Labour Law & Hr Consultant
State of Milharashtra v. Milhadeo Krushna Waghmode, 1994 LLR 950: 1994 (69) FLR 571: 1994-II CLR 238: 1994-II LLN 829 (Born HC).
Principal employer and the contractor will be liable for payment of compensation to a workman injured in an accident.
Mohammad Rafiq Mohiuddin v. S. Narasimha, (2002) IV LLJ (Supp) NOC 1306: 2002 LLR 718 (AP He).
In a recent judgment, the Madras High Court reiterated that compensation payable for the death of employees must be based on the wages payable under the Minimum Wages Act, 1948, unless the employee’s actual wages exceed the minimum wage.
29th June 2018 From India, Madras
29th June 2018 From India, Mumbai
I invite your kind attention to Section 39 of the UttarPradesh Shops and Establishments Act,1962 which reads as hereunder:
"Sec.39.Application of the Workmen's Compensation Act,1923 and Rules:
The provisions of the Workmen's Compensation Act,1923 and of the Rules made thereunder, shall mutatis mutandis apply to every employee of a shop or commercial establishment."
Your post clearly shows by your own words that the affected person was a contract labor in your establishment engaged through a contractor who failed to enroll him under the ESIC for obvious reasons, might be with or without your knowledge. Admittedly the injuries sustained by the employee was certainly due to an employment accident in your premises. Therefore, the factual as well as the legal position is -
(1) Since the contract labor was a non-member of the ESIC at the time of the employment accident, the contractor is liable to pay compensation to him under the E.C Act,1923 for the consequential loss of earning capacity caused by the disability.
(2) If the contractor fails, as Principal Employer, first you have to pay the compensation and other expenses stipulated under the EC Act,1923 and can recover it from the contractor later. Please refer to the provisions of sec.12 of the E.C Act,1923.
(3)When the fact remains that he was allowed to work in the establishment during the accident, in my opinion, the questions such as whether the particular day was his weekly off or not or he himself volunteered to work are simply irrelevant.
29th June 2018 From India, Salem
Thanks as always.
Just some clarifications:
1) As per pt.1 of your answer the consequential loss of earnings will be calculated taking the salary of 8k per month with the scope of disability!
2) During the period of loss of pay will the principal employer or the company also have to pay EPF contribution at 12% of 8k or the standard norm or not have to pay!
3) Also I have been told that there is unrest between the contract employes against the contractor for not implementing ESI and they are threatening to go to a Respective Labour competent authority. What is the role or penalty on the company in such a situation.
Thanks once again
30th June 2018 From India, Mumbai
My answers to the follow-up queries are -
(1) Yes; if the salary/wages of the employee on the date of accident is on the higher side, it should be notionally restricted to Rs.8000-00 p.m only for the purpose of calculation of E.C under the Act. If the actual salary is less than the statutory minimum wages, only the minimum rate of wages should be taken into account as already quoted by Mr.Babu Alexander.
(2)" The period of loss of pay" as mentioned can be of two types - one the period of treatment and the other being the period of non-employment as a result of the disability created by the injuries sustained in the employment accident. The employer has to pay wages for the entire period of treatment till recovery from the injuries in addition to the expenses of the treatment. It is the actual wages payable had the employee not met with the accident. Therefore, all the statutory employer's contribution to be as usual.
(3) First, you better go through the definitions " Immediate Employer " u/s 2(13) and " Principal Employer " u/s 2(17) and then read section 40 dealing with the primary responsibility of the PE for payment of contribution to ESIC and its recovery from the immediate employer u/s 41 of the ESI Act,1948 respectively. Therefore, as PE you have to ensure the enrollment of the CL before allowing them to work. The consequences of non-payment of contribution may result in recovery proceedings as well as arrest of the concerned PE or Immediate Employer as the case be. Better be proactive and resolve it amicably..
30th June 2018 From India, Salem
Your queries are answered as follows:-
1. If such a contract employee is applicable under Employee Compensation Act & 2
2) Should the company have to pay for the contract employee under provisions of the Employee Compensation Act considering his wage as Rs 8K. Also will the company have to pay any loss of pay to the employee in addition to compensation.
In your case it is an admitted fact that the contract employee is not covered under the ESI Act.
Hence, you are liable to pay the compensation as per the provisions of the Employees Compensation Act for the loss of earning capacity arising out of the accident. You will also be liable to pay any loss of pay to the employee in addition to compensation, if the loss of pay is caused due to the accident i.e. period of treatment till recoveries from the injury and the medical expenses
3) If the contractor is not fulfilling his obligations under ESI act is there any penalty towards the principal employer.
Yes. It is well settled principle of law that the Principal Employer has to ensure that the contractor comply with the provisions of the applicable labour laws. In case of non-compliance by the contractor the Principle Employer will be held responsible and penal can be initiated against the Principal Employer
4) Does the employee compensation act also be applicable on an employee if he/she decides to work on the day of his/her weekly off
Yes it applies.
S. G. Management Services
(PAN INDIA Consultant - Labour Law Compliance,
P.F.ESI, P Tax, Benefit Management &
1st July 2018 From India, Kolkata