Unit 4 — Exam Guide

1. Introduction

The Employees’ Compensation Act, 1923 (formerly Workmen’s Compensation Act) provides for payment of compensation to employees for injuries suffered during the course of employment. It is a social security legislation based on the principle of no-fault liability.

2. Conditions for Employer Liability — Section 3(1)

Section 3(1) provides that the employer shall be liable to pay compensation if:

1. The employee suffers a personal injury
2. The injury is caused by an accident
3. The accident arises out of the employment
4. The accident occurs in the course of employment

"Arising Out Of" Employment

• There must be a causal connection between the employment and the accident
• The injury must be related to the nature of the work
• Risk of injury must be incidental to the employment

"In the Course Of" Employment

• During working hours and at the workplace
• Includes authorised breaks and intervals
• Includes acts incidental to employment

3. Doctrine of Notional Extension

The Doctrine of Notional Extension extends the concept of ‘in the course of employment’ beyond the strict boundaries of the factory gate and working hours:

• Covers the journey from the factory gate to the actual workplace
• Includes time immediately before and after working hours
• Extends to the route taken by the worker to and from the workplace (in some cases)
• Saurashtra Salt Manufacturing v. Bai Valu Raja — A worker struck by lightning while at the workplace was held to be entitled to compensation. The accident arose out of and in the course of employment.

4. Amount of Compensation

5. When Employer is NOT Liable — Section 3

The employer is NOT liable to pay compensation in the following cases:

1. The injury results in disablement for less than 3 days
2. The injury (not resulting in death) is caused by the worker being under the influence of drink or drugs
3. The worker wilfully disobeyed a safety rule or removed a safety guard

6. Case Laws

Saurashtra Salt v. Bai Valu Raja — Lightning strike at workplace = employer liable. Accident arose out of employment.

SRTC v. Wife of the Driver — A drunk bus driver died in an accident. Employer was held liable because in case of DEATH, the exception of intoxication does not apply.

1. Introduction

The ESI Act, 1948 is a comprehensive social security legislation that provides for certain benefits to employees in case of sickness, maternity, disablement, and death. It is a contributory scheme where both employer and employee contribute.

2. Application

• Applies to establishments with 10 or more employees
• Employees drawing wages up to Rs. 21,000 per month
• Employer contributes 3.25% and employee contributes 0.75% of wages

3. Six Benefits under the ESI Act

(i) Sickness Benefit — Section 46(1)(a)

• Payable at 70% of wages for a maximum of 91 days in any two consecutive benefit periods
• Available during certified sickness
• Must have contributed for at least 78 days in the contribution period
• Extended sickness benefit for long-term diseases (TB, cancer, etc.) — up to 2 years at enhanced rate

(ii) Maternity Benefit — Section 46(1)(b)

• Payable at 100% of wages for 26 weeks (increased from 12 weeks by amendment)
• Additional 1 month for illness arising out of pregnancy
• Must have contributed for 70 days in two consecutive contribution periods
• Available for confinement, miscarriage, or medical termination of pregnancy

(iii) Temporary Disablement Benefit — Section 46(1)(c)

• Payable at 90% of wages for the entire period of disablement
• Payable from the first day of disablement
• Applicable when injury is caused by employment injury/occupational disease
• Paid as long as the disablement continues

(iv) Permanent Disablement Benefit — Section 46(1)(d)

• Payable as a monthly pension for life
• Amount depends on the extent of disability as assessed by a Medical Board
• Full pension for 100% disablement; proportionate for partial
• Reviewed periodically by the Medical Board

(v) Dependants’ Benefit — Section 46(1)(e)

• Payable to dependants of the deceased insured person
• Paid as a monthly pension
• Widow receives pension for life (or until remarriage)
• Children receive pension until age 25
• Parents receive pension if no widow/children

(vi) Medical Benefit — Section 46(1)(f)

• Free medical treatment at ESI hospitals and dispensaries
• Available to the insured person and their family members
• Includes outpatient, inpatient, specialist, and surgical treatment
• Super-speciality treatment available at ESI hospitals
• Continues even during periods of unemployment (for a limited period)

4. Additional Benefits

• Funeral Expenses — Rs. 15,000 lump sum to the person who performs the funeral
• Vocational Rehabilitation — for permanently disabled persons
• Old Age Medical Care — medical benefits for retired insured persons

1. Appointment — Section 20

• Appointed by the State Government by notification
• Must be a member of the judicial service or an advocate with 5+ years’ experience
• State government specifies the local jurisdiction of each Commissioner
• Multiple Commissioners can be appointed for different areas

2. Exclusive Jurisdiction

• The Commissioner has exclusive jurisdiction over compensation matters
• No civil court can entertain any suit for compensation
• This ensures speedy and specialised disposal of claims

3. Matters to be Decided — Section 19(2)

The Commissioner has jurisdiction to decide:

1. Whether the injured person is a workman under the Act
2. Whether the injury arose out of and in the course of employment
3. The amount of compensation payable
4. Who are the dependants of the deceased workman
5. How compensation shall be distributed among dependants

4. Powers of Civil Court — Section 23

The Commissioner has the same powers as a Civil Court under the CPC:

• Summoning and enforcing attendance of witnesses
• Requiring discovery and production of documents
• Administering oaths
• Receiving evidence on affidavits
• Issuing commissions for examination of witnesses

5. Reference to High Court — Section 27

• Commissioner may refer any question of law to the High Court for decision
• High Court decides the question and returns it with its opinion
• Commissioner is bound by the HC’s decision

6. Distribution of Compensation — Section 8

• In case of death, compensation must be deposited with the Commissioner
• Commissioner distributes it among the dependants
• Direct payment to dependants is INVALID — must go through the Commissioner
• Commissioner decides the share of each dependant

7. Recovery

• Compensation ordered but not paid can be recovered as arrears of land revenue
• Employer who defaults is liable to pay 50% penalty in addition to the compensation amount

8. Appeal — Section 30

• Appeal lies to the High Court
• Must be filed within 60 days
• Only on questions of law (not facts)
• HC may confirm, modify, or set aside the order

9. Case Law

Pratap Narain Singh v. Srinivas Sabata — The Supreme Court held that direct payment of compensation to dependants by the employer is not valid. Compensation must be deposited with the Commissioner for proper distribution.