about human research management

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1. SOCIAL SECURITY ACT :
The Social Security Act of 1935 is a law enacted by the 74th United States Congress and signed
into law by US President Franklin D. Roosevelt. The law created the Social Security program
as well as insurance against unemployment. The law was part of Roosevelt's New Deal
domestic program. By the 1930s, the United States was the only modern industrial country
without any national system of social security. In the midst of the Great Depression, the
physician Francis Townsend galvanized support behind a proposal to issue direct payments to
the elderly. Responding to that movement, Roosevelt organized a committee led by Secretary
of Labor Frances Perkins to develop a major social welfare program proposal. Roosevelt
presented the plan in early 1935 and signed the Social Security Act into law on August 14,
1935. The act was upheld by the Supreme Court in two major cases decided in 1937.
The law established the Social Security program. The old-age program is funded by payroll
taxes, and over the ensuing decades, it contributed to a dramatic decline in poverty among the
elderly, and spending on Social Security became a major part of the federal budget. The Social
Security Act also established an unemployment insurance program administered by the states
and the Aid to Dependent Children program, which provided aid to families headed by single
mothers.

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EXPANSION OF BENEFITS OF SOCIAL SECURITY ACT :
The original Act provided for only one Federally-administered benefit: Old-Age Insurance,
which was paid only to the insured worker. The 1939 Amendments transformed the very nature
of the Social Security program. The Amendments created two new benefit categories under
§202 of the Act:
• Payments to the spouse and children of a retired worker called dependents or family
benefits, a provision of Old-Age Insurance.
• Payments to the family of an insured worker in the event of the premature death of the
worker, called survivors benefits, the provision of the then-newly created Survivors Insurance
program.
• Retirement-aged wives, children under 16 (under 18 if attending school), widowed
mothers caring for eligible children, and aged widows were all made eligible for dependents and
survivors benefits.
• Under select circumstances, parents of deceased insured workers were also made eligible
for Survivors Insurance. To be eligible parents must be at least age 65, not entitled to Old-Age
Insurance, wholly dependent upon the insured worker for income, and mustn't have married since
the death of the insured worker. Furthermore, the parent(s) are not eligible if the deceased insured
worker leaves a widow or unmarried surviving child under the age of 18.
• The 1939 Amendments also increased benefit amounts and accelerated the start of
monthly benefit payments from 1940 to 1942.
Alternation of financing mechanisms :
The Old-Age Reserve Account previously established under §201 of the Act was replaced by
the Federal Old-Age and Survivors Insurance Trust Fund, administered by a Board of Trustees.
The Secretary of the Treasury, Secretary of Labor, and the Chairman of the Social Security
Board were all ex-officious members. (The composition of the Board of Trustees has been
significantly altered since.)

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WHAT IS THE SOCIAL SECURITY ACT?
 The Social Security Act established benefits for old-age retirees and the jobless, as well as
aid for dependent mothers and children, victims of work-related accidents, people who are
blind, and those who have physical disabilities.
 It was signed into law in 1935 during the administration of President Franklin D. Roosevelt.
Previously, such benefits were not provided at all by the federal government, aside from
pensions for veterans.
 Under the act, the U.S. government started collecting the Social Security tax from workers
in 1937 and began making payments in 1940. It laid the groundwork for many aspects of
U.S. labor law.
 The Social Security Act of 1935 is a law enacted by the 74th United States Congress and
signed into law by US President Franklin D. Roosevelt.
 The law created the Social Security program as well as insurance against unemployment.
The law was part of Roosevelt's New Deal domestic program. By the 1930s, the United
States was the only modern industrial country without any national system of social security.
 In the midst of the Great Depression, the physician Francis Townsend galvanized support
behind a proposal to issue direct payments to the elderly. Responding to that movement,
Roosevelt organized a committee led by Secretary of Labor Frances Perkins to develop a
major social welfare program proposal.
 Roosevelt presented the plan in early 1935 and signed the Social Security Act into law on
August 14, 1935. The act was upheld by the Supreme Court in two major cases decided in
1937.
 The Social Security Act also established an unemployment insurance program administered
by the states and the Aid to Dependent Children program, which provided aid to families
headed by single mothers. The law was later amended by acts such as the Social Security
Amendments of 1965, which established two major healthcare
programs: Medicare and Medicaid.

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BACKGROUND
 Industrialization and the urbanization in the 20th century created many new social problems
and transformed ideas of how society and the government should function together because
of them.
 As industry expanded, cities grew quickly to keep up with demand for labor. Tenement
houses were built quickly and poorly, cramming new migrants from farms and Southern
and Eastern European immigrants into tight and unhealthy spaces. Work spaces were even
more unsafe.
 By the 1930s, the United States was the only modern industrial country in which people
faced the Depression without any national system of social security though a handful of
states had poorly-funded old-age insurance programs.
 The federal government had provided pensions to veterans in the aftermath of the Civil
War and other wars, and some states had established voluntary old-age pension systems,
but otherwise, the United States had little experience with social insurance programs.
 For most American workers, retirement during old age was not a realistic option.
 In the 1930s, the physician Francis Townsend galvanized support for his pension proposal,
which called for the federal government to issue direct $200-a-month payments to the
elderly.
 Roosevelt was attracted to the general thinking behind Townsend's plan because it would
provide for those no longer capable of working, stimulate demand in the economy, and
decrease the supply of labor.[7] In 1934, the Dill-Connery bill for federal funding of state
pensions programs, passed the House of Representatives and came near passage in the
Senate that May.
 According to one study, ‘Roosevelt took ‘no open stand on the bill, but called supporters to
the White House and persuaded them to delay passage until the administration prepared its
own, "more comprehensive version.”

