LABOUR LAW NOTES
28/10/2020

Sec. 10 provides that the employer is bound to pay a minimum bonus in every AY,
irrespective of whether profits were actually earned or losses were incurred. The minimum
bonus amount is 8.33% of the salary or wage earned by the employee in that AY or Rs.
100/- whichever is higher. This is to be read with Sec. 15 as well.

In Jalan Trading Co. v. Mill Mazdoor Sabha, the SC made an observation that the power
of the Parliament to fix the minimum bonus at 8.33% of wage/salary cannot be questioned.
This is because the purpose of giving bonus is to make equitable distribution of the
profits/surplus of the employer, after deducting prior charges. It further held that this
legislation fixing the minimum bonus is neither a fraud on the Constitution nor is it a
colourable exercise of powers.

In J.K. Chemicals v. Govt. of Maharashtra (1997) the Court adjudged a challenge to the
fixation of minimum bonus. The court held that irrespective of the financial condition of
the establishment or the losses incurred in the AY, there can be no challenge to the fixation
of minimum bonus and the employer is bound to pay so in compliance with Sec. 10.

Sec. 11 was earlier omitted in 1976 and later inserted in 1980 by amendment. It deals with
payment of maximum bonus. It states that if the employer has the capacity to pay more
than minimum bonus of 8.33% in one AY, he shall pay a maximum of 20% of the
salary/wages in that AY. He must not pay more than 20% of the salary or wages of the
employee.

Sec. 10 and Sec. 11 are subject to the principle of set-on and set-off as mentioned in Sec.
15. While Sec. 10 mandates a minimum bonus in an AY, Sec. 11 sets a maximum limit at
20% of the salary/wages of the employee. The concept of carry forward allows the
employer to carry forward any extra allocable surplus, even after paying 20%, to the next
year.

Sec. 12 provides that an employee who draws a salary/wages of 7,500 upto 21,000 can
claim bonus. An employee earning below 7,500 can also get bonus. Every employee
drawing above 7,500 shall be treated as drawing only 7,500 for the purpose of computation
of bonus payable. Thus, even for a person drawing 21,000, the bonus shall be calculated on
7,500 only. Thus, 8.33% of 7,500 is calculated and not 8.33% of 21,000.
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
The purpose is to reduce the disparity in the bonus amount amongst the various employees.
If there is a high disparity, there might be industrial unrest amongst the works/employees.
Therefore, the ceiling for computation of bonus is a salary of 7,500 only. Even if actual
salary is 21,000, the bonus will be calculated on 7,500 only.

Above 21,000, there can be no claim for bonus at all.

Sec. 13 provides for proportionate reduction in bonus in certain cases. Every employee has
to put in atleast 30 days of work in an AY in order to receive some bonus. This was
elaborated under Sec. 8 as well, to be eligible for bonus and proportionate payment. The
bonus shall be calculated proportionately based on the number of working days (as
calculated under Sec. 14). This is subject to a minimum of 8.33% of the salary/wages once
the employee puts in 30 days of work. If the employer is paying more than 8.33%, then the
further calculation shall be proportionate to the working days put in.

Sec. 14 provides for the computation of working days. Working day includes (a) the day
on which he has been laid off, (b) leave with salary/wages, (c) absent due to temporary
disablement caused by accident arising in course of employment, (d) maternity leave with
salary or wage.

“Temporary disablement”, “arising out of and in course of employment” are concepts to be
studied in Employee State Insurance Act and Employee Compensation Act.

Sec. 15 is a recommendation of the High-Power Bonus Commission. Sec. 10 provides a
minimum bonus of 8.33% and Sec. 11 provides a maximum ceiling of 20% of salary/wages.
If the employee has excess profits even after the payment of 20% under Sec. 11, he may
carry this excess profit in the next following 4 years. This carrying forward is called “SetOn” and it can go on for 4 AY. Every year the ceiling of 20% applies.

“Set-Off” is a negative financial situation, exactly opposite to Set-On. If there is no
available surplus at all in an AY, and even the payment of 8.33% is not possible in its
entirety, then the deficit bonus is carried forward to the next AY. Thus, he promises to pay
the current AY’s 8.33% in the next AY. In the next AY, he shall have to pay the previous
year’s 8.33% + the current year’s 8.33%. This carrying forward of minimum bonus to
second AY is called Set-Off. He may carry forward such deficit for 4 AY. If he cannot pay
it even in the fourth AY, he may be ordered to shut down his establishment altogether.

Thus, set-on and set-off can be done for 4 AY.

Sec. 16 provides for special provisions with respect to certain establishments. This
provision is specially for new establishments. The High-Power Bonus Commission
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recommended the insertion of this provision. It provides that for a new establishment, for
the first 5 AYs, the employee need not pay any kind of bonus irrespective of the amount of
profits or losses sustained. The concept of set-on and set-off also do not apply to the first
five years of the new establishment.

Thus, Set-on and Set-off may be started from the 6th AY onwards. 6th AY onwards, the
employer may pay anything between 8.33% and 20% of salary/wages range. In case of
excess profits, it may be set-on and in case of deficit, it shall be set-off.

Sec. 17 deals with the customs with respect to bonus. The custom is not to pay the bonus
at the end of the AY (1 Aptil-31 March). Traditionally, an interim bonus is paid during big
festivals such as Diwali, Durga Puja etc. Such interim or customary bonus paid by the
employer shall be adjusted to the bonus amount at the end of the AY. This implies that the
interim bonus shall be deducted from the final bonus paid at the end of AY, and only the
balance amount of money is paid as bonus.

Sec. 18 states that where an employee is found guilty of any kind of misconduct which has
caused financial losses to the employer, then the employer shall (not may) be entitled to
deduct the amount of loss so caused from the amount of bonus payable to the employee in
that AY only. The employee is entitled to receive the balance amount, if any, after the
deduction of the loss so caused.

Sec. 19 prescribes the time limit for payment of bonus. The bonus shall be paid by cash.
Wherever there is a dispute regarding the payment of bonus, it shall become payable within
one month from the date on which the award becomes enforceable. Within a period of one
month from the date of the decision of the Labour Court or the award of the Industrial
Tribunal. Normally, the bonus shall be paid within 8 months from the close of the AY.

Sec. 20 provides that in any AY, if a public-sector establishment producing and selling
goods or providing services, in competition with a similar establishment in the private
sector, and the income of the public-sector establishment is substantial, the public-sector
undertaking shall pay a bonus of 20% (maximum bonus u/s. 11). If any of these
requirements are not fulfilled, the bonus need not be paid.
Notes 29/10/2020: 
Sec. 21 allows the employee, or his authorized representative or his legal heirs in case of
his death, if any money is due to him as bonus. This is through application to appropriate
government. The government will then make preliminary enquiry and see if the amount is
due to the employee. Once it is satisfied, it will issue a certificate stating the amount of
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bonus due to the employee. This is then submitted to the district collector’s office and this
will be recovered as arrears of land. The application has to be made within 1 year from the
date on which the money becomes due. However, if the appropriate government is satisfied
that the applicant had a sufficient cause for delay in making application, it may condone
the delay.

Sec. 22 states that any dispute with relation to the bonus amount becomes an ‘industrial
dispute’. An industrial dispute arises when the question is whether a bonus is to be paid or
not. An industrial dispute can arise under Sec. 20 of this Act also. A reference of such
dispute may be made to any of the machineries under the ID Act.

Sec. 23 is the presumption about the accuracy of the balance sheet and profit and loss
account of corporation and companies. This section tries to avoid any unnecessary enquiries
into the accuracy of the accounts of the company, cause usually it is already audited by
CAG or by any auditors duly qualified under the companies act. The authenticity of these
accounts cannot be challenged. However, if any TU wishes to have any clarification on any
item in the accounts and it has not been audited by the CAG or the auditors duly qualified,
they can make an application to the authority and the authority asks the company to make
the clarification and the company is bound to give clarification. Read with Sec. 25.

Sec. 24 states that banking companies’ accounts are already audited by designated auditors
and such accounts cannot be questioned in any case.

Sec. 25 provides that where a company fails to give clarification, the authority may appoint
an auditor to audit the accounts once again and the Company cannot dispute the same. The
default of the employer shall then be recovered and paid accordingly.

Sec. 26 states that the employer must maintain registers, records and other documents as
required.

Sec. 27 defines Inspectors, who are appointed by the appropriate government and exercised
his powers within his jurisdiction. There can be no obstruction of his entry into premises
of establishment, all accounts documents etc. must be produced for inspection before him,
if he wishes to conduct any enquiry with any person on the establishment then the
arrangements have to be made. Any document may be copied by him and arrangements for
making copies must be made. He also has power to seize the books or documents. He is
deemed to be a public servant under IPC.
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
Sec. 28 states contravention of the Act is punishable with imprisonment upto 6 months or
fine upto Rs. 1000/- or both. Sec. 29 states that in case of offence by Company, the person
incharge of the company shall be held guilty of the offence and proceeded against.

In labour law, the disputes shall be settled in the Labour Courts or other authorities under
labour legislations, wherein it deals with labour matters. In case of offences, the criminal
proceedings would go on simultaneously in criminal courts.

For offences, Sec. 30 provides that the rank of Regional Labour Commissioner or Labour
Commissioner would take up the case.

Sec. 31 provides that no suit shall lie against the Government or any officer of Government
acting in good faith.

Sec. 31-A provides that if the bonus is paid under other Acts or other agreements providing
better bonus, this Act shall not apply. This agreement must be approved by appropriate
authority.

Sec. 32 provides that this Act does not apply to LIC, Merchant shipping, Dock Workers,
universities, red cross etc.

Sec. 34 provides that read with Sec. 31-A, the provisions of this Act shall apply even where
it is inconsistent with other agreement etc.

Sec. 35 provides that it does not apply to coal mines, PF, etc.

Sec. 36 provides that if the Government wishes to exclude certain establishments, it may
do so with Official Gazette notification.

Sec. 38 empowers the Central Government to make rules for effectuating the provisions of
this Act.

Sec. 39 provides that the Act shall be read with ID Act and not in derogation of the same.

