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Monday 6 January 2020

Amendment to Employees Compensation Act - Details and Implications

A significantly important amendment has been effected in the Employee’s Compensation Act, 1923 which is set to make a big impact.
The amendment, which was published on 3rd January, 2020, has revised the monthly wage amount from Rs. 8000 to Rs.15000. While it may seem like a minor change in the number alone, the implication is both important and far –fetching. Here is what the implications of the changed wage are:
  •         Compensation calculated on the revised wage of Rs.15,000 against the previous Rs. 8,000
  •          Death benefits and permanent total disablement benefits will now be consequently higher due to this change

Benefits Available under Revised Rule:
Following the change to wages, here are the freshly calculated benefit amounts available to employees:

WHERE WAGE IS LESS THAN Rs. 15000 per month:
Death benefit:
Minimum – Rs. 1,20,000
Maximum – Rs. 17,14,050
Permanent Disablement Benefit:
Minimum – Rs. 1,40,000
Maximum - Rs. 20,56,860

WHERE WAGE IS MORE THAN Rs. 15000 per month (wage ceiling Rs. 15,000)
Death Benefit:
Minimum – Rs. 7,45,275
Maximum – Rs. 17,14,050
Permanent Disablement Benefit:
Minimum – Rs. 8,94,330
Maximum – Rs. 20,56,860

[Note: Compensation received is directly proportional to the age of the employee. Slabs with entitlements have been mentioned in Schedule IV of the Act]

In order to bring relevance and a better understanding, here are some key terms defined under the Act:
·         "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 is specified in Schedule II, or
       (ii) (a) a master, seaman or other member of the crew of a ship
             (b) a captain or other member oft he 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 who is employed outside India in any such capacity as is 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 is 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;
     "wages" includes any privilege or benefit which is capable of being estimated in money, other than a travelling allowance or the value of any travelling concession or a contribution paid by the employer of a workman towards any pension or provident fund or a sum paid to a workman to cover any special expenses entailed on him by the nature of his employment ;
         "dependant" means any of the following relatives of a deceased employee, namely-
(i) a widow, a minor legitimate or adopted son, an unmarried legitimate or adopted daughter, or a widowed mother; and
(ii) if wholly dependent on the earnings of the employee at the time of his death, a son or a daughter who has attained the age of 18 years and who is infirm;
(iii) if wholly or in part dependent on the earnings of the workman at the time of his death-
(a) a widower,
(b) a parent other than a widowed mother,
(c) a minor illegitimate son, an unmarried illegitimate daughter or a daughter legitimate or illegitimate or adopted if married and a minor or if widowed and a minor,
(d) a minor brother or an unmarried sister or a widowed sister if a minor,
(e) a widowed daughter-in-law,
(f) a minor child of a pre-deceased son,
(g) a minor child of a pre-deceased daughter where no parent of the child is alive, or
(h) a paternal grandparent if no parent of the employee is alive;

Explanation,- For the purposes of sub-clause (ii) and items (f) and (g) of sub-clause (iii), references to a son, daughter or child include an adopted son, daughter or child respectively

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