The document provides an overview of the Payment of Wages Act 1936, which regulates the payment of wages for certain classes of employed persons in India. Some key points covered include: - The Act aims to ensure timely payment of wages and restricts unauthorized deductions from wages. - It applies to persons employed in factories, railways, and other specified establishments. - The employer is responsible for wage payments as per the stipulated timelines and modes of payment under the Act. - Various permissible deductions from wages are outlined, including for absence, amenities provided, taxes, and with employee authorization. - Employers must maintain registers related to employees, wages paid, and deductions made.

1. SRM Institute of Science and
Technology (VDP Campus)
MB20HR03 COMPENSATION AND
BENEFITS MANAGEMENT
UNIT - IV
By
Dr.V.Suganya
Department of Management Studies

2. UNIT IV
Legalization and Compensation The
legislative process – Payment of Wages
Act 1936, Employees Insurance Act 1948,
Workers Compensation Act 1923,
Employees Provident Fund Act 1952

4. ● Introduction
● Object of the act
● Applicability of the act
● Definitions
● Rules for payment of wages (sec 3 to sec 6)
- Responsibility for payment of wages (S.3)
- fixation of wage - periods (s.4)
- Time of payment of wages (S.5)
- Mode of payment of wages (S.6)

5. ● Deductions which may be made from wages (s.7 to s.13)
● Limit of deduction (s.7 (3) )
● Maintenance of registration (s.13-a)
● Case law
● Conclusion
● References

6. The Payment Of Wages Act 1936 was come in to the force
on 23rd April 1936.This Act was passed to regulate the
payment of wages for certain classes of persons employed
in industry. It ensures payment of wages in a particular
form and at regular intervals without unauthorized
deductions. The Act extends to whole of India sec. 1(2). It
was extended to Jammu and Kashmir by the Central
Labour Law (Extension to Jammu and Kashmir) Act
1970.
.

7. ● To Regulate the payment of wages to certain class of
employed person.
● Regulation completed by the Act is to fold :
1. The date of payment of wages.
2. The deduction from wages whether fine or otherwise.
● To ensure payment of wages to persons who covered by
the Act certain provisions have been made in this Act.

8. According to Sec. 1(4) of the Act, it applies to in the first
instance to the payment of wages to :
1.Person employed in Factory.
2.Person employed upon any railway by a Railway
Administration or either directly or through sub- contractor .
3.Person employed in industrial and other establishment
specified in sub – clauses (a) to (g) of clause (ii) of sec 2
4.The State Govt. may after giving 3 months notice by
notification in the Official Gazette , extends the provision of
this Act or any of them to payment of wages to any class of
persons employed .

9. 1. Employed Person [sec 2 (i)] -
Employed Person includes the legal representative of a
deceased employed person.
2. Employer [sec 2 (i-a)] -
The term Employer includes the legal representative of a
deceased employer.

10. 3. Factory [sec 2 (i- b)]
“Factory" means any premises including the precincts thereof-
(i)whereon ten or more workers are working, or were working on
any day of the preceding twelve months, and in any part of
which a manufacturing process is being carried on with the aid
of power, or is ordinarily so carried on, or
(ii)whereon twenty or more workers are working, or were
working on any day of the preceding twelve months, and in
any part of which a manufacturing process is being carried on
without the aid of power, or is ordinarily so carried on,- but
does not include a mine subject to the operation of the Mines
Act, 1952 (XXXV of 1952) or a mobile unit belonging to the
armed forces of the Union, a railway running shed or a hotel,
restaurant or eating place;
.

11. Explanation I.-
For computing the number of workers for the purposes of this
clause all the workers in different groups and relays in a day
shall be taken into account;
Explanation II.-
For the purposes of this clause, the mere fact that an Electronic
Data Processing Unit or a Computer Unit is installed in any
premises or part thereof, shall not be construed to make it a
factory if no manufacturing process is being carried on in such
premises or part thereof.

