Employer’s Liabitity to render Compensation to the

employee on occurrence of accicent during the course of

employement. – BY: Shubhanshu Yadav(R129216089_
Every employee needs a secured job and wants to get compensation for the expenses he has
incurred. This is a requirement that needs to be fulfilled by the company whether it is small
scale or large scale. After all, a company’s success depends on its employees. Therefore, the
protection of employees’ and their safety is a top priority of a company. This article is all
about how much compensation is given, under what conditions, who is entitled to claim
compensation and a lot more. Injured workers and worker compensation are key liability
issues for any business in India. This is particularly the case for companies with large labor
forces, such as information technology and business process outsourcing or industrial
companies, but small businesses are also impacted by labor laws that mandate compensation
for employees injured on the job.
What laws govern compensation for workplace injuries?
Compensation for workers in India varies depending on the size of the company.
If the business employees more than 20 employees, the Employees' State Insurance Act,
1948 applies. Under this act, employees and the company pay toward an insurance benefit in
case of injury. When a workplace injury occurs, the injured employee is able to avail of both
medical and financial support.
If the business employs less than 20 people, the company must refer to the Employee's
Compensation Act, 1923 (Previously, Workmen's Compensation Act, 1923). This act outlines
methods for providing compensation to employees injured on the job. The Act is particularly
pertinent to small office places and small-scale manufacturing operations.
The 2017 amendment in the Employee's Compensation Act, 1923, makes it mandatory for
employers/companies to inform its employees of their rights to compensation under the Act,
either in writing or electronically, in a language understood by the employee. Failing to do
this, the employer is liable to a penalty of INR 50,000 (US$715), which may be extended to
INR 100,000 (US$1,431).
When do employers need to compensate an injured employee?
The Act requires employers to compensate an employee who has suffered an accident while
performing his/her duties during work hours, resulting into
 Permanent total disability,
 Permanent partial disability,
 Temporary disability, or
 Death.
Permanent Total Disability
Permanent total disability is relevant when a worker can no longer perform any of their
previous duties due to an on-the-job injury. This injury must be assessed to permanently
affect the employee's ability to perform their duties.
In this case, the worker is entitled to a minimum compensation of INR 140,000 (US$2,004)
or 60 percent of his/her monthly wage multiplied by a factor based on the employee's
potential future earnings. The total payment can be significantly larger based on the age of
the injured employee.
Permanent Partial Disability
When an employee has sustained an injury that renders them unable to perform their role at
the same capacity for the rest of their career, the employee is entitled to permanent partial
disablement compensation.
For partial permanent disability, compensation is dependent upon the nature of the injury and
the employee's loss of earning capacity. The Act includes a schedule of possible permanent
disability injuries and lists the loss of earning capacity. For example, an arm amputated at the
shoulder is assessed as a 90 percent loss of earning capacity, while the loss of an entire index
finger is considered a 14 percent loss of earning capacity.
In cases that the worker's injury is not included in the given schedule, employers must
provide a medical doctor to perform an evaluation of the injured employee and calculate the
loss of earning capacity. The compensation for the injured worker is then established based
on the percent of lost earning capacity multiplied by the monthly wage multiplied by a factor
based on the employee's potential future earnings.
Temporary Disability
Employees that sustain injuries that render them disabled, permanently or partially, for a
temporary period are compensated through temporary disability.
In cases of temporary disability, an injured worker will be paid 25 percent of their salary
every two weeks, making monthly compensation fifty percent of total earned wages. In cases
of temporary injury, a medical doctor is required to examine the injured employee and
determine necessary leave. A worker on temporary disability leave must undergo a physical
examination twice in the month following the injury and once during the following months if
they are still claiming disability.
Death
In the unfortunate case of a death, the worker's immediate dependents are entitled to
compensation. The compensation payable on death is INR 120,000 (US$1,717), or half the
worker's monthly wage multiplied by a factor based on the employee's potential future
earnings.
In all cases, it is the employer's duty to ensure that the workers receive these medical
evaluations without incurring personal expenses.
HR best practices
The Act dictates that if the employer and injured employee do not come to an agreement on
compensation, the dispute must be settled in a court of law.
A court case involves testimony from the employee's family, co-workers, and workplace
supervisors, and is mostly costly as well as time-consuming for both the employer and the
injured employee. Such disputes often have a serious impact on morale within small
businesses.
To avoid such burdens, employers must regularly audit human resource materials and
policies to ensure that their business is in compliance with relevant health and safety laws.
Small offices that do not maintain India-based human resource personnel, or use documents
drafted for other international offices, should consider consulting local experts to audit their
human resource materials and policies. This, combined with employee training, can help
ensure that businesses are able to manage workplace injuries effectively.
The employer's accountability to compensate an employee arises under section 3 of the
Employees Compensation Act, 1923. Under this section, five prerequisites are enumerated
upon satisfying which the employer shall be accountable to pay compensation to an
employee, which are as following:[1]

1) If a personal injury' has been sustained by an employee:

If an employee while functioning in an establishment has sustained any personal injury
(whether physical or phycological) by an accident, then employer shall be liable to
compensate such an employee. Personal injury has not been defined under the Act. However,
a personal injury is an injury caused to a person's physique, intellect or reputation due to a
person's negligence, remissness or illegitimate conduct.

