed by the commissioner under

this act if there is an agreement between the parties or if there is an order
given by the commissioner. A certificate of a qualified medical practitioner
will be accompanied that there is a change in the condition of the employee
subject to the rules and regulations under the Act.
2. Any half monthly payment may be reviewed, can be continued, increased,
decreased or ended under the act or if the accident is found which resulted
in permanent disablement. Such an employee may get less amount because
he had already received by way of half monthly payments.

Communication of Payments Section 7:

Commutation of half- monthly payments- Any right to receive half- monthly

payment agreement between the parties is commutation of payments. If the parties do
not agree and the payment continues for not less than six months then on the
application of either party, the Commissioner will redeem the payment of a lump sum
amount which was agreed by the parties.

Distribution of Compensation Section 8:

Rights of heirs of dependents
1. Compensation will not be provided to the employee whose injury has
resulted in death and lump sum payment will also be not provided who is
 under a legal disability. The compensation may be deposited to the
commissioner and a direct payment will not be allowed by the employer to
the employee.
2. In the case of a deceased employee, an employer can make payment to any
dependant advances. The compensation will amount to equal to three
months’ wages of the employee and the amount shall not exceed the
compensation payable to the dependant. If the amount exceeds, it may be
deducted by the commissioner from the compensation and repaid to the
employer.
3. An amount not less than ten rupees which is payable may be deposited with
the commissioner on behalf of that person.
4. The receipt of the commissioner will be sufficient discharge of the amount
if any compensation is deposited with him.
5. When any compensation is deposited with the commissioner and he is
payable to any person, he may if the person to whom the compensation is
to be payable is not a woman or a person with a legal disability then he
may pay the money to the person who is entitled to get the compensation.
6. When any lump sum amount is deposited with the commissioner and he is
payable to a woman or a person who is legally disabled, such amount can
be invested for the benefit of any other woman or a person with a
disability. The commissioner may direct the amount in such cases.

Compensation not to be assigned, attached or charged Section 9:

Compensation not to be assigned, attached or charged, save as provided by

this Act, 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 workman by operation of law, nor shall any claim be set off
against the same.

Notice and claims of the accident Section 10:

A claim for compensation cannot be entertained by a commissioner unless the

notice of the accident is given in a certain manner.
Power to acquire statements from employers regarding fatal accidents Section
10A:

When a commissioner receives information about the death of an employee,

because of an accident that is arising out of or in the course of employment, he can
send a registered post or a notice to the employer of the employee, to submit a notice
within thirty days of service. The statement or notice shall be in a prescribed form
mentioning the circumstances under which the death took place. Also stating that
whether the employer is liable or not to deposit compensation on the death of the
employee.

Reports of fatal accidents and serious bodily injuries Section 10B:

A notice is required to be given to any authority when any law is in force for
the time being, if any accident occurs on the premises of the employer which results
in the death of employee or serious bodily injury the person on behalf of employer is
required to give a notice within seven days of the death. This person shall send a
report to the commissioner giving details of the death or serious bodily injury. It will
be done only when it is provided by the state government that instead of sending the
report to the commissioner it is sent to another authority to whom a notice can be
given. “Serious bodily injury” means injury to a limb or permanent loss of sight or
hearing or fracture of limbs or the insured person is absent from work for more than
twenty days.

Medical Examination Section 11:

When an employee brings to the notice that he has met with an accident,
before the expiry of three days he will be examined free of charge by a qualified
medical practitioner. If the employee refuses to submit himself or herself for
examination or in any way obstructs the same, his right to compensation shall be
suspended. If the employer voluntarily leaves without having been examined in the
place where he is employed, his right to compensation shall be suspended until he
returns and offers himself for examination.
 The incorporation of words “assessment of loss of earning capacity by the
qualified medical practitioner” in Section 4(1)(c)(ii) has some purpose and it is not a
case of ambiguity.

If there’s no provision that the Commissioner to see the compensation and he ignores
the medical practitioner’s report, there is no question of avoiding it by Commissioner
unless he desires a second report from the Medical Board; New Asian nation
Assurance Co. Ltd. v. Sreedharan, 1995.

Contracting Section 12:

When a person (principal) is in the course of some business or trade, with any
other person (contractor) for the execution of any work, the principal will be liable to
pay the amount to the employee who has been employed in the business. The
principal is liable because compensation has to be claimed from the principal and the
amount of wages will be calculated by the employer.

When the principal will be liable to pay he will be indemnified by the

contractor or any other person from whom the employee can claim compensation. The
agreement between the principal and the contractor about the right amount and
indemnity will be settled by the commissioner.

If the accident occurred at a different place that is either on the premises of the
workplace or any other place, the employee will not be able to recover compensation
from the employer. Other than this no other constraint is there and employees can
recover compensation from the contractor instead of principal.

Remedies of employer against a stranger Section 13:

When an employee recovers compensation as he suffered any injury and

creates a legal liability of some other person other than the person by whom the
compensation was paid, the other person will be entitled to be indemnified by the
person who is liable to pay damages.
Insolvency of employer Section 14:

1. When an employer enters into a contract with any insurer in respect of any
liability to an employee, and if the employer becomes insolvent or makes a
composition or scheme or arrangement with his creditors in this event the
company is insolvent. The employee can recover the amount of
compensation if the company is winding up and it is the case of insolvency.
2. If in any case in the case of insolvency, the contract of the employer with
the insurer is void or voidable due to any reason such as non compliance on
the part of the employer, if the contract is not void or voidable the insurer
may be entitled to prove in the proceeding or at the time of liquidation for
the amount to be paid to the employee.
3. In case the liability of the insurer to the employee is less than the liability
of the employer to the employee, the employee may prove for the balance
amount of the compensation in the insolvency proceedings or at the time of
liquidation.
4. When the compensation is a half monthly payment, the amount due for the
said purpose will be taken in a lump sum amount. The amount payable will
be half monthly payment, if it be could be redeemable it will be proof.
5. The insolvency of the employer shall not be applied where a company has
wound up voluntarily merely for purposes of reconstruction of the
company or amalgamation with another company.