12. 4. Industrial and other establishment [sec. 2 (ii)] -
means any,
(a)tramway service or motor transport service engaged in
carrying passengers or goods or both by road for hire or
reward;
aa) air transport service other than such service belonging to or
exclusively employed in the military naval or air forces of the
Union or the Civil Aviation Department of the Government of
India;
(b) Dock wharf or jetty;
(c) inland vessel mechanically propelled;
(d) mine quarry or oil-field;
(e) plantation;

13. (f)workshop or other establishment in which articles are produced
adapted or manufactured with a view to their use transport or sale;
(g)establishment in which any work relating to the construction
development or maintenance of buildings roads bridges or canals or
relating to operations connected with navigation irrigation or to the
supply of water or relating to the generation transmission and
distribution of electricity or any other form of power is being carried
on;
(h)any other establishment or class of establishments which the Central
Government or a State Government may having regard to the nature
thereof the need for protection of persons employed therein and other
relevant circumstances specify by notification in the Official Gazette.

14. 5.“Wages" [sec 2 (iv)] –
All remuneration (whether by way of salary allowances or
otherwise) expressed in terms of money or capable of being so
expressed which would if the terms of employment express or
implied were fulfilled by payable to a person employed in
respect of his employment or of work done in such
employment and includes -
(a)any remuneration payable under any award or settlement
between the parties or order of a court;
(b)any remuneration to which the person employed is entitled
in respect of overtime work or holidays or any leave period;
(c)any additional remuneration payable under the terms of
employment (whether called a bonus or by any other name);

15. (d)any sum which by reason of the termination of employment
of the person employed is payable under any law contract or
instrument which provides
for the payment of such sum whether with or without
deductions but does not provide for the time within which the
payment is to be made;
(e)any sum to which the person employed is entitled under any
scheme framed under any law for the time being in force, but
does not include -
(1)any bonus (whether under a scheme of profit sharing or
otherwise) which does not form part of the remuneration
payable under the terms of employment or which is not
payable under any award or settlement between the parties or
order of a court;

16. (2)the value of any house-accommodation or of the supply of
light water medical attendance or other amenity or of any
service excluded from the computation of wages by a general
or special order of the State Government;
(3)any contribution paid by the employer to any pension or
provident fund and the interest which may have accrued
thereon;
(4)any travelling allowance or the value of any travelling
concession;
(5)any sum paid to the employed person to defray special
expenses entailed on him by the nature of his employment; or
(6)any gratuity payable on the termination of employment in
cases other than those specified in sub-clause (d).

17. a) Every employer shall be Responsible
a) In Factory –
Manager of the Factory is responsible
c) In Industrial or other Establishment
A person responsible to the employer for Supervision and
control of the Industrial or other Establishment.
d) In Railway –
that
A person nominated by Railway Administration for
particular local area

18. e) In case of Contractor –
A person appointed by contractor who is directly under his
charge
f) In other Cases-
A person appointed by employer

19. According to Sec 4 of the Act a Wage Period
must not exceed one month.

20. A) If the number of persons employed in factory,
industrial or other establishment or in railway -
1. Wages to be Paid before 7th Day-
If person employed less than 1000 persons
2. Wages to be Paid before 10th day –
If person employed more than 1000 persons
3. In Case of Dock, Wharf or Jetty or in Mine-
Before expiry of the second working day from the
day on which his employment is terminated

21. B) Wages in case of Termination of Employment –
1. Before the expiry of the 2nd working day from the day
on which his employment is terminated.
2. In case of closure of the establishment for any reason
other than a weekly or other recognized holiday a
wages must be paid before the expiry of the 2nd day
from the day on which his employment is terminated.

22. C) Exemption –
If the State Government may given general or special
order ,exempt the person responsible for the payment
of wages from the operation of the above provisions
in certain case.
D) Wage To be paid on a working Day –
Except under sub– section 2 all payments of wages
must be made on a working day

23. According to sec 6 all wages must paid –
- In currency coin or currency notes or both
- After writing authorization of employed person pay
him wages either by cheque or by crediting the wage
in his bank account

24. Section 7- sub –section (1)
1.Every payment made by the employed person to the employer
or his agent must for the purpose of this Act be deemed to be a
deduction from wages.
2. Penalties mentioned hereunder are not deduction if imposed
for good and sufficient cause –
a)With holding of increment or promotion
b)In case of demotion
c)Suspension

