Understanding Workmen's Compensation: How Are Benefits Calculated for Different Scenarios?

Hi Friends,

The Workmen's Compensation Act of 1923 and subsequent amendments impose a statutory obligation upon employers to compensate their own employees and those of contractors for labor or otherwise employed by them when incapacitated as a result of an employment accident.

We give below the workings of compensation payable in the event of death or permanent total disablement. There is a fixed chart of factors based on the completed years of age on the last birthday immediately preceding the date on which the compensation fell due. A specimen of factors is given below:

Age Factor
18 226.38
25 216.91
30 207.98
35 197.06

The factor decreases as the age increases.

Now we give below the formula for working out compensation. The maximum wages are taken as Rs. 4000 for the purpose of arriving at compensation payable.

For the calculation, we will consider the age of the workmen as 33, and the corresponding factor applicable then will be 201.66.

Case 1) Death of Employee
Age 33 Factor 201.66
Wages Rs. 4000 x 50% = 2000 x 201.66 = Rs. 403320

Case 2) Permanent Total Disablement
Wages Rs. 4000 x 60% = 2400 x 201.66 = Rs. 483984 (maximum Rs. 452760)

Case 3) Temporary Total Disablement
The first 3 days are excluded. Suppose the number of days was 28. Then the calculation will be 28-3 = 25 days:
25 X 25% of wages
15
i.e., 1.66 x 1000 = Rs. 1660

Keep Smiling...
Mahesh K Prasad

Hi Ashvin,

I was going through the post, and I must admit it is very informative. I have a question though. Can you let me know what would be the compensation for a person of Age 22 with partial disability (Two phalanges have been cut in the Left Index and Middle Finger each), and his wages would be minimum wages, say 3000/-.

Thanks,
Ashvin

Hi Friends,

The Workmen Compensation Act of 1923 and subsequent amendments impose a statutory obligation upon Employers to compensate their own Employees and those of 'Contractors for labor or otherwise employed by them when incapacitated as a result of an accident of employment.

We give below the working of compensation payable in the event of death or permanent total disablement. There is a fixed chart of factors based on the completed years of age on the last birthday immediately preceding the date on which the compensation fell due. A specimen of factors is given below:

Age Factor

18 226.38

25 216.91

30 207.98

35 197.06

The factor goes down as the age increases. Now, we give below the formula for working out compensation. The maximum wages are taken as Rs. 4000/- for the purpose of arriving at the compensation payable. For the purpose of the calculation, we will take the age of the workmen as 33, and the corresponding factor applicable then will be 201.66.

Case 1) Death of Employee

Age 33 Factor 201.66

Wages Rs. 4000 x 50% = 2000 x 201.66 = 403320/-

Case 2) Permanent Total Disablement

Wages Rs. 4000 x 60% = 2400 x 201.66 = 483984/- (maximum Rs. 4,52,760/-)

Case 3) Temporary Total Disablement

First 3 days are excluded. Suppose the number of days was 28, then the calculation will be 28-3=25 days.

25 X 25% of wages

15 i.e., 1.66 x 1000 = 1660/-

Keep Smiling.... Mahesh K Prasad

Dear all,

Can anyone update me on whether an employer covered under the ESIC Act would be liable to pay workers' compensation in the case of a road accident (resulting in death) after duty hours with their own vehicle?

Dear Mr. Prasad,

I have gone through your compensation calculation, and an apparent irregularity comes to my mind, i.e., compensation so arrived at for Case-1 (Death of employee) cannot be less than that for Case-2 (permanent disablement).

Please check and rectify.

Dear Sir,

What is 25 and 15?

"Temporary Total Disablement"
First 3 days are excluded. Suppose the number of days was 28. Then the calculation will be 28 - 3 = 25 days.
25 x 25% of wages = 15.

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Dear Mr. Prasad,

For case no. 2, the amount is not mentioned by you, but it is 60% of Rs. 483,984, i.e., Rs. 290,390.

The name of the act is the Employees' Compensation Act of 1923. The bill was passed in the month of January itself.

How to Settle Accident Case (Permanent Disablement) Settlement

Note: The employee is a contract worker and not covered by ESIC.

An employee met with an accident inside our factory in November 2009, resulting in the loss of his index finger. He rejoined in January 2010, with Form 18 and 18B submitted as per the Factories Act. He joined the company with a temporary fitness certificate provided by the doctor who administered his medical treatment. As advised by the doctor, he needs to undergo a second operation at a later stage, which is scheduled for this month. Once completed, how should we proceed?

Please guide me on the following:

1. How to determine the percentage of permanent loss and where to obtain this information.

2. How to resolve this issue and what steps should be taken by the principal employer.

3. What necessary actions should be taken from the contractor's side?

4. What documents need to be obtained from the contractor?

I request your guidance to resolve this matter without any issues. Alternatively, can you provide your contact number so I can call you?

Thanks & Regards,

Kannan N

[Phone Number Removed For Privacy Reasons].