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2. EMPLOYEES PROVIDENT FUND :
DEFINITION :
The Employee Provident Fund, popularly known as PF is the retirement saving scheme
available to all the salaried employees, is backed by the government on which fixed interest is
paid. Provident fund is a government-managed retirement savings scheme for employees who
can contribute a part of their pension fund every month. These monthly savings get accumulated
every month, easily accessible as a lump sum amount at retirement or the end of employment.
ORIGIN :
The Employees' Provident Fund came into existence with the promulgation of the Employees'
Provident Funds Ordinance on the 15th November, 1951. It was replaced by the Employees'
Provident Funds Act, 1952. And is a retirement savings plan for salaried employees who work

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for a company with 20 or more employees. Overall, the employee provident fund is an excellent
approach to save money for retirement. It also serves as an emergency fund in case you need
money for medical expenditures, a wedding or mortgage payments.
ESTABLISHMENT OF THE ACT :
It was replaced by the Employees' Provident Funds Act, which extended to the whole of India
except Jammu & Kashmir. The Employees' Provident Funds Scheme, framed under section 5
of the Act, was introduced in stages and came into force in its entirety by 1 November 1952.
The two different retirement saving schemes under Employees' Provident Funds and
Miscellaneous Provisions Act, 1952, meant for salaried employees.
OBJECTIVES OF AN ACT :
 EPF Scheme is implemented to help the government, public or private sector employees
financially by providing a lump sum amount on their retirement or separation from their job by
managing provident fund of them.
 It helps in providing social security to the members of the scheme.
 To ensure that each employee only has one EPF account.
 Compliance must be made as simple as possible.
 Ensure that organisation follow all of the EPFO’S rules and regulations on a regular basis.
 To assure the dependability of internal services and to increase their facilities.
 All member accounts should be easily accessible online.
 Claim settlement times will be lowered from 20 to 30 days.
 Encouragement and promotion of voluntary compliance.
 Decrease the amount of time it takes to resolve disputes from a month to 72 hours.
 Provide subscribers with no trouble service through EPFO offices.

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 Confirm that all eligible facilities are in compliance with the needs of the mentioned
statute.
 Encourage and foster voluntary conformity.
 Member Accounts are updated on a regular basis.
 Access to the Member Account is available online.
UAN NUMBER:
Universal Account Number (UAN) has been made mandatory for all individuals covered under
the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. UAN is a 12-digit
number allotted by EPFO to every employee to whom EPF Scheme is applicable. An employee
is supposed to have a single UAN. The UAN will show both the PF numbers, the previous
employer's as well as that of the new employer, linked to it.
The UAN, therefore, acts as an umbrella for multiple member IDs allotted to the individual by
different employers. It is a one-time permanent number which will remain the same throughout
one's career. When you join a new organisation, the first thing you should do is ask your
employer for the ‘New Form No. 11- Declaration Form’ to furnish the existing UAN. If you
don’t have one, then just give your previous PF number along with the date of exit from your
previous job.
CONDITIONS OF THE ACT :
1. Any paid worker with a paycheck significantly lower than 15,000 INR is required to join
the EPF.
2. Employees having a monthly salary far beyond INR 15,000 are qualified to participate in
the EPF if they receive clearance from the Regional PF Commissioner along with their
employer.
3. EPF applicability for employers
4. Any company that has 20 or more employees in total is required by law to deduct EPF.

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5. Subject to certain conditions even organisations with less than 20 employees are
applicable.
6. EPF applicability for employees
7. Any salaried employee with a monthly income of less than 15,000 INR needs to
compulsorily be a member of the EPF.
8. An employee with a monthly income higher than INR 15,000 (the current prescribed
limit) is eligible to become a member of the EPF if he/she gets approval from the Assistant PF
Commissioner and employer.
9. An employee can also choose to opt out of EPF if his/her salary is higher than INR 15,000
and if they have never made any contribution to EPF. This can be done by filling Form 11,
which is a self-declaration form provided by the EPFO.
Types of EPF Forms :
The business provides several sorts of PF Forms for various claim methods. Some required
forms are as follows:
Form 19: To be completed after a member has completed the final payout of their PF account.
Form 10C: For obtaining the Workers’ Pension Fund ’95 Scheme Credential Reward.
Form 10D is used to file pension applications.
Form 20: Used to collect PF following the passing away of a person’s lawful heir/nominee.
Form 5IF: must be completed by the lawful heir/nominee of the participant in order to receive
an assured benefit under the Workers’ Deposit Linked Financial Services act of 1976.
Form 31: To request an advance/temporary pullout under Workers’ Provident Plan ’52.
Form 13: To move PF/pension funds across accounts.
Form 14: To use the PF account to finance a policy of life insurance.

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PENALTIES ORDER OF THE EPF :
(1) Whoever, for the purpose of avoiding any payment to be made by himself under this Act
[the Scheme, the [Pension] Scheme] or the Insurance Scheme] or of enabling any other person
to avoid such payment knowingly makes or causes to be made any false statement or false
representation shall be punishable with imprisonment for a term which may extend to one year,
or with fine of five thousand rupees, or with both].
(1A) An employer who contravenes, or makes default in complying with, the
provisions of section 6 or clause (a) of sub-section (3) of section 17 in so far as it relates to the
payment of inspection charges, or para 38 of the Scheme insofar as it relates to the payment of
administrative charges, shall be punishable with imprisonment for a term which may extend to
[three years] but
a) which shall not be less than [one year and fine of ten thousand rupees] in case of default
in payment of employees' contribution which has been deducted by the employer from the
employees' wages;
b) which shall not be less than six months and fine of five thousand rupees, in any other
case:]
PROVIDED that the court may, for any adequate and special reasons to be recorded in the
judgment, impose a sentence of imprisonment for a lesser term.
(1B) An employer who contravenes, or makes default in complying with, the
provisions of section 6C, or clause (a) of sub-section (3A) of section 17 in so far as it relates to
payment of inspection charges, shall be punishable with imprisonment for a term which may
extend to [one year] but which shall not be less than [Six months] and shall also be liable to
fine which may extend to [five thousand rupees]:
PROVIDED that the court may, for any adequate and special reasons to be recorded in the
judgment, impose a sentence of imprisonment for a lesser term ]
(2) [Subject to the provisions of the Act, the Scheme,] the Pension Scheme or the
Insurance Scheme] may provide that any person who contravenes, or makes default in
complying with any of the provisions thereof shall be punishable with imprisonment for a term