25. Deduction made by the employer must be
made according to this Act only and this are
as follows:

26. -it must be approved by state Govt.
-Rules given in Section 8 of the Act are as follows :
1. Notice Board of fines must be displayed in the work premises
2. Give opportunity to employee to show the cause against the
imposing fine
3. Amount of fine must be 3% of his wage
4. Fine should not imposed on any employee who is under 15 year
5. Fine imposed one time only
6.Fine should not recovered in installments
7.Fine should be recovered in 60 days
8.Imposed on the day act or omission made by the employee
9.It credited to common fund and utilize for the benefit of the
employees
1 . A) Fine (Section 8) –

27. - It must be deducted by employer for the one day or for
any period
- It Should not be exceed a sum which bears the same
relationship to the wage payable in respect of the wage
period as this period of absence does not to such wage
period
- Employee refuses to work without proper reason when he
is present for the work place must be deemed to be absent
from duty
- If 10 or more persons together absent for the duty without
notice and without any reasonable cause
-

28. - Give opportunity to explain reason or cause for damage or
loss happened
- Deduction amount must not be exceed than value or
amount of damage or loss
- All deductions and realization must be recorded in a
register to be kept by responsible person

29. A) Deduction for house Accommodation [Sec 7. (2) (d)] -
- Employer can be made deduction for the house
accommodation provided to employee
- This facility must be accepted by employee
- Deduction should not exceed an amount equivalent to the
value of the house accommodation provided.
B) Deduction for Amenities and Services [Sec.7 (2) (e)] –
- Employer can be made deduction for the amenities and
services provided to employee
- Deduction should not exceed an amount equivalent to the
value of the amenities and services supplied.

30. According to Section 7 (2) (f) -
- Advance paid to employee before employment began ,
this amount recovered from first payment of the wages to
employee
- Amount of advance given for travelling expenses can not
recovered

31. According to Section 7 (2) (ff) -
Employer can made deduction for recovery of loans with
interest made from any fund constituted for the welfare of
labour in accordance with the rules approved by state
Govt.

32. According to Section 7 (2) (fff) –
Deduction for recovery of loans granted for house
building and other purpose shall be subject to any rules
made by the State Govt. regulating the extend to which
such loans may be granted and the rate of interest payable
thereon

33. Income tax payable by the employed person can
be deducted from wages to him by the employer
and amount is recovered in 12 months
employment.
9. Deduction By Order Of Court[ Section 7(2)(h)]
Deduction required to be made by order of the court or
other authority competent to make such order may be
made from the wages of employed person.

34. -Deduction for payments to co-operative societies
of advance from any provident fund which is
recognized by Provident Fund Act 1925 or
approved by the State Govt.
-This is subject to the conditions approved by
the State Govt.

35. A)According to sec. 7 (2)(j) – Deduction for the payment of
co-operative societies –
- It must be approved by State Govt. or prescribed officer
-Deduction made with written authorization of employed
person.
-Deduction made as per condition given by the State Govt.
B)According to sec. 7 (2)(k) – Deduction for the payment of
insurance schemes or E.I.C –
k) Deduction for payment of –
1.any premium on life insurance policy or for other purchases of
securities of Govt. of India or State Govt.

36. 2. Any saving scheme of post office
kk) Deduction For the payment of his contribution to any
fund constituted by employer or registered trade union For
the welfare of employed person or his family or both and
it is approved by State Govt. or prescribed officer
kkk) Deduction for payment of the fees payable by him for
membership of registered trade Union.
All above deduction made with the written authorization
of the employed person

37. The employer has an authority to made deduction for the payment of
insurance premium or fidelity bond may be effected from wages.
 13 . Deduction For Recovery of Losses [Section 7 (2)
Deduction for recovery of losses sustained by the railway
administration made in the following cases
m)Losses on account of acceptance or counterfeit or base coins mutilated
or forged currency noted
n)Losses on account of the failure of the employed person to invoice to bill
,to collect or to account for appropriate charges due to fares, freight,
demurrage etc. or in case of sale of food in catering establishment

38. o) Losses on account of rebate and refund
incorrectly granted by the employed person such
losses attributed to his neglect or default.
14. Deduction For Contribution to Prime Minister
National Relief Fund etc [section 7 (2)(p)-
With the authorization of employed person the deduction
can be effected towards contribution

39. 1. In case where such deductions are wholly or partly
made for payment to co –operative societies 75% of
such wages and
2.In any other case 50% of such wages

40. - Employer required to maintain register in the
following matter :
a)Details of person employed
b)Nature of work performed by them
c)Wages paid to them
d)Deductions made from their wages
e)Receipts given by them and
f)Such other particulars which may be prescribed
- Register and records must be preserve for 3 years and
it must be available at the time of inspection.

