1

LABOUR LAW SEMINAR (PAPER-III)

TOPIC: - CONCEPT OF DISABLEMENT

NAME:-PRAKASH MARATHE

CLASS: - SECOND YEAR LL.M

SUBJECT: - LABOUR LAW (PAPER III)

 INDEX

SR.NO. TOPIC PG.NO.

CONCEPT OF DISABLEMENT
1. INTRODUCTION 3
2. DISABLEMENT UNDER WORKMEN’S COMPENSATION ACT, 4
1923
A. Historical Background 4
a. Workmen’s Compensation in England 4
b. Workmen’s Compensation in US 7
c. Workmen’s Compensation in India 8
B. Partial and Total Disablement 9
a. Partial Disablement 9
b. Total Disablement 11
C. Amount of Compensation 14
a. Compensation in case of Permanent Total Disablement 14
b. Compensation in case of Permanent Partial Disablement 14
c. Compensation in case of Temporary Disablement whether Total 18
or Partial
d. Compensation payable to an employee in respect of accident 19
occurred outside India
3. DISABLEMENT UNDER ESI ACT, 1948 20
A. Historical Background 20
B. Disablement under ESI Act 20
a. Permanent Partial Disablement 21
b. Permanent Total Disablement 21
c. Temporary Disablement 22
C. Disablement Benefit 22
4. CONCLUSION 23
SCHEDULE I 24
SCHEDULE IV 28
BIBLIOGRAPHY 30
 CONCEPT OF DISABLEMENT

1. INTRODUCTION

It was strongly felt after World War I that universal peace based on social justice was
essential. In order to achieve this, the International Labour Organization (ILO) was
formed in 1919. In the first session of ILO held at Washington in 1919, India also
participated as an original member.

The role of ILO since its inception has been very significant in creating international
standards of social insurance and in promotion of social security. It was on the initiative
and influence of the ILO that the first legislation of its kind towards social security in the
country namely, Workmen’s Compensation Act, 1923 was enacted. Later on the
Employee’s State Insurance Act, 1948 replaced the Workmen’s Compensation Act in the
areas where the Employee’s State Insurance Act has been made applicable.1

The concept of ‘disablement’ is relevant under both the Workmen’s Compensation Act to
claim compensation and the Employee’s State Insurance Act to claim disablement
benefit. But it is to be noted that the term ‘disablement’ has not been defined specifically
under both the Acts. The Workmen’s Compensation Act provides for partial and total
disablement while the ESI Act provides for permanent total, permanent partial and
temporary disablement.

In common parlance the term disablement can be understood as follows:

When an accident occurs and the workman sustains injury, it results into loss of capacity
to work and in turn it results into loss of earning capacity of that workman. Such
condition of incapacity of doing work and subsequently resulting into loss of earning
capacity is called as disablement.

1
Sharma J. P., Simplified Approach to Labour Laws, (Bharat Law House, New Delhi, 3rd Ed.2009) at 73
 2. DISABLEMENT UNDER WORKMEN’S COMPENSATION ACT, 1923
A. Historical Background

The law of Workmen’s Compensation was introduced firstly in Germany where it had
been introduced in 1884 by the Iron Chancellor, Bismarck. He was the first among the
European statesmen to understand fully the implications of the Marxist challenge and to
take some steps towards forestalling the threatened revolution of workers by providing
for their security in various forms. One of the benefits secured to the workers by a new
law was a right to receive compensation from their employer for injuries suffered in the
course of employment, irrespectively of any fault or breach of duty on the part of the
employers. Later on, Austria followed Germany in 1887.2

a. Workmen’s Compensation Act in England3

In England the Workmen’s Compensation Act (1897) had come from Germany. Though
it is believed that in Germany the law of compensation was introduced against the
implications of the Marxist challenge, in England the law of compensation seems to have
been caused by broad consideration of justice and humanity rather than a motive of
neutralizing the revolutionary potentialities of the working class.

The British Act of 1897 fell short of the German precedent in one respect. While the
German Act required employers to indemnify injured workmen, or in the case of fatal
accidents, their families, and it also set up an insurance system under which the
employers were obliged to insure the risk, the British Act only made indemnification at
prescribed rates obligatory, but left insurance of the risk to remain optional.

It is a matter of history that from an early period up to the middle of the 18 th century, the
political and economic philosophy holding sway over Europe was ‘mercantilism’,
according to which it was necessary and proper to exercise a strict control over private
enterprise, whether joint or individual. Gradually, however, a reaction set in. towards the
middle of the 18th century, it began to be felt that there was too much of Government
which was destroying individual initiative and affecting the prosperity of the nation. The

2
Goswami V.G. Dr., Labour and Industrial Laws, Vol.1 (Central Law Agency, Allahabad9th Ed.2011) at
27
3
Id at 24
feeling led to the evolution of the doctrine of the laissez faire which means “let things
alone”.