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which may extend to [one year, or with fine which may extend to four thousand rupees, or with
both].]
[(2A) Whoever contravenes or makes default in complying with any provision of
this Act or of any condition subject to which exemption was granted under section 17 shall, if
no other penalty is elsewhere provided by or under this Act for such contravention or
noncompliance, be punishable with imprisonment which may extend to 146[six months, but
which shall not be less than one month, and shall also be liable to fine which may extend to five
thousand rupees].
JUDGEMENT OF CASES IN EPF :
Aluminium Corporation Of India ... vs Regional Provident Fund ... on 31 March, 1958
Equivalent citations: AIR 1958 Cal 570, (1959) ILLJ 249 Cal
Author: P Mukharji
Bench: P Mukharji
ORDER P.B. Mukharji, J.
1. This is an application by the Aluminium Corporation of India Ltd. under Article 226 of
the Constitution. The company complains against an order of the Government, dated 23rd
October, 1957 No. R-1237/WB/6983 addressed by the Regional Provident Fund Commissioner
at 28, Theatre Road, Calcutta to the Manager of the Aluminium Corporation of India Ltd. This
order is purported to be made under Section 19-A of the Employees Provident Funds Act, 1952.

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3. PAYMENT OF GRATUITY ACT :
DEFINITION :
The Payment of Gratuity Act, 1972 is an Indian law that makes certain industries pay a one-
time gratuity to retired employees. The law applies to railways, ports, factories, oilfields,
plantations, mines and shops. The gratuity is 15 days' wages for every year of employee service,
or partial year over six months. In India, gratuity is a type of retirement benefit. It is a payment
made with the intent of monetarily helping an employee after his or her retirement. It was held
by the Supreme Court of India in Indian Hume Pipe Co Ltd v Its Workmen that the general
principle underlying a gratuity scheme is that by service over a long period the employee is
entitled to claim a certain amount as a retirement benefit.[2]The Payment of Gratuity Act was
passed by the Parliament of India on 21 August 1972 and it came into force on 16 September
1972.

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ORIGIN OF THE ACT :
The Payment of Gratuity Act 1972 is a social security enactment. An Act to provide for a
scheme for the payment of gratuity to employees engaged in factories, mines, oilfields,
plantations, ports, Railway companies, shops or other establishments. The significance of this
legislation lies in the acceptance of the principle of gratuity as a compulsory statutory retiral
benefit. The Act accepts, in principle, compulsory payment of gratuity as a social security
measure to wage earning population in industries, factories and establishments. Thus, the main
purpose and concept of gratuity is to help the workman after retirement, whether retirement is
a result of the rules of superannuation, or physical disablement or impairment of vital part of
the body. Thus, it is a sort of financial assistance to tide over post retiral hardships and
inconveniences. Previously the scheme of gratuity was introduced in those establishments only
where the employers were so kind and generous to the workers or there was an agreement
between the employers and the workers. This scheme was confined to the particular
establishments and even within those establishments, to certain categories of staff. There was
no general legislation for the payment of Gratuity to all industrial workers. In due course of
time, it was felt the workers should get gratuity as a right in return of their long dedicated
services to the industry. Industrial Tribunals and Supreme Courts dealt with the disputes on the
subject and their awards and decisions brought the revolutionary changes in Social Security
Legislations in Indian industrial sector.
[2] In the case of Delhi Cloth and General Mills Co. Ltd. Vs their workers[3]Supreme Court
held that the object of providing a gratuity scheme is to provide a retiring benefit to the workman
who have rendered long and unblemished service to the employer and thereby contributed to
the prosperity of the employer.[4]In the Working Journalists (Conditions of Service) &
Miscellaneous Provisions Act, 1955, the provision to pay the gratuity to the working journalists
was made. After few years, the Government of Kerala enacted the Kerala Industrial Employees
Payment of Gratuity Act, 1970 making gratuity a statutory right of the employees. West Bengal
Government enacted the West Bengal Employees Payment of Gratuity Act, 1971 relating to the
subject. The other states were also thinking to legislate such enactments. Thus, it was felt that
there should be an uniform central legislation for the whole country instead of state legislations
for each and every separate states.

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The whole matter was discussed in the Labour Ministers’ Conference held 24th and the August
1971 and thereafter in the Indian Labour Conference held on 22ndand 23rd Oct., 1971 it was
agreed that the central legislation on the payment of gratuity should be undertaken.
Accordingly, the payments of Gratuity Act, 1972 was enacted, largely based on the West
Bengal legislation, which was come into force on 16th September, 1972.[5] The Act has been
further amended many times say in 1984, 1987, 2010 and the latest in 2018.
OBJECTIVES OF THE ACT :
The object of the act is to help the workman financially by giving gratuity after retirement for
the recognition of continuous, meritorious services and sincere efforts by the employee towards
the organization.
• Provide a scheme for the payment of gratuity to employees.
• To provide for matters connected with or incidental to the scheme for payment of gratuity.
• To provide retiring benefits to employees who have rendered continuous services to his
employers and thereby contributed to his prosperity.
• Define the principles of payment of gratuity according to the prescribed formula.
• Provide machinery for the employment of liability for payment of gratuity.
• It extends to the whole of India. It is provided that in so far as it relates to plantations or
ports, it shall not extend to the State of Jammu and Kashmir.
CONDITIONS FOR THE ACT :
The Act applies to:
• Every factory, mine, oilfield, plantation, port, and railway company;
• Every shop or establishment within the meaning of any law for the time being in force
about shops and establishments in State, in which 10 or more persons are employed or were
employed, on any day of the preceding 12 months;
• Such other establishments or class of establishments in which 10 or more employees are
employed, or were employed, or were employed, on any day of the preceding 12 months, as the