41. MANSUKH GOPINATH JADHAV
V/S
W.M.BAPAT
In this case it was held that there is nothing illegal in the
action of the employer or the representative union in arriving at
a settlement and the clause in the settlement providing for
deduction of certain amount and paying it to the employee’s
union such settlement does not contravene sec.7 of the Act
because this section permits deductions with the consent of the
employees.

42. The payment of wages Act was passed to regulate the
payment of wages to certain class of persons employed in
industry. It applicable to factory, railway, industrial and other
establishment etc. Every employer is responsible for payment
of wages and payment must be paid to employed person not
exceed than one month .Wages paid to the workers in
terms of current coin and currency notes or cheque or
credited to employees bank account. Section 7 to 13 of the
payment of wages Act is related to the deductions which may
be made from wages.
All deduction must be done with the consent of the
employed person.

43. 1. Labour and Industrial Law’ s
- K.M.Pillai 11th Edition 2007
2. Labour and Industrial Laws
- A.K.Singh
- R.K.Agrawal
-A.K.Goyal

45. Mission Statement :
To provide for certain benefits to Employees in case of Sickness,
Maternity and Employment Injury and to make provisions for
Related Matters.
The ESI Scheme is an integrated measure of
“Social Insurance” come to the life through the
Employees' State Insurance Act - 1948, and is
designed to complete the task of protecting
“Employees” as defined in the ESI Act – 1948,
against the hazards of Sickness, Maternity,
Disablement or Death due to Employment
injury and to provide full Medical care to
insured persons and their families.

46. Coverage in India:
No. of States/UTs covered:- 29
No. of implemented centers:- 787
No. of Employees:- 1.39 crores
No. of Insured Persons/Family units:- 1.43 crores
No. Insured women:- 26.00 lakhs
No. of Beneficiaries:- 5.55 crores
No. of Employers covered:- 4.06 lakhs
Infrastructure in India:
No. of Regional/Sub-Regional/Divl. Offices:- 52
No. of Branch/Pay offices:- 798
No. of ESI Hospitals:- 148
No. of Hospital Annexes:- 42
Total No. of Hospital Beds:- 27,739
No. of ESI dispensaries:- 1388
No. of IMOs/IMPs/Specialists etc.:- 8925
No. of Para-medical staff:- 45000
At an average the ESI Corporation makes 40 lacs individual payments each year amounting to
about Rs. 300 crores through its wide spread network of branch Offices in implemented areas.

47. Under Section 2(12) The Act is applicable to the “Factories” employing
10 (Ten) or more persons irrespective of whether power is used in the
process of manufacturing or not.
Under Section 1(5) of the Act, the Scheme has been extended to Shops,
Hotels, Restaurants, Cinemas including preview Theatre, Road motor
transport undertakings and Newspaper establishment employing 20
(Twenty) or more persons.
Further, u/s 1(5) of the Act, the Scheme has been extended to Private
Medical Institution and Educational Institutions employing 20
(Twenty) or more persons in certain States .
The existing wage-limit for coverage under the Act, is Rs. 15,000/- per
month (excluding remuneration for overtime) w. e. f:- May 01, 2010.
AREAS COVERED
The ESI Act is applicable across the length and breadth of the India.

48. Employee’s ESI
Contribution
(1.75% Of Gross Salary)
Employer’s ESI
Contribution
(4.75% Of Gross Salary)
Ttotal ESI
Contribution
(6.5% Of Gross Salary)

49. The amount of contribution (Employee’s and Employer’s share) is to be
deposited with the authorized bank (State Bank Of India) through Online
Generated Challan, on or before 21st day of the Succeeding month, of
month following the calendar month.
Contribution can also be submitted Online, by selecting Online Payment
Option during Payment of the contribution, the process will take you the
Payment page of SBI corporate banking login to complete the payment &
same will be competed in few minutes.
If the employee is drawing upto Rs.70/- as daily average wage, he is exempt
from the payment of his share of contribution. The employer is however to
pay employer's share of 4.75% of the salary received by the employee.
The State Govt. bears one-eight share of expenditure on medical benefits
with in the per capita ceiling of Rs. 1200/- per I.P. family per annum & all
additional expenditure beyond the ceiling.

