Understanding Compensation for Employees Who Die in Accidents Away from Work: What Are the Legal Obligations?

Dear Friend,

Please let me know what compensations are to be paid to the kin of a deceased employee who died in a road accident far away from the company. Is he entitled to any compensation under the Workmen's Compensation Act? Is gratuity payable for the remaining years until 58 years? Is any other compensation to be paid? Please reply immediately, as it needs to be cleared urgently.

Thanks,
Shiv Kumar

Dear,

If an accident occurred in the course of employment, then only his kin are entitled to compensation if death occurred while on duty. Gratuity will be paid for the services rendered by the individual. No compensation is legally entitled.

Regards,
JS Malik

Yes, Mr. Malik is absolutely right. If an employee dies while going home after his duty, or he is coming to the office, or he is there to perform any official work when this happens, he is eligible for compensation. "I mean if an accident occurred in the course of employment, he is eligible."

Thanks for the reply. As the accident occurred away from his office, I feel he is not entitled to any compensation. But what about gratuity? Is he entitled to the period (e.g., if he worked for 3 years) he worked in our company, or is he entitled to the remaining years until 58 years? I saw in this forum some time back that in the case of death, the employee is entitled to gratuity for the remaining years until 58 years. Please give your suggestion.

Thanks,
Shiv Kumar

Dear Sir,

If the management applied for any group gratuity scheme with any insurance company, such benefits are entitled under the scheme. In other cases, the actual service is only calculated.

Dear Shiv Kumar,

In the case of death, the legal representatives of the deceased employee are eligible to receive gratuity. However, the gratuity will not be calculated for a projected period of 58 years; instead, it will be limited to his actual service. In death cases, the only difference is that the gratuity accrues even if the employee had not completed the qualifying service of five years.

Regards,
Madhu.T.K

Dear all,

Please clarify, is it required to have completed five years or not? If an employee has not completed five years and dies in the third year of their service, what is the current position?

Naresh

Firstly, death has to occur in the course of employment. It does not matter if it happened far from the company premises in case he had gone for the company's work. If it was on his personal time and unrelated to the company, one need not pay the compensation, although many provide it as a compassionate gesture.

Secondly, as Mr. Madhu clearly stated, gratuity is payable since the case involves death. Therefore, the 5-year period ban is not applicable here. He will be paid gratuity for the three years he served, which amounts to about 90 days' pay.

Compensation under the Workmen's Compensation Act of 1923 has to be paid if the death is "arising out of employment" or "during the course of employment". Whether the death occurred within the premises of the organization or not is immaterial. There are several case laws where the concept of "notional extension" is applied. For instance, an employee who, after 8 hours of hard work, leaves the premises and dies outside the main gate due to a heart attack, is also considered as a "death during the course of employment".

Secondly, the payment of gratuity is based on the clause in the Insurance-Linked Gratuity Scheme of the organization. If the gratuity includes a life insurance cover, the amount available from the insurance company can be paid. Otherwise, the payment is regulated by the Payment of Gratuity Act of 1972. This Act does not restrict any employer from paying a better or higher amount of gratuity.

Thank you very much for the valuable suggestion. Thank you. But on humanitarian grounds, one should pay all dues even if he is the sole breadwinner. I remember a Supreme Court judgment on this. Please clarify.

Dear Sajanssa,

How did you calculate these 90 days? I think 15 days' salary is given for the completion of every year. Please clarify if I was wrong.

Thank you.

Dear Kumaran,

I endorse the views of Mr. KCS Kutty. But to make it more clear, I may point out that although Section 4(1) of the Payment of Gratuity Act provides the requirement of a minimum of 5 years of continuous service to have been rendered by the employee for eligibility for the payment of gratuity, the proviso below the said rule clearly provides that the completion of continuous service of five years shall not be necessary in the case of death or disablement.

Further, although Section 4(2) of the Payment of Gratuity Act provides that the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned, Section 4(5) clearly provides that "nothing in Section 4 shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer."

That means it depends upon the generosity of the employer to pay a higher amount of gratuity but shall not pay less than the minimum amount payable under the Act.

But please be aware, the gratuity is payable within a period of 30 days from the date it becomes payable to the eligible person; otherwise, simple interest at the prescribed rates would also become payable as per the provisions of Section 7 of the Act.

P S Dhingra
Vigilance & Management Consultant
Dhingra Consultancy Group
New Delhi

Thank you to everybody for the valuable replies. Our management is willing to pay a good amount to the kin of the deceased employee. To avoid any future issues, we want to provide the amount both in accordance with the law and on compassionate grounds. After reviewing all your responses, when I calculated the compensation amount we wish to offer to his family, it exceeds what he is legally entitled to. Therefore, we hope there will be no problems in the future.

My thanks to all of you for your valuable replies.

Thanks,
Shiv Kumar

Dear Mr. Shiv,

Generally, continuous service of five years is necessary for the payment of gratuity. However, if the termination of the employee's employment is due to death or disablement, the completion of five years' service is not necessary. The nominee or legal representative of the deceased employee can apply for the gratuity amount. The employer shall pay gratuity at the rate of 15 days' salary (based on the salary rate last drawn) for every completed year of service in all cases. For example, if the service period is 3 years, then gratuity will be paid for 15 x 3 = 45 days. I hope this information is satisfactory.

Sanjay Gupta
9871018121

Hi Jyoti,

Please see the attachment. I hope this will help you to some extent.

Best wishes,
Jyoti

As per the Workmen's Compensation Act of 1923, the worker will only receive compensation if the accident occurs "in the course of employment and out of the course of employment."

Gratuity is payable in cases of death even if the employee has not completed 5 years of service.

Vasant Nair

Hi Shiv,

Ref: W.C. Act

To be eligible for compensation under the W.C. Act, death should have occurred in the course of employment. It is immaterial that the deceased met with an accident on the road, far off from the premises of the company. Mr. Malik's view is right.

Ref: Gratuity Payment

The nominee(s) of the deceased is entitled to gratuity, even if the deceased rendered only 3 years of service. Of course, he will be paid for only three years on a pro-rata basis.

I.N. JHA

Hi, if the death occurred during the course of employment, then the kin of the deceased is entitled to compensation under the Workmen's Compensation Act through the employer. Alternatively, they are entitled to compensation under the Motor Vehicle Act as the death occurred in a road accident, through the insured and the insurance company. You can choose one of the remedies at your liberty.

Prem Prakash (Adv.)

Dear Mr. Shiv Kumar,

Mr. Madhu is 100% correct as I have also paid gratuity to one of my employees in the year 2004 who died due to an accident after his two and a half years of service. In this case of death, the basic criteria of five years of eligibility is not taken into account, and he is to be paid for the years he worked in the organization. In this case, he is not entitled to Workers' Compensation as the death did not occur during the course of his employment or at the place of his work. Therefore, the worker only needs to be paid gratuity based on the formula laid down for gratuity payments. I hope this will meet your requirements.

Mahender Singh
9824014044