Navigating Workers' Compensation: What Happens When a New Employee Faces a Tragic Accident?

One worker who recently joined a factory died in an accident while coming to work. In total, there are 100 employees in two shifts, but the Workers' Compensation (WC) policy is taken for 60 employees, and it is written in the policy that there should not be more than 60 employees at the site at any time. The employee who died in the accident had not even received his first wages. My query is:

Claim Status and Employer Responsibilities

1. What will be the status of the claim?
2. What steps should the employer take?
3. Does the employer have to report the matter to the factory inspector and the insurance company?
4. What's the time frame for reporting the matter to the factory inspector and the insurance company?

Thanks

Legal Obligations Under the Factories Act, 1948

Section 88 of the Factories Act, 1948 states that if an accident occurs in any factory causing death or bodily injury, and as a result, the injured person is unable to work for 48 hours or more immediately following the accident, the Manager of the factory must send notice of the incident to the relevant authorities in the form prescribed by the Rules established by the State Government.

The above is the legal position. Now, addressing your queries, my responses are as follows:

1. It doesn't make a difference whether the concerned worker has received his first salary or not. Once his name is included in the company's muster roll, he becomes an employee of that particular establishment.

2. The employer may object to reporting the accident to the authorities if it occurred while the worker was on the way to the factory. If there is mutual agreement, then there should be no issue.

3. If the Workers' Compensation (WC) policy covers 60 workers, the maximum number present on the job at any given time, there should be no problem with his coverage under the policy. You must provide detailed information about the accident to the insurance company.

4. In the event of an accident resulting in death, it is essential to report it immediately to the Factory Inspector and the nearest police station. If the deceased was covered under the Employee State Insurance Corporation (ESIC) Act, informing the ESIC authorities is also necessary.

I hope the above clarifies your queries.

Best regards,
BS Kalsi

Immediate Actions Required

Hope you have informed the Chief Inspector of Factories at the police station by letter. If not, do it at once!

Key Questions for Consideration

From where was the worker coming to work? Do you have or know his residential address? Was he traveling from his residence? Was the time of the accident too early for him to report for duties? The answer to this question is crucial for the Employee Compensation Act policy or ESI Act. What is the title of your insurance policy?

Please understand that in such a complex case, the details provided by you are too limited.

Important Questions to Consider

A. Are all workers drawing wages of 15,000 or more?

B. Is the factory located in an ESI non-implemented area?

If the answer to A is no or yes and to B is yes, then the Employee Compensation Act is applicable.

If the answer to A is no and to B is no, then the ESI Act is applicable; the insurance policy will be redundant.

If the answer to A is yes and to B is yes or no, the ESI Act is not applicable.

If you have taken, in fact, the purpose of the policy will be void.

C. Are the workers covered under the ESI Act?

If yes, then you need to cover him and generate his IP number and write a letter to the local office narrating the circumstances.

Regards, Shrikant Prabhudesai

[Phone Number Removed For Privacy Reasons]

If a worker, whether casual or permanent, dies or is injured, they are entitled to receive workers' compensation. The coverage under this is predefined for all sorts of accidents. Ensure that you report the incident, fill out the form issued by your respective state's factory rules, and inform the Chief Inspector of Factories (CIF) to expect an inspection at any time. If your factory falls under the Employees' State Insurance (ESI) scheme, the procedure involves contacting the local police. Be sure to obtain the worker's death certificate.

In fact, there are 120 workers in the factory, out of which 20 are covered by ESI. Of the remaining 100 workers who work in two shifts, 60 workers are covered by the Employee Compensation Policy. At any given time, around 60 workers remain on the site.

Questions Regarding Employee Compensation Policy

My questions are:

- Is it mandatory to provide coverage for all 100 workers under the Employee Compensation Policy, or is coverage for the 60 employees sufficient?
- If an employee meets with an accident while coming to the factory, is it covered under the Employee Compensation Act?
- Should the victim's family report the matter to the Commissioner's office?

Regards

Thank you for your advice. In fact, there are 120 workers in the factory, out of which 20 are covered by ESI. Out of the remaining 100 workers who work in two shifts, 60 workers are covered by the Employee Compensation Policy. At any given time, around 60 workers remain on the site.

My Questions

- Is it mandatory to provide coverage for all 100 workers under the Employee Compensation Policy, or is coverage for the 60 employees sufficient?
- If an employee meets with an accident while coming to the factory, is it covered under the Employee Compensation Act?
- Should the victim's family report the matter to the Commissioner's office?

Regards

Legal Compliance and ESI Coverage

It is strange that you are not sharing complete details in one go. Now it is clear why you name yourself as anonymous.

Now, coming to expressing a legal opinion. You mentioned in the second post about ESI being applicable; obviously, your establishment would be located in a notified area. So, all workmen/employees who are drawing wages up to Rs. 15,000 per month are to be compulsorily covered under the ESIC Scheme. During inspection by an ESI inspector, the ledger and payroll will show evidence that for employees left uncovered, the employer's share and employee's share, along with penalties and damages, will be fully recovered.

Importance of Compliance for HR Professionals

Let me express one more thing which I felt on occasions is important for all HR professionals. This is a real HR task - to ensure law compliance and always save the company from risks and non-compliance. When the company is directly liable for non-compliance, then who will save it? I fail to understand why this worker was left uncovered under ESI but is now forcefully being attempted to seek advantage of EC for a death victim. HR practitioners should not forget the human element, the main and lead role. Had he been under ESI, his dependents would get a good pension.

EPF and Pension Coverage

In one PF matter, the Supreme Court of India (SCI) has decided that the employee who died should have been covered under EPF and Pension. Since he was not covered, the Apex court ruled that all pension and PF dues, like a normal employee under PF cover, will be recovered from the company for the dependents of the victim.

Regards,
RDS Yadav
Labour Law Adviser and Director,
Future Instt of Engg and Management Technology

Addressing ESI and WC Policy Compliance Concerns

You are in serious trouble with the ESI authorities. How can you cover part of the employees under ESI and the rest under the WC policy? I am sure the wages of more than 20 employees are less than 15,000 per month.

Today or tomorrow, ESI will issue you a notice and conduct an inspection. You will have to pay both the ESI contributions from the day your business started. ESI is a very severe act, especially regarding penal provisions. Seek help from a consultant to cover all eligible employees. This way, you will save on penal interest. Have a WC policy only for those earning beyond 15,000.

Regards