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Q. Explain the terms "Dependents" and "Wages" w.r.t. WCA, 1923. What do you understand by Workers Compensation? In what situations does an employer have to compensate a worker? Explain the phrase "arising out of and in the course of employment" with reference to WCA, 1923. How far is an employer liable to pay compensation to a laborer injured in an accident arising out of and in the course of employment? Since amount of compensation depends on the nature of suffering, discuss the various sufferings on the which amount to be paid differs. What are the remedies available to a workman injured in course of an employment? How is social security is made available to the workman under WCA, 1923?  

What are the objectives behind Employees' State Insurance Act 1948 and how does it differ from Workmen's Compensation Act 1923?

Dependents means any of the following relatives of a deceased workman. Section 2 (1) (d) of WCA 1923 classifies dependents into three classes. In the case of New India Insurance Co Ltd vs Man Singh and others, 1984, MP HC held that persons in these classes do not have mutually exclusive claim to compensation. They can simultaneously claim compensation.
  1. Widowed mother, widow, minor legitimate or adopted son, unmarried legitimate or adopted daughter. In this case it is irrelevant whether they are fully or partially dependent on the earnings of the workman.
  2. Legitimate son or daughter if -
    1. they are fully dependent on the earnings of the workman.
    2. if they are infirm.
    3. if they are above 18.
  3. The persons in this class must be dependent wholely or partially on the earnings of the workman to claim compensation.
    1. widower
    2. a parent other than widowed mother
    3. an minor illegitimate son, an illegitimate or legitimate or adopted daughter if minor and married or if minor and widowed
    4. widowed daughter in law
    5. a minor brother, an unmarried sister, or widowed sister if minor.
    6. a minor child of predeceased son.
    7. a minor child of a predeceased daughter if no parent of the child is alive.
    8. a paternal grandparent if no parent of the worker is alive.
In the case of Ramji vs Lalit Kumar Bardiya, 1995, MP HC held that the parents have to the right to claim compensation because the workman was living jointly with them. In joint families there is a sharing of income and responsibilities. Even if workman did not contribute to the family fund that was only because he was not being paid by the employer. The family would have received the benefit of his wages otherwise. 

WagesSection 2(1) m defines wages as any benefit or privilege received by a worker from an employer that can be estimated in money except
  1. traveling allowance or value of any concession given on traveling.
  2. employer's contribution to PF or pension fund
  3. any expenses reimbursed to the workman incurred due to work.
The following benefits are included in calculating wages:
  1. Bonus - was held to be wages in the case of Maharastra Sugar Mills Ltd. vs Ashru Jaiwant AIR 1966 Bom.
  2. Maternity benefits payable to a woman after pregnancy.
  3. Dearness Allowance
  4. Benefits in the form of food, clothing, and accommodation
  5. Accommodation 
  6. Overtime pay
In the case of M/s J C Mills vs Deshraj, AIR 1952, MP HC held that paid leave is not a wage unless it is stated expressly in the contract of employment that paid leave can be encashed if not taken.
Section 2(1) n defines workman as
        Exception: A member of the armed forces is not a workman.


Workmen's Compensation and Social Security
Success of an industry depends on the productivity of the workers. Thus, minimizing the labor cost is a prime objective of factory owners. In their zest to reduce the labor cost, safety of the workers gets neglected thereby increasing the chances of death or injury to the workers. An increase in the use of complex machinery, the risk for injury to worker had increased. Further, many times, because of the injury a worker may not be able to work, or in case a worker dies, his dependents have no way of making ends meet. This in turn gives rise to poverty, hopelessness, and above all insecurity among other workmen which is detrimental to the industry itself. This is unacceptable in any civilized country. Thus, to ensure that workers and their dependents get enough financial security, Workmen's Compensation Act was enacted in 1923.  It obligates the employer to compensate a worker for his loss due to personal injury while on the job. Appropriate compensation to worker and his dependents prevents unrest among other workers. This promotes a general well being among the working class.  In the absence of such compensation, the dependents may be forced into begging or illegal activities. Thus, WCA is a great mechanism to enhance social security.

This act has gone long way to protect workmen for accidental loss of life or limb and to provide social security to poverty stricken workmen. Although its main objective is to compensate the workers for injury it has also prompted the employers to implement processes that reduce risk to the workers.

Main Features of the act:
Principles Governing the act:
Nature of liability

This is a different kind of liability. It is not same as a liability in torts. It arises due to the relationship between the worker and employer. An employer is only liable to pay the difference between the earning capacities of the worker before and after the accident irrespective of the loss or expenses incurred in treatment of the worker. It is also not dependent upon the neglect or wrong doing of the employer.