50. Employers covered under the Act, are required to Pay the
Contribution towards the scheme on a Monthly basis. There are two
contribution periods each of Six months and two corresponding
benefit periods also of Six months duration as under.
Contribution Period Benefit Period
1st April to 30th Sep. 1st Jan to 30th June
(of the following year )
1st Oct to 31st March 1st July to 31st Dec.
** At an average the ESI Corporation makes 40 lacs individual payments each
year amounting to about Rs. 300 crores as cash benefits.

51. The following benefits are provided under
section 46.
Medical benefit
Sickness benefit
Maternity benefit
Disablement benefit
Dependents benefit
Funeral expenses
Others Benefits

52. The ESI Scheme provides full range of Medical Care to all Insured
person and thier family, through a network of ESI Dispensaries,
Hospitals & Panel Clinics, Diagnostic Centers & Super Speciality.
Super-Speciality treatment such as:- Open Heart Surgery, Neuro
Surgery, Bone Marrow Transplant, Kidney Transplant or specialized
investigations like CAT scan, MRI, Angiography etc.
Eligibility for MB:- An employee who is covered under the Scheme
for the first time is eligible for medical care for a period of three
months. If employee contributes atleast for 78 days in a contribution
period the eligibility is there upto the end of the corresponding benefit
period.
Claim form under ESI Act:- Form - 09

53. Sickness Benefits represents periodical cash payments made to an IP during
the period of certified sickness occurring in a benefit period when IP requires
medical treatment and attendance with abstention from work on medical
grounds.
Eligibility for SB:- Minimum 78 days contribution in one contribution period.
The daily rate of Sickness Benefit is 50% of the daily wages.
Max. Duration:- Maximum period of 91 days in any two consecutive benefit periods.
Claim form under ESI Act:- Form - 09
Extended Sickness Benefit: Extended Sickness Benefit is a Cash Benefit paid for
prolonged illness due to any of the 34 specified diseases as per (Annexure – A).
Eligibility for Extended SB:- Continuous employment for a period of 2 years and should have
contributed for atleast 156 days in 4 preceding contribution periods. The daily rate of Extended
Sickness Benefit is 40% more than SB rate.
Maximum Duration of ESB:- Including Sickness Benefit payable for 91 days the ESB is
payable upto a further period of 124/309 days that can be extended upto 2 years in special
circumstances on recommendation of competent authority.

54. Maternity Benefit consists of periodical cash payments in case of confinement or
miscarriage or sickness arising out of pregnancy, confinement, premature birth of
child or miscarriage, to an insured woman as certified by a duly appointed medical
officer or mid wife.
Eligibility for MB:- The contribution condition is the same as for Sickness Benefit.
The daily benefit rate is double the Sickness Benefit rate and is thus roughly
equivalent to the full wages. Benefit is paid for Sundays also.
The Benefit is paid as follows:-
(a) For Child Delivery:- For a total period of 12 weeks beginning not more than
6 weeks before the expected date of child birth.
(b) For Miscarriage:- For a period of 6 weeks following the date of miscarriage.
(c) For Sickness arising out of pregnancy, confinement, premature birth
of child or miscarriage:- For an additional period of upto 04 weeks.
Claim form under ESI Act:- Form – 09 & 19 (Notice of Work)
Medical Bonus:- Medical Bonus is lump sum payment made to an insured woman or
the wife of an insured person in case she does not avail medical facility from an ESI
hospital at the time of delivery. The amount of Bonus is Rs. 2500/-.