Compensation to be first charge on assets transferred by Employer Section 14-A:

When an employer transfers his assets or property before any amount is due to
him in respect of any compensation, and the liability accrued is now before the date in
law it is the first charge on that part of the assets or property so transferred as it
consists of immovable property.

Special provisions relating to Masters and Seamen Section 15:

When the person injured in the aircraft is the master of the ship and he is the
employer, but the accident happened and commenced on the ship, it is not necessary
for the seaman to give any notice of the accident for compensation for the injuries
suffered.

In such cases the death of the seaman or the master, the claim for compensation may
be made within one year without the notice after the news of death is received by the
claimant. Also if the ship is deemed to have been lost, within eighteen months of the
date on which the ship was or is deemed to have been lost.

Special provisions relating to captains and other members of the crew of

aircrafts Section 15-A:

If the captain of the aircraft is serving and he is the employer but an accident
occurs, any crew member or the captain it is not necessary for any crew member to
give notice of the accident.

In such cases the death of the seaman or the master, the claim for
compensation may be made within one year without the notice after the news of death
is received by the claimant. Also if the ship is deemed to have been lost, within
eighteen months of the date on which the ship was or is deemed to have been lost.

When an injured captain or any other crew member of the aircraft or the ship is
discharged from any depositions or testimony of a witness is taken by a judge or
magistrate the central government or any state government may enforce any
proceedings on the basis that the evidence is admissible:

i. if the deposition or testimony of witness is authenticated by the signature of

the Judge, Magistrate, or consular officer before it is made.
ii. if the person who is accused or he/she is the defendant is having the
opportunity by himself or his agent to cross-examine the witness.
iii. if the deposition or the testimony of the witness is or was made in the course
of a criminal proceeding and the proceeding was made in the presence of the
person who is accused.
Special provisions relating to employees abroad of companies and motor vehicles
Section 15-B:

The special provision related to employees abroad and motor vehicles will be
applied to the persons or employees who are recruited by the companies registered in
India and under the Motor Vehicles Act, 1998.

i. The notice of the accident and the compensation claimed may be served on the
agent of the company. Or the notice may be served on the local agent or the
owner of the motor vehicle in the country of the accident.
ii. In case the employee dies, the provisions made in this section 15-B shall
apply. The claim for compensation may be made within one year after the
news of the death of the claimant has been received.
iii. Therefore, in case of any compensation claimed, the commissioner shall
entertain the claim. Although as provided in the section is not much preferred
in due time.

Returns as to Compensation Section 16:

The state government can direct any person who is employing an employee at
a specified class, specified time and authority that is specified in the notification of
official gazette. The state government may also direct to specify the number of
injuries in respect of compensation and the amount that has been paid by the employer
during the previous year as compensation.

Contracting out Section 17:

If an employee has made a contract or agreement before or after the

commencement of the act, and if he voluntary ceases the right to compensation from
the employer it shall be considered null and void. The employee cannot seek
compensation for any personal injury arising out of or in the course of employment
and the liability will be reduced of any person who is entitled to pay compensation
under this Act.
Penalties Section 18-A:
Penalties Arise when whoever-

Fails in maintaining a book that is required to maintain under sub Section

3 of Section 10
The person fails to make a report that is needed to send under section 10B.
Fails to inform the employee of his rights to claim compensation needed
under Section 17A. He or she will be punished with fine which is not less
than fifty thousand rupees that can be extended to one lakh rupees.
No prosecution can take place under this section.

COMMISSIONERS

Section 19: Reference to Commissioner

The question arises about the liability of any person under the act, who will
pay the compensation. A question arises about the person who is injured or not or how
much amount is to be given or the duration of the compensation. Also about the extent
of the disability the person who is suffering and will get compensation. All such
issues are to be resolved by the commissioner.

Appointment of Commissioner Section 20:

Commissioner means a commissioner for employee compensation appointed
under Section 20. The state government or the central government may appoint any
person to be commissioner for workmen’s or employees’ compensation act in some
specified areas. Every commissioner is identified as a public servant in the Indian
Penal Code.

1. If the state government appoints more than one commissioner for any area,
a specific order may regulate the business.
2. Any commissioner may choose a person or more persons who possess
knowledge and assist him in holding the inquiry.
Venue of proceedings and transfer Section 21:

The provisions under the act will be subject to the commissioner as well if
there is a matter related to rules and regulations. The rules made under the act before
the commissioner for the area where-

1. The accident happened that resulted in the injury.

2. If the employee dies and if the dependent claims compensation it will reside.
3. Employer’s office is registered.

No matter should be processed before a commissioner other than the

commissioner who has jurisdiction in the area where the accident happened. It shall
not happen without giving notice in the manner prescribed. If the employee is the
mater of the ship or seaman or a captain or crew member of the aircraft or employee
in a motor vehicle, meets with an accident outside India, then such matter shall be
done by the commissioner.

Form of Application Section 22:

No other application for any matter of the commissioner for dependants

should be made for compensation. Until and unless some question arises between the
parties there is no settlement as per agreement.

The power of commissioner is required to further deposit in the cases which

talks about fatal accidents- Section 22-A

When any amount is deposited by an employer as compensation payable in

respect of an employee whose injuries resulted in his death, and the commissioner
thinks that amount or sum was not sufficient, he may state a notice in writing giving
reasons, he may call upon the employer to show why he could not make a further
deposit within such time as stated in the notice. If the employer fails to satisfy the
Commissioner, the Commissioner may make an award determining the total amount
to be paid, and requires the employer to deposit the deficient amount.
Powers and Procedure of Commissioners Section 23:
He has the power to award compensation more than what is claimed by the
employee if the facts warrant the award. A case dealing with the commissioner
was Karnataka State Road Transport Corporation v. B.T. Somashekaraiah, 1994

Appearance of Parties Section 24:

A person may appear or become a witness for the purpose of examination, an
application or act is required to be made by a person to a commission. It may be done
on behalf of a legal practitioner or an official of the insurance company or registered
trade union or an inspector appointed under Section 8 of the Factories Act, 1948, or
any other officer which is specified by the state government with the permission of
the commissioner or a person who is authorised to do so.