Sec. 40 repeals Payment of Bonus Ordinance.
30/10/2020
1. Disqualification from receiving the bonus has been added to the Wage Code 2019. This is
the only new provision which has been added. In the Payment of Bonus Act, it was fraud,
misappropriation of property, riotous or violent behavior etc. The only addition in the wage
code is “conviction for sexual harassment”.
2. According to the Payment of Bonus Act, the bonus has to be paid within 8 months from the
closure of AY. The Wage Code added the provision to extend this 8-months period to two
years by application by employer.
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3. These are the only two changes brought by the wage code.
Employee Compensation Act, 1923
History:
1. The industrial revolution had its impact across the world and in India through expansion of
industries across the world. The unskilled workmen operated heavy and dangerous
machinery for long hours. This Act was earlier called as Workmen’s Compensation Act,
1923.
2. The workers rendering their work in the factories, industries and other establishments
wherein, there is threat to their body and life. The injury may be permanent or temporary.
The essence lies in making the employer answerable for the injury so caused in the course
of employment. The aspect of employer’s responsibility for the workers’ injury formed the
core.
3. The second aspect is whether the workers are aware of the occupational hazards and the
risks involved in the specific employment.
4. Across the world, efforts to make the employer responsible for the injury so caused to the
workman in the course of employment gained momentum. Earlier, in England under the
common law, it was called the ‘Employer’s Liability Act’ making the employer liable by
making him responsible for all kinds of accidents in his establishment. The employer
always took the plea of contributory negligence on part of the worker to escape liability. In
Britain, the British Parliament recognized this shortcoming and passed the ‘Employee’s
Compensation Act 1897’ in the UK.
5. In India, earlier it was called the Fatal Accidents Act. It had a limited scope and only
covered death. It did not cover other injuries caused in the course of employment.
6. The ILO adopted a number of conventions as early as 1921, 1925 for employees
compensation
7. India constituted a joint-select committee which took inputs from experts including
employees, employers, mining workers, hospital staff etc. The Employee Compensation
Act was made in 1923 and brought into force from 01 July 1924.
Preamble and Applicability:
1. The preamble states that it is an Act to provide for payment by ‘certain classes of
employers’ to their employees of compensation for injury by accident. This accident must
be in the course of employment and the injury must be in the due course of the discharge
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of duties in the course of employment. The accident must be within scope of the
employment and not beyond that.
2. Sec. 1 provides that the Act is applicable to the whole of India except J&K. ESI Act applies
to J&K. The position may have changed with the enactment of the Wage Code and the
CAA.
3. Earlier, there was a threshold of workers (wage limit) drawing an amount of only Rs. 500/per month alone shall be eligible for claiming compensation under this enactment. Later it
was enhanced to Rs. 1000/-. Now, all those wage limits are removed and all employees can
claim compensation.
4. Schedule II of the Act covers 32 categories of employees who can claim benefits under the
Act. The appropriate govt. has the power to add any number of classes of employees to this
list under Schedule II. Such employees listed under Schedule II are eligible to claim
compensation under this Act.
Definitions:
1. A commissioner means a commissioner appointed by the appropriate govt under Sec. 20.
2. Compensation means compensation as provided by the Act. Sec. 3 deals with when the
employer is liable or otherwise. Sec. 4 and Sec. 5 provide for the formula for the calculation
of the compensation to be paid by the employer.
3. Dependant is a very important concept. Dependant includes certain categories of relatives
of the deceased employee. Similar to Class I, Class II heirs etc. in the Hindu Law of
Succession, the categories of dependants include the following:
a) A widow, minor legitimate or adopted son, an unmarried legitimate or adopted daughter
or a widowed mother
b) A son or daughter who has attained 18 yrs. of age and who is an infirm, wholly
dependant on the earnings of the employee at the time of his death.
c) If wholly or in part dependant on the earnings of the employee at the time of his death:
(1) A widower
(2) A parent other than a widowed mother
(3) A minor illegitimate son, an unmarried illegitimate daughter or a daughter
legitimate or illegitimate or adopted if married and a minor or it widowed and a
minor.
(4) A minor brother or an unmarried sister or a widowed sister if a minor
(5) A widowed daughter-in-law
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(6) A minor child of a pre-deceased son
(7) A minor child of a pre-deceased daughter where no parent of child is alive
(8) A paternal grandparent if no parent of employee is alive.
d) A married daughter who is a major cannot be a dependant.
4. Employee includes a railway servant, master of a ship, crewman of a ship, captain and crew
of aircraft, driver, helper, mechanic, cleaner or any person employed with a motor vehicle,
a person recruited to work abroad by a company who is employed outside India in a
capacity under Schedule II with a ship, aircraft, vehicle or company registered in India. It
also includes person employed in contract of employment under Schedule II categories. It
does not include Armed Forces. Where the employee is dead, any reference to any
employee who has been injured shall include his dependants.
5. Partial disablement means a disablement which is temporary in nature. It reduces the
earning capacity of the employee in the establishment in which he was working at the time
of the accident. The disablement must have been a result of the employment i.e., occurred
in due course of employment. There are 3 concepts: temporary disablement, permanent
partial disablement, permanent total disablement.
31/10/2020
1. Employee Compensation Act is where any employee (includes workman also, there is not
wage limit anymore) is entitled to get a compensation for an injury sustained due to an
accident which has occurred in the due course of employment.
2. The objective is to do good for the actual loss suffered by the employee. Compensation is
something like an insurance against the risk involved in doing the work in the course of
employment. Where the employee sustains any of the different kinds of injuries, or on death
of employee, the employer is liable to pay compensation.
Principles under Employee Compensation Act:
1. Accident and the injury therefrom sustained, must either be “arising out of” and “in course
of employment”.
2. There are 4 principles:
a) A casual connection between the injury and the accident; and the accident and the work
done in the course of employment.
b) All of these above four principles must be proved in order to claim compensation.
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c) Principle 1: There must be a connection between the injury and the accident. This
relation must be proved. The accident and the work done. Thus, the accident has
occurred due to that specific work due to the employment.
d) Principle 2: The onus of proof lies on the claimant. The claimant can be the employee
who sustained the injury or the dependant claiming thereunder, in case of death or
permanent total/partial disablement. The link required in the first principle has to be
established by the claimant.
e) Principle 3: It is not necessary that he must be physically present within the premises
of the establishment. Even if he has ceased to work for the day, still the employer can
be held liable under certain circumstances.
Eg: A teacher after teaching her last class for the day, continues to remain in the school
till the end of shift. For any injury sustained within the establishment, the employer
may be held liable. For any injury sustained outside the premises of the establishment,
the employer may be held liable in certain circumstances. The journey from home to
establishment is also within the scope of “employment” and here too, the employer may
be held liable.
Eg: In case of door-to-door delivery, the workman is hardly present on a designated
‘establishment’. The daily travel and deliveries are not within the premises but the
‘employment’ extends to the travel and it is not limited to designated premises.
Thus, where the nature of job itself requires the employee to travel frequently, the scope
of the term ‘employment’ extends to such travel as well.
f) There are certain kinds of employment wherein, the work involves high stress levels.
The scope of ‘employment’ can also extend to when such employee has reached his
home, and due to the stress involved in work, he suffers from certain mental problems,
heart disorders, BP etc. Thus, employment includes the physical premises, travel
involved and the resultant strain out of the employment etc. Thus, the scope of the term
‘employment’ is very wide.
g) Principle 4: If the evidence is adduced to show the greater possibility that if a
reasonable, prudent man were in the employee’s place, and that the injury resulting to
the employee is only out of the employment only, then that is sufficient to claim
compensation. Probability alone is sufficient to claim compensation. Injury need not be
physical only. It may be psychological as well.
3.
Nature of Liability of the Employer:
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a) The Employee compensation Act tries to create a new kind of liability. It is not similar
to law of torts.
b) Every employer is liable to pay the compensation fixed as per the Act under Sec. 4,
Sec. 5 etc. Thus, the compensation amount to be paid is fixed. The compensation is not
based on the suffering of the worker or the expenses incurred in treating himself etc.
The compensation is based on ‘earning capacity’ before and after the accident.
c) Although the nexus between the injury caused and the employment has to be proven,
the compensation is based on the reduction in the wage-earning capacity of the
employee before and after the accident. The extent of difference/reduction in the
earning capacity of the worker, before the accident and after the accident, shall be the
basic principle governing the liability of the employer.
d) Thus, earning capacity is a very important principle under the Act. It shall govern the
liability of the employer to pay compensation.
4. Doctrine of added peril:
a) An employee is under the contract of employment under the control of the employer. He
cannot do any act beyond the scope of the instructions given, or take any added risks, or
deviate from the procedure stated, or fails to follow the instructions.
b) If the employee has done any negligent/wrongful act, which he is not supposed to do as a
part of his employment, which has resulted in the accident and injury, then the employer
shall not be liable.
c) If the accident or injury occurs due to the acts done by the worker by working in such a
way which is against the instructions of the employer and adds peril to the course of
employment, in such case, the employer is not liable.
5. Adjudication of Compensation:
a) Based on nature of disablement, a procedure is fixed in the Act to calculate the
compensation to be paid. Once the compensation has been fixed, it cannot be revised
on any other ground, even if the injury aggravates after the fixation/payment of
compensation.
b) Compensation once fixed shall not be revised under any circumstances for the
aggravation of the injury. This applies in case of lumpsum payment of compensation.
c) There are 2 types of compensation: Half-monthly payments and lumpsum payments.
The above two points applies to the lumpsum payment. The question of whether it shall
be half-monthly payment or lumpsum payment shall be decided by the adjudicating
authority.
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d) Half-monthly payments are of shorter duration, usually of a few months, with the hope
that the employee shall recover and come back to work. In the course of half-monthly
payments, if the injury of the employee aggravates, then by application to the
adjudicating authority the quantum of compensation may be revised.
e) In case of lumpsum compensation, if the lumpsum amount as already been paid, and
then if the injury aggravates (due to any complication, internal bleeding etc.), the extra
claim may included in the ‘any other order as it deems fit in the interest of justice, equity
and good conscience’ clause in the prayer of the employee. Claims for mental agony
and ‘unforeseen aggravations of the injury’ must be claimed at the first instance only.
f) If the quantum of compensation is to be challenged by the employee, the employee
cannot take the compensation at all. If he accepts the compensation, the employee loses
his right to challenge the quantum and ask for enhancement.
6. Self-Inflicted Injury:
a) Doctrine of added peril, self-inflicted injury and contributory negligence go together.
b) Accident is inherently something unforeseen and unintentional. If it is not unforeseen
and not unintentional, it cannot be called an accident. Thus, when an employee does an
act intentionally or there is complete negligence on the part of the employee knowing
fully well the risk involved, and the risk involved is not unforeseen by him, despite such
knowledge if he does the act, the employer cannot be held liable since it is self-inflicted
injury.
7. Contributory Negligence:
a) Eg: An employee is cut by a rusted iron piece and the employer gives basic first-aid.
Then, after coming back to work, the employee neglected the injury. The employee
then develops tetanus in the entire body and dies. Here, the death is due to the
contributory negligence of the employee and the employer cannot be held liable.
b) Here, where an employee fails to take reasonable care and neglects the safety measures
or procedures etc., the plea of contributory negligence may be raised by the employer
and the employer shall not be held liable in case of contributory negligence.
02/11/2020
1. “Contract of Service” and “Contract for Service” are two different concepts. In both cases,
