Amount of compensation

by • 15/01/2013 • GeneralComments (0)666

Q-6      Describe the amount of compensation paid under Section 4.


The amount of compensation has a direct relation to the loss of earning capacity. The loss of earning capacity can only he determined by ascertaining the difference in the earning capacity of a worker in his normal occupation and that of the lowest of similar occupations. In awarding compensation, loss in earning capacity and not loss in physical capacity of the workman is to be estimated. Thus the amount of compensation payable depends on the nature of the accident and the amount of average monthly wages of the workman concerned. Under the law compensation is payable for (a) death, (b) permanent total disablement, (c) permanent partial disablement, and (d) temporary disablement. Each of these is briefly discussed below for the purpose of calculating the amount of compensation; the injuries have been divided into four groups, which are discussed in the following:

  1. DEATH

Where death results from an injury to a workman who is in receipt of monthly wages not exceeding Rs. 3,000/= the amount of compensation payable to heirs shall be Rs. 200,000/= as specified in column 10 of Schedule IV.


Where permanent total disablement results from an injury to a workman drawing Rs. 3,000/= p.m. as wages, the amount of compensation payable shall be Rs. 200,000/= as specified in Schedule IV.


Where permanent partial disablement results from the injury:

(a)        In case of injury specified in Schedule J, compensation will be calculated on the basis of percentage of loss of earning capacity as laid down therein.

(b)        In case of an injury not specified in Schedule I, such percentage of compensation payable in case of permanent total disablement as is proportionate to the loss of earning capacity permanently caused by the injury.


Where temporary disablement, whether total or partial results from injury arising out of and in course of employment, the workman drawing wages upto Rs. 3,000 p.m. irrespective of being adult or minor, the compensation payable shall be:

(a)        1/2 of the monthly wages during the period of disablement or a period of one year from the date of injury whichever is less.

(b)        Thereafter only in case of chronic lung disease, 1/3 of the monthly wages during the period temporary disablement or for a period of 5 years from the date of injury whichever is less.




In the following cases the compensation payable must be deposited with the commissioner, and any payment made directly by the employer shall not be deemed to be a valid payment of compensation under the law.

(a)        Compensation payable in respect of death of a workman

(b)        Compensation payable as lump sum to a woman or a person under legal disability.

APPEALS [Sec. 30]

An appeal shall lie to the High Court from the following orders of the commissioner:

(a)   An order awarding as compensation a lump sum or disallowing a claim.

(b)   An order refusing to allow redemption of half-monthly payment.

(c)   An order providing the distribution of compensation among dependents of deceased workman or disallowing the claim.

(d)   An order allowing or disallowing any claim for the amount of indemnity.

(e)   An order refusing to register a memorandum of agreement.




Monthly wages means the amount of wages deemed to be payable for a month’s service whether the wages are payable by month, or by whatever other period or at piece rate.


The monthly wages are calculated as follows:

  1. Where a workman, during continuous period of 12 months preceding accident has been in service, monthly wages shall be 1½ of total wages of such 12 months,
  2. Where service of workman is less than one month, the monthly wages shall be average amount, which during the 12 months preceding the accident, was being earned by a workman employed on the same work.
  3. In other cases monthly wages shall be 30 times the total wages earned in respect of last continuous service preceding accident divided by number of days comprising such period.



Any right to receive half-monthly payments may, by agreement between the parties or if the parties cannot agree and the payments have been continued for at least 6 months, on the application of either party to the commissioner be redeemed by the payment of a lump-sum of such amount as may be agreed to by the parties or determined by the Commissioner, as the case may be.

The Commissioner, on the application of either party accompanied by a certificate of qualified medical practitioner that there has been a charge in the condition of the workman, may review any half-monthly payment agreed to by the parties or fixed by the Commissioner. On such review, the half-monthly payment may be continued, increased, decreased, or ended, [Sec, 6).

Under Section 8 provision has been made for small payments out of compensation amount by the employer to the deceased workmen’s dependants as:

(a)   Advance not exceeding Rs.100 in the aggregate; and

(b)   For workman’s formal expenses not exceeding Rs.25.

Such amount shall be deducted by the Commissioner from the compensation. On the deposit of the compensation, the Commissioner shall distribute it among the dependants of the deceased workman in any proportion as-he thinks fit, or may even allot to any one dependant.

If he is satisfied that no dependant exist he shall after 2 years from the date of deposit, transfer the balance to a fund notified by the Provincial Government.

Where any lump-sum amount deposited is payable to a workman or a person under legal disability, such sum may be invested or otherwise dealt with for the benefit of such woman or person under legal disability.



No lump-sum or half-monthly payments shall in any way be capable of being assigned or charged or be liable to attachment or pass to any person other than the workman by operation of law, nor shall any claim be set off against the same.



The Commissioner shall not entertain any claim for compensation under a notice of accident has been given to the employer as soon as practicable after the happening thereof, or unless a claim is preferred within 3 years, and in case of death within 3 years from the date of death. The Commissioner may entertain the claim if he is satisfied that the failure or delay to give notice pr prefer the claim was due to sufficient cause, The notice must give the name and address of the person and state in ordinary simple language the cause of the injury and the date on which the accident happened.



Where the Commissioner has received information from any source that a workman has died as a result of accident, he may send a notice to employer requiring him to submit within 30 days, a statement of circumstances of death.

The employer shall indicate whether, in his opinion, he is or is not liable to deposit compensation. If the employer thinks that he is liable to deposit compensation he shall make the deposit within 10 days. If notice of the employer thinks otherwise, he shall in his statement indicate the grounds on which he deny his liability.



A workman who has given notice of accident must submit himself for medical examination by a duly qualified medical practitioner provided and paid for by the employer. Likewise, a workman who is in receipt of half-monthly payment shall also submit himself for such examination from time to time Where the workman is not examined free of charge the expenses of such medical examination shall be reimbursed to him by the employer. If workman refuses to do so, or obstructs the examination, his right to receive compensation is suspended until he complies or unless there was a sufficient cause.

If a workman leaves without having been so examined, the place in which he was so employed, his right to compensation is suspended until he returns and offers himself for medical examination.

Where the workman, without medical examination, dies the Commissioner may direct the payment of compensation to the dependants of deceased workman.

Where the right to compensation is suspended, no compensation is payable in respect of period of suspension.



Where any person contracts with another person for the execution of work, the principal shall be liable to pay to any workman employed in the execution of such work any compensation due. The contractor such amount shall indemnify the principal. The workman can recover the compensation from the contractor instead of the principal.

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