Industrial Relations And Labour Laws
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Dear colleagues,
I appreciate cite managing valuable contributions bringing us that has quality and clarity both..
In one of my client unit, one contractor labour met with accident as a result his one arm from shoulder joint got imputed.W C was applicable, He is 20 , drawing Rs.4000/ pm as wages.Being local, all village people accompanied him, gheroed staff employees and thru a written document on 8th May 14, agreed by Management that Co will pay medical exp. , reappoint under any contractor at monthly wages of Rs.9000/.after his treatment.Company has complied this till Nov.14 and then not paying other than Min wages approx Rs 4500/month.After 14 months, worker has recently approached management, demanding unpaid wages @Rs.5000/month.
Many of our learned fellow members must have dealt similar matters , I thought to consult you.
Please suggest me alternative and legally tenable action as management we need to take now.
RDS Yadav

From India, Delhi
Agreement was literally by coercion and such agreements are voidable by its nature.
What was the role of the contractor whose employee he was?
You can decline to make further payments,but take care to assess the law and order situation which may arise.

From India, Pune
Dear Mr Nath Rao,
The contractor played safe and neutral and not working in unit after 2-3 months as his assignment also then completed.Once management stops entry of labour, chances of labour trouble are high. One of experts has suggested to file a case before WC commissioner to decide upon disability the legally payable compensation amount, I subscribe to his views.We are not paying any extra money other than earned wages.
RDS Yadav

From India, Delhi
I am not getting the issue. Is it that one of your contract workers met with an accident while on duty (please specify whether while on duty or not) and following that his hand was amputed from shoulder. Now he has only one hand. Am I right?

Now, if this has happened during the course of employment, he would have got Rs 5,37,600 as compensation as per Workmen Compensation Act. I have taken the age, 20 years and the corresponding compensation factor, ie, 224 and 60% of wages which is applicable for disablement , ie, 2400 (4000 X 60%)

Now, there has been direction that while deciding the compensation, you should take the minimum wages as applicable to the employee. Although the maximum wages is 8000 per month, if we take that as the base, the compensation would be double the amount shown above. It is difficult to accept that the minimum wages is only Rs 4500 and it should be basic wages only and without taking the variable DA part of the wages.

One more thing is that if the establishment is situated in an ESI implemented area, the entire liability would have been shifted from the employer to ESI Corporation. Again it should be noted that you should have enrolled the employee under ESI.

Now, without making any such payments and without referring the dispute to Workmen Compensation Commissioner, you have made a bilateral settlement that the employee would be given employment. This is not a proper settlement, I should say, because, the poor fellow and others who came to take to you on the issue were totally ignorant about the compensation payable by the employer (whether contractor or the principal employer himself in the absence of the contractor not paying) and his legal obligation that all medical expenses including the loss of income should be borne by the employer only. The employer or the contractor misused the situation and found an easy settlement saying that the employee would be given employment once he is discharged from the hospital.

Therefore, you should first settle the issue of compensation and then come to the issue of non payment of agreed salary. You cannot deny that also, because you have undertook to give Rs 9000 per month and if not given, pay it with retrospective effect.


From India, Kannur
Dear friends!
Thanks for showing lights which brings light on issues.This is a true and fact base , a real IR matter, not any hypothetical . I am pleased to share few other informations hereunder.

The w/man was engaged wef 1st May 14, met with accident 0n 25th May 14 , in same month.Establishment was not in ESI implemented area.Medical exp and interim relief Rs.1.60 lacs (which was signed really under coercion) was paid thru contractor by my client company. He was taken under different contractor in July 14 .Wages payment @Rs 9 K/Month paid by contractor as earlier contractor completed assignment in June 14. IP is working as per T&C of agreement , PAID @Rs 9 K/Month but from Nov.14 onwards given Min. wages only - not @Rs 9 k/Month.There are three major situations which I foresee and wanting your strategic and legal views-(a) What to do when employer has to pay double the wages while IP got his disability / earning capacity both 90%down? (b) Is it not cascading effect even on any major/ minor accidents in future,what to do?(c) What is effect of agreement pertaining to employment and wages at enhanced rate if WC does not permit and in any such condition risk and liability there on?
I am getting more lights, pl. express your view points frankly taking present and future in to considerations.
Thanks and regards,

RDS Yadav
Labour law Adviser
Director-Future Instt.of Engg and Management Technology

From India, Delhi
The agreement entered into by literal coercion cannot hold water.
Take up the matter with union and abrogate the agreement.
Management should not be blackmailed as it can become an IR matter.
Such agreements which create unforeseen liabilities. should be reviewed as it can be an existential threat to the future of its finances.
A private company cannot keep paying more than its capacity.
Be bold and take up with union -facts and figures need to be presented and also the fact that the whole company can wind up if such agreements are forced upon the management.
This will touch the unions mind-if there is no firm,where is the employment going to come from?
Self interest may make their mind change,but firmness of management should be seen.

From India, Pune
Again I do not find any merit in the statement that payment of Rs. 1.6 was made by coercion. Why so? If you had approached the Workmen Compensation Commissioner immediately he would have helped you to arrive at the compensation. Medical expenses should any way become your responsibility (in case the contractor is not taking it up) and what is left is the payment of compensation and that would be around the same amount as shown in my previous post.

As against the above, if you have made any internal arrangement, that will not be legally maintainable because this is a matter to be settled before the WC Commissioner. I am not sure if the WC Commissioner will permit that instead of paying the lumpsum amount, say, Rs 5,36000, you can pay Rs 5000 each month (9000 minus the amount you were paying before the accident, ie, 4000).

The employer should take the responsibility of reduction in the earning capacity of the employee because it was due to the accident that his earning capacity reduced by 90% and first the employer should compensate the loss caused to the employee and then think of rehabilitating the employee by giving work which can be done by him. The wages or remuneration that was fixed without putting any thought on these might be at a higher side but considering that he has lost his earning capacity for the rest of his life, it is nothing.

It will not have a cascading effect provided you follow the rules. If a similar incident happens you should pro actively follow the rules and get the mediation by the Labour department and decide on the compensation. In the present case also, if you had approached the WC Commissioner, you would not have to spend Rs 9000 every month. The Commissioner should not have ordered that you should give employment to a person with 90% disability and that also at a double the minimum wages( I still doubt if the minimum wages is Rs 4500 only)

As the matter was not brought to the notice of WC Commissioner, the agreement MAY prevail and if so, you have to pay Rs 9000 every month because it is there in the agreement. Whether the agreement is valid or not (due to the absence of free consent) another question.


From India, Kannur
Dear Mr.Nathrao and Mr Madhu TK,
Thanks for your wonderful contribution me better prepared in this very case. We are legal advisers for extracting solutions when missed or opportunities just derailed any employer from fair solutions . In coordination with Labour department and LOCAL machinery when there is such complex situation, we attempt to set them on track.WC commissioner has accepted our matter for disposal. Of course, this time as you all have advised to get resolution within legal frame work, I am looking forward same from WC Commnr.Shall return to you , on getting orders from him again
Best wishes,
Labour RDS Yadav
Labour law Adviser
Director-Future Instt.of Engg and Management Technology

From India, Delhi
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