After it had been formulated the doctrine of laissez faire found a rapid and wide
acceptance particularly in England and it ushered in a period during which the agencies
of production operated under conditions of complete economic freedom. In the sphere of
employment the doctrine translated into terms of concrete policy, meant that every
individual was free to enter any occupation or service that he might choose and that
wages and other conditions of service were to be determined entirely by free bargaining
between the employer and the employee. The bargain, thus concluded would thereafter
rule.

The experiment with a policy of complete economic freedom was carried on for a
considerable period but, in the end, laissez faire in its turn, began to reveal its own
defects. Taking again the sphere of employment alone, it was found that not only were
the employers imposing, in the name of freedom of contract, cruelly harsh terms on the
employees who had no equal bargaining power and forcing them to work for
unconsciously long hours and under appalling conditions but the employees had even no
adequate means of relief against the employers for injuries sustained in their service. For
death or disablement by industrial injuries, the only legal remedy that a workman or his
dependents would seek was damages at common law, but that law having been evolved at
an earlier stage of industrial development to govern for simpler relations of master and
servant afforded little real protection in the complicated circumstances of modern
industry.

At common law, workmen’s claim could be allowed only if he was able to establish some
negligence or breach of duty on the part of the employer as the sole cause of the accident
resulting in the injury. But it was not easy to prove either of those torts, first because the
courts’ hesitating perhaps to saddle the growing industries with too much liability to the
employee, were apt to construe the duties of the employer very narrowly and secondly,
because in the majority of cases, the employer had ceased to be a human individual and
come to be a limited company which it was difficult to find guilty of a tort.
Apart from these hurdles in the way of proof, the workman had also to contend against
the bar of contributory negligence which meant that if there was some negligence on his
part which had contributed to the occurrence of the accident either wholly or to such an
extent that it was not possible to determine whether his or the employer’s negligence had
been the decisive cause, he could not recover.

There was again, the doctrine of common employment or “the fellow servants rule”, as it
is called in America. It meant that there was always an implied term in a contract of
service that the servant agreed to accept the risk of injury from the negligence of a fellow
servant and consequently, when such negligence was the cause of the injury, he could not
claim damages from the master.

The result of these limitations was that an injured workman or, in the case of fatality, his
dependents could rarely recover damages at common law. In that state of conditions
under which workmen were being compelled to work by their insensitive employers and
the inadequacy of the relief available to them for injuries, a reaction against the doctrine
of laissez faire inevitably set in and comprehensive series of labour legislation came
gradually to be enacted with a view to liberating the workers from there helplessness
against the power of the men who owned the factories and establishment where they
worked. First came the Factories Act which were directed at improving the conditions
prevailing in the factories and compelling the employers to adopt suitable safety
measures for the prevention of accidents.

Next legislation was the Workmen’s Compensation Act, which provided for compulsory
payment by the employer, some compensation, calculated by reference to the wages, for
death or disablement of a worker by accident while at his work, independently of any
negligence or breach of duty on the part of the employer. When first enacted in 1897, the
Act was limited to injuries caused directly by accidents and it covered only a few
industries and occupations, but the list was enlarged by subsequent amendments and by a
fresh Act passed in 1906, occupational diseases were added. The benefit of the Act was,
however, limited to workmen drawing remuneration up-to a certain amount.
The Act of 1906 was replaced by a new Act in 1925 with no change in the provisions.
The National Insurance (Industrial Injuries) Act 1946, which coming into force in 1948
introduced an insurance system under which insurance benefits were payable to victims
of the industrial accidents and to sufferers from certain industrial diseases. The solatium
receivable by workmen was given the name of ‘benefit’ in lieu of ‘compensation’.

b. Workmen’s Compensation Act in United States4

By the end of 19th century, the coincidence of increasing industrial injuries and
decreasing remedies had produced in the United States a situation ripe for radical change,
and when, in 1893, a full account of the German system written by John Graham Brooks
was published as the fourth special Report of the Commissioner of Labour, legislators all
over the country seized upon it as a clue to the direction which efforts at reform might
take place. The stimulus was also provided by the enactment of the first British
Compensation Act in 1897, which later became the model Act in many respects.

In 1910, New York became the first State to enact a workmen’s compensation law
sufficiently comprehensive to meet the problem effectively with compulsory coverage of
certain hazardous employments. It was held unconstitutional in 1911 by the Courts of
Appeals, on the ground that the imposition of liability without fault upon the employer
was a taking of property without due process of law under the State and Federal
Constitutions in Ives v. South Buffalo Rly. Co.

In New York the Ives decision was answered by the adoption in 1913 by a Constitutional
Amendment permitting a compulsory law, and such law was passed in the same year. In
1917 this compulsory law was held Constitutional by the United States Supreme Court.
By 1920 all States except one had adopted compensation Acts and on January 1, 1949 the
last State, Mississippi, came under the system.

4
Id at 27
 c. Workmen’s Compensation Act in India5

The origin of labour welfare activity in India goes back to 1833 when slavery was
abolished. But the earliest legislative approach could be traced back to the passing of the
Apprentices Act 1850. The next Act was the Fatal Accidents Act 1855 that aimed at
providing compensation to the families of workmen who lost their life as a result of
“actionable wrong”. The Act had the Preamble “whereas no action or suit is now
maintainable in any Court against a person who, by his wrongful act, neglect or default,
may have caused the death of another person, and it is often right and expedient that the
wrongdoer in such case should be answerable in damages for the injury so caused by
him”.