there must be an employer-employee relationship. In contract FOR service, the master
orders the servant/employee as to what is to be done. In contract OF service, the employer
not only defines what is to be done, but also how it is to be done.
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2. Eg: Placing an order with a carpenter for a table of given specification is a contract FOR
service. However, where an employer employs a carpenter for a given period, with given
raw materials, with given specifications, with given procedure for making the product, and
monitoring every small activity with every activity under the control of the employer; it is
contract OF service.
3. Contract of Service has a master-servant relationship.
4. Disablements:
a) Disablement is either permanent or temporary. The basic test lies in whether there has
been a reduction in the earning capacity of the employee because of the accident. If it
is of a purely temporary nature, if the employee is able to resume and continue in the
same earning capacity or not is the test to decide disablement.
b) It is temporary partial disablement is where the employee is not able to earn for a
short period of time but after recovering, he is restored back to his same capacity.
c) However, if there is a reduction in the earning capacity of the employee and he is not
able to do the same work as it was before the accident, i.e., he is in a lesser category job
or there is a reduction in his working/earning capacity from the earlier work due to the
accident. Thus, he is not in a position to go back to the job he was doing earlier. It is
permanent partial disablement.
d) The following propositions are important:
(1) Earning is not the same as earning capacity. There is difference between earning of
a person and his capacity to earn. The person may have an earning capacity higher
than the actual earning of the person.
(2) Rise in earning may be because of various factors and rise in wages is not decisive
of no loss of earning capacity. If the wages/salary does not decrease or does
increase, it does not mean that there is no reduction in earning capacity. Eg: A
person’s wages increase as a result of hike by government; however, he has still lost
his earning capacity.
(3) Loss of physical capacity is not co-extensive with loss of earning capacity. They
may be disjointed. Eg: There can be a loss of physical capacity but still there can be
a rise in income due to other factors.
(4) Loss of physical capacity or physical incapacity may be relevant for determining
the earning capacity in certain circumstances. Thus, it must be investigated on a
case to case basis so as to ascertain whether the two are connected or disconnected.
There can be a loss of physical capacity resulting in loss of earning capacity, due to
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coming to a lower cadre. However, there can also be loss of physical capacity with
no effect on earning capacity of the worker in that particular establishment.
e) Upper Doab Sugar Mills Ltd. v. Daulat Ram (AIR 1936 All 493)- The worker was a
blacksmith by profession and in course of employment, he lost the index and middle
finger. The thumb and other 2 fingers were fine. After recovery, he was ready to come
back to work. The court held that the fundamental question was whether he would be
able to continue in his job as a blacksmith or whether he would have to work in a lower
cadre. If he has to work in a lower cadre, his income comes down. This is the test to see
whether he is incapacitated from doing the same work. If he cannot do the same work,
what is the reduced cadre into which he is placed, what is the proportionate reduction
in the earning capacity. These would be considered in order to compute the
compensation to be awarded.
03/11/2020
1. General Manager Railways Bombay v. Shankar: There are classifications of poasts in
railways and the employee was working as A-1 post. Due an accident he lost one eye and
2 teeth. The medical officer said losing one eye made him unfit for the A-1 posting and
even for the B cadre. He was given C cadre posting. He refused to accept this C-Cadre
posting and demanded compensation to be calculated as ‘permanent total disablement’. The
HC stated ‘is there a reduction in earning capacity or is it that he cannot earn anything at
all totally?’ in this case, there is only ‘reduction’ in earning capacity and his total earning
capacity did not become zero. Therefore, the HC stated that permanent total disablement’s
compensation cannot be claimed and only permanent partial disablement.
2. Sukhai v. Hukumchand Jute Mills Limited: Sukhai was a copper wire winder in a mill. On
a day he was injured by a Chinese clay ball in his left eye. He was given first aid and then
sent to a hospital, where they had to remove the left eyeball totally. He was replaced with
an artificial eye. 2 months later when he came back, he was asked to resume the same duties
and he continued in the same duties and earned same wages. Here, there is no reduction in
earning capacity. After one year, he made an application for compensation claiming there
was total vision loss in left eye, due to accident in course of employment.
The court gave a suspensory award in this case. The suspensory award is given by court in
peculiar circumstances. He has a disablement but there is no reduction in earning capacity.
Suspensory award was based on the reasoning that although currently there is no reduction
in earning capacity, a few years down the line, there might be an infection which might
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aggravate the injury. Then, if the injury aggravates, then the employee shall be entitled to
claim compensation.
3. Ball v. William Hunt: The employee was already blind in one eye. He got the employment
by approaching the employer and the employer was unaware of him being blind. In the
course of employment, the employee suffered an injury in the same blind eye and they had
to remove the eyeball entirely. The defect caused on his face now was glaring. Now when
he approached employers for a job, everybody refused to give him employment. The
employee now made a claim for compensation. Here, the court held that is permanent total
disablement due to the earning capacity being reduced to absolute zero.
4. Rukiya Bai v. George D’Cruz: The person was a labour handling physical goods by
uploading them on a ship. He slipped and fell during this and his entire spine got damaged
to the extent that he could not sit. The court held that he has received high degree of injury
and due to this, his entire earning has been cut off. When the entire earning capacity is cut
off, it is called permanent total disablement.
5. Permanent total disablement is when the earning capacity of the person comes down to zero
although he is alive. He is in capacitated from doing any kind of work, which he could’ve
done prior to the accident and now, he cannot do any kind of work. His entire earning is
cut off. This is permanent total disablement.
6. Sec. 3 deals with employer’s liability for compensation and it is a limited liability. There
are few conditions under Sec.3 (1) in 4 conditions:
a) Personal injury occurred
b) Injury caused by accident
c) Accident must have arisen out of and in course of employment
d) Accident results in death, permanent total disablement, permanent partial disablement,
temporary partial disablement,
e) Disablement exceeds a period of 3 days.
7. Under Sec. 3, he shall NOT be liable to pay compensation if:
a) The disablement does not exceed a period of 3 days
b) In respect of accident resulting in death or permanent total disablement, the employer
can claim that the employee was under influence of drugs or drinks at the time of
accident
c) If employee has willfully disobeyed instructions/orders of employers given especially
for the safety of the employee. If the employer gives some specific instructions to do
14
the work and the employee disobeys these orders and does the work in some other
method/manner.
8. Sec. 3(2) also defines occupational diseases, which are diseases which are confined to that
particular occupation itself. These are classified into Part A, Part B and Part C of Schedule
III.
Eg: Asthma in Asbestos Industries; People working in Cotton Mills are required to close
their noses and ears in process of cotton ginning, yet, the lungs get completely infected and
there is no cure for this; in any kind of under-ground mining, the lung capacity comes down
quickly; in chemical factories as well, skin allergies and lung infections are common due
to fumes. IT industry also has injuries related to the spine, brain, eyes etc. Although, not all
occupations have occupational diseases.
9. The occupational diseases mentioned in Part A of Schedule III, the burden of proof always
lies on employee to prove that he has contracted these diseases due to the employment. The
employer is liable to pay compensation. However, if the disease surfaces up after he has
left the employment, in Part A cases, no compensation shall be paid and the employer shall
not be liable.
10. In Part B cases, if the disease surfaces later, the employer shall be liable to pay if the
employee is able to prove that he got it after working for a continuous period of 6 months
or more in the employment of the employer.
11. In Part C cases, if the disease surfaces later, if the employee has worked under the one
employer and then worked under another employer, and then he develops the disease, the
Central Govt. shall specify in respect of which employment he has contracted the disease
and it must be an occupational disease, then that particular employer shall pay the
compensation to the employee. There is no 6 months requirement as seen in part B
4/11/2020
1. Personal Injury: Injury is usually understood in the sense of bodily injury. However, it is
not sufficient to include only physical injury. Personal injury covers physical injury and
also psychological injury, nervous shock, mental strain etc.
2. Indian News Chronical v. Mrs. Lazaraus (AIR 1961)- The employee was an electrician by
occupation. His employment required him to go into a cooling room with very low
temperature and immediately go into the heating room with very high temperature and enter
these two rooms constantly in short intervals to maintain temperature. As a result of this,
he was attacked by pneumonia and he dies in 5 days. His mother, the respondent in this
15
case, claimed compensation stating that he got pneumonia only due to his employment. The
court held that personal injury does not only mean bodily injury but also includes
psychological injury, nervous shock, mental stress etc.
3. Accident: Accident is any mishap or event which is unanticipated, untoward incident etc.
in the context of EC Act, it is not only considering the person who caused it and the person
who suffered through the accident. The main point is that the workman would not have
suffered the accident, had he not been there in that particular place at that particular time.
The reason why he was there is because of the employment. Thus, the employment was the
reason he suffered the accident and the employer is liable to pay compensation.
4. The important aspect is ‘arising out of and in course of employment’. ‘Arising out of’ refers
to the cause or reason of the accident. The ‘in course of’ means the place and circumstances
under which the accident takes place and the time when it has occurred. There must be
casual connection between the ‘arising out of (cause)’ and ‘in course of employment’.
5. The burden of proof shall lie on the claimant to prove this connection that the accident has
arisen out of and in course of employment in order to claim compensation.
6. State of Rajasthan v. Ram Prasad and Another (2001-SC)- The employee was a lady
Shrimati Geeta, she was working inside the premises in an open yard. At this time, while
working, natural lightening struck her and she died on the spot. The husband made a claim
for compensation. Here, there is a direct connection between the “employment”, “accident
caused” and the “resulting injury/death”. Hence, the employer was liable to pay
compensation.
7. R. B. Moondra & Co. v. Mst. Bhanwari (AIR 1970 Raj 111)- The petrol tanker business
was being run by Moondra and Co. for carrying petrol from the source to various petrol
pumps. Bhanwari was a driver for the tanker. Bhanwari reported to the employer that the
tanker was leaking petrol. The employer asked him to remove all the petrol and half fill the
tank with water. Once this was done, the employer asked him to get inside the tank to find
out where the leak was. Since it was dark inside the tanker, the driver switched on his lighter
inside the tank and immediately the tanker caught fire and exploded, he died on the spot.
The court held that the employee might have done some small negligence by carelessly
lighting the lighter, however, it was purely arising out of and in course of employment and
thus, the employer was made liable to pay.
8. Trustees Port of Bombay v. Yamunabai (AIR 1952 Bom)- The employees were working in
a workshop, and someone from outside placed a bomb inside the workshop, and the bomb
exploded and the employee was injured due to this. It was a clear case where the employer
16
was held liable to pay compensation. The court held that only because of the employment,
the employees were working on that day at that time. Thus, it was purely arising out of and
in course of employment.
9. Smt. Koduri v. Polongi Atchamma (1969 AP)- A quarry is a small mine site. The employee
was to upload quarry material from the quarry site into the lorry, then sit on top of the lorry
when it was fully loaded and then, go to the place where it had to be downloaded, download
the material, then sit in the lorry and come back to the original place for uploading again.
One day, while sitting on top of the lorry, he tried to get up and break a branch to hit a
rabbit running nearby, in this process, he slipped and fell on the tracks and was crushed to
death. His wife made a claim for compensation. Here, the court held that it was completely
beyond the scope of the employment and outside the instructions of his employer, even
though being in the lorry is part of employment. The court held that the employer is not
liable to pay compensation.
10. National Iron and Steel Co. Ltd. v. Manorama (AIR 1953 Cal.) – A small boy (before child
labour act) was employed to carry and serve tea continuously to the employees by crossing