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Central Government may, by notification published in the Official Gazette, specify in this
behalf [Section 1(3)],
• To be eligible for gratuity under the Gratuity Act, an employee needs to have at least five
full years of service with the current employer, except in the event that an employee passes
away or is rendered disabled due to accident or illness. In these cases, gratuity must be paid.
The Payment of Gratuity Act, 1972 is applicable to employees engaged in factories, mines,
oilfields, plantations, ports, railway companies, shops, or other establishments with 10 or more
employees. Gratuity is fully paid by the employer. No part of the gratuity comes from an
employee’s salary.
• To be eligible for gratuity under the Gratuity Act, an employee needs to have at least five
full years of service with the current employer, except in the event that an employee passes
away or is rendered disabled due to accident or illness. In these cases, gratuity must be paid.
• Gratuity is paid when an employee:
• Is eligible for superannuation
• Retires
• Resigns
• Passes away or is rendered disabled due to accident or illness (if an employee passes
away, gratuity will be paid to the employee’s nominee).
• The Act is applicable, to factories, mines, oil fields, plantations, ports, railways, motor
transport undertakings, companies, and to shops and other establishments, Employing 10 or
more workmen.
• The Act provides for payment of gratuity at the rate of 15 days wage s for each completed
year of service subject to a maximum of Rs. ten lakh. In the case of seasonal establishment,
gratuity is payable at the rate of seven days wages for each season. The Act does not affect the
right of an employee to receive better terms of gratuity under any award or agreement or
contract with the employer. Central Government is the Appropriate Government in relation to
an establishment belonging to or under the control of the Central Government or having
branches in more than state or an establishment of a factory belonging to or under the control
of Central Government or of a major port, oilfield railway or mine.

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The Act does not apply to:
• Apprentices, and Persons who hold civil posts under the Central Government or a State
Government and are governed by any other Act or by any rules provided for payment of
gratuity.
• The government may, however, exempt any establishment covered by this Act from the
provisions of the Act, if its employees receive gratuity or pensionary benefits not less favorable
than the benefits provided by this Act [Section 5(1)].
3.4 PENALTIES OF THE ACT :
(1) Whoever, for the purpose of avoiding any payment to be made by himself under this Act
or enabling any other person to avoid such payment, knowingly makes or causes to be made
any false statement or false representation shall be punishable with imprisonment for a term
which may extend to six months, or with fine which may extend to one thousand rupees, or with
both.
(2) An employer who contravenes, or makes default in complying with, any of the provisions
of this Act or any rule or order made thereunder shall be punishable with imprisonment for a
term which may extend to one year, or with fine which may extend to one thousand rupees, or
with both.

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Provided that where the offence relates to non-payment of any gratuity payable under this Act,
the employer shall be punishable with imprisonment for a term which shall not be less than
three months unless the court trying the offence, for reasons to be recorded by it in writing is of
opinion that a lesser term of imprisonment or the imprisonment of a fine would meet the ends
of justice.
(1) Gratuity shall be payable to an employee on the termination of his employment after he has
rendered continuous service for not less than five years:
(a) on his superannuation, or
(b) on his retirement or resignation, or
(c) on his death or disablement due to accident or disease;
Provided that the completion of continuous service of five years shall not be necessary where
the termination of the employment of any employee is due to death or disablement:
Provided further that in the case of death of the employee, gratuity payable to him shall be paid
to his nominee or, if no nomination has been made, to the heirs.
Explanation. - For the purposes of this section, disablement means such disablement as
incapacitates an employee for the work which he was capable of performing before the accident
or disease resulting in such disablement.
(2) For every completed year of service or part thereof in excess of six months, the employer
shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages
last drawn by the employee concerned :
Provided that in the case of piece-rated employee, daily wages shall be computed on the average
of the total wages received by him for a period of three months immediately preceding the
termination of his employment, and, for this purpose, the wages paid for any overtime work
shall not be taken into account :
Provided further that in the case of an employee employed in a seasonal establishment, the
employer shall pay the gratuity at the rate of seven days' wages for each season.
(3) The amount of gratuity payable to an employee shall not exceed twenty months' wages.

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(4) For the purpose of computing the gratuity payable to an employee who is employed, after
his disablement, on reduced wages, his wages for the period preceding his disablement shall be
taken to be the wages received by him during that period, and his wages for the period
subsequent to his disablement shall be taken to be the wages as so reduced.
(5) Nothing in this section shall affect the right of an employee to receive better terms of
gratuity under any award or agreement or contract with the employer.
(6) Notwithstanding anything contained in sub-section (1),-
(a) the gratuity of an employee, whose services have been terminated for any act, willful
omission or negligence causing any damage or loss to, or destruction of, property belonging to
the employer, shall be forfeited to the extent of the damage or loss so caused;
(b) the gratuity payable to an employee shall be wholly forfeited,-
(i) if the services of such employee have been terminated for his riotous or disorderly
conduct or any other act of violence on his part, or
(ii) if the services of such employee have been terminated for any act which constitutes an
offence involving moral turpitude, provided that such offence is committed by him in the course
of his employment.
JUDGEMENT OF CASES IN THE ACT :
The appellants were paid such gratuity in terms of such office memorandum. However, later
on, the Payment of Gratuity Act2 was amended by Central Act No. 15 of 2010 which received
the assent of the Hon’ble President on 17.5.2010. The relevant provisions of the Amending Act
read as under:
“1(1). This Act may be called the payment of Gratuity (Amendment) Act, 2010.
(2) It shall come into force on such date as the Central Government may, by notification in the
Official Gazette, appoint.
2.In Section 4 of the Payment of Gratuity Act, 1972, in subsection (3), for the words “three
lakhs and fifty thousand Rupees”, the words “ten lakh rupees” shall be substituted.”