It was way back in 1884 when the question of granting workmen’s compensation for
serious and fatal accidents was first raised in India in 1884 and the need for proper
legislation was emphasized by factory and mining Inspectors. But it took about 40 years
for Government of India to frame a full-fledged comprehensive Workmen’s
Compensation Act. Only towards the end of 1920-21, Government of India initiated steps
for framing legislation by constituting a small committee in June 1922, comprising
members of Legislative Assembly, Employer’s and Worker’s representatives and medical
and insurance experts. The Committee’s detailed recommendations for framing
legislation were accepted and Workmen’s Compensation Act was passed in 1923.

The Workmen’s Compensation Act 1923 followed the British Act in its main principles
and in some of its details, but it contained a large number of provisions designed to meet
the special conditions in India. Under this enactment the responsibility for payment of
compensation rested with employer, a system which led to certain hardship.

By the Amendment Act 2009, the title of the Act i.e. Workmen’s Compensation Act 1923
was made as the Employees’ Compensation Act 1923 and in place of the word
‘workmen’, the word ‘employees’ was substituted.

5
Sharma J. P., Simplified Approach to Labour Laws, (Bharat Law House, New Delhi, 3rd Ed.2009) at 715
 B. Partial and Total Disablement
a. Partial Disablement

It has been defined under Section 2 (1) (g) to mean where,

the disablement is of a temporary nature, such disablement as reduces the earning

capacity of a workman in any employment in which he was engaged at the time of his
accident resulting in the disablement, and where,

the disablement is of permanent nature, such disablement as reduces the earning capacity
in every employment which he was capable of undertaking at that time provided that
every injury specified in Part II of Schedule I6 shall be deemed to result in permanent
partial disablement.7

When an accident occurs and the workman sustains injury, it results into loss of earning
capacity of that workman. Such condition of incapacity of doing work is called
disablement. If the earning capacity of a workman is reduced by the disablement merely
in the particular employment in which he was engaged at the time of his accident, it is
known as partial disablement of temporary nature, on the other hand if the earning
capacity of a workman is reduced as result of disablement in every employment which he
was capable of undertaking at the time of the accident, it is known as partial disablement
of permanent nature.

Lipton (India) Ltd. v. Gokul Chandra Mondal8

In this case Gokul Chandra Mondal was the workman in the wage group of Rs. 300-400
per month under Lipton (India) Ltd., sustained an injury in the left eye by the fall of iron
particles with the consequent loss of vision in an accident arising out of and in the course
of employment. He filed an application before the commissioner claiming a sum of Rs.
3780 as compensation at the rate of 30% loss of his earning capacity. The appellant
denied permanent partial disablement because the workman remained disabled only for

6
Infra page 24
7
Goswami V.G. Dr., Labour and Industrial Laws, Vol.1 (Central Law Agency, Allahabad9th Ed.2011) at
43
8
Id at 44
14 days and thereafter he resumed his duties. The Commissioner after considering
evidence adduced by both the parties including medical evidence came to the conclusion
that the workman has sustained permanent partial disability in the left eye and so the
workman was entitled to compensation at the rate of 30% loss of his earning capacity as
fixed by item No. 26 of Part II of the First Schedule overruling the contention of the
appellant that item 26 was not applicable and that compensation was to be determined
under Section 4 (1) (c) (ii) and consequently he directed payment to him by the appellant
of the sum of Rs. 3780/-.

In appeal the High Court of Calcutta confirmed the view taken by the Commissioner and
observed that we are unable to accept the contention that unless there is complete loss of
vision of one eye item 26 is not attracted. There is nothing in item 26 which excludes
partial loss of vision. In welfare legislation if any particular provision is capable of two
interpretations, the one that is more favourable to the persons for whose benefit the
legislation has been made should be adopted. There can be no doubt that partial loss of
vision of one eye comes within the purview of item 26.

Calcutta Electric Supply Corp. v. HC Das9

No compensation is granted for any physical disability unless there was loss of earning
capacity. It is only in the case of scheduled injury that such loss is presumed. Where the
injury is not scheduled injury, the loss of earning capacity must be proved.

b. Total Disablement

It has been defined under Section 2 (1) (l) to mean such disablement whether of a
temporary or permanent nature as incapacitates a workman for all work which he was
capable of performing at the time of accident resulting in such disablement and every
injury specified in Part I of Schedule I or combination of injuries specified in Part II of
Schedule I where aggregate percentage, as specified in Part II against those injuries
amounts to 100% or more.10