When is an employer liable to pay compensation?

Section 3 says that an employer is liable to pay compensation if a personal injury is caused to the workman due to an accident arising out of and in the course of employment. Thus, the following conditions must be satisfied to claim compensation:
  1. Personal injury must have been caused to a workman.
  2. The personal injury must have been due to an accident.
  3. The accident must have arisen out of and in the course of employment.
  4. The injury must have resulted in death or the worker must have received total or partial disability at least for 3 days due to the injury.
The following are the excuses or conditions in which an employer is not liable to pay any compensation:
  1. If the injury did not cause total or partial disablement for more than 3 days.
  2. If the injury did not result in death or permanent total disablement and
    1. The worker was under the influence of drinks or drugs.
    2. The worker willfully disobeyed the orders expressly given or a rule expressly framed for the safety of the workman.
    3. The worker willfully did not wear or removed protective gear as required to work while having known that such devices exist and were available.
Employer's liability in case of occupational diseases
Section 3 also discusses many diseases that can be caused due to employment in certain industries. These diseases are divided in 3 parts and are listed in Schedule 3. There are different rules for the compensation arising due to diseases of different parts.

In the case of Indian News Chronicle vs Mrs Lazarus - Punjab AIR 1961 - it was held that Injury need not only be physical. Pneumonia caused due to change in temperature is also injury because of job.
In the case of Sunil Industries vs Ram Chander Pradhan - SC 2001 - It was held that it is not necessary for a workman to be working in a factory as defined in Factories Act 1948 to claim compensation.

Arising out of and in the course of Employment

arising out of  == suggests the cause of the accident
in the course of == refers to the time, place, and circumstances of the accident

The claimant must prove that the accident has occurred due to the circumstances arising out of employment. If the risk taken by the workman was only because of the employment, it is a valid casual connection. If the risk taken was on the worker's own account and not due to employment, then the employer is not liable. Worker was doing something for the furtherance of the employer's business and not for his own benefit, it is a valid connection. Worker should not be doing something which is way out of scope of his employment - doctrine of added peril.

It is not necessary that the accident has taken place within the work place, or even within working hours but that the employment has some casual relationship with the cause of the accident. A worker might get hurt while going to quench his thirst or bodily needs, and that would be a valid ground for compensation. Thus, the activity of the worker may not necessarily be exactly the same but must be reasonably linked to the work that he is supposed to do.

Trustees Port of Bombay vs Yamunabai - AIR 1952 Bom - A worker was injured by a bomb placed by somebody in the workplace. HC held that it was arising out of employment. HC stipulated that if a particular accident would not have happened to a workmen had he not been in the employment at that time and place, it would be an accident arising out of the employment.

State of Raj vs Ram Prasad - 2001 SC - Worker died due natural lightning. SC held that since the workman was exposed to lightning only because of the job, employer is liable to pay compensation.

R B Moondra and Co vs Mst Bhanwari - AIR 1970 Raj - Worker entered a petrol tank to check leak. He lighted a match and died of burns. HC held that it was in due course of employment and that he did not take any additional risk because he did not believe there was any risk since the tank was partially filled with water.

Notional Extension of Employer's premises
Ordinarily, going to and coming home from work place is not considered within the course of employment. However, there may be reasonable cases where an extension of employer's premise and time may be applied if while going to or coming from work the worker has to use part of the employer's facilities.
This was discussed by the House of Lords in the case of  St Hellen's Colliery Ltd. vs Hewlston in 1924. In this case, the worker was not obligated to use employer's train to work. He could use any other means to commute. So it was held that an accident arising while on the special train was not in the course of employment.

In the case of Varadarajulu vs Masaya Boyan AIR 1953, Mad. HC held that the worker had no other means to go to the work place other than to use the employer's lorry. So, accident happening while in the lorry is in due course of employment.

Willful disobedience of orders or safety devices etc
In order to disown any claim for compensation, it is not enough to show that the workman neglected the safely measures or disobeyed the orders. The employer must show that such neglect was willful and the orders that he disobeyed were express. Mere disobedience is not enough because it could be because or forgetfulness or due to the result of impulse of the moment.

In the case, of Arya Muni vs Union of India 1965, a workman lost is right eye due to an accident. The employer claimed that there were instructions to use goggles but the worker did not use them. However, it was held that since the worker did not know English, it cannot be said that he understood the message. Also, while the worker was aware of goggles that did not mean that he understood that they were mandatory. The supervisor also did not tell him so. Thus, the employer was liable to pay compensation.