Method of Recording Evidence Section 25:

The commissioner makes a brief written message(memorandum) of the
evidence of every witness as the examination process proceeds. The memorandum
should be in written form and duly signed by the commissioner. The form so signed
by the commissioner must be in his own handwriting and it will be a part of the
record.

Time limit for disposal of cases relating to compensation Section 25A:

The Commissioner can dispose of the matter relating to compensation under
this Act within a period of three months from the date of reference and intimate the
decision in respect thereof within the said period to the employee.

Cost Section 26:

All costs, incidental to any proceedings before a Commissioner, shall, subject
to rules made under this Act, be in the discretion of the Commissioner.

Power to submit cases Section 27:

A commissioner can submit a Question related to law so that the High Court
can decide the compliance with the standards or rules if the High Court wants to do
so.
Registration of agreements Section 28:

A memorandum should be sent by the employer to the commissioner when a

lump sum amount is payable as compensation due by the agreement either half
monthly payment or payment being payable to a woman or a person with a legal
disability. The memorandum must be genuine and should be registered in the
prescribed manner. However, a memorandum cannot be recorded before seven days
after the communication has taken place between the commissioner and the concerned
parties.

Effect of failure to register agreement Section 29:

The employer will be liable to pay the full amount of compensation if the
registration of the agreement of memorandum is not sent to the commissioner as
required under the section. The employer will pay the compensation as he is liable to
pay under the provisions of the Act (Section 4) Until the commissioner directs to
deduct more than half of the amount to be paid to the employee as compensation.

Appeals Section 30:

An appeal may lie to the High Court by following the orders of the
commissioner.
1. A lump sum amount as compensation is awarded as an order, and redemption
of half the monthly payment is away.
2. An order may refuse to allow gain of a half monthly compensation.
3. Distribution of compensation by order among the family members of the
deceased, or disallowing of any claim of a person.
Substantial Question of Law
If there is difficulty in applying the facts to the law it will not amount to a
substantial question of law. Reference case- Asmath Bedi(dead) v. Marimuthu. The
period of limitation under section 30 is sixty days if a person makes an appeal. An
appeal lies against the order of commissioner who will compensate only when a
substantial question of law. The scope in section 30 of the Act for appealing against
the order that is passed by the commissioner is very limited. An appeal shall not lie
against any order unless a substantial question of law.
Can courts intervene on question of fact?

Yes, the courts can intervene on the question of fact. This was done in the case
of Mangala Ben vs Dilip Motwani It was first held that there is no substantial question
of law. In the opinion of the Court, the finding of the Commissioner does not prove
that the deceased was in the employment of the owner. The learned Commissioner
further held that the claimant did not produce any evidence to prove that the deceased
was employed for the purposes Dilip Motwani’s trade or business. He observed that in
the absence of such evidence, the deceased cannot be held to be an employee. In the
opinion of the court, the Commissioner committed error of law in holding that the
burden lay on the claimant to prove that the deceased was employed for the purposes
of the respondent’s trade or business. The appellate court has no jurisdiction to
entertain an appeal unless the same involves a substantial question of law, Nisan
Springs (Pvt) Ltd v. Om Jain, 1990.

Effect of death of claimant

If the injury of the employee results in his death, the employer shall give
compensation in addition to the compensation that is deposited with the
commissioner. A sum of five thousand rupees and not less than that will be given to
the eldest surviving dependant of the employee. Provided further that no appeal by an
employer under clause (a) shall lie unless the memorandum of appeal is accompanied
by a certificate by the Commissioner to the effect that the appellant has deposited with
him the amount payable under the order appealed against.

Review, Revision, Remand, and Writ

If an employee is not satisfied with the decision of the court regarding the
compensation, he can appeal for review by the court. Review can be made only after
the decree is passed by the court or an order is made. If there is an error in the
decision by the court appeal can be made for revision which can be done only by the
High Court. An employee can writ if he has been wrongly remanded. Remand means
In custody of the court.
Appeal not accompanied with certificate by the Commissioner under Proviso (3)

If the appeal is not accompanied by a certificate by the commissioner that is

payable and deposited with him then no appeal by the employer under clause (a) shall
lie against the law. The period of limitation under the section for the appeal will be
sixty days.

Condonation of delay

If the appeal by the employee is delayed it is known as condonation of delay.

An appeal is filed when the employee is not satisfied by the decision of the court and
want to appeal again for the decision. So when the employee gets delayed in
appealing the suit it will be condoned.

Withholding of certain payments pending decisions of appeal Section 30-A:

The commissioner may withhold the payment of any amount which is

deposited with him when an employer appeals under section 30 and it is directed by
the High Court.

Recovery Section 31:

The commissioner can recover any amount payable by any person as arrears of
land revenue. The commissioner will be deemed to be a public officer if there is an
agreement for the payment of the compensation under the meaning of section 5 of
the Revenue Act, 1890.

Power of the State Government to make rules Section 32:

The state government has the power to make rules and regulations for the purpose of
this act. These rules provide all the matters without prejudice namely:

1. The state government prescribes certain intervals where an application may be

made under Section 6 is subject to conditions when not accompanied by a
medical certificate by a qualified practitioner.
 2. The state government prescribes some intervals where an employee is required
to submit himself to undergo certain medical examination of section 11.
3. The state government prescribes a procedure that needs to be followed by the
commissioners. It is required when there is disposal of cases under the act and
by the parties.
4. The state government regulates the transfer of matters. It also regulates cases
from one commissioner to another and also transfer of money in some cases.

Publication of rules Section 34:

The power to make rules in Section 32 will be subject to the conditions of the
rules which are made after previous publication. Rules so published in the Official
Gazette will have an effect in the Act.

Rules to give effect to arrangements with other countries for the transfer of
money paid as compensation Section 35:

The Central Government may make rules for transfer money to any foreign
country which is deposited with a commissioner under the act by a notification. A
person who resides in a foreign country or is about to reside may be awarded the
money deposited under the law relating to employees. The amount related to fatal
accidents shall not be transferred without the consent of the employer under the
commissioner.

