Employee’s Compensation: Modi govt has raised wage limit to Rs 15,000 for calculation

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Updated: January 8, 2020 10:58:10 AM

Employee's Compensation Act 1923: Before 2010, Employee’s Compensation Act, 1923 was known as Workmen's Compensation Act. It provides for compensation to an employee who dies or suffers partial or total disablement due to accident on duty.

Employees to get more compensation now. Employees to get more compensation now.

Employee’s Compensation Act rule change 2020: Here’s good news for workers. The Central government has changed the amount of wages to be considered for calculation of compensation to workers under the Employee’s Compensation Act 1923 vide notification S.O.71 (E) dated January 3, 2020. The amount of wages considered previously for the calculation of compensation was just Rs 8,000. Now, it will be Rs 15,000, according to the notification by the Ministry of Labour and Employment.

Before 2010, Employee’s Compensation Act, 1923 was known as Workmen’s Compensation Act. It provides for compensation to an employee who dies or suffers partial or total disablement due to accident on duty. The compensation has to be paid by the employers. An employee cannot claim compensation under the Act if he/she is already entitled to compensation from ESIC.

As per the Employee’s Compensation Act, an employer is liable to pay compensation of personal injury is caused to an employee during an accident arising out of and in course of his/her employment. If personal injury is caused to an employee by accident arising out of and in the course of his employment, his employer shall be liable to pay compensation under the provisions of the Act. The employer will not be liable to pay compensation when:

– An injury does not result in the total or partial disablement of the employee for more than 3 days;

– an injury doesn’t result in death or permanent total disablement caused by an accident under the influence of drink or drugs;

– In case of accidents caused by wilful disobedience of the rules by the employee and wilful removal of safety guards, the employer is not liable to pay compensation.

Compensation calculation

The computation of compensation under the Act is done as per provisions on Section 4 of the Act:

1. In case of accidents resulting in death: an amount equal to fifty per cent. of the monthly wages of the deceased multiplied by the relevant factor; or an amount of Rs 1,20,000, whichever is more;

2. If the accident results in permanent total disablement: an amount equal to 60 per cent. of the monthly wages of the injured employee multiplied by the relevant factor; Rs 1,20,000, whichever is more.

As per the new rule notified by the government, Rs 15,000 will be considered as wage for calculating compensation under the Act.

The relevant factor for computation is mentioned in schedule IV of the Act.

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