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4. In terms of sub-section (2) of Section 1 of the Amending Act, a notification was issued
by the Government of India on 24.5.2010 appointing the said date as the date on which the
Amending Act came into force.
5. The grievance of the appellants is that the tax has been deducted at source when the
gratuity was paid to the appellants before the commencement of the Amending Act. The
appellants have thus challenged the date of commencement as 24.5.2010 but asserted that it
should be made effective from 1.1.2007 and consequently the appellants would not be liable for
deduction of tax on the gratuity amount.
6. Certain provisions of the Gratuity Act as it existed prior to 2 For short, the ‘Gratuity Act’2
amendment by Central Act No. 12 of 2018 and that of Income Tax Act, 19613 would be
necessary to be extracted: “The Payment of Gratuity Act, 1972
7. Learned counsel for the appellants argued that the amendment of the Gratuity Act is to grant
liberalised benefits. Therefore, it would be retrospective. Reliance is placed upon judgment of
this Court in Commissioner of Income Tax (Central)-I, New Delhi v. Vatika Township Private
Limited
The aforesaid case is of insertion of provision to Section 113 of the Income Tax Act providing
that tax chargeable under the said Section shall be increased by a surcharge and shall be
applicable in the assessment year relevant to the previous year in which the search is initiated
under Section 132 of the said Act. It was the said provision which came up for consideration
before this Court. This Court held as under: “31. In such cases, retrospectivity is attached to
benefit the persons in contradistinction to the provision imposing some burden or liability
where the presumption attaches towards prospectivity. In the instant case, the proviso added to
Section 113 of the Act is not beneficial to the assessee. On the contrary, it is a provision which
is onerous to the assessee.
Therefore, in a case like this, we have to proceed with the normal rule of presumption against
retrospective operation. Thus, the rule against retrospective operation is a fundamental rule of
law that no statute shall be construed to have a retrospective operation unless such a
construction appears very clearly in the terms of the Act, or arises by necessary and distinct
implication. Dogmatically framed, the rule is no more than a presumption, and thus could be
displaced by outweighing factors.”

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4. WORKMEN’S COMPENSATION ACT :
DEFINITION :
The Workmen's Compensation Act, 1923 was made to offer compensation to the workers who
have encountered injuries due to an accident during their employment. This act ensures that
rights of the laborers are maintained even after they encounter some disability or death due to
an accident during their work. An Act to provide for the payment by certain classes of
employers to their workmen of compensation for injury by accident. Where as it is expedient
to provide for the payment by certain.
ORIGIN OF THE ACT :
The Workmen Compensation act was formed after noticing the labourers’ exposure to danger
due to advanced machinery, which is comparatively more sophisticated. According to the
Compensation Act of 1884, employers were responsible for workmen compensation only when
a fatal road accident took place. In 1885, mining and factory inspectors realised that the Fatal

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and Major Accident Act was insufficient in changing conditions. After hearing the situation,
the government formed a committee of experts from various fields to enact the Workmen’s
Compensation Act,1923. The act stopped the lengthy process of generally expensive courts;
instead, the step was taken to seek easy compensation for the injury caused during employment.
Later in 2010, the act came to be known as the Employee’s Compensation Act.
ESTABLISHMENT THE ACT :
The Act has its basis on two aspects:
# Theory of least cost.
# The production cost shall have the cost of blood and workmen included.
For an industry to run, an employer uses capital, skills in business and the labor of workers who
are paid for the labor. The management has to put aside finances for the possibility of the
expense needed to repair the machines when they break down. If that care and attention can be
given to machines, human beings working in the same environment need also receive care and
attention for the risks they undertake when working in that industry. Social security offers to
ensure compensation is paid to a disabled or injured person only if the accident rose in the
middle of the employment. The compensation paid to a workman by an employer when an
accident occurs is a relief and social security measure provided by the Act. A workman is now
able to get compensation regardless of his negligence.
The Act also puts in place the amount that is to be paid according to the intensity of the injury.
This makes an employer aware of the amount of compensation he is liable to pay in case of an
accident. The Act is recognized all over India and applies to all workmen and casual workers
in factories, plantations, mines, transport establishments, railways, ships, circuses, construction
work and any other potentially dangerous occupations made mention in Schedule II of this Act.
The Act is not applicable to people in the Armed Forces.

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OBJECTIVES OF THE ACT :
The main object behind the enactment of the Act is:
❖ To provide compensation at the time of an accident. And ensure that the workmen have
a sustainable life after an injury caused during the employment.
❖ This act forms a duty and responsibility of an employer to look towards the welfare of
workmen when injured during employment. Still, it has also reserved the right to earn a profit
from the employer.
There are two basic concepts of the Act:
❖ The theory of minimum cost
❖ The theory of including the cost of the workmen’s efforts into the cost of production.