A personal injury does not include an injury to someone's personal property. Common
examples of such an injury may include motor vehicle accidents, plane and railway accidents,
accidents at employment, product defects, medical accidents, libel and slander etc. According
to this Act, personal injury also includes occupational diseases.

The case of Indian News Chronicle vs. Mrs. Lazarus[2], is a celebrated case in which the
Court defined the scope of personal injury caused to any workman while working in an
establishment. In this case, the workmen went to a cooling room from a heating room and
contracted pneumonia and he died within a span of five days. The Court in this case held that
the workmen died due to a personal injury. A personal injury includes a physical injury.

2) If such a personal injury has been inflicted as a result of an accident:

In order to demand compensation from an employer, an employee must substantiate that
those personal injuries have been resulted out of an accident while executing his
indispensable duties.

The term accident also has not been made clear under the Act. An accident, in normal
parlance, can mean as an unexpected event that results in harm to some person. An accident
cannot be predicted as to enable any person to save themselves from any kind of harm or
injury. Likewise, an employee cannot predict any accident which resulted in an injury to him.
Therefore, it is a responsibility of an employer as a principle to render any compensation to
an employee in case of such an accident.

3) If such an accident has arisen out of' and in the course of an employment:
The most essential requirement of getting compensation from an employer is to substantiate
that the accident has been caused out of the employment' or during the course of the
employment', respectively. It does not suffice that an accident had been caused to an
employee.

It is equally necessary to prove that such an accident resulted out of the employment or in the
course of such employment. An employer is not entitled to compensate an employee on the
basis of any accident alone. It might be the circumstance where the injury has not been
resulted during the course of the employment. The onus of proving that the harm is caused
out of or during the course of the employment is only upon the employee in this situation and
not the employer. The employee has to substantiate his case in front of a court.

It is necessary in the current situation to understand the meaning of the expressions, arising
out of the employment' and in the course of employment:
a. Arising out of employment
The expression arising out of employment refer to those incidents where there exists a
relationship between the conditions under which the work is required to be performed
and the resulting injury. In simple words, there must be a connection between the
harm and work the deceased was doing. The accident must have resulted out of that
work only. It is also necessary to satisfy a court that if such a person has not been
doing that work, the injury will not cause to him. If both the conditions are satisfied,
the court will grant the employee the right to claim compensation from the employer.

In the case of State of Rajasthan vs. Ram Prasad and another[3], the death of the
employee was caused due to natural lightening struck at him. The court held that the
employee shall be liable to receive compensation as he satisfied the dual conditions:
· The lightening struck at the deceased when he was in employment of the employer;
and
· If the deceased had not been on the work place where the lightening struck at him,
the deceased would not have died.
 
b. In the course of employment
To make an employer liable to pay compensation, the workmen has to substantiate
that the work performed was identical with the time and place of the employment. In
other words, the employee has to prove that the work was done during the working
 hours of the employee and at the place of the employer. The employee also has to
prove that he was executing his duties for the benefits of the employer.
In the case of National Iron and Steel Company Limited vs Manorama[4], a boy was
working on a tea shop which was situation outside the factory premises. His duty was to
provide tea to all the workers placed in the factory. The boy while coming out of the premises
passed a violent mob of workers. The police, in order to protect themselves from the attack of
workers, fired on the mob which also hit the boy and he died instantly. The court held that the
deceased shall be liable to compensation as he was working during his working hours at the
place of premises and also, he was executing his duties for his employer.

4) If such an injury resulted in permanent or partial disablement of an employee for a period

exceeding three days:
If an injury caused to an employee from the accident results in his permanent or partial
disablement for a period in excess of three days, then the employer shall be liable to render
compensation to such employee.

The permanent or partial disablement has been defined under the Act[5]. Partial

disablement can be both temporary and permanent. When the disablement is of temporary in
nature, such disablement reduces the earning capacity of the employee in any employment in
which he was engaged at the time the accident took place and when the disablement is
permanent, it reduces the earning capacity in every employment he could engage when the
accident took place.

5) If such an accident resulted in death of an employee:

The last requirement which will enable the heirs of employee to receive compensation is to
prove that such accident resulted in death of the employee. If it is proved in front of the court
that the death was caused by an accident occurred out of or in the course of the employment,
then the heirs of the employee shall be entitled to receive compensation.

EXCEPTIONS TO THE ABOVE PRE-REQUISITES

The Act, along with the prerequisites, also listed few exceptions in order to safeguard
the employer from paying compensation which are as following[6]:
a. The injury which resulted from an accident does not result in total or partial
disablement of an employee for period in excess of three days;
b. The injury does not result in death of the employee;
c. The employee, at the time of accident, was drunk;
d. The employee intentionally disobeyed any rules or regulations framed for the safety
of employees; and
e. The employee intentionally disregarded or removed the safety grounds framed for
their safety.