Negligence of the workman
In the case of Padam Debi vs Raghunath AIR 1950 Orrisa HC held that once it is established that an accident happened without any design and in course of employment, the question of negligence, great or small, is irrelevant.

In the case of Roshan Deen vs Preeti Lal 2002 SC held that liability to pay compensation cannot be reduced or avoided by any agreement with the worker to that affect.

Alternative Remedies
In case of an injury, a workman has the following alternative remedies
  1. he can claim compensation under WCA 1923.
  2. he can claim damages in torts.
  3. he can claim under the Employer's liability act.
However, a workman is not allowed to put his employer into double jeopardy of proceedings or compensation as per section 3(5). Thus, he cannot make any claim for compensation under this act if he has instituted any civil proceeding for the same injury. Similarly, a workman is not allowed to institute any civil proceeding for damages against the employer or any other person for the same injury if,
  1. he has made a claim for compensation before a commissioner or
  2. the amount of compensation has been settled between him and the employer in accordance with the provisions of this act.
A workman cannot get compensation twice through any means for the same injury.
Section 3(5) uses the word "instituted", which is more specific than that the just filing a claim. "Instituted" means setting on foot an inquiry. Thus, if a workman has filed a claim and then withdrawn it before any inquiry was started, it will not be considered as instituted.

Amount of compensation
The amount of compensation for an injury depends on the extent of the loss of earning capacity, which usually depends on the type of injury and resulting disablement. Section 4 defines detailed rules for determining the amount of compensation.

a) If the injury results in death, the amount of compensation is equal to the amount of 50% of the monthly wages of the deceased workman multiplied by a relevant factor or 80,000/- which ever is more.
b) If the injury results in total permanent disability, the amount of compensation is equal to the amount of 60% of the monthly wages of the workman multiplied by a relevant factor or 90,000/- which ever is more.
In these cases, if the monthly wage is more than 4000 Rs then the monthly wage considered in the calculation will be 4000/-. The relevant factor must be seen in schedule IV and it depends on the number of years in service.
c) If the injury results in partial permanent disability, the amount of compensation is equal to the amount determined under permanent total disability multiplied by the percentage of loss of earning capacity as given in schedule I, if the injury is mentioned in schedule I, or is equal to the percentage of amount determined under permanent total disability as the percentage of loss of earning capacity as determined by a qualified medical practitioner.
d) If the injury results in temporary, partial or total, disablement, the workman must be paid half monthly payments of 25% of his monthly wages for the time he is disabled.

Any payment received by the workman for the treatment of his injury from his employer will not be considered against the amount of compensation.

Employees' State Insurance Act 1948

While Worker's compensation act was instrumental in providing a secure working environment to workers to quite an extent, it still lacked the aspect of insurance.  Worker's compensation Act is geared towards providing an assistance in case of an accident causing an injury, that too only when the accident happens in due course of employment.  However, there are several other factors such as disease and age, which may cause a worker to become unable to do any job. In such cases, WCA 1923 does not provide any help.  Further, no welfare activity is done under WCA.

Dr Adarkar studied the social conditions of labor in India and made a detailed report on the problems and solutions. Based on his reports and suggestions made by several prominent experts of ILO, ESI Act was enacted. The main object of ESIA 1948 is to provide a comprehensive insurance to the workers. ESIA is the first legislation that looks after the general welfare of the labor in India. It provides health, disability, and unemployment insurance to workers. The term welfare is quite wide and includes any activity done for the physical, economical, and intellectual betterment of the workers and their dependents.

In the first instance this act applies to factories all over India. A state govt. can all extend provisions of this act to any industry or any class of industries, or establishment in any part of the state.

Section 3
Under this section, the Central Govt. has formed a corporation by the name of Employees' State Insurance Corporation, which is a legal entity.

Section 4 defines the constitution of the ESI Corporation. It details the provisions regarding president, board of directors, managers, etc.

Section 38
This sections specifies that all employees working in factories are covered. In the case of Hyderabad Asbestos vs. ESI Court AIR 1978, SC held that the term employee is wide enough to included anybody who works for the factory directly or indirectly.

Section 39
It obligates the factory occupier to contribute to the ESI fund.  This contribution includes Employer's share as well as Employee's share.

Section 46 
This section details the benefits that Employees' state insurance provides. This includes sickness, maternity, disability, medical, dependent, and funeral benefits.