The Wage Limit For Compensation Calculation Raised by Rs. 7,000 By Modi Government

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Employee’s Compensation Act 1923 update: The Modi government has brought a good news for the workers as they have changed the wage that will be considered to calculate the compensation to workers under the Employee’s Compensation Act 1923 via notification S.O. 71(E), dated 3rd January 2020.

The amount of wage that was previously considered to calculate the compensation was Rs. 8,000 which is increased by Rs. 7,000 to Rs. 15,000, as per Ministry of Labour and Employment’s notification.

Before 1st January 2010, the Employee’s Compensation Act, 1923 was called Workmen’s Compensation Act. The act provides compensation to employees who dies are left partially or completely incapacitated due to accident while on duty. The compensation is paid by the employer. However, an employee who is entitled to get compensated from ESIC (Employees’ State Insurance Corporation) cannot claim compensation from Employee’s Compensation Act.

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The Employee’s Compensation Act dictates that the employer is liable to compensate an employee if he/she sustains an injury or if any loss of life happens due to any accident during or due to the employment. However, an employer shall not be liable to pay the compensation under the following circumstances:

  • The injury or partial disablement do not last for more than 3 days
  • The injury does not result in permanent incapacity of death of the employee caused by an accident due to employee being under the influence of drugs and/or liquor.
  • The accident is caused by negligence of the employee such as – not following the rules and policies and/or not using proper safety attire.

The compensation is calculated as per the provisions in Section 4 of the Act:

  • In case the employee loses his life, the amount shall be equal to Rs. 1,20,000 or 50% of the employee’s monthly wage multiplied by the relevant factor; whichever one is higher.
  • If, by the accident, the employee is left totally incapacitated then Rs. 1,20,000 or 60% of the employee’s monthly wage of the employee multiplied by relevant factor shall be paid as compensation; whichever one is higher.

According to the new rule provided by the notification, Rs. 15,000 will be considered as wage instead of Rs. 8,000 when calculating the compensation under this Act.

The relevant factor that will be used for computation is provided in the Schedule IV (Schedule 4) of the Employee’s Compensation Act, 1923. Click here to know the Relevant factor.

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