the road to get across to the company. One day, the workers were outside the company on
a Strike and shouting slogans etc. The boy was still carrying tea and serving the working.
Some workers became unruly and the police was called. The police started firing bullets
into the air. One of the bullets that went into the air returned and struck this little boy and
he died on the spot. The mother of the boy claimed compensation since it was arising out
of and in course of employment. The court held that the employer must pay compensation
since it was purely arising out of and in course of employment and the boy would not have
been there unless it was for the employment.
11. Bai Shakri v. New Manekchowk mills Co. Ltd . (1961) – The mills used to manufacture
cloth and the mill was working in shift system. The employee’s shift was at 3 PM. The
employee came early and went to meet a friend in another department and then he reported
back to his own department at 3:20 PM. Here he suffered a heart attack, he was shifted to
a hospital. Later, he resigned from the employment and later on he died. The claim was
made on the employer stating that it was arising out of and in course of employment. This
case is very important since it laid down a few guidelines. It was held that:
a) There must be a casual connection between the injury, the accident and the work
done in course of employment. It should not be a very remote connection.
17
b) The onus is upon the applicant to show that it was the work and the resulting strain
which contributed to or aggravate the injury. The burden of proof shall lie on the
applicant.
c) The employee need not actually working when the injury occurs. He might even be on
holiday or might have resigned.
d) If there is evidence to show that the injury/death is as a consequence of the employment
and the stress and strain of employment results in aggravation of injury or death, then
if the reasonable prudent man is able to draw the connection between the injury/death
and employment, then the employer is made liable.
Thus, the employer was made liable.
12. Notional extension theory
05/11/2020
1. The third principle in the Bai Shakri case is that ‘it is not necessary that the employee must
be actually working at the time of his death or that death must occur while he is working
or had just ceased to work’. In another case where an employee had a lot of work stress and
after returning home from the establishment, after 3 hours of relaxation, the employee had
a massive heart attack and died on the spot. Here, the employer was made liable.
2. The fourth principle in the Bai Shakri case is that ‘Where the evidence is balanced, if the
evidence shows a greater probability which satisfies a reasonable man that the work
contributed to the causing of the personal injury, it would be enough for the employee to
succeed’.
3. In the Bai Shakri case, the employer was NOT made liable since it was not arising out of
and in course of the employment.
4. The outcome of these 4 principles is that where the employee is performing his duties of
the employment, and the accident occurs at the place of work or while working outside
establishment or at home, or while travelling, the employer is held liable. Thus, the
connection is between the work done, the consequence of the work as resultant strain, the
accident and the injury as a result of the accident.
Notional Extension Theory (NET):
1. The accident must be arising out of and in course of ‘employment’. The question is where
the employment begins. The employments beings from the time the worker travels from
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his house to establishment, works in the establishment and then travels and returns home.
The NET concept is this extension of meaning of employment to the travel of the employee.
2. The reason is, the worker is travelling only because of employment and so the employer
shall be liable.
3. The NET extends the scope of employment even for the travel. Situation 1: However, the
NET does not apply to a case where the worker deviates from his path, or indulges in any
personal engagement while coming back from employment, and then meets an accident,
then the NET does not apply.
4. Thus, the NET only applies where the worker strictly follows his path and does not deviate,
and it is only from and to the establishment.
5. In St. Helens Colliery Co. Ltd. v. Hewlston (HOL of UK, 1924) – Here, the employee was
travelling in a colliery was injured. The employer had an agreement with the train company
and had a special train (colliery) for the employees to travel to and from their homes. It was
a single trip for every employee i.e., to and from home. The cost of this travel was deducted
from their wages. The employee’s train met with an accident. The HOL held that the
employer was not liable to pay compensation. The reason given was that the employee was
not bound to travel by the train and he could have travelled by some other means. The
employee’s contract of service does not say that he must travel by this train. Secondly, it
was stated that the train was not the only means of reaching to and from home. Had it been
the only means of transportation, the employer would be liable. However, since there were
other means as well, the employee was not obligated to use this mode. Thirdly, the HOL
said that travel does not come in the scope of ‘arising out of and in course of employment’
unless the contract of services says that the travel must be by the means given by employer.
6. After 1924, this concept changed and this decision was held inappropriate later. Thus, travel
is included in employment. The current situation is as follows:
7. Situation 2: the transportation is provided by the employer and the employee while in this
transport, gets injured due to an accident. The employer shall be liable.
8. Situation 3: the employer does not provide any mode of transport, and the employee uses
his own mode of transport and gets injured due to an accident. The employer shall be liable.
9. Situation 4: the employer provides transportation and the employee chooses not to use this,
uses his own mode of transport and gets injured due to an accident. The employer shall be
liable.
10. The only situation where the employer shall not be liable is where the employer deviates
from the set route and engages in any personal tasks.
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11. Sec. 4 of EC Act: it deals with amount of compensation. It states that where there is death
as a result of injury, an amount equal to 50% of the monthly wages of the deceased
employee multiplied by the relevant factor or an amount of 1 lakh 20 thousand rupees shall
be paid, whichever is more.
12. Relevant factor is in Schedule IV wherein against the age of the employee (the last birthday
before the employee met with the accident), starting from 16 yrs to 65 yrs, a number is
given which is the relevant factor. Eg: if the age of employee is 16 yrs., it is 228.54. For 65
yrs, it is 99.37. the relevant factor reduces with increasing age of employee.
13. It states that where there is permanent total disablement as a result of injury, an amount
equal to 60% of the monthly wages of the deceased employee multiplied by the relevant
factor or an amount of 1 lakh 40 thousand rupees shall be paid, whichever is more.
14. The reason for which the compensation for death is lower, is because, the employee in case
of permanent total disablement is alive and he has to live the rest of his life in such condition
and he cannot resume any kind of work thereafter. The physical pain, mental agony and
increased hardships of his dependants make the compensation higher for permanent total
disablement.
15. The explanation to this section provides that if the monthly wages exceed Rs. 4000, then it
shall be considered as Rs. 4000 only for all purposes.
16. In case of permanent partial disablement, there is division between Part II of Schedule I
and those not mentioned in this Part II. Part II of Schedule I mentions the percentage of
loss in earning capacity. Thus, type of disablement and the percentage of loss in earning
capacity will be taken into consideration for computing compensation.
17. Usually, there are multiple injuries occurring to the same person. ALL such injuries are
taken into account to calculate compensation. The total aggregate of this computed
compensation shall NOT EXCEED the compensation to be paid in case of permanent total
disablement. Thus, the compensation shall be the aggregate of all injuries, but this total
amount shall not exceed the amount in permanent total disablement.
18. Where the injury results in temporary partial/total disablement, compensation shall be
calculated at 25% of monthly wages multiplied by relevant factor paid accordingly. The
idea is, the employee will definitely come back to work. Therefore, the mode of payment
shall be half-monthly payments. If the disablement continues for a period of 28 days from
the date of accident, then every fortnight, the employee must go for medical examination
to a doctor under ESI or registered govt. doctors, the doctor must certify that he still requires
20
15 more days of rest. This certificate is then submitted and he gets compensation for the
next 15 days.
19. Thus, the doctor’s report shall be the basic proof to get compensation. Once the doctor
certifies him as fit, he must return to employment and he cannot claim compensation.
20. If in between, he does not get himself examined and he doesn’t produce the certificate, the
amount of compensation cannot be paid.
21. If there is death of employee, under ESI Act, funeral expenses are paid to the eldest member
of the family. These funeral expenses are now at Rs. 10,000/-. This shall be paid by
employer in addition to the compensation.
22. All labour laws are applied only to organized sectors. They are called organized sector since
labour laws are applied to it. What is organized sector is notified by the Govt. from time to
time.
23. Under Sec. 4, employer is liable to pay compensation and he is liable to pay as soon as it
becomes due. However, where there is dispute relating to the amount paid, under Sec. 4A
the employer must deposit the amount with the Commissioner, without prejudice to the
rights of the employee. If the employer fails to deposit this amount within 1 month from
the date on which it is due, the Commissioner is entitled to ask the employer to deposit the
amount with 12% rate of interest per annum. If still the employer does not deposit without
justification, the Commissioner can recover it with interest as arrears along with 50% of
the total amount (principal + interest) as penalty. The employer will be given a chance to
be heard and NJP are complied with.
24. The Commissioner or Asst. Commissioner etc. are appointed by the Govt. and it notifies
their jurisdictions etc. as well.
06/11/2020
1. Sec. 5 provides for method for calculating wages. For this it is necessary to ascertain
continuous service. Continuous service means he must have worked in the establishment
for atleast 12 months. Monthly wages are 1/12th of the wage received in the year.
2. If the employee has worked for less than one month, the wages earned by other employees
employed by such employer for doing the same nature of work is considered. If there is no
such employee in that establishment, then the wages for similar work in nearby
establishments is considered.
3. Sec. 6 talks about review. Where half-monthly wages are payable, the review shall be done
by the Commissioner, on the application of the employer/employee based on certificate of
21
the medical practitioner. The main issue is whether there had been a change in the condition
of the workman. The Commissioner looks into the medical certificates and other records
presented.
4. The Commissioner has the power to continue the half-monthly payments, or decrease or
increase them. If the disablement has aggravated from temporary partial disablement to
permanent disablement, the commissioner can convert it from half-monthly payment to
lumpsum compensation and the amount already paid shall be deducted. This is also done
under Sec. 6 only.
5. Sec. 7 deals with commutation of half-monthly payments. The half-monthly payments can
only be converted into lump-sum payments only AFTER six months by application to
Commissioner under Sec. 6. Before 6 months, it cannot be done. The lumpsum payment
can also be decided by agreement between employee, employer and Commissioner.
6. Sec. 8 deals with distribution of compensation between dependants under the supervision
of the Commissioner for EC. Act. Whenever an accident results in death, the employer shall
not make any direct payments to the family/dependants of the workman. It shall be
deposited to the Commissioner and the Commissioner shall distribute the amount to the
rightful dependants. If the person receiving it is not mentally sound or has other mental
disability or infirmity, even the commissioner cannot directly make payments to such
person. He must open a bank account and deposit the amount there and only the interest on
that amount can be utilized. This is the case for women, children and the persons with
disability.
7. If the person is a minor, the lumpsum amount may be given to him upon attaining majority.
For a person with legal disability (unsound mind), then the interest only can be received
and not the lumpsum. However, if there are other family members who take care of such
person, then the lumpsum may be claimed by them only for the use of the person. Even if
they want to take a lumpsum amount for the benefit of the legally disabled person, they can
take an amount upto 3 months of wages of deceased person.
8. The employer may even deposit the amount in an account and provide the receipt to the
Commissioner. The Commissioner can also investigate the same.
9. The employer has a duty to either deposit the amount in the bank (and give receipt) or
deposit it to Commissioner. The commissioner is duty-bound to serve notice on the family
of the deceased and conduct an inquiry to find out who are the family members, who are
genuinely dependant on the money of the deceased. He thus, gives notice asking them to
appear before him. He also determines how many of them cannot earn anything for
22
themselves. He then writes a report and only when he is satisfied, he distributes the amount
to the persons he thinks is appropriate. Eg: A minor dependant can claim compensation but