9
(1968) 2 LLJ 169
10
Sharma J. P., Simplified Approach to Labour Laws, (Bharat Law House, New Delhi, 3rd Ed.2009) at 727
The total disablement may be of two kinds, first temporary total disablement and
secondly, permanent total disablement. In temporary total disablement the earning
capacity of a workman is lost for a temporary period and in permanent total disablement
the earning capacity of a workman is lost forever with regard to all work which he was
capable of performing at the time of the accident resulting in such disablement. It has
been expressly provided that in total disablement, 100% earning capacity is lost as a
result of any injury specified in Part I of Schedule I or as a result of two or more injuries
specified in Part II of Schedule I.11

The loss of earning capacity has to be determined by taking into account the diminution
or destruction of physical capacity as disclosed by the medical evidence. Then it has to be
seen to what extent such diminution or destruction should reasonably be taken to have
disabled the affected employee from performing the duties which a workman of his class
ordinarily performs. The medical evidence as to physical capacity is an important factor
in the assessment of loss of earning capacity.12

The certificate of a medical expert can only say what the injury is, its effect temporary or
total and to an extent the physical incapacity of the man. It is however, for the Court to
find having regard to the evidence before it whether the workman has suffered partial or
total disablement.13

Pratap Narain Singh Deo v. Shrinivas Sobata and another14

The Supreme Court observed that the expression total disablement has been defined in
Section 2 (1) (l) of the Act. It has not been disputed that the injury was of such a nature as
to cause permanent disablement to the respondent, and that the question for consideration
is whether the disablement incapacitated the respondent for all work which he was
capable of performing at the time of the accident. The Commissioner has examined the
question and recorded his finding as follows:

11
Goswami V.G. Dr., Labour and Industrial Laws, Vol.1 (Central Law Agency, Allahabad9th Ed.2011) at
45
12
Ibid
13
Ibid
14
AIR 1976 SC 222
“The injured workman in this case is carpenter by profession. By loss of the left hand
above the elbow, he has evidently been rendered unfit for the work of carpenter as the
work of carpentry cannot be done by one hand only”.

The Court held this finding as reasonable and correct.

V. Jayraj v. T. P. Transport Corpn. Ltd.15

A conductor working in State owned Transport Corporation lost his hearing capacity due
to shock received by him in an accident in the bus in which he was working. He claimed
compensation under item 6 in Part I of Schedule I of the Act. The Commissioner fixed
the loss of earning capacity at 20% even though the medical certificate showed that there
is 100% sensorineural hearing loss on right ear and 73.5% hearing loss on the left ear.
Hence the appeal was filed under Section 30 of the Act was filed.

It was held that the loss of earning capacity has to be calculated in terms of permanent
partial disability which the workman has been subjected to. The fact that the workman is
continued in the employment and gets old wages will not absolve the employer from
paying the compensation. The employer may continue him in the old post and give him
old wages by way of grace, but that would not disentitle the employee to claim
compensation. It was observed that fixing of loss of earning capacity at 20% by the
commissioner cannot be upheld. Having regard to the fact that the appellant had lost the
hearing in the right ear at 100% and in the left ear at 73.5%, the loss of earning capacity,
could be fixed at 60%. Thus allowing the appeal the amount of compensation was
enhanced by the High Court.

Samir U. Parikh v. Sikander Zahiruddin16

The question before the Court was whether the Commissioner has power to assess the
loss of earning capacity more than what is provided in the Schedule against a particular
injury. In this case the Commissioner determined the actual loss of earning capacity at
80% even though the Schedule fixed it at 40%. The Bombay High Court held that the

15
(1989) LLJ 38 (Mad)
16
(1984) II LLJ 90 (Bom)
percentage of the loss of earning capacity stated against the injuries in Part II of Schedule
I of the Act is only the minimum to be presumed in each case and the applicant is entitled
to prove that the loss of earning capacity was more than the minimum so prescribed. The
Commissioner is therefore, empowered to come to his own conclusion with regard to the
loss of earning capacity in each case on the basis of the evidence led before him.

K. Janardhan v. United Insurance Company Ltd.17

In this case the appellant tank driver met with an accident and was severely injured. His
right leg was amputated up-to knee joint. The Commissioner held it to be 100% disability
and awarded compensation. In appeal based on the opinion of the doctor, the High Court
held it to be 65% disability. Relying upon the ratio laid down in the judgement of Pratap
Narain Singh Deo v. Shrinivas Sabata and another, the Apex Court held the appellant had
suffered 100% disability and he was not in a position to work as a driver.

17
2008 LLR 785 (SC)
 C. Amount of Compensation

Section 4 of the Act provides how the amount of compensation is to be computed. It

contains principles on which compensation is to be determined which are as follows:

a. Compensation in case of Permanent Total Disablement

Section 4 (1) (b) provides that where permanent total disablement results from the injury
the amount of compensation shall be equal to 60% of the monthly wages of the injured
workman multiplied by the relevant factor, or an amount of Rs. 1,40,000, whichever is
more.

After Section (1) (b) the proviso has been inserted namely:

“Provided that the Central Government (instead of Parliament) may, by notification in the
Official Gazette, from time to time, enhance the amount of compensation mentioned in
Clauses (a) and (b).