Rules made by the Central Government to be laid before Parliament Section 36:

Every rule made under the act by the Central government is laid before each
house of parliament while it is in session for thirty days. It may be done in one session
or in two sessions before the expiry of the session. The houses may make any
modifications in the rule or the houses may agree that the rule should not be made.
 THE EMPLOYEES’ STATE INSURANCE ACT, 1948

The Employees’ State Insurance Act incorporates a number of sections, these

sections provide for medical benefits and insurance for any employees working under
factories registered under the ESI Corporation. This is an exciting prospect from both
an employee’s and a legal perspective as the beginning of a formal social security
program in India.
Application and scope of the Act
The Employees’ State Insurance Act, 1948 (ESI), enables the financial backing
and support to the working class in times of medical distress such as:

1. Sickness.
2. Maternity Leave.
3. Disorders(mental or physical).
4. Disability.
5. Death.
It is a self-financed initiative, which serves as a type of social security scheme,
to prevent the working class from any financial problems arising out of the above
medical issues.
Constitutionality of the Act

The ESI Act serves as a constitutional instrument because of its practice of

providing insurance and medical insurance. While the ESI Act is mostly executed
through the ESI Corporation, the Central Government takes control of most of the
proceedings. This control by the Central Government largely contributes to the
constitutionality of the Act, because Insurance, be it public or private, is listed in the
Seventh Schedule of the Indian Constitution as a Union List subject i.e. it can only be
legislated by the Central Government.

Definitions

The Employees State Insurance Act contains several important definitions that
explain the meaning of important provisions.
Appropriate Government Section 1

The definition of “appropriate government” divides powers between the Central

and State governments effectively. The Central government is appropriate in cases of
establishments that the Central government controls. It is the appropriate government for
railway administration, major ports, mines, and oil fields as well. In all other cases, the
appropriate government is the relevant State government.

Confinement Section 3

Pregnancy which leads to the birth of a living child is called “confinement”

under this Act. It can also mean the birth of a child (living or dead) after 26 weeks of
pregnancy.

Contribution Section 4

Principal employers under this Act have to pay a sum of money to the
Employees State Insurance Act Corporation according to relevant provisions. This
money is basically later payable to employees by the ESI Corporation for their benefits.
Every employer to whom the Act applies has to make this contribution.

Corporation Section 6

This important definition describes the Employees State Corporation that this
Act has set up. This corporation has several important powers and duties.

Dependant Section 6A

In case a worker under the Act dies during employment, the ESI Corporation
pays some money to his dependants. In order to understand who must receive this
money, we must know who these “dependants” are. According to the Act, dependants
are certain relatives of a deceased worker. These include his widow, a son below 25
years of age, an unmarried daughter and his widowed mother. A son/daughter above 25
years can also be a dependant if he/she is wholly dependant on the worker. In certain
cases, dependants can also be a minor illegitimate child, minor sibling, a parent other
than widowed mother, etc.
Employment Injury Section 8

An employee can receive financial support under this Act for specific injuries
that occur in employment only. Hence, the Act refers to them as “employment injuries”.
These injuries must be a result of an accident or occupational disease arising in the
course of employment. It is immaterial whether the workers contract these occupational
diseases within India or outside.

Employee Section 9

This is a very important definition because only “employees” under the Act can
claim compensation there under. An employee is basically a person who is employed for
wages in relevant factories/establishments. Furthermore, there are some additional
requirements depending on the nature of the employee’s services. For example, an
employee may directly work permanently for the principal employer or may work
temporarily on contract.

Exempted Employee Section 10

There are certain employees who are not liable to pay a contribution to the ESI
Corporation under this Act. These employees are called as exempted employees.

Factory Section 12

A “factory” means any premises (or its precincts) wherein 10 or more employees
work or have been working. These workers should be in employment for the preceding
twelve months. Furthermore, some manufacturing process must take place on such
premises. Mines or railway running sheds, however, cannot come under the definition of
factories.

Insured Person Section 14

An insured person under this Act is basically an employee to whom contribution

is payable. Furthermore, he can claim all other benefits under the Act.
Principal Employer Section 17
A principal employer is generally the owner or occupier of a factory to which the
Act applies. It can also include the owner’s managing agent or factory manager and legal
representative of a deceased owner/occupier. In the case of departments of the Central
government, the principal employer is the department’s head. In all other establishments,
the person in charge of supervision and control is usually the principal employer.
CORPORATION, STANDING COMMITTEE & MEDICAL COUNCIL
Establishment of Employees’ State Insurance Corporation
The ESI Act exercises its function through the Employees’ State Insurance
Corporation, established via Section 3, a body created to maintain social security. It
was established on 24 February, 1952. The corporation is supposed to grant relief to
the employees in case of medical emergencies.

Constitution of Corporation
The composition of the ESIC is defined in Section 4, and it is as follows:

1. The Director-General.
2. Chairman, appointed by the Central Government.
3. Vice-Chairman appointed by the Central Government.
4. Not more than 5 persons nominated by the Central Government.
5. 1 person to represent each state.
6. 1 person representing the Union Territories.
7. 10 persons representing employers.
8. 10 persons representing employees.
9. 2 persons representing the medical profession.
10. 3 members of parliament (2: Lok Sabha and 1: Rajya Sabha).
Term of office of members of the Corporation
Section 5 the following members are appointed for up to a 4 year period:
1. Director-General.
2. Chairman.
3. Vice-Chairman.
4. The 5 people nominated by Central Government.
5. The members representing each state.
6. The members representing each Union Territory.
Eligibility for re-appointment or re-election

An outgoing member of ESIC, the Standing Committee of ESIC, or the

Medical Benefit Council is automatically eligible for re-appointment or re-election
into office as the case may be, at the pleasure of the appointing Central Government.

Authentication of orders, decisions, etc.

The signature of the Director-General of ESIC is the only necessary

requirement to authenticate an outgoing order or a decision, there is no other way to
authenticate or enforce an order. The Director-General can also temporarily delegate
his authority to any other officer. In this case, the signature of the authorised officer
will also suffice to authenticate an order.

