Tragic Accident on Factory Premises: Who Bears the Responsibility for Compensation?

Dear Experts,

A driver entered the factory to lift the finished goods and tragically died in a road accident on the factory premises. Who is responsible for providing compensation to the deceased driver? Can the authorities require the factory management to compensate under the Employees' Compensation Act or any other relevant legislation? Are there any precedents or case law that shed light on this situation?

Regards,

Worker Coverage Under ESI and Employee Compensation

Any person who is inside the factory to perform any work is treated as a worker (can be casual labor or engaged through the contractor). Any worker inside the factory premises shall be covered under ESI if the salary is within the ESI limit, even if the person is working for one day. Any person covered under ESI is not covered under the Employee Compensation Act, and it is advisable to take an Employee Compensation Policy for those who are not covered under ESI.

Liability for Accidents Inside Factory Premises

Any accident that occurs inside the factory premises is directly liable to the occupier. If the transport vendor is not compensating, then the factory needs to compensate.

Road Accidents and Compensation

If a road accident happens in the factory and compensation is awarded from the vehicle insurance, then Employee Compensation is not applicable.

I disagree with Jeevarathnam Sir. I am assuming he was the driver of a transport vehicle that came to pick up goods from the factory.

1. Compensation under the Employee Compensation Act will not apply as the person is not an employee under any law. He is an employee of a service provider who has come in connection with his work of driving a vehicle. Just because he happened to be in the factory at that time does not make him a contract worker (assumption: he was just driving or sitting and not doing any factory-related work).

2. The factory is not liable to pay his ESIC because he is basically transiting and not working in the factory. However, to prevent problems and litigation, the factory management should have ensured that the transport company has covered his workers under ESIC.

3. His family can claim compensation from the factory under TORT, for which the factories generally take public liability insurance. (Note, the policy should not be the one just restricted to Environment)

4. If there was negligence on the part of the factory or its employees, again his family is entitled to file a civil suit under TORT or ask the police to file a criminal case (no compensation in a criminal case).

5. The family can claim compensation from the insurance company through the Motor Vehicles Tribunal.

Hi Saswatabanarjee, It's nice to have healthy discussions as it will help to understand the Act & Rule much better. I really welcome your observation.

Workmen/Employee Compensation Act

The Workmen/Employee Compensation Act never refers to a worker; it pertains to individuals employed in industries or activities, etc.

Compensation Eligibility

Section 1(ii) & (iii) of Schedule 3 clearly states that anyone employed for the purpose shall be compensated as per the Act.

Definition of a Workman

Section 2(n) provides the definition of a workman, which includes contractors, casual laborers, etc., employed for any activity within the premises.

I do acknowledge the importance of TORT, public general liability, unnamed insurance policy, Workmen compensation policy if covered as contractors, third-party liability, etc., which also provides coverage.

In the instant case, the employer/paymaster is liable to pay the compensation. The driver was engaged in material collection and transportation on behalf of the transporter agency. The family of the deceased should file a case against the transporter for compensation. This is a motor vehicle (MV) case. As per Section 164, if a person is seriously injured or dies due to an accident caused by a motor vehicle, the owner or insurer of that vehicle must pay compensation. The company where the accident occurred is not liable to pay compensation because there was no employee-employer relationship with the deceased.

The company authority may choose to provide some financial assistance to the deceased's family out of goodwill or sympathy. Moreover, if the cause of the accident is found to be due to negligence on the part of the company authority, they can be held responsible by the Factory Inspector and Police. In such a scenario, there would be a separate case initiated by the Factory Inspector.

Jeevarathnam P Sir,

Definition of Employee in the Employee Compensation Act

The definition of a worker in the Employee Compensation Act, Sec 2(n), was deleted in 2009. The definition of an employee is as follows:

*[(dd) "employee" means a person who is--
(i) a railway servant as defined in clause (34) of section 2 of the Railways Act, 1989 (24 of 1989), not permanently employed in any administrative district or sub-divisional office of a railway and not employed in any such capacity as specified in Schedule II; or
(ii) (a) a master, seaman, or other members of the crew of a ship,
(b) a captain or other member of the crew of an aircraft,
(c) a person recruited as a driver, helper, mechanic, cleaner, or in any other capacity in connection with a motor vehicle,
(d) a person recruited for work abroad by a company and employed outside India in any such capacity as specified in Schedule II, and the ship, aircraft, or motor vehicle, or company, as the case may be, is registered in India; or
(iii) employed in any such capacity as specified in Schedule II, whether the contract of employment was made before or after the passing of this Act and whether such contract is expressed or implied, oral or in writing; but does not include any person working in the capacity of a member of the Armed Forces of the Union; and any reference to any employee who has been injured shall, where the employee is dead, include a reference to his dependents or any of them;]

Nowhere in the definition are they talking about contract workers. But in any case, a driver of a truck that has come to pick up some goods from the factory does not qualify as he was not "Employed in Such Capacity as specified in Schedule II by the factory. In fact, the factory did not employ him at all.

Employer Definition in the Employee Compensation Act

If you see sec 2(e), it says
(e) "employer" includes anybody of persons whether incorporated or not and any managing agent of an employer and the legal representative of a deceased employer, and, when the services of an *[employee] are temporarily lent or let on hire to another person by the person with whom the *[employee] has entered into a contract of service or apprenticeship, means such other person while the *[employee] is working for him;

Even here, the services of the driver were never lent or let on hire to the factory. The transporter may have "let" the truck for carrying the goods. It does not make the factory the employer of the driver. If that were the case, then they would be liable for any vehicle anywhere in the world carrying the goods.

Compensation under the Employees' Compensation Act

Under the Employees' Compensation Act, the factory management must compensate the driver's family for his unfortunate demise on the premises. This social security legislation mandates compensation for employees injured or killed during work. Despite the accident occurring at the factory, the driver qualifies as an employee entitled to compensation. The management's liability is established through vicarious responsibility. Precedents have upheld the obligation to compensate families in such cases.

Liability under the Fatal Accidents Act

Additionally, the Fatal Accidents Act holds them accountable if negligence led to the accident.

In conclusion, the factory management must provide compensation under either of these acts, providing support to the bereaved family.

Dear Pocket,

Please explain how the driver working for a transporter becomes an employee of the occupier of the factory. Also, please tell me under which clause in the Fatal Accidents Act he is covered.

Please note that the post shows nothing to indicate that the occupier or manager was responsible or negligent for the accident.