Employees'

Compensation Act,
1923 and
Employees State
Insurance Act,1948
By: Shrimee Srivastava
t.me/shrimeesrivastava

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Concept of Social Security
• Social security is a dynamic concept. Being
a dynamic subject, no rigid limit can be
laid down for long duration of time. It
varies from time to time and country to
country. Whatever may be the scope of
social security.
• Social security may provide for the
welfare of persons who become incapable
of working by reason of old age, sickness
and invalidity and are unable to earn
anything for their livelihood.
Social Security legislation
• Broadly speaking, there are Five social security
legislation.
• These are:
• (1) Employees' Compensation Act, 1923
• (2) Employees' State Insurance Act, 1948
• (3) Employees' Provident Funds and Miscellaneous
Provisions Act, 1952
• (4) Maternity Benefit Act, 1961
• (5) Payment of Gratuity Act, 1972
Employees Compensation
Act,1923
• The doctrine of added peril was enacted in the
Workmen Compensation Act, 1923 to improve
the working conditions of the employees.
• According to Doctrine Of Added Peril if a
workman while performing his duty does
something which is not required to do and
which involves extra danger, the employer
would not be liable to pay compensation if any
injury caused to him.
• An Act to provide for the payment by certain
classes of employers to their employees of
compensation for injury by accident.
• This Act may be called the Employee's
Compensation Act, 1923.(The amendment has
been brought about by the Workmen’s
Compensation (Amendment) Act, 2009 came
into force on January 18, 2010) - This was
done in view of the recommendations of the
National Commission on Labour (2002), which
had suggested the use of the word 'employee'
in place of 'workman' or workmen in order to
ensure gender neutrality
• SCHEDULE I. list of injuries deemed to result in
permanent total disablement.
• SCHEDULE II list of persons who, subject to the
provisions of Section 2(1) (nn),' are included in the
definition of employees
• An amendment of the Act in 2010 further added
certain employments, operations and persons in
Schedule II of the Act. These include railway employees
other than those employed in administrative capacity,
crew of a ship and aircraft, drivers, helpers and
mechanic of motor vehicles, persons. recruited abroad
by a company and employees employed by contractors.
Clerks are now covered for compensation. The state
government is empowered to add to Schedule II
• SCHEDULE IlI. list of occupational diseases
• SCHEDULE IV. factors for working out lump sum
equivalent of compensation amount in case of
permanent disablement and death
Applicability of the Act
• It applies to employees working in
factories, mines, docks, construction
establishments, plantations, oilfields and
other establishments of the Employee's
Compensation Act.
• It applies to persons recruited for
working abroad and who is employed
outside India as in Schedule II of the Act.
• It applies to a person recruited as the driver, helper,
mechanic,/ cleaner or any other in connection with
a motor vehicle and to a captain or other member
of the crew of an aircraft.
• The Act does not apply to the members of armed
forces of the Union & Workmen who are covered
under ESI (Employee State. Insurance) Act.
• Casual Workers & workers employed otherwise
than for employer"s trade or business
Definitions:
• Disablement
• Disablement means
• Loss of capacity to work or to move
• It may result in loss or reduction of his earning
capacity
• It may be permanent or temporary
• It may be partial or total
• He is not able to earn as much as he used to earn
before his disablement
• Partial disablement
• Means 'any disablement as
• Reduces the earning capacity of a
employee as a result of some accident’
• Temporary Partial Disablement: Reduces
Earning Capacity in Employment he was
engaged at time of Accident
• Permanent Partial Disablement: Reduces
Earning Capacity in every Employment
which he was capable of at
time of Accident.
"Total disablement“
Means such disablement, whether of a temporary or
permanent nature, as incapacitates a "(employee] for
all work which he was capable of performing at the
time of the accident resulting in such disablement:
Provided that permanent total disablement shall be
deemed to result
• from every injury specified in Part I of Schedule I Or
Less of both hands
• from any combination of injuries specified in Part If
thereof where the aggregate percentage of the loss of
earning capacity, as specified in the said Part II against
those injuries, amounts to 100% or more
• Employee
• "Employee" means a person, who is-
• 1) Railway servant;
• 2) Crew of ship;
• 3) Crew of aircraft;
• 4) Driver, cleaner, helper or mechanic of motor
vehicles;
• 5) Employees recruited abroad;
• 6) Persons employed in activities like manufacturing
process, explosives, mines, ship loading/unloading,
construction, electricity generation and distribution,
drivers, horticulture.
• "Employee' does not include any person working in
the capacity of a member of the Armed Forces of
India
Employer's Liability for
Compensation
• An employer is liable to pay compensation,
• Personal injury is caused to a employee
• By accident arising out of and in the course of his
employment.
• However, an employer is not liable in the following case:
• 1) Injury, which results in total or partial disablement of employee up
to 3 days
• 2) Injury caused by an accident directly attributable to the following:
• a. Employee working under the influence of drinks or drugs
• b. Willful disobedience of express orders of safety
• c. Willful removal of safety guards or devices
• (However even in such cases, if the employee dies or suffers
permanent total disablement the employer will be liable)
• Further, an employer is liable to a employee if
• • A employee contracts any specified occupational
disease
• • While he is in the service of the employer for
at least 6 months