once he turns a major, he cannot claim compensation irrespective of whether he himself
earns or not.
10. If the family members are not major or not in normal mental condition, the money is
deposited into a bank and they are to survive on the interest.
11. When the Commissioner is conducting the enquiry and he misses out on a member, then
that one member who has been missed out can make an application to the commissioner
and then he conducts an inquiry as to the truth of the application. Where the application is
found to be legitimate, the person shall be given compensation.
12. Sec. 9 provides that compensation cannot be assigned, attached or charged as operation of
law, nor be used to set-off any claim. Compensation includes both lump sum payment and
half-monthly payments. This is related to Execution proceedings under CPC.
13. Sec. 10 deals with notice and claim. There is a time limit for making a claim. No claim
shall be entertained without notice of the accident and unless the claim is presented within
2 years from date of accident. In case of occupational disease, the accident is deemed to
have occurred on first day of employee being continuously absent from the employment
due to this. For partial disablement, due contracting such disease, claim must be within 2
years from notice of such occurrence to employer. If an employee develops symptoms of
an occupational disease peculiar to that employment within two years of the cessation of
employment, the accident shall be deemed to have occurred on the day on which the
symptoms were first detected.
14. Any defect or irregularity in notice shall not bar the claim. The notice generally consists of
name, address of person injured, the cause of accident and details, usually in local language.
The State Govt. requires every employer to maintain a notice book. The employer must
maintain all such notices and copies of each must be sent to commissioner. The
Commissioner shall use these notices for initiating enquiry for giving compensation.
15. The notice may be sent by the employee or the Commissioner by registered post.
16. Sec. 10-A states that whenever there is a fatal accident, the employer must send a statement
to the Commissioner with details of such fatal accident, the info of injured persons or
deceased persons etc. The employer must send this report/statement/notice to
commissioner giving full particulars of accident including cause and casualties etc., within
30 days from date of accident. The employer, if he does not dispute liability, he can deposit
the amount of compensation within 30 days itself. If the employer does not send the report
23
within 30 days, the Commissioner himself can conduct a preliminary enquiry to get all
these details. After this, the claimants can directly go to the Commissioner to make claim
for compensation.
17. After conducting such enquiry, the Commissioner can compel the employer to submit the
detailed report within 7 days from such order under Sec. 10-B. he must also state the
circumstances which led to the accident.
18. Sec. 11 provides for medical examination of all injured persons in the accident. For
temporary partial disablement, it is a continuous medical treatment. No compensation for
less than 3 days treatment, it is not considered injury. For treatment which goes beyond a
period of 3 days, he must be examined with registered medical practitioner and he must
attach this medical certificate. He then gives a notice to employer of this along with medical
certificate. For claiming half-monthly payments, he requires physical examination by
registered medical practitioner and certificate. If the employee refuses to appear before the
practitioner, the employer can refuse to pay compensation.
19. If the employee who refuses to get examined by registered medical practitioner, later he
dies, then the employer may choose not to pay compensation. However, if the claim is made
before Commissioner, the Commissioner may provide for the same.
20. If the injury aggravates from temporary partial to permanent partial because of negligence
of worker by refusing to appear before practitioner or failing to comply with instructions
of doctor, the employer shall not be held liable and he shall not be liable to pay extra
compensation in addition to the amount already being paid.
21. Sec. 12 deals with contracting. When the employer enters into contract of service, he cannot
enter into a separate contract which absolves him of his liability to pay compensation, this
is contracting out. Such contract is void and the employer is bound to pay compensation
even though such contract exists.
22. Where the workers are employed through contractor and only the contractor has the direct
contact with the workers. The employer does not have direct contact with the employee.
The employer shall be held liable since there is principle agent relationship with contractor.
Later he may be indemnified by contractor or through the assistance of the Commissioner.
23. Thus, if the contractor is not available, the claimant may get it through the principal
employer. The liability does lie on the contractor. However, if he does not pay, the principal
employer cannot escape liability.
24. Under sec. 13, if a stranger pays the claims of the employees, then the employer shall pay
such stranger.
24
25. Under Sec. 14, if the employer is insolvent, then the claims of compensation of the
employees shall be paid first. The compensation shall be the first charge on the assets of
the employer if the insolvency proceedings are initiated.
07/11/2020
1. Sec. 15 provides special provisions relating to masters and seamen. Even in case of ships
and seamen, the Act applies. The notice of accident and claim, the notice is to the master
of the ship and served as if he is employer. If the accident occurs while the master is inside
the ship, the notice is not required. In case of death of seaman, within 1 year the claim for
compensation must be made. If the ship is entirely lost at sea, within 18 months of news of
the same the claim must be made. Even if there is a delay in this, the Commissioner may
pardon it if the reasons are sufficient.
2.
Sec. 16 states that the State Govt. may notify in the official gazette to the employer
requiring him to send all details of employee, name, cadre, nature of work, date of
employment etc. in case of injuries, they must inform the state govt about the nature of
injury sustained by each and every employee, the compensation paid for the injury. This
info is also filed with the annual returns filed by employer. It is previous years’
compensation along with current compensation paid.
3. Sec. 17 is contracting out. Even if the employer & employee have an agreement which
absolves the employer of any liability of compensation or states he will pay lesser, even if
such agreement is signed before the enactment of the Act, it shall be void and the employer
is still liable to pay compensation. The employee may still claim compensation.
4. It is the duty of the employer to inform the employee that he is right to claim compensation
right at the time of joining.
5. Sec. 18 dealing with proof of age is repealed.
6. Sec. 18-A provides for penalties. Whoever fails to maintain a notice book under Sec. 10,
or if he fails to send info to Commissioner which he required to send regarding the details
of accident under Sec. 10-A, or Sec. 10-B within 30 days, or fails to file returns under Sec.
16, or fails to inform employee about his right to claim compensation, the fine of minimum
50k or max. 1 Lakh may be imposed. Criminal prosecution can be commenced within 6
months from the date of the accident.
7. There is one aspect which prevails across all social security legislations. Simultaneously,
there can be civil and criminal proceedings that go on between the employer and employee.
25
8. Sec. 19 is reference to the Commissioner. This deals with jurisdiction of the Commissioner
to decide upon the liability of a person to pay compensation, the amount or the duration in
which the compensation is to be paid, this section confers basic jurisdiction on the
Commissioner.
9. Sec. 20 deals with appointment of commissioner. The appropriate govt is the State govt
and it is done by notification in official gazette. If more than one commissioner is
appointed, then the jurisdiction is determined. The state govt may also appoint an assistant
to give special knowledge. Commissioner is public servant under IPC.
10. Sec. 21 is venue of proceedings and transfer. The proceedings shall be before commissioner
in whose jurisdiction the matter lies. The procedure to be followed is as per the rules laid
down under this Act. The jurisdiction is wherever the employer’s registered office is
situated.
11. Sec. 22 lays down the form of application. Wherever any accident occurs, the claim for
compensation is made before commissioner. If the employer and employee can settle the
matter amongst themselves, then there is no need to come before commissioner. But if it is
disputed or not settled, then only they come before commissioner. There is a prescribed
format consisting of name, address, circumstances of accident, nature of injury etc. along
with prescribed fee. If the applicant is illiterate, he can take help of anybody else including
Commissioner. In case of fatal accidents, sum has to be deposited before commissioner. If
commissioner feels the amount is less, he may issue show cause to the employer as to why
lesser amount is deposited and why he shouldn’t be asked to deposit the rest within a
specified period.
12. If the employer fails to respond to this notice of commissioner, then the commissioner can
pass an award determining the amount payable by employer and the employer is directed
to pay.
13. Sec. 23 gives commissioner the powers of civil court, calling witnesses, production of
documents, recording evidence etc.
14. Sec, 24 deals with who has to appear before the commissioner. The person is required to
appear before the commissioner himself OR on his behalf a legal practitioner, OR an
official of insurance co. OR official of TU, OR, inspector under factories act or mines act,
OR any other person with the permission of the commissioner.
15. Sec. 25 the commissioner shall make a brief memorandum of the content of evidence as
stated by witnesses and examination of witnesses is done before commissioner and contents
written by him, signature of witnesses is takes after reading out the contents. This shall
26
form a part of the record. If necessary, medical evidence of medical practitioner is also
taken. The commissioner is usually required to dispose the matter within 3 months of date
of application & communicate decision to employee, employer and TU.
16. Sec. 26 states costs shall be imposed according to the rules of the Act and the commissioner
may decide whether to impose costs or not.
17. Sec. 27 allows the commissioner for the decision or opinion of HC where a question of law
is involved.
18. Sec. 28 is registration of agreements. Whenever the compensation amount is settled by way
of agreement, the agreement has to be written and settled. It shall be payable to the person
so entitled. If it is half-monthly payments, it shall be paid by way of agreement. If the
person has legal disability, the agreement must be entered into between the parties and
submitted to the commissioner within 7 days from the date of entering the agreement. He
shall register it and if necessary, make required changes in the same. Then, he shall see that
it is enforced.
19. Sec. 29 provides that if the employer fails to register such agreement, then employer shall
be liable to pay full amount of compensation and he cannot make any kind of deductions
thereto.
20. Sec. 30 states that an appeal shall lie before HC from order of commissioner. It may be
regarding payment of compensation, whether lumpsum, whether half-monthly, disclaiming
payments by employer, any order regarding interest or penalties, refusal to allow
redemption of half-monthly payments, identification of dependants of deceased employee,
indemnity between contractor and principle employer, failure to register agreement. The
limitation period for filing appeal is 60 days and Sec. 5of Limitation Act shall apply in all
such cases.
21. Once appeal is filed, commissioner shall withhold the amount deposited till the appeal is
decided.
22. Sec. 31 allows the commissioner to recover the arrears of compensation in the same manner
as he recovers arrears of land revenue.
23. Sec. 32 empowers the State govt to make rules for better implementation of the Act. Sec.
33 is repealed. Sec. 34 makes it mandatory to publish such rules made. Sec. 35 deals with
rules regarding an agreement, and deposit of money to commissioner, dependant residing
in foreign country, it is commissioner’s duty to distribute the money to such persons
residing abroad.
27
24. Sec. 36 makes it mandatory to lay the rules made by the Central Govt. before the parliament
and it must be approved within 30 days, with modifications etc. made by the House.
09/11/2020
EMPLOYEE STATE INSURANCE ACT, 1948
1. Origin and Need:
a) Prior to this Act, in the early days of industrialization, the workers were dying and
suffering of various diseases etc. Some social workers were trying to attract the
attention of the government to the most hazardous working conditions. The concept of
social security is persons should be protected against such hazards. Robert Owens etc.
were amongst these socialists working in 1900s.
b) The workers were not protected even for loss of limb and life etc. For this reason, they
were trying to take these to notice of govt.
c) The national commission of labour tried to give a reason thereby making social security
aspect as mandatory for the employer. If the social security aspect is taken up by the
government, it will lead to welfare of entire nation.
d) Beveridge Report was submitted by Beveridge. In this, the employer was made liable
for payment of compensation for loss of life or limb and exposure to risk and hazardous
situations
2. ILO:
a) The ILO has been continuously contributing to the social security legislations and
conventions for the protection of workers’ welfare.
b) The ILO passed a convention on maternity benefits in 1919. The women workers got
protection under this Act.
c) Thereafter, it adopted a number of conventions including Philadelphia Declaration,
1944 for mandatory workers’ welfare. From 1964-1967 ILO passed a number of
conventions. In total, it passed 22 different conventions, social security legislations
