Employee Compensation for Injury and Death

Compensation calculation: two illustrative age bands

The Code fixes the payout with a formula, not a flat number. For death and permanent total disablement it is a percentage of monthly wages multiplied by a relevant factor tied to the worker's age, read from column (3) of the Sixth Schedule. The table runs the same formula for two age bands. The wages, the ages, and the factor values below are illustrative placeholders to make the arithmetic visible; they are not the statutory figures.

Illustrative only. Monthly wages (Rs 20,000), ages (25 and 50), and the relevant factor values (220 and 150) are assumed inputs used to show the arithmetic. The actual relevant factor for each completed age is fixed by the Sixth Schedule and is not reproduced here. The fifty and sixty per cent shares are from the Code; the Central Government may specify the monthly wages used and may notify a minimum amount.

The rule in plain words

A workplace injury is the employer's financial responsibility under the Code. When an injury suffered during the course of employment leads to death or lasting disablement, a fixed formula, not the employer's discretion, sets the amount payable. Three things drive the figure: the worker's monthly wages, the worker's age, and the kind of injury.

For death, the base amount is fifty per cent of the deceased worker's monthly wages multiplied by a relevant factor. For permanent total disablement, it is sixty per cent of monthly wages multiplied by that factor. In both cases the employer pays the calculated sum or an amount the Central Government notifies from time to time, whichever is more.

The relevant factor comes from column (3) of the Sixth Schedule, matched against the worker's completed years of age on the last birthday before the date the compensation fell due. The Central Government may enhance the compensation and may also specify the monthly wages used in the sum.

A worked example, two age bands

The table above runs the formula for two workers on the same assumed monthly wage. Because the relevant factor is tied to age, the two age bands can land on different totals even when the wage is identical. The wage, the ages, and the factor values in the table are assumed only to make the arithmetic visible.

Whatever the formula produces, the final step never changes: the employer pays that figure or the amount the Central Government has notified, whichever is higher. The percentages are fixed by the Code, fifty per cent for death and sixty per cent for permanent total disablement; the factor itself and any notified floor sit outside this worked illustration.

Exceptions and fine print

• Accident outside India: the competent authority takes into account any compensation already awarded under the law of the country where the accident occurred, and reduces the amount it fixes by that sum.
• More than one injury from the same accident: the amounts are added together, but the total can never exceed what permanent total disablement would have paid.
• Medical costs are separate: the employer reimburses the actual medical expenditure the worker incurs to treat injuries caused during the course of employment, on top of the compensation.
• The amounts are not frozen: the Central Government may, by notification, enhance the compensation for death and permanent total disablement, and may enhance the funeral amount.

What an employer must do

• Work out the amount using the correct percentage, the Sixth Schedule factor for the worker's completed age, and the monthly wages figure, then pay that or the notified amount, whichever is more.
• On a death, deposit with the competent authority, in addition to the compensation, a funeral sum of not less than fifteen thousand rupees or the amount the State Government prescribes, for the eldest surviving dependant, or for whoever actually paid for the funeral where there was no dependant or the worker was not living with the dependant.
• Reimburse the actual medical expenditure for treating the work injury.
• For temporary disablement, begin the half-monthly payments on the sixteenth day and continue them as the Code requires.
• Remember that any payment already made to the worker by way of compensation during the disablement is deducted from the lump sum or half-monthly payments, but money paid towards medical treatment is not.

What a worker or dependant can do

• Establish that the injury arose in the course of employment, since that is what triggers the employer's duty to pay.
• Check the calculation: the right percentage for the type of injury, the age-based factor, and the monthly wages used.
• Claim reimbursement of the actual medical expenditure spent on treating the injury.
• For temporary disablement, expect a half-monthly payment of twenty-five per cent of monthly wages, and note the three-day waiting period applies only where the disablement lasts less than twenty-eight days.
• On a death, a dependant can claim the funeral deposit held by the competent authority.

Temporary disablement: the half-monthly payment

Where the injury causes temporary disablement, whether total or partial, the worker is paid by instalment rather than a lump sum: a half-monthly payment equal to twenty-five per cent of monthly wages.

Timing turns on how long the disablement lasts. The payment starts on the sixteenth day. If the disablement lasts twenty-eight days or more, that sixteenth day is counted from the date of disablement. If it lasts less than twenty-eight days, a waiting period of three days applies first. Payments then continue half-monthly for as long as the disablement lasts or for five years, whichever is shorter.

• A cap applies: no half-monthly payment can exceed the amount by which half the pre-accident monthly wages exceeds half the wages the worker earns after the accident.
• If the disablement ends in the middle of a half-month, only a proportionate sum is due for that half-month.
• Compensation already received from the employer during the disablement is deducted; amounts received towards medical treatment are not treated as compensation for this deduction.

Permanent partial disablement and the Fourth Schedule

Not every lasting injury is total. For permanent partial disablement, the Code pays a percentage of what permanent total disablement would have paid. The source of that percentage depends on whether the injury is listed.

If the injury is listed in Part II of the Fourth Schedule, the Schedule states the percentage of loss of earning capacity to apply. If the injury is not listed, a medical practitioner assesses the percentage of loss of earning capacity permanently caused, and that proportion is applied to the permanent total disablement amount. In assessing an unlisted injury, the medical practitioner must have regard to the percentages the Fourth Schedule sets for comparable listed injuries.

Frequently asked questions