Discover key aspects of the Employees’ Compensation Act, 1923: Liability conditions, compensation calculation, compliance, penalties, and insights from CA Gaurav Agrawal.
Employees’ Compensation Act, 1923
Act does not apply to the establishments that are covered by the Employees State Insurance Act, 1948 (ESIC).
Conditions When Employer is Not Liable to Pay Compensation:-
a) An injury that doesn’t result in partial or total disablement of the employee for more than 3 days.
b) Any injury that does not result in permanent total disability or death because of an accident in the influence of drugs or drink.
c) If an employee meets with an accident that is caused because of willful disobedience of the rules by him/her and willful safety guard removal.
Calculation of the Compensation
a) Accident that Results in Permanent Total Disablement
An Amount equal to 60% of injured employee’s monthly wage multiply with the relevant factor or Rs.1,20,000/- whichever is higher is given.
b)When an Accident Results in Death
An amount that is equal to 50% of the monthly wage of the deceased employee multiply with the relevant factor or an amount equal to Rs.1,20,000, whichever is higher is given.
This Act offer compensation to the workers who have encountered injuries due to an accident during their employment and not covered under ESIC Act.
Rs.15,000/- is considered as wage for computation under the act. The relevant factor here is provided in Section IV of this Act.
Compliance:-
a) The applicant has to give notice of accident to the employer or by entering in the notice book within an appropriate period.
b) Every notice submitted should be with the name and address of the person injured and also by including the cause of the injury and the date on which the accident occurred.
c) Then submit the claim application to the commissioner within 2 years from the date of the accident.
d) In the event of an occupational disease, the accident is deemed to have occurred on the first day of illness.
e) In case of any defect if any in the notice or not giving notice or delayed application will not reject the claim for compensation.
f) Employer shall file Annual return specifying the number of injuries and amount of compensation paid etc.
g) Employers shall maintain notice book, which shall be readily accessible at all reasonable times to any injured employee employed on the premises and to any person acting bona fide on his behalf.
Penalty for Non-Compliance:-
If the amount is not paid within a month from the date of the accident, the Commissioner will ask the employer to pay simple interest at the rate of 12% per annum or as prevailing in any scheduled bank along with the compensation amount.
If there is no justification for the delay, the Commissioner will demand an apology from the employer after giving a reasonable opportunity of being heard, direct the employer to pay a further sum not exceeding 50% of the compensation, through penalty.
The amount of penalty and also interest should be paid to the workman or his dependent in the following cases:
The half-monthly instalments of compensation (payable in case of temporary disablement) should be paid within the time specified.
The half-monthly instalments can be converted into a lump sum payment, by an agreement between the employer and the employee or by applying to the Commissioner.
Shall be punishable with fine which not be less than Rs 50,000/- but which may extend to Rs 1,00,000/-.
Author – CA Gaurav Agrawal, Kishore Gupta & Co, Chartered Accountants in Practice from Central Delhi and can be contacted at gauravag.ca@gmail.com & Mobile Number 9711033545.
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