• However compensation is payable; even when

• • There is no fault of the employer, except the
aforesaid cases where the compensation is not
payable.
• • The employee did not take proper precautions or he
was careless or negligent in the
performance of his work
Amount of compensation payable
• Compensation is payable
• • To employee in case of partial or total
disablement
• • To dependants of employee in case of death
• In case of death and total disablement
• Compensation must be paid through the
Commissioner of Employees' Compensation,
appointed by the Government.
Sec 4: Amount of compensation
a) where death results from the injury
• Amount = 50% of the monthly wages * relevant
factor
• Or Rs.120000 whichever is higher
• (Wage Ceiling fixed to 15000 - Amendment 2020)
b) where permanent total disablement results
from the injury
• Amount = 60% of the monthly wages* relevant
factor
• Or Rs. 140000 whichever is higher
• Funeral expenses for death

• • In addition to compensation

• • deposit with the Commissioner funeral

expenses Rs. 5000 to payment of the same to the
eldest surviving dependent did not have a
dependent to the person who actually incurred
such expenditure the central government to
modify the amount from time to time
• c) where permanent partial disablement
results from the injury
• Injury Specified in Schedule I, PART II:
• Percentage of the compensation which is payable
in the case of permanent total disablement as is
specified therein as being the percentage of the
loss of earning capacity caused by that injury,
• Injury not specified Schedule I : percentage of the
compensation payable in the case of permanent
total disablement as is proportionate to the loss of
earning capacity (as assessed by the qualified
medical practitioner permanently
caused by the injury.
Time Limit for disposal of cases
relating to compensation
• The Compensation Commissioner shall
dispose of the matter relating to
compensation
• • Within a period of 3 months from the date
of reference and
• • Intimate the decision in respect thereof
within the said period to the employee.
Theory of notional extension
• It is well established that there must be some
casual connection between
• The death of the worker (and)
• His employment

