How Do You Calculate Compensation Under the Workmen Compensation Act: Gross or Basic Salary?

Compensation Calculation Under the Workmen Compensation Act

Can anyone share if, while calculating the compensation benefits for employees under the Workmen Compensation Act, we must determine the compensation based on their gross salary or basic salary?

Please also review my calculations below to confirm if they are correct or incorrect.

At the time of the accident, the individual was 34 years old and had completely lost vision in their right eye. Their gross salary is Rs. 14,903.

According to the WC Act, I have calculated the compensation amount to be Rs. 5,35,045. (Gross Salary of Rs. 14,903 * 60% = Rs. 8,942 {60% of gross salary} * factor for age of 199.45 {as per WC Act} = Rs. 17,83,482 {Rs. 8,942 * 199.45} considering a 30% loss as per Schedule I Part II.)

I believe my calculations above are correct. Please provide your suggestions and also share a suitable format for an affidavit that the employer can use to provide this compensation.

Regards,
PRGHR

Have you informed the concerned authorities and the Workers' Compensation (WC) Commissioner's office about the accident? Please approach the WC Commissioner's office and present the calculations you have made. If they confirm the accuracy of your calculations, proceed to make a demand draft (DD) and submit it. However, if you seek guidance from others and the WC Commissioner discovers discrepancies, they may demand a higher compensation amount.

Thank you.

If you don't mind, I would like to make an objective suggestion: before raising a basic question of law, you should refer to the relevant provisions of the particular law yourself and clarify at which point you have difficulty understanding. Now, please go through the definition of 'wages' in clause 2(m) of the Employees' Compensation Act, 1923, and make a decision.

Compensation Calculation for Permanent Disablement

Even if the wages are above Rs 8000/-, except for temporary disablement, the salary is deemed as Rs 8000/-, and the calculation of compensation is based on this limit. Your case involves permanent disablement. Wages mean gross wages, including privileges or benefits capable of being estimated in terms of money, except TA, traveling concessions, PF contributions, etc.

Regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]

Dear Sir, Umakanthan.M,

Thanks for your kind advice. I have gone through the WC Act and I came to know the meaning of Wages. As per the WC Act, the employer has to calculate the compensation from GROSS SALARY ONLY, not from BASIC SALARY.

Regards,

I think your calculation is excessive. Since the employee's monthly wages are above Rs. 8000.00, it should be limited to Rs. 8000.00 only as per Explanation II to Sec. 4(1) w.e.f 31-05-2010. The relevant factor for a 34-year-old is 199.40. Disability is 30%. Therefore, Compensation = 60% of 8000, i.e., 4800 x 30/100 x 199.40 = Rs. 2,87,136.00.

Please reverify.

Thank you for your kind information. I will check the same through relevant books and get back to you. If you have any format for statutory settlement through compensation, please send it to me. It will enable me to pay the compensation to the workmen.

Thank you.

Regards

In addition to the amount of compensation, please add up the actual medical expenses incurred by the worker.