Employee Compensation Act Confusion: Should I Use Rs. 15,000 or My Actual Salary?

Hi, For calculation under the Employee Compensation Act, which amount of salary should be considered, Rs. 15,000 or the actual salary? Please clarify.

Thanks & Regards, Ankur

Maximum Salary Under the EC Act

The maximum salary under the EC Act is Rs. 15,000/-. If an employee is drawing wages below Rs. 15,000/-, then the actual wages shall be treated; if above, then Rs. 15,000/- only.

Hello Ankur,

As per the new rule notified by the government, Rs 15,000 will be considered as the wage for calculating compensation under the Employees' Compensation Act, rule change 2020. The relevant factor for computation is mentioned in Schedule IV of the Act.

Example Calculation

If the employee's actual salary is Rs. 30,000, we calculate as per that wage ceiling.

Calculation for Permanent Total Disablement

In the case of Permanent Total Disablement, where the age is 30:
Relevant Factor of Age X 60% of Wage ceiling.

Compensation = 207.98 X 9,000 = Rs. 18,71,820/-

Thank you.

Regards, Pradhap Ambethkar
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Note:

An employee cannot claim compensation under the EC Act if he/she is already entitled to compensation from ESIC.