• If the employee dies, as a natural result of the

disease from which he was suffering then it will be
considered that he has died of that disease as a
wear and tear of his employment and hence no
liability would be fixed upon the employer.
• However, if the employment is contributory
cause or has accelerated the death, or if the
reason of the death only the disease but
also the disease coupled with the
employment then it could be said that the
death course of the employment and the
employer would be liable.
Penalty
• Section 18A prescribes penalty upon persons who
• (a) fail to maintain a notice-book which is required to be maintained under
sub-section (3) of Section 10, or
• (b) fails to send to the Commissioner a statement which he is required to
send under sub-section (1) of Section 10A, or
• (c) fails to send a report which he is required to send under Section 10B, or
• (d) fails to make a return which he is required to make under Section 16, or
• (e) fails to inform the employee of his rights to compensation as required
under Section 17A," with fine which shall not be less than fifty thousand
rupees but which may extend to one lakh rupees"
• No prosecution under this Section shall be instituted except by or
with the previous sanction of a Commissioner, and no Court shall take
cognizance of any offence under this Section, unless complaint
thereof is made within six months of the date on which the alleged
commission of the offence came to the knowledge of the
Commissioner.
 Employees State
Insurance Act,1948
By: Shrimee Srivastava
• OBJECT OF THE ESI ACT
• The main object of the ESI Act is to impose an obligation to
provide various benefits to the employees covered and the
members of their family.
• It provides certain benefits to employees in case of sickness,
maternity, employment injury and to make the provision for
matters related to it.
• It is a insurance scheme- employees get benefits if they are
sick or disabled
• An organization called ESI corporation has been formed under
this Act to supervise the Scheme.
APPLICABILITY OF THE ACT
• The Employees' State Insurance Act, 1948
applies to non-seasonal factories employing 10
or more persons including the government
owned factory.
• Thus for the purposes of this Act, a factory
means any premises including precinct where
10 or more persons are employed irrespective
of whether power is used in the manufacturing
process or not.
• Further, all persons including those drawing
wages above the wage limit will be taken into
account for the purposes of counting 10
persons for the coverage of the factory.
• The Act empowers the appropriate government to
extend the provisions of the Act to other classes of
establishments - industrial, commercial, agricultural
or otherwise, by giving one month's notice.

• Under Section 1(5) of the Act, the Scheme has been

extended, inter alia, to shops, hotels, restaurants,
cinemas including theatres, road, motor transport
undertakings and newspaper establishments
employing 10 or more persons and also to private
medical and educational institutions employing 10
or more persons in most of the States/UTs.
Persons Covered

• The Act covers any person employed

directly or through a contractor drawing
wages upto Rs. 21000 per month in or
in connection with the work of a factory
or establishment to which this Act
applies.
• For disabled person- Rs. 25000
• Employees:
• any person employed for wages
• In or in connection with work of factory or
establishment to which the ESI Act is applicable.
• And includes
• 1) Persons employed through contractor;
• 2) Apprentices appointed under Standing Order
(But Excludes Apprentice covered by Apprentices
Act,
• However, apprentice shall be treated as an
employee whose training period is extended to
any length of time).
• it does not include any person working in the
capacity of a member of the Armed
Forces of the Union.
• The Insured Person should have been in
insurable employment for a minimum period
of two years.
• The Insured Person should have contributed
not less than 78 days during each of the
preceding four contribution periods.
• The contribution in respect of him should have
been paid or payable by the employer
• The contingency of the unemployment should
not have been as a result of any punishment
for misconduct or superannuation or
voluntary retirement.
Benefits:
• Employees are entitled to benefits under Section
46 of the ESIAct as social security in the event of
injury while on the job. There are six different
sorts of advantages available:
• • Medical benefit.
• • Sickness benefit
• • Maternity benefit
• • Dependents' benefits.
• • Disability benefits
• • Additional benefits.
EMPLOYEES' STATE INSURANCE
FUND
• In order to insure workers against sickness,
disablement and provide for maternity, funeral,
medical and dependents' benefits to the
insured employees', the ESI Act provides for the
creation of a "Employees' State Insurance
Fund".
• The fund is mainly derived from the
contribution of employees and employers
which are to be deposited in the fund. The fund
is administered by the Employees' State
Insurance Corporation.
 CONTRIBUTIONS
• The ESI Act is contributory in nature.
• Section 2 (4) defines 'contribution' to mean the
sum of money payable to the Corporation by the
principal employer in respect of an employee and
includes any amount payable by or on behalf of
the employee in accordance with the provisions
of this Act.
• The contribution payable under this Act in respect
of an employee shall comprise contributions
payable by the employer and employee and shall
be paid to the Corporation. (Section 39)
• Period for which Employee Contributions are

Payable

• Contribution (both the employer's contribution and

the employee's contribution) shall be payable by the

principal employer for each wage period in respect

of the whole or part of which wages are payable to

the employee and not otherwise.