Constitution of Standing Committee

The composition of the Standing Committee of ESIC is as follows:
1. A chairman appointed by Central Government.
2. 3 members within the corporation representing 3 state governments.
3. 3 members within the corporation representing employers.
4. 3 members within the corporation representing employees.
5. 1 member within the corporation representing the medical profession.
6. One MP belonging to the corporation.
7. The Director-General.

Terms of office of members of Standing Committee

The following members are appointed for a two year period:
1. The Chairman.
2. The 3 members representing the states.

Medical Benefit Council

The Medical Benefit Council is an advisory body on matters related to the

administration of medical benefits under the ESI scheme. It consists of:

1. The Director-General of ESIC as Chairman.

 2. The Director-General of Health Services as co-Chairman.
3. The Medical Commissioner of ESIC.
4. One member for each state appointed by State Government.
5. Three members representing employers.
6. Three members representing employees.
7. Three members including one woman representing the medical profession.

Tenure of the members of the Medical Benefit council

The following members of the Medical Benefit Council are appointed for a
period of 4 years, these are:
1. The Director-General of ESIC as Chairman.
2. The Director-General of Health Services as co-Chairman.
3. The Medical Commissioner of ESIC.
4. One member for each state appointed by State Government.
Resignation of membership
The resignation of a member of the Corporation is complete when a notice for
the same, in writing, is delivered to the Central Government, and his seat shall fall
vacant upon acceptance of his resignation.
Cessation of Membership
A member of the ESIC shall cease to be a member of his respective body
(Corporation, Standing Committee or Medical Council) upon failing to attend three
consecutive meetings. However, the same member can be restored by the concerned
body via the rules made by the Central Government. If in the opinion of the Central
Government, any employer, employee or medical representative fails to represent
their qualification, they shall cease to be members of ESIC.
Disqualification
A person can be disqualified as a member of ESIC if:
1. If he is declared to be of unsound mind by a qualified court.
2. If he is an undischarged insolvent.
3. If at any time, he has been convicted of an offence regarding moral turpitude.
Filling of vacancies
Any vacancy in the office of ESIC shall be filled by appointment or election,
as the case may be. A member of ESIC can only hold the ex-member’s spot in the
respective committee, if the original holder of that position was found to be eligible
for the same. Otherwise, the position is void.

Principal Officers

The Principal Officers referred to under this Section are the Director-General
and/or Financial Commissioner, to act as the CEO for ESIC. They serve as whole-
time officers and are not permitted to undertake any work outside of office
jurisdiction without the sanction of the Central Government. The time period for the
appointment of any principal officer may not exceed 5 years. The operation of their
fees, disqualification, and cessation of seats operate in the same manner as that of
their subordinates.

Staff
ESIC has the jurisdiction to employ staff of officers as may be necessary for
the optimum running of the corporation, however, according to the prerequisites
in Section 17, the sanction for creating any staff position has to be acquired from the
Central Government. Their salary shall be prescribed by the Central government
within a particular range, which cannot be exceeded. The scale of pay will be
determined on the basis of their educational qualifications, method of recruitment,
duties, and responsibilities, etc.

Powers of the Standing Committee

The Standing Committee, with its powers defined in Section 18, shall
administer the affairs of the Corporation and may exercise any of the powers and
perform any of the functions of the Corporation, while authorised and under the
jurisdiction of the corporation. The Standing Committee shall submit for the
consideration and decision of the Corporation all such cases and matters as may be
specified in the regulations made in this behalf. The Standing Committee also, in its
discretion, may submit any other case or matter for the decision of the Corporation.
Corporation’s Power to promote measures for the health of insured persons
ESIC, in its jurisdiction, may take initiatives that promote health and welfare
amongst its employees, while also promoting rehabilitation and re-employment for
past employees who were injured or disabled in the course of employment. The
funding and expenditure for such initiatives is at the discretion of the Central
Government.

Meetings
ESIC, its Standing Committee, and its Medical Council shall meet periodically
to observe rules and procedures in regard to the efficient functioning of the
corporation. Such observations can be specified as per the regulations in regard to the
meeting.
Supersession of the Corporation and Standing Committee
The supersession of the Corporation and the Standing Committee occurs when
there is a persistent failure to perform the duties prescribed to both parties. In such a
case, the Central Government, via a notification in the Official Gazette, can take the
place of the corporation, or with the consultation of the corporation, can take the place
of the Standing Committee. The supersession of the corporation will take place by
rendering all of the seats of the corporation, previously occupied by the members, as
vacant. In the case of the Standing Committee, a new one shall be constituted
immediately as per Section 8 of the ESI Act.
Duties of the Medical Benefit Council
The Medical Council’s functions are as follows:
1. Advise the other two ESIC bodies on matters relating to the implementation
that would be beneficial in the medical field. It acquires certification for the
grant of medical benefits.
2. Investigate against complaints lodged against medical practitioners with
relevance to the medical relief offered.
Duties of Director General and the Financial Commissioner
The duties of the Director-General and Financial Commissioner are prescribed
by the ESI Act itself in accordance with the Central Government. These tasks may
concern various arenas from management to miscellaneous tasks.
Validity of the act of the Corporation

No act of any ESIC body shall be termed as invalid with respect to their own
rules and regulations. Invalidity cannot be claimed on the eligibility or ineligibility of
a particular member of that office.

Regional Boards, Local Committees, Regional and Local Medical Benefit

Council
The Corporation may appoint Regional Boards, Local Committees and
Regional and Local Medical Benefit Councils in such areas and in such manner, and
delegate to them powers and functions.
Finance and Audit
Employees’ State Insurance Fund
The Employees’ State Insurance Fund is the primary monetary source for the
ESIC to perform its functions. All contributions paid under this Act and all other
money received on behalf of the Corporation shall be paid into this fund to be held
and administered by the Corporation. These could be in the form of grants, donations
or gifts by the government.