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❖ There are various resources used to run an industry like machinery, capital, skilled and
unskilled workers.
❖ Every industry, keep aside a certain amount for any mishappening that may occur in the
factory, e.g. a machine does not work properly, a wall of an industry falls etc. So, a question
arises, if the machine gets such concerns, then why not humans.
❖ The Workmen Compensation Act, 1923 or the Employee’s Compensation Act, 1923,
provides social security to the employee by providing them with compensation for injury or
accident during employment.
❖ Section 3 of the Employee’s Compensation Act deals with ‘Employer’s Liability for
Compensation. This section provides the condition when an employer is liable to pay
compensation to the employees.
❖ If the personal injury caused to an employee due to an accident that occurred during
employment
❖ If the injury is an occupational disease mentioned under Part A, Part B or Part C of the
Schedule III of the Employee’s Compensation Act, the disease should have been caused
❖ To provide compensation at the time of an accident. And ensure that the workmen have
a sustainable life after an injury caused during the employment.
❖ This act forms a duty and responsibility of an employer to look towards the welfare of
workmen when injured during employment. Still, it has also reserved the right to earn a profit
from the employer.
❖ Use to an injury by accident during employment.

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CONDITIONS OF THE ACT :
A fundamental objective is to provide broad coverage of employees for job-related accidents
and disease:
o Workers' compensation laws should cover most occupations or job-related accidents and
disease.
o A second objective is to provide substantial protection against the loss of income. The
cash benefits are designed to restore a substantial proportion of the disabled worker's lost
earnings, so that the disabled worker's previous standard of living can be maintained.
o A third objective is to provide sufficient medical care and rehabilitation services to
injured workers. Workers' compensation laws require employers to pay hospital, surgical, and
other medical costs incurred by injured workers and provide for rehabilitation services to
disabled employees to help them be restored to productive employment.
o Another objective of Workers' compensation is to encourage firms to reduce job-related
accidents and to develop effective safety programs. Firms with superior accident records pay
relatively lower workers' compensation premiums because experience rating is used to
encourage firms to reduce job-related accidents and disease. Above all, workers' compensation
laws are designed to reduce litigation.
o Disabled workers are paid benefits promptly without requiring them to sue their
employers. The objective is to reduce the amount of cases held in court, which would help
reduce or eliminate the payment of legal fees to attorneys.
o According to the workmen’s compensation act, and employer has to pay the
compensation to its employee when he/she encounters some personal injury due to an accident
that arose during an employee’s employment. An employer is not liable for paying the
compensation .
o An injury that doesn’t result in partial or total disablement of the employees for more
than three days.
o Any injury that does not result in permanent total disability or death because of an
accident in the influences of drugs or drink.

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4.4 PENALITIES OF THE ACT :
1) Whoever - (a) fails to maintain a notice-book which he is required to maintain under sub-
section (3) of section 10 or
(b) fails to send to the Commissioner a statement which he is required to send under sub-
section (1) of section 10A or
(c) fails to send a report which he is required to send under section 10B or
(d) fails to make a return which he is required to make under section 16 shall be punishable
with fine which may extend to five thousand rupees.
(2) No prosecution under this section shall be instituted except by or with the previous sanction
of a Commissioner and no Court shall take cognizance of any offence under this section unless
complaint thereof is made within six months of the date on which the alleged commission of
the offence came to the knowledge of the Commissioner.
(1) If personal injury is caused to a workman by accident arising out of and in the course of his
employment his employer shall be liable to pay compensation in accordance with the provisions
of this Chapter :
Provided that the employer shall not be so liable -
(a) in respect of any injury which does not result in the total or partial disablement of the
workman for a period exceeding three days;
(b) in respect of any injury not resulting in death or permanent total disablement caused by
an accident which is directly attributable to -
The workman having been at the time thereof under the influence of drink or drugs or the willful
disobedience of the workman to an order expressly given or to a rule expressly framed for the
purpose of securing the safety of workmen or the willful removal or disregard by the workman
of any safety guard or other device he knew to have been provided for the purpose of securing
the safety of workman. (2) If a workman employed in any employment specified in Part A of
Schedule III contracts any disease specified therein as an occupational disease peculiar to that
employment or if a workman whilst in the service of an employer in whose service he has been

25. 25
employed for a continuous period of not less than six months (which period shall not include a
period of service under any other employer in the same kind of employment) in any employment
specified in Part B of Schedule III contracts any disease specified therein as an occupational
disease peculiar to that employment or if a workman whilst in the service of one or more
employers in any employment specified in Part C of Schedule III for such continuous period as
the Central Government may specify in respect of each such employment contracts any disease
specified therein as an occupational disease peculiar to that employment the contracting of the
disease shall be deemed to be as injury by accident within the meaning of this section and unless
the contrary is proved the accident shall be deemed to have arisen out of and in the course of
the employment :
JUDGEMENT CASES OF THE ACT :
1. The first appellant was working as a labourer in a truck bearing registration No OAX
2764 and was engaged by the second respondent for the loading and unloading of sand. On 5
June 2000, the truck met with an accident as a result of which the first appellant suffered
multiple injuries in his abdomen and kidney. He underwent a surgery and was discharged from
the hospital on 22 June 2000. A claim for compensation was lodged before the Workmen
compensation-cumAssistant Labour Commissioner, Odisha. The claim was allowed by an order
dated 24 May 2016. It was held that the first appellant in spite of all the possible treatment
became permanently disabled upto 85% which would reduce his earning capacity upto 100%.
Since he was receiving Rs 2100 as a monthly income, the total compensation payable was
arrived at Rs 2,78,926 (60% of 2100 (monthly income) x 221.37 (age factor as he was 22 years
old) x 100 (loss of earning)). The Labour Commissioner directed that the compensation must
be paid together with interest at the rate of 12 per cent per annum on the principal sum awarded
from the date of accident till the deposit.
2. The first respondent, who is the insurer, filed an appeal before the High Court, being FAO
No 358 of 2018, with a delay of 619 days. The High Court, by its order dated 11 April 2018,
dismissed the application for condonation on the ground that there was an unexplained delay of
619 days. Nonetheless, the High Court directed that the appellants are not entitled to any interest
on the compensation awarded except the accrued interest. The order of the High Court was
sought to be reviewed, but the petition for review was also dismissed on 8 February 2019 on