55. Disablement Benefit is admissible for disablement caused by
employment injury. At the first instance, temporary disablement
benefit is payable as long as the temporary disability lasts. If the
employment injury results in partial or total/permanent disability,
permanent disablement benefit is payable till the death of the insured
person.
The Daily benefit rate for Permanent and Temporary Disablement is roughly
equivalent to about 100% of the wage rate. For permanent partial disablement, the
rate of benefit is proportionate to the percentage of loss of earning capacity. The
benefit is paid for Sundays also.
Claim form under ESI Act: For Temporary Disablement:- Form – 09
For Permanent Disablement:- Form – 14

56. Dependents benefit is paid as family pension to the
dependants of a deceased insured person in the event of
death due to employment injury or occupational disease
and is equivalent to about 70% of the wages.
 Eligible Members:
 A widow can receive this benefit on monthly basis for life or till her Re-Marriage.
 A son or daughter can receive this benefit till (25) twenty five years of age.
 Other dependants like parents including a widowed mother etc. can also receive this benefit
under certain conditions.
 The first installment is payable within a maximum of three months following
 the death of an insured person and therefore, on a regular monthly basis.
 Claim form under ESI Act:- Form – 15 & 16

57. Funeral expenses are in the nature of a lump sum payment of Rs. 10000/- (revised from
@ 5000/- w.e.f:- April 2011) made to defray the expenditure on the funeral of deceased
insured person. The amount is paid either to the eldest surviving member of the family
or, in his absence, to the person who actually incurs the expenditure on the funeral.
Claim form under ESI Act:- Form – 22
Others Benefits:-
Rehabilitation Allowance:- Rehabilitation in case of disabled insured persons under 45 years of
age with 40 percent or more disablement.
Free Supply:- Free Supply of physical aids and appliances such as crutches, wheelchairs,
dentures, spectacles and other such physical aids.
Old Age Medical Care:- Old age Medical care for self and spouse at a nominal contribution of
Rs. 120/- per annum.
Rajiv Gandhi Shramik Kalyan Yojana:- Unemployment Allowance is payable to those
workers facing involuntary unemployment due to closure of factory or non-employment injury.
Benefit rate which is just above 50% of the daily wages for max 01 year.

58. Complete the Registration process with in 15 days after the Act
becomes applicable. Submit Form - 01 to the Regional office or apply
through Online to get the unique Registration No. under this Act.
Following Responsibility are:-
 Generated the TIC & handover to employee for Smart Card.
 Maintain an Accident Book in Form - 11 (under Regulation 66)
 Submit an Accident Report in Form – 16 within 24 hours of Accident.
 Grant leave to insured employees on the basis of sickness certificates.
Records Maintenance :-
Register of Employees in Form -6 (under Regulation 32)
Accident Book in Form - 11 (under Regulation 66)
Inspection Book (under Regulation 102A)
File for copies of return of declaration forms.
File for copies of Return of Contribution, Challans, etc.
File for general correspondence & copies of Accident Reports.

59. Right to receive Payment of any benefit under the Act that shall not be
“Transferable or Assignable”.
Cash Benefits payable under the Act are not liable to attachment or sale in
execution of any decree or order of any court.
Employer shall not dismiss, discharge or reduce the wages or otherwise
punish a covered employee during the period he / she is in receipt of
Sickness Benefit or Maternity Benefit etc.
By reason of his liability to pay his share of contribution under the ESI Act,
no employer shall directly or indirectly reduce the wages of a covered
employee.
Right to register their grievances / complaints at any level for immediate
Redressal & Judgement.
Right to approach EI Court against any action/ decision of the medical
Board etc.

60. Medical treatment is available in any ESI Dispensary, Centre & ESI
Hospital all over of India.
As per rule, Smart card (know as Pahachan card) will be accepted
(valid) for life long.
No need to take New card, when employee is changing the Job or office.
It is comfortable to carry always by the insured persons & their families.
Employee’s & their family members details can change or update with
out any objection.
Insured person health record will be available online for any future
treatment required to the person in all ESIC centers.
Any one can find the details easily of insured persons & his family
members by login with IP No. on esic.in (via- IP’s login).
Temporary and permanent workers can use this facility of Smart Card to
avail all the above benefits easily.