receiving ratification from 520 nations.
d) In these 22 conventions, Convention No. 18, 19, 42 and 118 deals with social security
legislations.
e) Employee Compensation Act, 1923 is considered as first step towards social security
legislation. The Whitley Commission in 1931 made a statement that ESI is necessary
since a worker has a family to look after, has dependants. Thus, ESI must protect such
28
dependants. In 1940-42 there was Labour Ministers Conference and in 1943, Adarkar
was appointed as special officer to submit report on medical condition of workers. His
report provided social security benefits on contributory basis. This report was vetted by
Raghunath Rao and Morris Stack. This report was placed before the Indian Labour
Conference in 1944 October. The Standing committee took it up in 1945.
f) The Bill providing for this was placed before Legislative Assembly in 1946 and enacted
in 1948.
g) This provided for compensation, maternity benefits, medical and sickness benefits etc.
h) Study group for social security with V K R Menon as chairman submitted report in
1958 and the ESI Scheme was revised on this report later.
3. Constitution of India:
a) Art. 41 dealing with social security benefits old age, sickness benefits etc.
4. Objectives of ESI Act:
a) It provides for compulsory health insurance for sickness, maternity and employment
injury. It was hurried through due to existence of world war.
b) This could not be confined to one State of India alone and it has to be throughout India
with uniform application. There must be one central body for administering this law.
This was named as the ESI Corp. constituted by central legislation.
c) The Corp. consisted of a central board consisting of representatives from central govt,
provincial govt, representatives of employers, representatives of workmen and
representatives of medical profession. It also had members of Central Legislative
Assembly.
d) From this Central Board of Corp., there were 2 committees: the standing committee of
the board and the medical benefit council of the board. The insurance was from the
contribution from the employer and the employees for the funds of the Board.
e) The contribution of the employee was dependant on the average wage of the employee.
In the first instance, the employer used to pay the contribution on behalf of the employer
and employee to the Board. The employer only deducts the extent of contribution and
then pays the remaining wages to the employee.
5. Earlier, if the employee was drawing less than 10 annas, there would be no contribution
from the employee and only the employer shall pay.
6. There are 6 different kinds of benefits:
a) Sickness Cash benefit
b) Maternity Benefits
29
c) Disablement Benefits
d) Dependant Benefits
e) Hospital examination/Medical Benefits
f) Funeral expenses
7. Medical care and treatment to insured employees is only in the hospitals established under
this Act, i.e., ESI hospitals, dispensaries and clinics. The cost of maintenance of this is
shared between State and Central Govt. proportionately.
8. For resolving all these issues, the ESI court is set up.
9. The Board will be making all the rules etc. and any issue goes through the Standing
Committee and Medical Benefit Council.
10. Preamble of the Act:
a) The Act is passed for benefits to employees in case of sickness, maternity and
employment injury. There are total of 6 benefits.
11. Sec. 1- it is called ESI Act, extending to whole of India. A state may implement it on a
different date. Today all state governments have implemented it.
12. If there is any establishment where there are better benefits than ESI benefits, then ESI
shall not be applicable to such establishment. Wherever necessary the appropriate govt may
issue a notification in official gazette to bring any new industry or establishment into the
ambit of the Act.
13. Definitions:
a) Appropriate govt. is same as previous Acts.
b) Confinement means the labour pain to a pregnant lady, after 26 weeks of pregnancy,
resulting in the birth of the child. This is 13 weeks before delivery, day of delivery, 13
weeks after delivery. Now this has been enhanced all over India from 6 months before
delivery and 6 months after delivery. However, it is upto the woman worker to decide
whether she wants to take entire period or a part of it.
c) Contribution is a sum payable to the corp. by principal employer and employee.
d) Dependant is same as Employee Compensation Act.
e) Employment injury is a personal injury caused by an accident which arises out of or in
course of employment.
f) Permanent partial disablement, permanent total disablement and temporary partial
disablement are same as EC Act.
30
g) Wage Limit- Any person belonging to Army, Navy Airforce do not have these benefits.
Any person having wages between Rs. 6,500/- to Rs. 15,000/- are entitled to benefits
under ESI Act. The upper limit has now been enhanced to Rs. 21,000/-.
h) The employer will contribute 4 ¾ % of the wages of employee as contribution from
employer’s side and the employee shall contribute 1 ¾ % of his wages.
10/11/2020
1. Sec. 3- Establishment of ESI Corp.a) From the composition of corp., standing committee and medical benefit council is
constituted.
b) It is established by central govt by official gazette notification. Immediately after the
Act, in 1948-1949 the corp. was established.
c) The basic function is administration of the schemes for 6 benefits under the ESI act.
d) Basic features:
(1) Almost like a company, it shall be a body corporate in the name of ESI corp.
(2) Perpetual succession, common seal and can sue and be sue in its name
(3) The effect of making it a body corporate is that it is a legal entity. It can own, buy
and sell properties in its name.
(4) Every district level, mandal level, village level etc. also there is ESI corp. and their
properties such as hospitals, dispensaries etc.
(5) All features of a legal entity shall apply.
2. Sec. 4- Composition:
a) It shall have members and office bearers. It shall have a Chairman and vice-Chairman
appointed by central govt. it shall have 5 members from central govt. one person from
each State and each UT in India.
b) 10 persons representing the employers to be appointed by central govt from various TUs
of employers. 10 persons representing employees appointed by central govt from various
TUs of employees.
c) 2 persons from medical profession appointed by central govt in consultation with
medical practitioners’ organizations.
d) 2 members of lok sabha and one member of rajya sabha. Director General of the corp.
shall be ex-officio member of corp.
e) All these members are eligible for re-election or re-appointment to the Board, Standing
committee or medical council.\
31
3. Sec. 5- Term of Corp.:
a) The chairman, vice-chairman, representatives of central govt, representatives of state
govts and UTs shall continue to hold office till pleasure of the President.
b) For representatives of TU, employers, medical professions, parliamentarians etc. shall
hold office for 4 years with a scope of re-election or re-appointment
4. Authentication of Orders: the director general shall be the proper authority to authenticate
the orders of the corp. if he is not available, any other officer may sign on his behalf.
5. Sec. 8 - Standing committee shall be constituted from amongst the members of the
Corp. It shall be as follows:
a) One chairman and 3 members of the corp., shall be office bearers. These are 3 members
from corp. representing State Govts. as notified by central govt. in official gazette.
b) The remaining persons shall be members. The members shall be 8 in number. 3 from
employers, 3 representing employee, 1 from medical profession, 1 member from
parliament.
c) Director general shall be ex-officio member.
d) There shall be Standing committees all over India. For 3 States, there is one standing
committee. Its duty is to administer the schemes of the ESI in these States.
6. Sec. 9 - Term:
a) The chairman and 3 office-bearers shall hold office during the pleasure of the President.
b) All the 8 members shall hold office for a period of 2 years from the date of appointment.
They will continue to be members till new members are elected and assume office.
7. Sec. 10 - Medical Benefit Council:
a) The office-bearers are the Director-General shall be ex-officio chairman. DirectorGeneral Health Services shall be ex-officio Co-chairman. The Medical Commissioner
shall be ex-officio member.
b) The members shall be: Deputy Director general of health services, 3 members from
employers, 3 members from employees, 3 members from medical profession (out of
these 3, 1 must be a woman), 1 representative from every State and 1 representative
from each Union territory.
8. Tenure:
a) The office-bearers shall hold office during pleasure of president.
b) The members shall hold office for a period of 4 years from date of appointment, until
new appointees assume office.
9. Sec. 11- Resignation:
32
a) Any member may resign by notice in writing to Central govt and the seat shall be
vacated only after the acceptance of resignation by Central govt. this is same for corp.,
the standing committee and medical council.
10. Sec. 12- Cessation of membership:
a) Any member who fails to attend 3 consecutive meetings of either body shall cease to
be the member of that particular body.
b) If he makes a request to reconsider and restore his membership, the central govt may
restore him.
c) If the members don’t continue to represent employers, employees or cease to be in
medical profession, the central govt. can make an official notification to cease their
membership.
d) If the parliamentarian ceases to be a member of parliament, his membership ceases.
11. Sec. 13- Disqualification: Either one of these makes them disqualified for corp., standing
committee or medical benefit councila) Declared of unsound mind by competent court
b) Adjudged as undischarged insolvent
c) If he has any direct or indirect interest in the subsisting or other contracts of the ESI
corp. Exception: if he is a medical practitioner or a mere share-holder (not director) of
a company. This is to avoid vested interests.
d) Conviction for an offence of moral turpitude.
12. Sec. 14- Filling of vacancies:
a) Shall be by appointment or elections as the case may be.
b) Appointments shall be when it is done by central govt.
c) Elections shall be for representations from TU of employers or employees.
13. Sec. 15- Fees:
a) It shall be prescribed by the central govt. for fees and allowances for office-bearers and
members
14. Sec. 16- Principal officers:
a) The central govt shall, in consultation with the corp, appoint Director-General and
Finance Commissioner.
b) The DG shall be the Chief Executive Officer of corp.
c) The DG and Financial commissioner shall be whole-time officers and shall not take up
any other employment.
15. Sec. 17 -Staff:
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a) The corp. may appoint such staff as may be necessary for the smooth business.
16. Sec. 18-Powers of Standing committee:
a) It is constituted to administer the affairs of ESI corp.
b) It can supervise, control the work of corp.
c) It has the power of the administration of corp. subject to general supervision of corp.
d) It may 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
e) It may take any other decision in furtherance of its objective.
17. Sec. 19-Corp. Power:
a) The basic objective of the ESI Corp. is to take decisions for improving health and
welfare of all insured persons.
b) The wage limit is Rs. 21,000/-. Any person drawing wages above this is not within
ambit of the Act.
c) It shall provide for rehabilitation and reemployment of insured person, usually disabled.
It shall incur expenses for such measures from its own funds.
d) It shall promote various other schemes for improvement of health and welfare of
insured person.
18. Sec. 20- Meetings:
a) All 3 bodies shall meet at such time and such place whenever they feel appropriate and
they shall transact the business in these meetings.
19. Sec. 21-Supersession or corp. and standing committee:
a) The central govt has the power to supersede the decisions of the corp. and standing
committee.
b) This is when there is default in discharging the duties of the corp. or standing
committee.
c) The NJP shall be followed by central govt.
20. Sec. 22-Duties of Medical Benefit Council:
a) It shall advice the Corp. or standing committee on matters regarding administration of
medical benefit, the certification for purposes of the grant of benefits and other
connected matters
b) It shall look into complaints in this regard.
21. Sec. 23-Duties of DG and financial commissioner:
a) They shall discharge the duties as prescribed from time to time.
22. Sec. 24-Acts of corp.:
34
a) The acts of the Corp. shall be valid for all purposes.
b) It shall be invalid only in case (actually it is not invalid):
(1) any defect in the constitution of the Corporation, the Standing Committee or the
Medical Benefit Council
(2) on the ground that any member thereof was not entitled to hold or continue in office
by reason of any disqualification or of any irregularity in his appointment or election
(3) by reason of such act having been done during the period of any vacancy in the
office of any member of the Corporation, the Standing Committee or the Medical
Benefit Council
23. Sec. 25-Regional Board, Local Committees, Regional and Local Medical Benefit:
a) These bodies are constituted at the lower level and there shall be delegation of power
from the upper bodies and the Medical Benefits Council to the lower bodies.
Contribution (Sec. 38-Sec. 45):
24. The contribution of the employer is 4 ¾ % of the wages of the employee. The contribution
of employee is 1 ¾% of the wages of the employee.
25. Contribution period and corresponding benefit period (IMPORTANT):
a) 1 April – 30 September is one contribution period. The second contribution period is 1
October – 31 March. Thus, there are 2 contribution periods in one year
b) The corresponding benefit period for April-September is the 1 January of that year to
30 June of the year. The corresponding benefit period for October-March is 1 July to
31 December.
c) Eg: Contribution period is 1 April 2020 to 30 September 2020, the corresponding
benefit period is 1 January 2021 to 30 June 2021. The next contribution period is 1
October 2020 to 31 March 2020. The corresponding benefit period is 1 July 2021 to 31
December 2021.
d) The contribution period is important for making a claim and for a newly joined