26. 26
the ground that the first appellant has already withdrawn the entire awarded amount along with
the accrued interest. 5 The judgment of the High Court is inexplicable. Having dismissed the
appeal of the insurer on the ground of limitation, there was no occasion for the High Court to
interfere on merits with the award of interest on compensation under the Workmen’s
Compensation Act 1923. When the appeal was dismissed on the ground of limitation, the High
Court could not have entertained it on merits. The error on the part of the High Court has led a
labourer and his spouse to travel all the way to this Court.
3. Though the accident took place in 2000, the course of litigation would now end only with
the present judgment. To set the record straight, the High Court has erred on merits as well.
Section 4A of the Workmen’s Compensation Act 1923 stipulates that the Commissioner shall
direct the employer to pay interest of 12% or at a higher rate, not exceeding the lending rates
of any scheduled banks specified, if the employer does not pay the compensation within one
month from the date it fell due.
4. In Saberabibi Yakubhai Shaikh v. National Insurance Co. Ltd.1 , this Court held that
interest shall be paid on the compensation awarded from the date of the accident and not the
date of adjudication of the claim in view of the decision of this Court in Oriental Insurance Co.
Ltd. v. Siby George2 where it was held that compensation would fall due from the date of the
accident. Further, in the recent decision in P. Meenaraj v. P. Adigurusamy & Anr.3 , this Court
reiterated that the applicant is entitled to interest from the date of accident while rejecting the
submission that the award of interest should be after the expiry of 30 days from the date of
accident. Thus, there was no legal basis for the High Court to delete the order of payment of
interest.
5. For the above reasons, we set aside the direction contained in the order of the High Court
dated 11 April 2018 by which the order for the payment of interest was deleted. The order for
the payment of interest which was issued by the Additional Labour Commissioner-
cumCommissioner, Workmen Compensation shall together with the award of compensation
stand restored.
6. Though the first respondent has not appeared in these proceedings, despite service of
notice, we are of the view that an award of costs is necessary since the appellants have been
compelled to move this Court against a palpably erroneous order of the High Court passed in
an appeal filed beyond limitation by the respondent. The insurer took the contest to the High

27. 27
Court in an appeal barred by limitation. A well-resourced insurance company has used its
position of dominance to evade the cause of justice.
7. Such strategies must be eschewed. In addition to the compensation and interest which
have been awarded, the appellants shall be entitled to costs quantified at Rs 50,000 which shall
be paid over within a period of four weeks, together with the component of the award inclusive
of interest that remains to be paid.
8. The appeal is allowed in the above terms.
9. Pending application, if any, stands disposed of.
"Where an employee receives a personal injury in a motor accident arising out of and in the
motor vehicle of the employer, whether the insurance company, which has insured the
employer-owner of the vehicle against third party accident claims under Motor Vehicles Act,
1988 (hereinafter referred to as 'the Motor Vehicles Act') and against claims for compensation
arising out of proceedings under the Workmen's Compensation Act, 1923 (hereinafter referred
to as 'the Compensation Act') in connection with such motor accidents, is liable to meet the
awards of Workmen's Commissioner imposing penalty and interest against the insured
employer under Section 4A(3) of the Compensation Act."
The High Court of Himachal Pradesh in the impugned judgments has answered this question in
the negative and against the insured employer. For coming to that conclusion reliance is placed
by the said High Court in a decision of a Division Bench of Karnataka High Court in the case
of Oriental Insurance Co. Ltd. v. Raju &. 1994 ACJ 191 and the judgment of a learned Single
Judge of the Gujarat High Court in the case of & Co. v. &. 1992 ACJ 286. Identical view is
taken by a Division Bench of the Gujarat High Court in the case of Gautam Transport,
Bhavnagar v. 1989 ACJ 587. The decision of a learned Single Judge of the Delhi High Court
in the case of Oriental Insurance Co. Ltd. v. Hasmat Khatoon & Ors. 1989 ACJ 862 has also
fallen in line. While on the other hand a learned Single Judge of Gauhati High Court in the case
of Oriental Fire and General Ins. Co. Ltd. V. Nani Bala Devi & Anr. 1987 ACJ 655; a Division
Bench of the Orissa High Court in the case of Khirod Nayak v. Commissioner for Workmen's
Compensation & Ors. 1992 ACJ 76; a learned Single Judge of the Madhya Pradesh High Court
in the case of New India Assurance Co. Ltd. v. Guddi & Ors. 1994 ACJ 1134 and a learned
Single Judge of the Rajasthan High Court in the case of United India Insurance Co. Ltd. v. Roop

