A few
decades ago ! ~ life was different .. .. there were white-collared and
blue-collared workers ! ~ what ! – how would colour differentiate a worker ? –
those were the days of a 9 to 5 gentleman !
A
white-collar worker was one who would performs professional, managerial, or
administrative work. He mostly would be sitting in an office or other administrative setting,
away from the dust and dirt of the industry. Blue-collar worker stereotyped to workers who were engaged in hard manual labour. Blue typified physically exhausting task.
The environment may be outdoors or require interaction with heavy machinery or
animals. The blue collar worker may be skilled or unskilled. The historical basis for the two terms may not
have changed radically from their origins. Blue collar workers can get dirt on
their shirts from working outdoors or in some physical capacity because of the
colour of the uniform. Whites were more of supervisors. Is there any radical change now ?
Out
there in the middle, every workplace is beset with exposure to accidents to those employed. Duty
is cast on the Employer and they are
liable to pay compensation for such work related injuries / accidents. There is an enactment dating back to almost a
century – regulating compensation to the workmen by the employer, in respect of death or injuries - arising out of and in the course of his
employment. The Workmen's
Compensation Act, 1923 provides for the payment of compensation by the
employer. Prior to the statutory establishment
of workers' compensation, the only recourse available to employees who were
injured on the job was to sue through
civil or tort law. In the United Kingdom, the legal view of employment as a
master-servant relationship required employees to prove employer malice or
negligence, a high burden for employees to meet. Although employers' liability
was unlimited, courts usually ruled in favor of employers, paying little
attention to the full losses experienced by workers, including medical costs,
lost wages, and loss of future earning capacity. Then came the statue – ‘the workmen Compensation Act’.
As a preface, the
scheme of WC Act is not to compensate the workmen in lieu of wages. The compensation is for the injuries / death
arising out of and in the course of employment. Though there could be various definition for
the term ‘workmen’ [forget whatever be the colour of his collar !] – WC Act defines "workman"
as any person (other than a person whose
employment is of a casual nature and who is employed otherwise than for the
purposes of the employer's trade or business) . Thus it would mean that the person is not
employed as a casual workman and that his employment is in connection with the
employer’s trade and business. The Act
lists out many categories of employees who would fall within the purview of
workmen as specified.
The Employees’
Compensation Act, 1923 is an old but an important enactment, as it introduced a
kind of social security scheme for the employees of this country. It enables an
employee, and in case of death of an employee, his dependents, to get, at the
cost of his employer compensation for employment injury. Much later, in 1948,
the Employees’ State Insurance Act, introduced a social insurance scheme for
the employees of his country. A decade back, the
nomenclature of the Act change to be ‘inclusive of gender’ thus becoming Employer Compensation Act.
The Act provides
that the employer shall not be liable only in respect of any injury which does
not result in total or partial disablement for a period less than 3 days. In respect
of any injury not resulting in death or permanent total disablement caused by
an accident which is directly attributable to - the workman having been at the
time thereof under the influence of drink or drugs or the willful disobedience
of the workman to an order expressly given or to a rule expressly framed for
the purpose of securing the safety of workmen or the willful removal or
disregard by the workman of any safety guard or other device he knew to have
been provided for the purpose of securing the safety of workman.
The Act provides
for a structured methodology for calculation of wages as also how and when the
employer would be liable in respect of
diseases – occupational disease. No
compensation shall be payable to a workman in respect of any disease unless the
disease is directly attributable to a specific injury by accident arising out
of and in the course of his employment.
Amount of
compensation : Sec 4 of the Act provides
that
·
where
death results from the injury an amount equal to fifty per cent of the
monthly wages of the deceased workman multiplied by the relevant factor; or
an amount of ________ thousand rupees whichever is more;
·
where
permanent total disablement results from the injury an amount equal to sixty
per cent of the monthly wages of the injured workman multiplied by the
relevant factor; or an amount of _____ thousand rupees whichever is more.