Explanation

For the purpose of section 4 (1) (a) and (b) the relevant factor in relation to a workman
means the factor specified in the 2nd column of Schedule IV.18 The table given in
Schedule IV shows that, relevant factor keeps on decreasing with the increase in
workman’s age.19

b. Compensation in case of Permanent Partial disablement

Section 4 (1) (c) of the Act under its clauses (i) and (ii) deals with the amount of
compensation in cases of permanent partial disablement either caused by injuries
specified in Part II of Schedule I or caused by injuries other than specified in Schedule I.

Where the permanent partial disablement results from the injury specified in Part II of
Schedule I, such percentage of the compensation which would have been payable in the

18
Infra page 28
19
Sharma J. P., Simplified Approach to Labour Laws, (Bharat Law House, New Delhi, 3rd Ed.2009)at 751
case of permanent total disablement as is specified there in as being the percentage of the
loss of earning capacity caused by that injury.

Where the permanent partial disablement results from the injury other than specified in
schedule I, such percentage of compensation payable in the case of permanent total
disablement as is proportionate to the loss of earning capacity permanently caused by the
injury.20

In order to find out the amount of compensation in cases of permanent partial

disablement, it would be necessary to calculate the amount of compensation in case of
permanent total disablement with reference to the age of the injured employee i.e. 60% of
his monthly wages multiplied by relevant factor as indicated in Schedule IV and then the
amount so obtained shall be determined in proportion to loss of earning capacity of the
injured employee as specified in Part II of the First Schedule in respect of injury in
question.21

In order to clarify the position in cases where the workman sustains more injuries than
one from the same accident, Explanation I to Section 4 (1) (c) has been added. It provides
that where more injuries than one are caused by the same accident the amount of
compensation payable under this head shall be aggregated but not so in any case as to
exceed the amount which would have been payable if permanent total disablement had
resulted from the injuries.it means that compensation in such a case shall not be more
than what would have been payable in the case of permanent total disablement.22

In the process of assessment of loss of earning capacity in cases of permanent partial

disablement caused by injuries which are not specified in Schedule I, it has been clearly
provided in Explanation II to Section 4 (1) (c) that in assessing the loss of earning
capacity for the purpose of sub-clause (ii) the qualified medical practitioner shall have

20
Goswami V.G. Dr., Labour and Industrial Laws, Vol.1 (Central Law Agency, Allahabad9th Ed.2011) at
89
21
Ibid
22
Ibid
due regard to the percentage of loss of earning capacity in relation to different injuries
specified in Schedule I.23

United India Insurance Co. Ltd. v. Sethu Madhavan24

The Commissioner cannot disregard the assessment made by a qualified medical

practitioner. However, if he does not accept the Certificate, he can refer the Party to
Medical Board for expert opinion and report or to call a second medical report.

C. David v. G. C. Mishra25

In this case it was held that while assessing compensation, the Court has to see whether
the earning capacity of the injured has been reduced in every employment and not merely
in particular employment in which he was engaged at the time of accident. That is the
reason why Section 4 (1) (c) (ii), Explanation II of the Act mandates that in case of non-
scheduled injury the qualified medical practitioner while assessing the loss of earning
capacity shall have due regard to the percentage of loss of earning capacity in relation to
different injuries specified in Schedule I.

Amar Nath Singh v. Continental Constructions Ltd26

Here the appellant lost his left eye and made claim as having lost his complete vision in
that eye but medically it was assessed that loss of vision was only 80%. The
Commissioner assessed the compensation payable to him as 100% under Schedule I, Part
I Item 4. The High Court reduced it to 30% relying upon the provisions under Item 26 of
Part II Schedule I.

It was contended before the Supreme Court that the reduction made by the High Court is
improper. The appellant relied upon the decision in Pratap Narain Singh Deo v. Srinivas
Sabata,27 wherein the case of amputation of left arm from the elbow causing total
disablement to perform the work of carpenter was discussed and contended in the present

23
Id at 90
24
(1993) I LLJ 142
25
(1997) II LLJ 844 (Ori)
26
2002 SCC (L&S) 1040
27
Supra note 12
case that there is a loss of one eye and the earning capacity of the appellant has been
reduced from what he was capable of earning at the time of accident, as a result of
disablement. The contention was refuted and submitted that the appellant himself has
been claiming that he was fit for work and his evidence discloses the same, and in the
circumstances the view taken by the Commissioner is incorrect and that of High Court is
justified.

Orissa State Electricity Board v. Kedar Charan Lenka28

The High Court of Orissa explaining and distinguishing “loss of earning” and “loss of
earning capacity” observed that these two concepts have conceptual difference. In case,
there is no loss of earning and there is continuance of engagement, reference to Section 4
(1) (c) (ii) of the Act is necessary to appreciate the distinction. The plea of employers was
that in case of continuance of engagement and non-reduction in earning, compensation is
not payable. The Court observed that this plea cannot be accepted. In considering loss of
earning capacity in case of permanent/partial disablement the comparison between the
wages drawn by the workmen before and after the accident from his employer at the time
of accident is not a determinative factor. If that be so, the employer to tide over liability
may offer a temporary employment to the claimant workman to deprive the latter of his
entitlement under the Act. That would be against the legislative intent. The intent is to
consider loss of earning capacity in such cases and not the loss of earning.