employee. The newly joined employee does not get benefits immediately. He gets it
only in the corresponding benefit period.
11/11/2020
1. Contribution Period:
Contribution Period
Benefit Period
1 April 2020 to 30 September 2020
1 January 2021 to 30 June 2021
35
1 October 2020 to 31 March 2021
1 July 2021 to 31 December 2021
2. This is important for calculation of claims and for a new employee who has just joined
employment. He will get his benefits after almost 6 months and not immediately. Later on,
he shall be getting the complete benefits.
3. The upper limit of wages for receiving ESI benefits is 21,000 or 22,000 per month. If the
wages increase this amount, then it is beyond the scope of ESI benefits.
4. The employer’s and employee’s contribution are taken and the insurance amount is paid
from this. The extra amount is put in and taken care of by ESI corp.
5. Persons entitled to benefits:
a) It can be the person injured i.e., the employee and his dependants.
b) The benefits are sickness benefits, maternity benefits, disablement benefits, dependant
benefits, medical benefits, funeral benefits.
6. Sickness Benefits (Sec. 46(1)(a), Sec. 49, Rule 55): it has to be examined and certified by
a registered medical practitioner. The sickness must exceed a period of 2 days. For
disablement benefits, it must exceed a period of 3 days.
a) Certificate must be provided by the registered medical practitioner. It shall state the
nature of sickness and the period of rest required.
b) The benefit is given at the rate at which it is prescribed by central govt and the period
so prescribed by govt.
c) The benefit is payment by employer to employee by rest.
d) For each benefit period, sickness benefit can be claimed for 78 days in one benefit
period. The next 78 days can be claimed in the next benefit period.
e) Standard benefit rate (Sec. 2 (7A)) is the average daily wages by diving the total
wages paid for the contribution period by the no. of days for which the wages are paid.
(1) Standard benefit rate = Average wages paid
(2) Average wages paid = (Total wage period for the particular contribution period)/
(The no. of days for which these wages were paid)
f) The sickness benefit is paid according to the standard benefit rate only.
7. Maternity Benefits (Sec. 46(1)(b), Sec. 50, Rule 56):
a) It is paid to the woman employee during confinement, before and after delivery. It is a
period of total 12 weeks. Usually it is divided into 6 weeks before delivery and 6 weeks
after delivery. This division is at discretion of woman. As per the new amendment, it is
for 6 months in total, divided before and after delivery.
b) Standard rate is the complete wages or salary of the woman.
36
c) This is available for the miscarriages, medical termination of pregnancy or premature
delivery as well.
d) State amendments give additional benefits.
e) She can take additional amount of Rs. 2,500/- as confinement expenses where there is
no ESI Hospitals or clinic available.
f) She shall be entitled to maternity benefit if she does not elsewhere in this leave period.
g) In case if insured woman dies during or immediately after delivery, then entire
maternity benefit shall be paid to the husband if the baby is alive. If the baby also dies,
then the maternity benefit is paid till the date of last death to the husband. It is paid in
case if the mother survives and the baby dies also.
h) The employer cannot ask her to work from home, stop her promotions, demote her or
try to remove her to avoid paying maternity benefits.
8. Disablement Benefits (Sec. 46(1)(c), Sec. 51, Rule 57):
a) It must be for any injury or disablement for injury sustained arising out of and in course
of employment.
b) It must be for a minimum of 3 days or he cannot be paid any disablement benefits.
c) There are 3 heads: permanent total, permanent partial or temporary partial.
d) The calculation, meaning and rate is same as EC Act. Highest is permanent total, then
death, then permanent partial, then temporary.
e) The same compensation shall be paid as EC Act. For permanent partial, it is 90% of
standard rate. For permanent total, it is full rate of compensation.
9. Dependant Benefits (Sec. 46(1)(d), Sec. 52, Rule 58):
a) Dependants of the insured person are first ascertained. This is same as EC Act. It is
payable to the widow, the children and mother also.
b) The widow, until her re-marriage, shall be paid at 3/5th of the full rate. If there are 2
widows, they shall share this amount i.e., 3/5th of full rate.
c) Legitimate or adopted son and daughter shall get 2/10th of full rate until he attains 25
yrs. or till she is married.
d) If there is any person who has mental or physical infirmity, he will be entitled to the
dependent’s benefits till he is alive or until his infirmity lasts. If the daughter has mental
or physical infirmity and she is totally dependant on the earning of the deceased, she
shall be entitled to the benefit till her death or the day till which the infirmity lasts.
e) If the total amount of compensation paid to all dependants together exceeds the total
allocable amount, then there is proportionate reduction in everyone’s share.
37
f) In Hindu Law, class I heirs exclude Class II heirs. Similarly, if the abovementioned
widow, son/daughter or mother is not there, only then the other parents or grandparents
or step-parents shall be eligible to claim. If there are other male dependants such as
brother, till age of 15 yrs. If there are female dependants, till age of marriage, they will
be entitled to benefits. If the female is already married and widowed, till age of 18 yrs
or till she is married, whichever is earlier.
10. Medical Benefits (Sec. 46(1)(e), Sec. 56, Rule 60):
a) Not only the insured person but also the family members are entitled to this.
b) Outpatient treatment (without getting admitted) is available to them in any ESI
Hospital.
c) Doctors’ visits are available.
d) In-patient treatment (getting admitted) is available to them in any ESI Hospital.
e) If any insured has permanent total disablement, he is entitled to this compensation and
benefits till age of 60 yrs (age of retirement) by showing all documents.
11. Funeral Expenses (Sec. 46(1)(f), Rule 59):
a) The eldest member of the family shall be paid Rs. 10,000/- as expenditure for funeral
if the insured person dies.
12. Sec. 47 and Sec. 48 have been omitted.
17/11/2020
Sem End Paper: Blooms Taxonomy Level 3, application-based questions, quotations from
judgments, find odd man out, based on hypothetical situations relying on some
concept/decision of court, read out all important cases discussed in class, no wage code but
there may be a comparative analysis-based question.
18/11/2020
Important Topics:
TU Act, ID Act, ULP, SO, DP, Minimum wages, Bonus, Employee Compensation, ESI,
Factories Act
1. Sec. 46 deals with medical benefits for an insured person under ESI. It is outpatient
treatment, there can be attachment of ESI scheme to any hospital or clinic with which the
corporation has a tie-up etc. In case of permanent total disablement, where he requires
treatment for the rest of his life, he can get it for himself and his spouse under this Act till
38
the age of his employment. Whoever is the eldest member of the family, they shall get
funeral expenses upto Rs.10,000/-.
2. Sec. 47 and 48 are omitted.
3. They will get periodical payments as far as sickness benefits is concerned. Every 15 days
he must produce himself before the registered medical officer to get the sickness benefit.
Can the employee get wages along with sickness benefits (periodical payments)? Sickness
benefits is similar to half of the wage amount. The employee shall get his wages, and after
he resumes his work, the amount of sickness benefit shall be reduced from his wages.
19/11/2020
1. Sec. 50 provides for maternity benefits upto 6 months subsequent to delivery. A woman
can claim maternity benefit under maternity benefit act and ESI. She has to choose between
one of the two and she cannot get benefit under both the Acts. The maternity benefits under
both acts are the same and they shall get full wages. Benefits under ESI is ONLY for people
drawing wages/salary under Rs. 21,000/- per month. A woman claiming it under Maternity
Benefits Act shall only get maternity benefit but under ESI, she shall get other benefits as
well. Thus, ESI gives more benefits in addition to maternity benefits.
2. Sec. 51 provides for disablement benefit. The same rules as Employee Compensation Act
apply here too. A person drawing below Rs. 21,000/- can claim under both Acts (has to
choose between either of the two) and for someone above Rs.21,000/-, only EC Act is
possible. The method of calculation etc. is all same. One can also claim dependant benefit
as well.
3. The basic rule is, if a benefit is available under more than one Act, it can be claimed only
under ONE Act.
4. In case of dependant benefits, there is basic presumption that the accident/injury took place
in course of business however, it must be proved by the dependant. If the workman has
violated any rules and regulations or instructions of the employer, then the employer shall
not be held liable to pay compensation. If the accident occurs when travelling in the
employer’s mode of transport or the employee’s own mode, the employer shall be held
liable. Even when the workmen is discharging the duties of the work outside the
establishment an emergency occurs, and workmen rush to address the emergency, if in this
process the workmen sustain any injuries, the employer is held liable.
5. The Dependants must be able to produce evidence that they are actually the dependants of
the workman during his lifetime.
6. Same applies for Occupational disease.
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7. Under Sec. 53, the bar is provided that where an employee is claiming compensation under
other Acts, he cannot claim it under ESI.
8. Sec. 54 provides for determination of question of disablement.
(a) whether the accident resulted in permanent disablement,
(b) whether the extent of loss of earning capacity can be assessed provisionally or finally
(c) whether the assessment of the proportion of the loss of earning capacity is provisional
or final
(d) in the case of provisional assessment, as to the period for which such assessment shall
hold good, shall be determined by a medical board constituted in accordance with the
provisions of the regulations and any such question shall hereafter be referred to as the
“disablement question”
9. Under Sec. 54-A, Under ESI there are 3 bodies, ESI Corp., Medical Board and the
Tribunals. The Employee must present his proof of disablement and medical reports as
evidence before the Medical Board. The Medical Board decides the extent of loss or
disablement caused to the person.
10. Sec. 55 provides that the decision of the Medical Board can be reviewed by the Medical
Appeal Tribunal. Above the Medical Appeal Tribunal, the Employees’ Insurance Court is
there. For review, the workman may go to the Medical Appeal Tribunal or the Employees’
Insurance Court, within the time prescribed.
11. If the employer feels that the assessment of the disablement is not appropriate, they may
write to the ESI Corp. and go for review before the Medical Appeal Tribunal.
12. There can be a review taken by the board in some cases of dependants benefits under Sec.
55-A. Suppose if the dependants were minors at the time of assessment, after they attain
majority, the Board shall take a decision as to whether they are entitled to benefits
thereafter. This decision may be challenged before the Medical Appeal Tribunal.
13. Sec. 56 provides for medical benefits wherein, they can be treated as out-patient, as inpatient in any hospital etc.
14. Sec. 57 and Sec. 58 are inter-related. Sec. 57 provides the scale of medical benefit, and it
shall only be to the extent laid down under ESI Act. If the medical benefits are claimed
since the section provides for ‘treatment’, then there is no scope of claiming reimbursement.
Sec. 58 provides for collaboration of ESI Corp. with the State Governments for starting
new hospitals, clinic etc. Under Sec. 59 and Sec. 59A, the ESI Corp. can enter into an MoU
with State Govts. For maintenance of the hospitals and clinics and for more benefits which
can be given. Sec. 59-B deals with whether the ESI Corp. or State Govt. shall provide the
40
medical and nursing staff, para-medical staff etc. for these hospitals. Usually it is the ESI
Corp. and it can establish medical college-cum-hospital as well.
15. Under Sec. 60, these benefits cannot be assigned, attached etc. for execution of any decree
of the Court. This applies even when the workman declares himself as insolvent. These
benefits are absolutely unattachable.
16. Under Sec. 61, the person can claim benefits under only ONE Act, where it is available
under 2 or more Acts.
17. Sec. 64 provides that if the person is taking medical treatments and the doctors state that he
must follow some conditions and he does not follow them, then the employer cannot be
held liable for making more payments for his deteriorating health. Similarly if the doctor
tells the worker not to go away from a place, or foes not get himself examined as per the
directions, and the worker fails to do so, the benefits may be stopped.
18. Sec. 65 states that maternity and sickness benefits cannot be claimed independently,
sickness benefit and disablement benefits.
19. Sec. 66-67 are omitted.
20. Sec. 68 states that where the principal employer fails or neglects to pay any contribution,
the ESI Corp. shall pay that compensation and it is entitled to recover it from the principal
employer later.
21. Sec. 69 if excessive sickness benefits are being claimed by the workmen, it implies that the
employer has not maintained hygienic working conditions in the workplace. This shall be
questioned and it will become the liability of the employer.
22. Sec. 70 provides that if a person has improperly received any benefits, then such wrongly
given benefits shall be recovered from the worker or the dependants and shall be recovered
as arrears of land revenue.
23. Sec. 71 provides that the cash benefits shall be paid upto the date of death including the
day of death and from that date, the benefit to be paid to dependants is calculated and paid.
24. Sec. 72 and Sec. 73 provides that since the worker is claiming benefits, the worker’s wages
cannot be stopped or reduced under Sec. 72 and the worker cannot be dismissed or punished
under Sec. 73.