Expenses of the fund

The ESI Fund is responsible for maintaining the expenses of ESIC, which are
as follows:

1. Payment of benefits and provision of medical treatment and attendance to

insured persons and their families, if required.
2. Payment of fees and allowances to members of the Corporation, the Standing
Committee and the Medical Benefit Council, the Regional Boards, Local
Committees and Regional and Local Medical Benefit Councils.
3. Payment of salaries, leave and joining time allowances, travelling and
compensatory allowances, gratuities and compassionate allowances, pensions,
etc.
4. Establishment and maintenance of hospitals, dispensaries, and other
institutions and the provision of medical and other ancillary services for the
benefit of insured persons and their families, if required.
 5. Payment of contributions to any State Government, local authority or any
private body or individual, towards the cost of medical treatment and
attendance provided to insured persons and their families, if required.
Administrative expenses
Administrative expenses are termed so, those expenses which cover the costs
of administration of ESIC, prescribed by the Central Government.

Holding of Property

ESIC is subject to conditions prescribed by the Central Government, in terms

of acquiring, hold, sell or transfer any property, movable or immovable, vested in or
acquired by it, so as to fulfill the purposes of the corporation. The ESIC also has the
ability to invest in property as and when required, under the jurisdiction of the Central
government. It can also delegate property for the benefit of its staff..
Budget Estimates
Every year, ESIC frames and projects a potential budget showcasing how
much expenditure it proposes to incur, and how it will discharge its liabilities during
the following year. This is then submitted to the Central Government for approval.
Accounts
The Corporation shall maintain correct accounts of its income and expenditure
in such form and in such manner as may be prescribed by the Central Government.
Audit
The Corporation prepares accounts regularly which are audited annually by
the comptroller and Auditor-General of India, and any audit which leads to an
expenditure will be payable to the above parties. Any person appointed by the
Comptroller and Auditor-General to act on their behalf will temporarily have the same
powers as the above parties and are authorised to demand the production of books,
accounts, connected vouchers, and other documents and papers. They shall also be
authorised to inspect any offices of ESIC at any time. The accounts of the
Corporation, before being forwarded to the Central Government, have to be verified
by the Comptroller and Auditor-General, or any of their representatives. After
verification, the accounts can be forwarded to the Central Government along with any
comments on the report, given by the above parties.
Annual report
The Corporation shall submit an annual report of its work and activities to the
Central Government.

Budget etc. to be placed before Parliament

The annual report, the audited accounts of the Corporation along with the
report of the Comptroller and Auditor-General of India, and the comments of the
Corporation on such report under section 34 and the budget, as finally adopted by the
Corporation, shall be placed before the Parliament.
Valuation of assets and liabilities
The Corporation shall, at intervals of three years, have a valuation of its assets
and liabilities made by a valuer appointed with the approval of the Central
Government: Provided that it shall be open to the Central Government to direct a
valuation to be made at such other times as it may consider necessary.
Contributions
All employees employed in the factories which meet ESIC prescribed rules
(under Section 2) are insured for all the benefits offered by it.

1. The contribution is a determinable amount of money payable by both the

employer and the employee, as per the situation, to the corporation.
2. The rates, while usually prescribed by the government, are not set in stone,
and are subject to change. Rates defined by the government are mostly set as
the unit standard for the contribution payable by the employer.
3. In the case of the employee’s contribution, the wage period in relation to the
respective employee shall be held as a unit to determine the compensation
payable, and are normally due on the last day of the wage period.
4. Failure to pay contributions by the employer will make him liable to pay an
interest rate of 12%.

Principal employer to pay contribution in the first instance

1. The primary employer has to collectively pay the contribution, both his own
and that of his employees, regardless of whether they are directly employed
under him or are working through an immediate employer.
 2. If a directly employed employee fails to pay his contributions, then the
employer can recover that contribution only by deducting the wages of said
employee.
3. The employer bears all the transfer costs of the payment to the Corporation.
Recovery of contribution from the immediate employer
In the case of an employee who is indirectly employed under the principal
employer, via an immediate employer, the principal employer shall be entitled to
recover the payment made on behalf of an indirect employee, from the immediate
employer, as a debt payable to him. The immediate employer also has to prepare a list
of all the employees under him and submit the same to the principal employer, before
paying his dues.General provisions as to payment of contribution. In case an
employee’s wage falls below the prescribed wage range prescribed by the Central
Government, the employee shall not be liable for his contribution and it shall not be
payable.
Method of payment of contributions
The manner for payments which the Act provides regulations for, has been
elaborated in the following conditions:
1. The nature and time of contribution being paid.
2. Payment which involves the usage of stamps or other adhesives fixed upon the
books of accounts, or any other documents.
3. The evidence of the contributions, which reaches the Corporation, is to be
dated.
4. The different entries in the books of accounts along with the details of the
insured persons.
5. The replacement of documents which have been lost, destroyed or defaced.

Employers to furnish returns and maintain registers in certain cases

According to the provisions given as per the ESI Act, the principal and
immediate employers are to submit all the investment profits, as well as any and all
details relating to their employees in any factory under their jurisdiction. In case of
failure to submit a return, that the corporation had reasonable cause to believe, should
have been submitted, the corporation can require the employers to present all the
details.
Social Security Officers and their functions

1. ESIC has the power to appoint persons as Social Security Officers. Their
functions are mostly to serve a role in inspecting the function of the
corporation.
2. If required, he can acquire any information from any employer as he sees fit.
3. He can enter any corporation at any time and can get all the accounts, books
and other employment documents presented to him without any due notice.
This can include information like wages, expenses, etc.
4. He can inspect and look into any matter regarding the employers and
employees as and when required under the jurisdiction of the court.
5. He can make copies or take extracts from any register or account back as per
his discretion.

Determination of Contribution in certain cases

A Social Security offer is restricted from exercising his functions and

discharging his duties, if the accounting statements of the factory/establishment are
not submitted, or not maintained in accordance with Section 44 of the ESI Act. As
such, the Corporation may, with the available information, determine the
contribution(defined under Section 39) amount payable to employees. However, this
procedure will not take place until after the person in charge has been given a
reasonable opportunity to be heard regarding the absence of such records.