The General Manager, M/s Tungabadra Minerals Ltd. v. Sri G Ameer29

The same principle was laid down as was expressed in OSEB v. Kedar Charan Lenka.

28
(1997) II LLJ 1058 (Ori)
29
2007 LLJ 1051 (Karnataka HC)
 c. Compensation in case of Temporary Disablement whether Total or Partial30

Section 4 (1) (d) deals with the amount of compensation in cases of temporary
disablement whether of total or partial nature. It has been provided that where temporary
disablement, whether total or partial, results from the injury the compensation shall be
paid in the form of a half monthly payment of the sum equivalent to 25% of monthly
wages of the employee in accordance with the provisions of sub-section (2) of Section 4.

Section 4 (2) lays down that the half monthly payment referred to in Section 4 (1) (d)
shall be payable on the sixteenth day

(i) From the date of disablement where such disablement lasts for a period of 28
days or more; or
(ii) After the expiry of waiting period of 3 days from the date of disablement
where such disablement lasts for a period of less than 28 days; and thereafter
half monthly during the disablement or during a period of five years,
whichever is shorter.

Provided that—

(a) there shall be deducted from any lump sum or half-monthly payments to which the
workman is entitled the amount of any payment or allowance which the workman has
received from the employer by way of compensation during the period of disablement
prior to the receipt of such lump sum or of the first half-monthly payment, as the case
may be; and

(b) no half-monthly payment shall in any case exceed the amount, if any, by which half
the amount of the monthly wages of the workman before the accident exceeds half the
amount of such wages which he is earning after the accident.

Explanation: — Any payment or allowance which the workman has received from the
employer towards his medical treatment shall not be deemed to be a payment or
allowance received by him by way of compensation within the meaning of clause (a) of

30
Goswami V.G. Dr., Labour and Industrial Laws, Vol.1 (Central Law Agency, Allahabad9th Ed.2011 at
92
the proviso, so such amount shall not be deducted from any lump sum or half monthly
payments to which the employee is entitled.

Section 4 (2A) – the employee shall be reimbursed the actual medical expenditure
incurred by him for treatment of injuries caused during the course of employment.

This sub-section does not mention any amount as such. It simply provides that actual
medical expenditure incurred by the employee concerned for treatment of injuries caused
during the course of employment shall be reimbursed. The actual amount may be
ascertained by bills and vouchers concerned.

Section 4(3) - on the ceasing of the disablement before the date on which any half-
monthly payment falls due there shall be payable in respect of that half-month a sum
proportionate to the duration of the disablement in that half-month.

d. Compensation payable to an employee in respect of accident occurred

outside India31

4(1A) provides that notwithstanding anything contained in sub-section (1), while fixing
the amount of compensation payable to a workman is respect of an accident occurred
outside India, the Commissioner shall take into account the amount of compensation, if
any, awarded to such workman in accordance with the law of the country in which the
accident occurred and shall reduce the amount fixed by him by the amount of
compensation awarded to the workman in accordance with the law of that country.

31
Ins. by Act( 30 of 1995, sec. 4 (w.e.f. 15-9-1995)
 3. DISABLEMENT UNDER EMPLOYEE’S STATE INSURANCE ACT, 1948
A. Historical Background

The Workmen’s Compensation Act though designed to protect and safeguard the interest
of the labour was in the nature of social assistance and not social insurance. The
Employee’s State Insurance Act, 1948 was the first measure adopted in India to provide
for Social insurance to the labourers.

Under the resolution of ILO of 1927 the Government of India was required to introduce a
health insurance scheme for industrial workers. But due to the economic conditions of the
country the scheme could not be launched immediately.

However, due to persistent efforts on the part of ILO the Government of India yielded
and also appointed Prof. Adarkar as a Special Officer to report on the health insurance of
the industrial workers in India. The report submitted by Prof. Adarkar contained
comprehensive contributory scheme of social insurance and ultimately the Employee’s
State Insurance Act, 1948 came into being.

B. Disablement under ESI Act, 1948

The ESI Act provides for benefits to be paid to persons who are covered under this Act.
The workers who sustain employment injury as defined under the provisions of this Act
are entitled to claim various benefits out of which one is the disablement benefit.

Disablement benefit is the periodical payment to an insured person suffering from

disablement as a result of an employment injury sustained as an employee under this Act,
certified to be eligible for such payments by an authority specified in this behalf by
regulations.32 In order to get disablement benefit it becomes necessary to provide the
meaning of disablement which is defined as follows:

32
Goswami V.G. Dr., Labour and Industrial Laws, Vol.1 (Central Law Agency, Allahabad9th Ed.2011 at
316
 a. Permanent Partial Disablement

Section 2 (15-A) defines permanent partial disablement as such disablement of

permanent nature, as reduces earning capacity of an employee in every employment
which he was capable of undertaking at the time of accident resulting in the disablement.

