Navigating Legal Gaps: What Happens if ESIC and WC Don't Cover a Factory Accident?

Our factory is covered under ESIC, and a few of the workers involved in the manufacturing process are out of the ESIC coverage because their wages are more than ₹15,000 per month. Under subsection 3 of section 10B of the Workmen’s Compensation Act, 1923 (Chapter II), there is a specific denial of the applicability of WC to the factories to which ESIC is applicable.

My question is, if any accidental death happens inside the factory and the ESIC benefit is not applicable due to wages being more than ₹15,000 per month, and also if the factory is outside the purview of the Workmen's Compensation Act, 1923, will any other law apply to this? Please clarify.

1. Sir, Section 10-B of the Employees' Compensation Act, 1923 (ECA) only relates to "Reports of fatal accidents and serious bodily injuries." This section does not mention exemptions for employees under the said EC Act when the ESI Act, 1948 is applicable.

2. Kindly refer to Section 53 of the ESI Act, 1948, which specifically prohibits employees from claiming benefits under the WCA (now ECA) "in respect of an employment injury sustained by the insured person as an employee under this Act."

3. Also, consider the ruling of the Honorable Supreme Court in the case of A. Trehan vs. Associated Agencies AIR 1996, SC, 1990. Therefore, employees earning wages exceeding Rs. 15,000 and falling under Schedule II of the ECA, 1923 are entitled to compensation under the EC Act, 1923.

Dear Sir,

As the company is covered under the ESIC, the employees covered under ESIC do not come under the purview of the Workmen's Compensation Act. However, the employees outside the ESIC coverage automatically fall under the Workmen's Compensation Act. It is better to get a group accidental policy for such employees to be on the safer side.

Dear Sir,

It is one thing to implement the law and another to do what is right. It is important to believe that in the event of an accident, the management should come forward to help the victim irrespective of the laws, and HR should ensure this.

You seem to be confused, and as a result, your question is unclear. No factory can be outside the purview of the WC Act; only employees (earning less than 15000 per month) can be exempt from the WC Act.

All the employees drawing the salary/wages less than ₹15,000 per month should be covered under the provisions of the ESI Act. Anybody drawing more than ₹15,000 per month has to be covered under the WC policy. The applicability of the ESI to the area is of no consequence for the WC policy for exempted employees drawing wages/salary of more than ₹15,000 per month.

Understanding the Applicability of WCA and ESI

If the employee is not covered under the ESI Act (exempt from ESI), there is involvement of the Workmen's Compensation Act (WCA). Either the company is covered under the act or not, because according to the law, if any workman has been injured or died due to contingency happenings, then the WCA acts against the employer.

When I worked with Bhushan Steel Limited, one of our employees was injured and died due to a fire. Although he was exempt from ESI, a WCA case was filed against the company to pay the wages and provide insurance to the dependents.

Regards