Appellate Authority

In the scenario specified in Section 45A, once the employer in charge is heard,
and he is not satisfied with the verdict given by the corporation, he may prefer an
appeal to an appellate authority as may be provided by regulation, within sixty days of
the date of the verdict. He must also pay a sum of 25% of his calculated contribution,
in order to file the appeal. In case he is successful, the corporation will also refund the
contribution paid by him.
Recovery of contributions

Any and all contributions which are payable under the provisions of ESI Act,
can be recovered, termed as ‘arrears of land revenue’.

Issue of certificate to the Recovery Officer

In lieu of Section 45B, where the contribution is to be recovered, an authorised

officer of the corporation issues a certificate bearing his signature and the amount to
be recovered, to a Recovery Officer, who then proceeds to recover the amount
specified from the factory where the default took place. He does this via:

1. Attachment or sale of the property of the factory, or the employer, as per the
situation.
2. The arrest of the employer and getting him detained in prison.
3. Appointing a receiver for the management of the property acquired, be it from
the factory or the employer.

Recovery Officer to whom the certificate is to be forwarded

For the contribution certificate to be forwarded to the Recovery Officer, the
factory employer must be under the jurisdiction of the Officer in the following ways:
1. The location where the employer carries on his business and where the factory
is located.
2. The location where the employer resides or he has any personal property
situated within the Officer’s jurisdiction.
3. The inability to recover the amount solely through the sale of property alone.

The inability to recover the amount solely through the sale of property alone

The analysis of the recovery amount, as per the certificate issued to the
Recovery Officer, operates on his word only. The factory or any authority related to it
cannot question the Officer on the correctness of the mount, and no objection shall be
entertained. However, with a prior intimation, an arithmetical mistake can be
corrected by an authorised officer, along with any orders about withdrawal or
cancellation of a certificate.
Stay of proceedings under certificate and amendment or withdrawal thereof

It is at the discretion of the Recovery Officer, within the boundaries of the ESI
Act, to halt legal proceedings if the time he has allocated for the recovery of an
amount, has expired. The Recovery Officer is also entitled to receive constant updates
about the status of payment of any due amount. If, as a result of an appeal, the amount
due is decreased, then the Recovery Officer temporarily halts the recovery of the now
decreased amount.

Other modes of recovery

Some of the other modes of recovery are elaborated within Section 45G. These
are rarer modes of recovery, due to the primary modes of recovery often being
preferred:

1. The defaulting employer may be required to pay a sum which was deducted
from the arrears after the sale of the property.
2. There might not be any penalty issued but the defaulting employer would be
required to pay the entire outstanding amount directly to the Director-General
of the Corporation.
3. Any joint shareholders who held money with the defaulting employer might
be forced to give up their shares to the Corporation until they are equal to the
defaulting employer’s shares, as compensation.

Application of certain provisions of the Income-tax Act

The arrears of the amount of contributors, which are to be sold to cover the
remaining costs, can be affected by decisions from the Assessing Tax Officer or Tax
Recovery Officer. They can make changes which shall apply to all the interests and
damages.
Benefits Available Under the Act:
Section 46 of the ESI Act grants benefits to employees as social security in
case of injury, which can be availed during the course of employment. There are 6
types of benefits that can be availed:
 1. Medical benefit.
2. Sickness benefit.
3. Maternity benefit.
4. Dependants’ benefits.
5. Disablement benefits.
6. Other benefits.
Medical Benefits
These benefits are guaranteed to the employee as soon as he/she is hired, with
the benefits extending to their family members as well. This benefit covers the
payment of all treatment expenses in lieu of medical issues faced by the employee
Sickness Benefits
The employees covered by the ESI Act can avail periodical payments in case
of sickness as per Section 46(1)(a), as long as the medical condition is verified by the
appointed medical practitioner. The compensation is approximately 70% of their
wages, with the upper limit for availing compensation being 91 days in a year. In a
period of 6 months of employment, the employee must have been working for a
minimum of 78 days, else the benefit cannot be claimed.
Maternity Benefits
As per Section 46(1)(b) of the ESI Act, an insured woman can claim periodical
payments in case of occurrence of any of the following situations:
1. confinement (labour leading to birth or birth after 26 weeks)
2. miscarriage
3. sickness arising out of pregnancy
4. premature birth of child
The benefit is payable for three months, with an extension of one month, if
required. The minimum work duration must be 70 days in the year preceding the year
of pregnancy.
Dependants’ Benefits
Section 46(1)(d) prescribes periodical payments(often made monthly) to the
dependants/family members of the person who dies during the course of employment,
with the cause of death being an employment injury or an occupational hazard.
Compensation is generally 90% of the employee’s wages.
Disablement Benefits
In case an employee suffers an injury during the course of employment which
results in their disablement. The nature of the disablement may be temporary or
permanent. Unlike the other benefits, there is no minimum work contribution required
to avail the disablement benefit, although eligibility for the same will be determined
by the Medical Board. This determination also affects the amount of compensation
granted, if any, with the general percentage of wages granted being around 90%.
Other Benefits
‘Other benefits’ refer to the miscellaneous benefits apart from the five major
benefits that can be availed by the employees. These are as follows:
1. Funeral Expenses: Compensation of Rs. 10,000 is granted to the eldest
surviving member of an employee’s family to perform his last rites.
2. Vocational Rehabilitation: The benefit is payable to disabled employees
undergoing rehabilitation.
3. Old age medical care: This benefit is available for retired employees, or those
who eft employment after suffering an injury, with general compensation
being Rs. 120 p/m.
Scheme for other beneficiaries
Section 53 of the ESI Act acts as a deterrent for employees, in order to prevent
them or their families from claiming benefits provided under the Act, so long as they
are still insured under the reliefs offered by the ESI Act. Section 61 acts like an
extension to Section 53, in the sense that while Section 53 only bars employees from
receiving compensation under the Employees Compensation Act, Section 61 bars
employees from receiving compensation from any other enactment so long as they are
still insured under the ESI Act.