It is further provided that every injury specified in part II of II Schedule shall be deemed
to result in permanent partial disablement.33

b. Permanent Total Disablement

Section 2 (15-B) defines Permanent total disablement as such disablement of a permanent

nature as incapacitates an employee for all work which he was capable of performing at
the time of the accident resulting in such disablement.

The essence of permanent total disablement is as follows:

i) The employee becomes permanently incapable to perform duties

ii) The loss of earning capacity is 100% or more
iii) It reduces the earning capacity of an employee in every employment which he
was capable of undertaking at the time of accident.
iv) The accident by which such an injury has been sustained by an employee has
arisen out of and in the course of employment.

Every injury specified in Part I of II Schedule to the Act amounts to permanent total
disablement and any combination of injuries specified in Part II of II Schedule shall also
amount to permanent total disablement where aggregate percentage of loss or earning
capacity amounts to 100% or more.34

33
Id at 318
34
Ibid
 c. Temporary Disablement

Temporary disablement is a condition resulting from an employment injury which

requires medical treatment and renders an employee, as a result of such injury,
temporarily incapable of doing the work which he was doing prior to or at the time of
injury.35

In case of temporary disablement employee becomes incapable to work or to perform his

duties for a limited period which he was doing before such injury. After treatment the
person becomes fit for doing his work. The ESI Act does not specify conditions of
temporary disablement because the affected person due to injury becomes fit for work
after proper treatment.

C. Disablement benefit

Section 51 of ESI Act provides for disablement benefit in case of temporary and
permanent disablement. The disablement benefit shall be payable to an insured person.
The disablement benefit is payable in two contingencies:

i) Where a person sustains temporary disablement for not less than 3 days
excluding the day of accident;
ii) Where a person sustains permanent disablement, whether total or partial

The Central Government has been empowered to prescribe rates, periods and conditions
subject to which such benefit shall be payable.36

35
Ibid
36
Id at 317
 4. CONCLUSION

It is the function of an ideal welfare State to give to every citizen the opportunity of
earning his living and freedom from fear of economic ruin which can involve physical
and even moral ruin.37 The Constitution of India affirms this opportunity to the people, in
the form of social and economic justice, which needs to be secured by peaceful, social
and legislative steps.

In order to provide socio-economic justice to the working people various legislative steps
have been taken in our country like other countries of the world. The enactment of
Employee’s Compensation Act 1923 was the first step towards social security in India
which provides for compensation to the employees, followed by Employee’s State
Insurance Act, 1948 which provides for insurance benefit to the workers.

The concept of ‘disablement’ has been defined in both the Acts in order to get
compensation under WC Act and to get disablement benefit under ESI Act. The meaning
and content of the concept of disablement under both the Acts is one and the same. The
only thing that can be noticed is that under WC Act the disablement is classified as
partial and total whereas under the ESI Act the concept is classified as permanent and
temporary. Another thing which needs to be mentioned is that under ESI Act the term
temporary disablement is defined only with respect to partial temporary disablement
whereas under WC Act both temporary partial and total disablement are defined.

In case of Workmen’s Compensation Act the employee gets a lump sum amount of
compensation in case of disablement whereas under the ESI Act the disablement benefit
is paid to the insured employee in the form of periodical payments.

37
K. D. Srivastava, Commentaries on the Workmen’s Compensation Act 1923 at 2
 SCHEDULE I

Part I

List of Injuries to result in permanent total disablement

Percentage of
Serial loss of
Description of Injury
No. earning
capacity
1. Loss of both hands or amputation at higher sites 100
2. Loss of a hand and a foot 100
Double amputation through leg or thigh, or
amputation
3. 100
through leg or thigh on one side and loss of other
foot
Loss of sight to such an extent as to render the
claimant
4. 100
unable to perform any work for which eye-sight is
essential
5. Very severe facial disfigurement 100
6. Absolute deafness 100

PART II

List of injuries deemed to result in permanent partial disablement

Percentage
of
Serial
Description of Injury loss of
No.
earning
capacity
Amputation cases—upper limbs (either arm)
1. Amputation through shoulder joint 90

2. Amputation below shoulder with stump less than 80

3[20.32 Cm from tip of acromion

3. Amputation form 20.32 Cm from tip of acromion to 70

less than 11.43 Cm below tip of olecranon

Loss of a hand or of the thumb and four fingers of one

4. hand or amputation from 11.43 cm below tip of 60
olecranon
 5. Loss of thumb 30
6. Loss of thumb and its metacarpal bone 40
7. Loss of four fingers of one hand 50
8. Loss of Three fingers of one hand 30
9. Loss of two fingers of one hand 20
10. Loss of terminal phalanx of thumb 20

Amputation cases – lower limbs

10A. Guillotine amputation of tip of thumb without loss of 10

bone

Amputation of both feet resulting in end bearing

11. 90
stumps

12. Amputation through both feet proximal to the 80

metatarsophalangeal joint
Loss of all toes of both feet through the metatarso-
13. 40
phalangeal joint

14. Loss of all toes of both feet proximal to the roximal 30

interphalangeal joint

15. Loss of all toes of both feet distal to the proximal inter- 20
phalangeal joint
16. Amputation at hip 90

Amputation below hip with stump not exceeding

17. 80
[12.70 Cms.] in length measured from tip of greats
trenchanter

Amputation below hip with stump exceeding [12.70

18. 70
Cms.] in length measured from tip of great trenchanter
but not beyond middle thigh

19. Amputation below middle thigh to [8.89 Cms.] below 60

knee

Amputation below knee with stump exceeding [8.89

20. 50
Cms.] but not exceeding [12.70 Cms.]