• When the Employees Contribution shall Not be
Payable

• No employee's contribution shall be payable by or

on behalf of an employee whose average daily
wages during a wage period are below
such wages as may be prescribed by the Central
Government. The average daily wages of an
employee shall be calculated in such manner as
may be prescribed by the Central Government."
• Contribution Period
• 1st April to 30th September1st
October to 31st March
• Rate of Contributions
• The contributions shall be paid at such rates as
may be prescribed by the Central Government.
The amount of contribution for a wage period
shall be as follows:
• (i) employer's contribution, a sum (rounded off
to the next of five paise) equal to 3.75 per cent
of the wages payable to an employee; and
• (ii) employee's contribution, a sum (rounded off
to the next higher multiple of five paise) equal
to 0.75 per cent of the wages payable to the
employee.
ENFORCEMENT OF THE ESI ACT

• A. Social Security Officer and other Officers

• For compliance of the provisions of the Act

and also to determine the correctness of
any of the particulars stated in any return
the ESI Act provides for the appointment of
Social Security Officers and other authorised
officers.
• Who may Appoint

• The ESI Act empowers the Corporation to appoint Social Security

Officers within such local limits as it may assign to them.
• Powers and Duties
• 1. The Social Security Officer or other authorized
official of the Corporation in order to enquire
into the correctness of the particulars mentioned
in any return under section 44 or for ascertaining
whether any of the provisions of this Act has
been complied with, may:
• (a) Require any principal or immediate employer
to furnish to him such information as he may
consider necessary.
• (b) Enter any office, establishment, factory or
other premises occupied by such principal or
immediate employer and require any person
found in charge thereof to produce before them
and examine such accounts, books and other
documents relating to the employment of
persons and payment of wages or to furnish to
him such information as he may consider
necessary.
Medical Benefit Council

• 1. Who may constitute

• Section 10(1) authorises the Central Government to constitute a
Medical BenefitCouncil.
• 2. Composition
• The Council shall consist of:
• (a) the Director General, the Employees' State Insurance Corporation,
ex-officio as Chairman;
• (b) the Director General, Health Services, ex-officio as Co-Chairman;
• (c) the Medical Commissioner of the Corporation, ex-officio;
• (d) one member each representing States (other than Union territories) in
which this Act is in force to be appointed by the State Government
concerned;
• (e) three members representing employers to be appointed by the Central
Government in consultation with such organisations of employers as may
be recognised for the purpose by the Central Government;
• (f) three members representing employees to be appointed by the Central
Government in consultation with such organisations of employees as may
be recognised for the purpose by the Central Government; and
• (g) three members, of whom not less than one shall be a woman,
representing the medical profession, to be appointed by the Central
Government in consultation with such organisations of medical
practitioners as may be recognised for the purpose by the Central
Government
• Term of office
• The term of office of a member of the Medical Benefit Council, other
shall be four years from the date on which his nomination is notified,
provided that a member of the Medical Benefit Council shall,
notwithstanding the expiry of the said period of four years, continue
to hold office until the nomination of his successor is notified.
• Sub-section (3) of Section 10 provides that a member of Medical
Benefit Council shall hold office during the tenure of the government
nominating him.
ADJUDICATION OF DISPUTES AND
CLAIMS
• A. Constitution of Employees Insurance
Court
• 1. Who may constitute
• The Act authorizes the State Government to
constitute an Employees' Insurance Court
for such local area as may be specified in
the notification. [Section 74 (1)]
• 2. Composition

• The court shall consist of such number of judges as

the State Government may think fit. The State
Government may appoint the same court for two
or more local areas or two or more courts for the
same local area.

• Where more than one court has been appointed

for the same local area, the State Government may
by general or special order, regulate the
distribution of business between them.
• Qualification

• Any person who is or has been a judicial officer

or is a legal practitioner of five years standing
shall be qualified to be a Judge of the
Employees' Insurance Court.