28. 28
Kanwar & Ors. 1991 ACJ 74 have answered this question in the affirmative against the
insurance company.
There is another judgment of a Division Bench of the Gujarat High Court in the case of
Radhabehn & Ors. Mulji Kanji Dhord & Ors. 1994 ACJ 404 which has adopted middle course
and has answered the question partly in the affirmative so far as the imposition of interest
contemplated by Section 4A(3)(a) of the Compensation Act is concerned and partly in the
negative so far as the imposition of penalty on the owner-employer under Section 44(3)(b) is
concerned. before we proceed to resolve the aforesaid conflict of decisions it will be profitable
to note a few background facts leading to these appeals.
Civil Appeal Nos. 15698-15699 of 1996 These two appeals arise out of a motor accident
wherein the owner of a motor truck, appellant in these appeals, had entrusted the said trust for
driving to one Pritam Singh and has employed one Hem Raj to be a cleaner attached to the said
truck. The said truck met with an accident on 15th February 1992 near Village Pulwahai on
Kumarsain Dhamla Road in the State of Himachal Pradesh. In the said accident driver Pritam
Singh and cleaner Hem Raj died on spot. It is the case of the appellant, owner of the truck, that
having come to know about the accident on 16th February 1992 he immediately informed the
Branch Manager of respondent no.9- insurance company about the accident.
The two claim petitions came to be filed by the heirs and legal representatives of deceased
driver and cleaner under the Compensation Act before the Commissioner for Workmen's
Compensation, Rajgarh district, Sirmur, Himachal Pradesh. The said applications wee moved
presumably by exercising option available under Section 167 of the Motor Vehicles Act which
lays down that 'notwithstanding anything contained in the Workmen's Compensation Act, 1923
where the death of, or bodily injury to, any person gives rise to a claim for compensation under
this Act and also under the Workmen's Compensation Act, 1923, the person entitled to
compensation may without prejudice to the provisions of Chapter X claim such compensation
under either of those Acts but not under both' - Thus these two applications wee in substitution
and in place of otherwise legally permissible claims before the Motor Accidents Claims
Tribunal functioning under the Motor Vehicles Act.
In the said claim applications, the claimants joined the appellant-employer as well as respondent
no.9-insurance company as respondents. The Workmen's Commissioner after hearing the
parties concerned computed the compensation available to the claimant-dependents of the

29. 29
deceased employees. So far as the claim put forward by the heirs of the deceased driver was
concerned the Commissioner awarded a sum of Rs. 88,968/- as compensation. But as the
compensation due was not paid either by the appellant-employer or by the insurance company
as and when it fell due the Commissioner awarded a penalty of Rs. 41,984/- with interest at the
rate of 6% per annum from the date of the accident till the date of payment under Section
4A(3)(a) and (b) of the Compensation Act. The entire amount of Rs. 88,968/- with penalty of
Rs.41,984/- and interest thereon was held payable by the insurance company to the claimants
jointly and severally with the appellant-employer. The said amount was made payable by
respondent no.9-insurance company on the basis that the insurance company had insured the
appellant against his liability to meet the claims for compensation for the death of employee
dying in harness giving rise to proceedings against the insured employer under the
Compensation Act. Similarly the Commissioner awarded a sum of Rs. 88,548/- to the claimants
being legal representatives of the deceased cleaner. In addition to the said amount, penalty of
Rs. 44,274/- with interest from the date of the accident till the date of payment was also made
payable by respondent no.9-insurance company.
The claimants were satisfied with the said awards.The amounts deposited in excess by the
insurance company were ordered to be refunded to it while the remaining amounts were ordered
to be paid to the claimants. it was, however, clarified that the claimants shall be at liberty to
recover the amount of penalty and interest in accordance with law from the employer, appellant
herein. Civil Appeal No.15700 of 1996 The appellant is the owner of a motor truck on which
deceased Prakash Chand was working as a driver, is the sole heir and claimant for
compensation. Between 20th and 21st August 1992 the said truck met with a accident on Kalka-
Simla national highway in the State of Himachal Pradesh. it resulted in instantaneous death of
driver Prakash Chand. It is the case of the appellant insured owner of the truck, that he informed
respondent no.2-insurance company which had insured the appellant against risks arising out
of the use of the insured motor vehicle. That he was insured comprehensively for all risks and
the insurance company was supposed to have immediately contracted the legal representatives
of the deceased driver and should have paid the compensation to the bereaved family which it
failed to do. Section 4 of the Compensation Act deals with 'Amount of compensation'. It lays
down the statutory scheme for computing the compensation payable in cases of the types of
accidental injuries suffered by the workmen concerned.

30. 30
5. CONCLUSION :
The Workman Compensation Act, 1923 was established to provide insurance to employees who
acquired/acquire injuries caused by accidents at the workplace. It ensures the protection of their
rights and dignity as labourers. Employers are also obliged to pay compensation to workers
who have suffered accidents that have resulted in disability or even death during jobs.
Social Security benefits paid totalled $35 million and rose to $961 million in 1950, $11.2 billion
in 1960, $31.9 billion in 1970, $120.5 billion in 1980, and $247.8 billion in 1990 (all figures in
nominal dollars, not adjusted for inflation). In 2004, $492 billion of benefits were paid to 47.5
million beneficiaries. In 2009, nearly 51 million Americans received $650 billion in Social
Security benefits. Reflecting the continuing importance of the Social Security Act, biographer
Kenneth S. Davis described the Social Security Act "the most important single piece of social
legislation in all American history. These are the social form of act are Employees provident
fund and Payment of gratuity of the act. The workmen compensation act got enacted for the
employees to give them their financial security in case of an accident that caused a considerable
loss. The act ensures that the employee’s right is protected even after he is disabled or injured
in an accident that happens at their workplace.
The Act is essentially designed for the workers to be able to get compensation from the
employers when they incur damages for the injuries sustained during an incident. The
fundamental law of Vicarious Liability applies in the Act. The employer is a master and the
employee is a servant. The employee only seeks insurance when the accident happens in the
course of employment and at work.

31. 31
6. REFERENCE :
 https://www.yourarticlelibrary.com/essay/human-resource-management/essay-
on-social-security-of-workers-hrm/75291
 https://en.m.wikipedia.org/wiki/Social_Security_Act
 //en.wikipedia.org/wiki/The_Payment_of_Gratuity_Act,_1972#:~:text=The%20P
aym
ent%20of%20Gratuity%20Act%2C%201972%20is%20an%20Indian%20law,p
artial %20year%20over%20six%20months.
 https://blog.ipleaders.in/payment-gratuity-act-1972/
 https://indianlawportal.co.in/salient-features-of-the-workmens-compensation-act-
1923/