21. Amputation below knee with stump exceeding [12.70 50

 Cms]
22. Amputation of one foot resulting in end bearing 50

23. Amputation through on foot proximal to the 50

metatarsophalangeal joint

24. Loss of all toes of one foot through the metatarso- 20

phalangeal joint

Other injuries

25. Loss of one eye, without complications, the other being 40

normal

26. Loss of vision of one eye, without complications or 30

disfigurement of eye-ball, the other being normal
26A. Loss of partial vision of one eye 10

A—Fingers of right or left hand Index finger

27. Whole 14
28. Two phalanges 11
29. One phalanx 09
30. Guillotine amputation of time without loss of bone. 05
Middle finger
31. Whole 12
32. Two phalanges 09
33. One phalanx 07
34. Guillotine amputation of tip without loss of bone 04
Ring or little finger
35. Whole 07
36. Two phalanges 06
37. One phalanx 05
38. Guillotine amputation of tip without loss of bone 02
B—Toes of right or left foot Great toe
39. Through metatarso-phalangeal joint 14
40. Part, with some loss of bone 03
Any other toe
41. Through metatarso-phalangeal joint 03
42. Part, with some loss of bone 01
Two toes of one foot, excluding great toe
43. Through metatarso-phalangeal joint 05
 44. Part, with some loss of bone 02
Three toes of one foot, excluding great toe
45. Through metatarso-phalangeal joint 06
46. Part, with some loss of bone 03
Four toes of one foot, excluding great toe
47. Through metatarso-phalangeal joint 09
48. Part, with some loss of bone 03

Note.—Complete and permanent loss of the use of any limb or member referred to in the
Schedule shall be deemed to be the equivalent of the loss of that limb or member.

Note.- Schedule I under Workmen’s Compensation Act is also same as Schedule II of the
ESI Act.
 SCHEDULE IV

Factors for working out lump sum equivalent of compensation amount in case of
permanent disablement and death.

Completed years of age on the

last birthday of the workman
immediately preceding the Factors
date on which the
compensation fell due
1 2
Not
more 16 . . . . . . . . . 228.54
than
17 . . . . . . . . . 227.49
18 . . . . . . . . . 226.38
19 . . . . . . . . . 225.22
20 . . . . . . . . . 224.00
21 . . . . . . . . . 222.71
22 . . . . . . . . . 221.37
23 . . . . . . . . . 219.95
24 . . . . . . . . . 218.47
25 . . . . . . . . . 216.91
26 . . . . . . . . . 215.28
27 . . . . . . . . . 213.57
28 . . . . . . . . . 211.79
29 . . . . . . . . . 209.92
30 . . . . . . . . . 207.98
31 . . . . . . . . . 205.95
32 . . . . . . . . . 203.85
33 . . . . . . . . . 201.66
34 . . . . . . . . . 199.40
35 . . . . . . . . . 197.06
36 . . . . . . . . . 194.64
37 . . . . . . . . . 192.14
38 . . . . . . . . . 189.56
39 . . . . . . . . . 186.90
40 . . . . . . . . . 184.17
41 . . . . . . . . . 181.37
42 . . . . . . . . . 178.49
43 . . . . . . . . . 175.54
44 . . . . . . . . . 172.52
45 . . . . . . . . . 169.44
 46 . . . . . . . . . 166.29
47 . . . . . . . . . 163.07
48 . . . . . . . . . 159.80
49 . . . . . . . . . 156.47
50 . . . . . . . . . 153.09
51 . . . . . . . . . 149.67
52 . . . . . . . . . 146.20
53 . . . . . . . . . 142.68
54 . . . . . . . . . 139.13
55 . . . . . . . . . 135.56
56 . . . . . . . . . 131.95
57 . . . . . . . . . 128.33
58 . . . . . . . . . 124.70
59 . . . . . . . . . 121.05
60 . . . . . . . . . 117.41
61 . . . . . . . . . 113.77
62 . . . . . . . . . 110.14
63 . . . . . . . . . 106.52
64 . . . . . . . . . 102.93
65 or more . . . . . . . . 99.37
 BIBLIOGRAPHY

1. Labour and Industrial Laws by Dr. V. G. Goswami

2. Commentaries on the Workmen’s Compensation Act, 1923 by K. D. Srivastava
3. Simplified Approach to Labour Laws by Dr. J. P. Sharma
4. http://ncw.nic.in/acts/The WORKMENCOMPENSATIONACT1923.pdf
5. http://www.vakilno1.com/wrkmnscompensation/workmenscompensationacthtml