·
where
permanent partial disablement results from the injury in the case of an injury
specified in Part II of Schedule I such percentage of the compensation which
would have been payable in the case of permanent total disablement
·
where
temporary disablement whether total or partial results from the injury a half
monthly payment of the sum equivalent to twenty five per cent of monthly wages
of the workman to be paid in accordance with the provisions of sub-section (2).
**
the factors are specified in the second column of Schedule IV of the Act specifying the number of years which are the
same as the completed years of the age of the workman on his birthday
immediately preceding the date on which the compensation fell due. Though the employee may be earning more, the
salary here was restricted to actual wages earned, and not exceeding Rs.2000/-
(which was subsequently enhanced to 4000 and thence to 8000).
The WC
Policy in effect covers the employment related liability of the employer. Thus the policy holder (Employer Company)
should become liable to their employees arising out of and in the course of
employment – and such liability would be calculated as stated above with wages
restricted to Rs.8000/- .. In case you are an Insurer, ever wondered why you
are collecting premium on actual wages ?
The Act clearly
specifies that the term "monthly wages" means the amount of
wages deemed to be payable for a months' service (whether the wages are payable
by the month or by whatever other period or at piece rates) and calculated as :
ü where the
workman has during a continuous period of not less than twelve months immediately
preceding the accident, the monthly wages of the workman shall be one-twelfth
of the total wages of the last
twelve months period;
ü where the
whole of the continuous period of service immediately preceding the accident
was less than one month – it is the wages earned by a workman employed on the
same work by the same employer or if there was no workman so employed by a
workman employed on similar work in the same locality;
ü when it is not possible for want of necessary
information to calculate the monthly wages – it shall be thirty times the total wages earned
in respect of the last continuous period of service immediately preceding the
accident from the employer who is liable to pay compensation divided by the
number of days comprising such period.
So the term monthly wages means the amount of wages deemed to be payable
for a month’s service. A period of
service for this section shall be deemed
to be continuous which has not been interrupted by a period of absence from
work exceeding fourteen days.
Now
comes an all important gazette
notification CG-DL-E-04012020-215147 of 3rd Jan 2020 – where in exercise of the
powers conferred by sub-section (1B) of section 4 of the Employee’s
Compensation Act, 1923 (8 of 1923) and in supersession of the notification of
the Ministry of Labour and Employment issued vide number S.O. 1258(E), dated
31st May, 2010; published in the Gazette of India, Central Government hereby specifies, for the
purposes of sub-section (1) of the said section, the following amount as
monthly wages, with effect from the date of publication of this notification in
the Official Gazette, namely:- “Fifteen thousand rupees”
After
the gazette notification – the liability of the Employer and subsequently of
the Insurer would have to be reckoned taking wages @ Rs.15000/0 (or actuals) –
which would enhance the outgo of the Insurer substantially from the earlier
Rs.8000/- The Insurer imperatively will
have to judiciously fix their rates or at least not grant the high % of
discounts that they have been allowing.
Before
concluding a thought on what would happen to the policies issued and in force
now ?
1.
One thought is the coverage in defined in the Operative clause
as ‘liability arising under WC Act 1923 and all its subsequent amendments’ – and that way for an accident
arising after the gazette notification, liability will have to be @ Rs.15000/-
as monthly wages
2.
However, the modern day policies of Insurers (check whether your
policy is so worded) contains average clause where one of the condition is
proportionate settlement of compensation finally arrived further reduced by the
amount insured and amount ought to have been insured.
3.
That way if the declared wages were to be less than Rs.15000/-
and if compensation were to reckoned at Rs.15000/- condition of average would
be applicable
4.
However, if the wages had been adequately declared (note that
Insurer had been charging a small proportion for that part of wages exceeding
8000) – condition of average would not apply and Insurer will have to pay a
higher compensation.
Any
questions ?
With
regards – S. Sampathkumar
5th
Jan 2020.
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