Employer’s Liabilities under Labor Laws in India

In this blog post, Sreeraj K. V, a student of Government Law College, Ernakulam, Kerala writes about employer’s liabilities under Labor Law. This post includes provisions under the Industrial Disputes Act, Workmen Compensation Act as well as Employers Liability Act, which deals with the provisions relating to employer’s liability towards his workmen.

Introduction

An employer, in simple terms, is a person or legal entity that controls or directs a servant or worker under an expressive or implied contract of employment and pays him/her salary or wages as compensation.[1] Employers include everything from individuals hiring a babysitter to Governments and business which may hire thousands of employees. In most of the western countries, Governments are the single largest employers, but most of the workforce is employed in small and medium businesses in the private sectors.[2]

Speaking legally, Section 2(g) of the Industrial Disputes Act deals with the term employer as:

1. About an industry carried on by or under the authority of any department of the Central or State Government, the authority prescribed in this behalf, where no authority is prescribed, the Head of the Department;
2. About an industry carried on by or on behalf of a local authority, the chief executive officer of that authority.[3]

Under the Workmen’s Compensation Act, 1923, section 3 of the Act provides for the liability of an employer to pay compensation to the employee which includes:

• If personal injury is caused to a workman by accident, arising out of and in the course of his employment, the employer shall be liable to pay compensation under the provisions of Chapter II of the Act:

Provided that the employer shall not be so liable –

1. In respect of any injury which does not result in the total or partial disablement of the workman.
2. In respect of an accident which is directly attributable to –
3. The workman was under the influence of drinks or drugs, or
4. The wilful disobedience of the workman to the orders for the purpose of securing his safety, or

• The willful removal or disregard by the workman of any safety guard or devices for the purpose of securing the safety of workmen.

Amount of Compensation

Subject to the provisions of the Act, the amount of compensation payable by the employer in case of an accident to the employee will be as follows:

• Where death results from the injury which, an amount equal to fifty percent of the monthly wages of the deceased workman, multiplied by the relevant factor; or an amount of fifty thousand whichever is more.
• Where permanent or total disablement results from the injury, an amount equal to sixty percent of the monthly wages of the injured workman multiplied by the relevant factor; or an amount of sixty thousand or more.[4]

Employers Liability Act, 1938

One of the main objectives of the Act was to declare certain defenses which shall not be raised in suits for damages in respect of the injuries caused by the workmen. The Act makes certain provisions for the safeguard and good condition of work as well. Section 2(b) of the Act defines the term employer as well as certain other provisions of the Act, which provides for certain liabilities of the employer in case of the injury or damages caused to the workmen. The main aim of the Act was ruling out certain defenses to the employer arising out of the injuries and damages sustained by the workmen. The law also stands for the protection of workmen in safeguarding their interests which bring suits for damages occurred to them during their operation.

Section 3 of the Act provides for defense of common employment barred in certain cases where employee causes personal injuries and its states that:

1. By reason of the omission of the employer to maintain good and safe conditions of work, machinery or plant connected to his trade or business, or the omission on the part of any person in the service of the employer with the duty if seeing that such works, plant, and machinery are in good and safe condition, or
2. Because of negligence of any person in the service of his employer who has any superintendence entrusted in him, while in the exercise of such superintendence; or
3. Because of the negligence of any person in the service of his employer to whose orders or directions the workman at the time of injury was bound to conform and did conform, where the injury resulted on his having so confirmed.

There are certain other provisions of the Act which states that any suit for damages raised by any workman who had suffered from any personal injury due to non-maintenance of healthy conditions of work, good and sound machinery, equipment etc., or by reason of the negligence on the part of the persons employed by the employer, such suit shall not be failed by reason of employment of such workman with the employer.[5]

This Act has been repealed by ACT NO.23 of 2016.

Employer NOT Liable to Pay Compensation

Employers are not liable to pay any compensation under certain circumstances:

• The injury will not result in a permanent incapacity or incapacitates the workman from doing his normal works.
• The injury is self-inflicted.
• The death or disablement results from the injury were falsely claimed by the employee to be free of to the employer.
• The injury was caused due to the consumption of alcohol or drugs by the employee during the time of his work.[6]

There are notable cases which dealt with the matter of liability of the employer in providing compensation to his/her employee. One among them is Dhropadabai and Ors v. M/s Technocraft Toolings, in which the Court stated that the claimant is entitled to compensation as the employee took his last breath during the time of his employment as well as at the place of his work. Even though the cause of death has no connection with his employment, the respondent is liable to pay compensation to the claimant as the death occurred during the employment of the deceased.[7]

Conclusion

It is common that whenever there arises an employer – employee relationship, there arises certain disputes among them as well. In such situations, the above-stated enactments provide certain guidelines to both of them so that they can arrive at a conclusion as well as in a settlement too. While looking into the liability of the employer for providing compensation to the employee, it will be clear that in one way or the other, the employee has undergone certain injuries or damages. There are many companies which look after their employees properly with adequate facilities as well as compensations and rewards whenever necessary. But there are certainly other areas wherein employees are treated in a much disappointing way. All such statutes stand for the good running of a business organization as well as for building up healthy relation among the employer and employee as well. Hence, both of them must be aware of their rights and responsibilities and not to violate the said statutes for their personal gains.

Footnotes:

[1] Retrieved on: http://www.businessdictionary.com/definition/employer.html

[2] Retrieved on: https://simple.wikipedia.org/wiki/Employer

[3] Retrieved on: http://www.lawyersclubindia.com/experts/-employer-means-in-terms-of-section-2-g-ii-of-I-D-Act-39701.asp

[4] Retrieved on: http://admis.hp.nic.in/himpol/Citizen/LawLib/C280.htm#s3

[5] Retrieved on: http://blog.ipleaders.in/employers-liability-act-1938/

[6] Retrieved on: http://www.clic.org.hk/en/topics/employmentDisputes/mattersRelatedToEmployees_compensationOrdinance/work_relatedInjuriesAndTheRelevantCompensations/q2.shtml

[7] Dhropadabai and Ors v. M/s Techno craft Toolings CIVIL APPEAL NO. 8155 of 2014