25. Sec. 74 constitutes the Employees’ Insurance Court to adjudicate the disputes arising from
the insured person or the employer. The State Govt. shall prescribe by Gazette Notification
and constitute an ESI Court in a particular area specifying its jurisdiction. The notification
shall also provide the no. of judges to be a part of the ESI Court. There will be no new
judges recruited, and with collaboration of State Govt., they must appoint a person who is
41
or has been a judge or is a legal practitioner of 5 years standing. Depending on no. of cases,
2 ESI courts may be established for the same area. The nature of business of these courts
shall be given in the Gazette notification.
26. Sec. 75 provides that the matters to be adjudicated include whether employee is an insured
person or not (badly workers are not insured), rate of wages for calculation of
compensation, rate of contribution by principal employer, whether a person is a principal
employer or not, what is the rights of the insured person and what is the duration for
compensation, review of benefits where minor dependant becomes major or disablement
gets cured etc., appeal from Medical Appeal Tribunal etc. If the principal employer has
paid, he can recover it from immediate employer and any dispute in this regard can go
before ESI Courts.
27. Sec. 76 states that ESI proceedings commence similar to CPC, where corporate, employer
or insured person makes a claim before ESI Court. The court first determines whether it
has jurisdiction or not, then proceed with all provisions of CPC like a civil suit. The case
can be transferred from one ESI Court to another ESI Court if the State Govt. permits. The
court to which the matter has been transferred shall continue with the proceedings in the
second court.
28. Sec. 77 states all proceedings before ESI Court shall be commenced by application only.
The cause of action comes to dependants in case of dependant benefits and must be claimed
within 12 months from date of cause of action arising. The cause of action for corporation
for recovery of contribution from principal employer arises on the date of first claim and
must be instituted within 5 years from such date. The cause of action for claim by principal
employer also arises on the date of first claim.
29. There are prescribed formats and the payment of court fee as well.
30. Sec. 78 provides same powers to ESI courts as to civil courts. It includes summoning and
enforcing the attendance of witnesses, compelling the discovery and production of
documents and material objects, administering oath and recording evidence.
31. Sec. 79 provides that legal practitioners, office holder of TU, any person appointed by the
person with permission of ESI court can appear before it.
32. Sec. 80 is omitted.
33. Sec. 81 provides reference to the HC where a question of law arises and the ESI court sends
it to the HC and till the HC’s decision is received, the case shall not proceed.
34. Sec. 82 provides that no appeal from ESI Court’s decision lies in case of a question of fact
but in case of question of law, it lies before HC. Sec. 5 and 12 of Limitation Act applies.
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35. Sec. 83 states that in case of appeal before HC, there is stay on payment of amount while
the appeal is pending.
36. Sec. 84 provides punishment for false statements. Whenever any insured person or his
dependants or any claimant makes any false statement with a view to get more benefits
under this Act, or employer makes false statements to avoid payments, all such false
statements shall be punishable with imprisonment upto 6 months or fine upto Rs. 2000 or
both. Upon conviction, the insured person shall not be entitled to any benefits under this
Act.
37. Sec. 85-A states that if there has been a previous conviction for an offence under this Act,
the subsequent punishment shall be enhanced to imprisonment upto 2 years and fine upto
5000. For employer, it shall be imprisonment of minimum 2 years and upto 5 years and
fine upto Rs. 25000.
38. Sec. 85-B allows the ESI Corporation to recover the contribution from employer along with
penalty or arrears as per regulations. This must be in accordance with principles of natural
justice. It may also reduce or waive the penalty if the employer can establish that it was a
sick industry. Recovery shall be as arrears of land revenue.
39. Sec. 86 provides that no prosecution before the ESI Court shall be instituted without the
previous sanction of the Insurance Commissioner or such other officer authorized by the
Corporation. ESI proceedings are usually civil proceedings, however, if it involves penalty
or imprisonment, it is criminal proceedings. For civil proceedings, no permission is
required. For criminal proceedings, this permission is required. Only a JMFC can take up
the case and it is commenced only on a written complaint with permission.
40. Sec. 86-A provides that if the offence is committed by a company the proceedings shall go
on as if the offence is committed by a legal person.
41. Sec. 87 states that any factory or establishment or class of factories or establishments can
be exempted provided that there is some other Act which gives them better benefits. They
may be exempted by official notification by State Government.
20/11/2020
Need and History of Factories Act
1. The weaker sections of the society became weaker and the stronger sections became
stronger with the lack of government intervention. With the increasing factories, the
number of workers increased and their problems increased. Their working conditions were
deplorable.
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2. The hygiene and safety conditions in the factories were not standard. There was no special
provision for women and children working hours.
3. The inspector in chief of the Bombay, Major Moore, cotton department drew the attention
of the govt. to all this. It was his major contribution which led to the passing of factories
Act 1881. The act prohibited only children below 7 years to work more than 9 hours a day.
Beyond that, every person could work for 9 hours a day with only 4 holidays a month.
4. The factories act 1881 is the mother of all labour legislations in India.
5. The govt of India appointed a factories commission which later brought the 1891 factories
act. This included a compulsory rest of half an hour, a weekly holiday, children below 9
years prohibited, 9-14 years got 7 working hours, for women it was 11 working hours, and
a woman should not work beyond 8 PM.
6. Then, after a number of amendments, the factories act of 1948 was brought with chapter 6
dealing with certain important aspects.
Factories Act
1. Chapter 3 (sec. 11 to sec. 20) deals with health of workman.
2. Chapter 4 (Sec. 21-Sec. 41) deals with safety
3. Chapter. 4A hazardous process s. 41A-41H
4. Chapter 5 (sec 42 to sec 50) deals with welfare
5. Chapter. 3, 4, 5 were in original act
6. Sec. 51-66 in Chapter 6 working hours of adults
7. Chapter 4A and Chapter 6 – Chapter 11 were new insertions
8. Chapter 7 (sec. 67 sec 77) deals with employment of young persons
9. Chapter 8 sec 78 – sec 84 annual leave with wages
10. Chapter 9 sec 85-sec 91A special provisions
11. Chapter 10 sec. 92 – sec. 106A penalties and procedures
12. Chapter 11 sec 107 – sec 120 supplementary provisions
General duties of Employer:
1. The factory has to be registered by owner, occupier, employer. The liability lies on
them. The duty is to send a notice to Chief Inspector of Factories atleast 15 days in
advance with all info necessary regarding a particular factory. This must consist of
various provisions regarding health, safety and welfare of workers they have framed
for their factory. Once approved, these must be pasted in a conspicuous place in the
local language also in the factory.
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2. These provisions framed by them must be reasonable and practically applicable. He is
also required to maintain the plant and machinery to an extent that there is zero risk to
workers.
3. If necessary, he must give the workers necessary instructions, training, information and
there must be complete supervision to ensure safety of the workers. He must maintain
a healthy atmosphere where there is no risk to health of workers on a day-to-day basis.
4. The employer also has a duty to state the various substances used in production, any
health hazards involved in such substances, nature of risk, the necessary precautions to
be taken by a workman.
Important provisions of Constitution:
1. The FR and DPSP make a reference to factories act. All workers are citizens of india
and thus it is indirectly applicable. Art. 14 gives equality, Art. 19 gives freedom of
expression, Art 23 prohibits trafficking humans for forced labour, Art 24 prohibits
employment of children in factories, Art. 32 writs, Art. 38-39 social principles followed
by State, Art. 39A equal justice and free legal aid, Art. 42 just and humane conditions
of work and maternity relief, Art. 43 living wages, Art. 43A participation of workers in
management of industries.
ILO Conventions:
1. ILO convention no. 29 dealing with forced labour, Convention no. 105 relating to
abolition of forced labour, Convention No. 3 and No. 103 deals with maternity
protection, Convention no. 183 is concerning maternity benefits, convention no. 110,
no. 4, no. 89 and no. 45 deals with conditions of work and light work of woman
employed in industry.
2. Convention no. 5, no. 10, no. 33, no. 59, no. 60, no. 138 deals with minimum age for
admission to employment.
3. Convention no. 6, no. 14, no. 79, no. 90 concerns night work by children and young
persons.
4. Convention no. 146 deals with minimum age, national policy, hazardous employment,
conditions of work and enforcement.
5. Convention no. 182 concerns the worst form of child labour.
6. ILO Conventions have been implemented Chapter 6 onwards
After all the amendments in factories act, right now in India, all of these conventions and their
principles have been adopted in India.
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Chapter 3- Health:
1. Cleanlinessa) Every factory shall be kept clean and free from effluvia etc. from:
(1) Accumulation of dirt etc.
(2) Floor of washrooms shall be cleaned atleast weekly
(3) Wet floors must be drained effectively.
(4) All walls etc. be painted properly
(5) All doors and window frames etc. shall be painted or varnished
(6) The dates shall be written in register
b) If for any factory, these provisions cannot be complied with, the State govt may be
notification in Gazette exempt the factory or suggest alternative method.
2. Disposal of waste and effluents
3. Ventilation and temperature
4. Dust and fume
5. Artificial humidification- required to be maintained as per prescribed guidelines for
regulating the temperature inside the premises.
6. Overcrowding
7. Lighting
8. Drinking water
9. Latrines and Urinals
10. Spittoons
Chapter 4- Safety:
1. Fencing of machinery
2. Work on or near machinery in motion
3. Employment of young persons on dangerous machines
4. Striking gear and devices for cutting powers
5. Self-Acting Machines
6. Casing of new machinery
7. Provision of employment of women near cotton openers
8. Hoist and lifts
9. Lifting machines, chains, ropes and lifting tackles
10. Revolving machinery
11. Pressure plant
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12. Floors, stains and means of access
13. Pits, sumps openings in floor etc.
Chapter 5- Welfare
1. Washing facilities for male and female workers
2. Facilities for storing and drying of clothes
3. Facilities for sitting, so that they don’t continuously stand and work
4. First aid appliances
5. Canteens
6. Shelters, rest rooms and lunch rooms
7. Creches, if there are more than 30 women employed. They are allowed to bring their infants
or children under 6 yrs of age. State govt. shall give notification of services and facilities
in these rooms. Facility for the mother to feed the child every few hours.
8. Welfare officer appointed for every 500 workers or more and state govt prescribed his
duties and frame rules.
Chapter 6- Working hours of adults
1. No adult shall be working more than 48 hours a week.
2. No adult shall be allowed to work on first day of the week (Sunday) and if not, then he
must be given holiday in the next 3 days. It shall be a paid holiday.
3. If the employer wants to shift the paid holiday, there must be sufficient notice given of such
intention to workers and Inspector of factories. Objections and grievances must be heard.
Only then, this change can be made the rule. Once changed, it must continue for 6 months
before changing again, and this notice of change must be fixed at a conspicuous place.
4. In any case, there can be more than 10 continuous working days for any worker without a
paid holiday in between.
5. The employer must also calculate how many hours of work he does. If the worker is doing
overtime, he shall be paid overtime wages. If he is working on a weekly holiday, he must
be given another paid holiday in the same month. He cannot work more than 10 continuous
day. Public holidays must be given.
6. No person shall be allowed to work more than 9 hours a day. Shift system must be approved
by the Inspector, a shift cannot be more than 8 hours. In a stretch, they must not work more
than 5 hours. There must be rest after 5 hours of work in a stretch.
7. If the employer wants exemption from 5 maximum working hours without rest, there must
be special permission from Inspector of factories.
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8. Including the rest, the working hours must not exceed 10.5 hours a day. However, usually
it is 8-9 hours a day.
9. If the person is working beyond midnight, the next 24 hours shall be a holiday for him.
There should not be overlapping of shifts by any means. There must be another set of relay
workers ready to take up the next shift. The State Govt and chief inspector of factories can
ask for reasons for overlapping of shifts. If they request for exemption from overlapping of
shifts, they must request permission from state govt. with reasons.
10. If a worker is working more than 9 hours a day or 48 hours a wage, he will be given
overtime wages at twice rate of wages (basic pay + allowances).
11. If the employer is selling essential commodities at concessional rate to the worker. These
concessions shall NOT be treated as bonus.
12. Overtime wages shall NOT be treated as bonus.
READ KHAN AND KHAN
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