Power to frame scheme

The Central Government holds the power to frame schemes for other
beneficiaries and their family members, mostly for providing medical facilities in ESI
hospitals. However, this must be within the framework of the ESI Act and must be
notified in the Official Gazette.
Scheme for other beneficiaries
Schemes implemented for beneficiaries may cover for a number of matters
such as:

a) The time and nature of the usage of medical facilities.

b) The presentation of particulars and details about the beneficiary and his family
as per the needs of the Corporation.
c) Miscellaneous matters which may be necessary to fully implement the
scheme.
Power to amend schemes
Via a notification in the Official Gazette, the Central Government may add to,
amend, introduce variations, or rescind the scheme.

Adjudication of Disputes and Claims

Constitution of Employees’ Insurance Court
Via a notification in the Official Gazette, an Employees’ Insurance Court will
be constituted by the State Government, with a set amount of judges as per the
decision of the State Government. The same court may be appointed for two or more
local areas, or two courts or more courts may be appointed for the same local area.

Power of Employees’ Insurance Court

The Employees’ Insurance Court will function with the same powers as that of
a Civil Court, in which, to enforce the provisions of the ESI Act, it can enforce
witness attendance, compel document and material evidence to be presented, it can
administer an oath and can record evidence. All expenses incurred before a
proceeding are subject to the discretion and liability of the court itself.

Reference to High Court

An Employees’ Insurance Court, according to Section 81 may submit any
question of law for the decision of the High Court and if it does so, the answer to the
question shall hold precedence before any judgment.
Appeal
Section 82 defines that no appeal can be laid down as against an order from
the Employees’ Insurance Court. However, appeals from the High Court can stand if
they involve a substantial question of law.
Penalties and Punishments
Sections 84, 85, and 85A cover all the punishments for default listed within the
ESI Act.
1. False Statement: Any person caught increasing the payment or benefit to avoid
payment by himself is known to make a false statement. Punishable with up to
six months and/or with fine not greater than Rs. 2000. Insured persons
convicted of this will not be entitled to cash benefits.
2. Failure to pay contribution: Persons failing to pay the contribution, unlawfully
deducts wages or benefits, unfairly punishes an employee, obstructs
inspector’s duties, etc. can be punishable for up to three years, no less than one
year with a fine up to Rs. 10000.
3. Subsequent Punishment: If a person is found committing the same offence
twice, he shall be punished with imprisonment for a term extending up to two
years with a fine of Rs. 5000 for each subsequent offence.
Power to recover damages
If an employer fails to pay the contributions due in any aspect, whether it be
from his side or his employee’s side, the Corporation can recover the deficit from him
by way of penalty. However, this recovery of contribution will not take place until
after the person in charge has been given a reasonable opportunity to be heard
regarding the failure to pay the contribution.
Power of Court to make orders
Along with the power of the court to recover damages, it also has provisions to
enforce judicial orders. If the defaulting employer fails to meet the time conditions for
payments that have been stated by the Court, the employer will be deemed to have
committed another offence, which can be punishable with imprisonment and/or fines.

Prosecution
Section 86 dictates that any sort of prosecution cannot take place under the
provisions of ESI Act unless it has previously obtained the sanction of the Insurance
Commissioner or any other authorized authority such as the Director-General of the
Corporation. No court lower than a First Class Magistrate can try an offence under the
ESI Act, and no Court will take cognizance of any offence reported under this Act.

Offences by companies
Taking inference from the concept of business entity, where every company is
its own individual i.e. it is a separate legal entity of its own and can sue or be sued in a
court of law accordingly. As such, when an offence is said to have been committed by
a company, all of its managerial employees, who were responsible for the company at
the time, will be tried along with the company, deemed to be guilty of the same
offence. They are liable for punishment accordingly.
Comparative Analysis

The ESI is a later Act and has a wider coverage. It is more comprehensive. It
also provides for more compensation than what a workman would get under the
Workmen’s Compensation Act. The benefits which an employee can get under the
ESI Act are more substantial than the benefits which he can get under the Employees
Compensation Act. The only disadvantage, if at all it can be called a disadvantage, is
that he will get compensation under the ESI Act by way of periodical payments and
not in a lump sum as under the Workmen’s Compensation Act. If the Legislature in its
wisdom thought it better to provide for periodical payments rather than lump sum
compensation its wisdom cannot be doubted. Even if it is assured that the workmen
had a better right under the Employees Compensation Act in this behalf it was open to
the Legislature to take away or modify that right. While enacting the ESI Act the
intention of the Legislature could not have been to create another remedy and a forum
for claiming compensation for an injury received by the employee by accident arising
out of and in the course of his employment.”
 ESI Act, 1948 Employees Compensation Act, 1923
Objectives of the Act : To provide Objectives of the Act: To provide
benefits to the employees in case of compensation to workmen for injury
sickness, maternity and employment caused by accident or occupational
injury caused by accident or occupational disease.
disease.
Act Covers: Employment injury or death Act Covers: Employment injury or death
caused by accident or occupational caused by accident or occupational
disease, sickness and maternity. disease.
Wage limit under the Act: Rs. 15,000 Wage limit under the Act at present: No
p.m. wage limit.
Nature of Scheme Offered: Contributory Nature of Scheme Offered: Non
wherein both the employer and the contributory and the employer has to pay
employee contribute 4.75% and 1.75% of the entire compensation.
wages, respectively.
Benefits covered under the Act: Covers six Benefits covered under the Act: Covers
benefits sickness benefit, medical benefit, disablement benefit and dependent’s
maternity, benefit, disablement benefit only.
benefit, death benefit and other benefits
Who is responsible for making Who is responsible for making
payment: ESIC. payment: Employer
Compensation is paid periodically. Compensation is paid as one time lump
sum payment in cash
Rehabilitation and re- Rehabilitation and re-employment: No
employment: Provision for rehabilitation such provision under the Act.
and re-employment of insured persons
who have been disabled.
Nature of claim process: Easy and Nature of claim process: Complex and
convenient. time consuming.
Act administered through: ESI Act administered
Corporation, Standing. Committee, through: Commissioners.
Medical Benefit Council and Court.