61. Under Section 39(5)(a) of the ESI act, read with Regulation 31(A) of the ESI
(General) Regulations 1950, the employer is liable to pay simple interest @
15 percent per annum in respect of each day of default or delay in payment
contributions. In addition, under the Provision of Regulation 31-C of ESI
(General) Regulations, 1950, read with section 85 (B)(i) of the ESI Act, the
Corporation is empowered to recover damage as under:
Period of delay in
payment of Contribution
Rate of Damages
on the amount due
i) Up to less than 2 months
ii)2 months and above but less than 4 months
iii). 4 months and above but less than 6 months
iv). 6 months and above
5 %
10%
15%
25%

62. Enrolment Process for Smart Card

63. Workmen Compensation Act, 1923
6

64. Objectives
6
⚫ TheAct, aims to provide workmen and/or
their dependents some relief or
compensation in case of accidents arising out
of and in the course of employment and
causing either death or disablement (partial
or total) of workmen.

65. Scope and Coverage
6
⚫ TheAct extends to the whole of India.
⚫ It applies to workmen employed in
factories, mines, plantations, transport
establishments, construction
work, railways, ships, circuses, & other
hazardous occupations & employments
specified in Schedule II to theAct.
⚫ The coverage of this act is also to cooks
employed in hotels and restaurants.
⚫ TheAct does not apply to members ofArmed
Forces of the Union & workmen who are
covered by the ESIAct, 1948.

66. Definitions[Sec.2]
6
⚫Commissioner
⚫Dependant
⚫Employer
⚫Disablement
⚫Wages
⚫Workman

67. Commissioner
6
⚫Sec.2(1)(b)
⚫Commissioner means a Commissioner
for Workmen’s Compensation
appointed under Sec.20.

68. Dependant[Sec.2(1)(d)]
⚫ Dependant means any of the following
relatives of a deceased workman, namely:
(I)a widow, a minor legitimate or adopted son and
unmarried legitimate or adopted daughter, or a widowed
mother.
(II)if wholly dependant on the earnings of the workman at
the time of his death, a son or a daughter who has
attained the age of 18 years and who is infirm.
(III) And any of the following were wholly or partly
dependent on the workman at the time of his death—
🞄 a widower, a parent other than a widowed mother, a
minor illegitimate son, a unmarried illegitimate
daughter or a daughter legitimate or illegitimate or
adopted if married & a minor or if widowed & minor, a
minor brother or an unmarried sister or a widowed sister
if a minor, a widowed daughter-in-law, a minor child of
pre-deceased son & daughter where no parent of the
child is alive & a paternal grandparent if not the parent
of the workman is alive. 6

69. Employer[Sec.2(1)(e)]
69
"employer" includes
⚫Any body of persons whether
incorporated or not;
⚫Any managing agent of an employer;
and
⚫The legal representative of a deceased
employer.

70. Disablement
70
⚫Disablement means loss of capacity to
work or to move. Disablement of
workman may result in loss or
reduction of his earning capacity. In the
later case, he is not able to earn as
much as he used to earn before his
disablement.
⚫Disablement may be (1) partial, or (2)
total.
⚫Further it may be (i) permanent, or (i)
temporary.

71. Partial disablement-2.1(g)
71
This means any disablement as reduces the
earning capacity of a workman as a result of
some accident. It may be temporary or
permanent.
⚫ Temporary partial disablement means any
disablement as reduces the earning capacity of a
workman in any employment in which he was
engaged at the time of the accident resulting in
the disablement.
⚫ Permanent partial disablement is one which
reduces the earning capacity of a workman in
every employment which he was capable of
undertaking at that time of injury.

72. Total disablement-2.1(l)
72
⚫‘Total disablement’means 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 the accident
resulting in such disablement

73. Wages[Sec.2(1)(m)]
73
⚫‘wages’includes any privilege or benefit
which is capable of being estimated in
money, other than a travelling
allowance or the value of any travelling
concession or a contribution paid by the
employer a workman towards any
pension or provident fund or a sum
paid to a workman to cover any special
expenses entailed on him by the nature
of his employment.

74. Workman[Sec.2(1)(n)]
74
⚫‘workman’means any person who is-
⚫(a) a railway servant as defined in
clause (34) of section 2 of the Railways
Act, 1989 (24 of 1989), not permanently
employed in any administrative, district
or sub-divisional office of a railway and
not employed in any such capacity as is
specified in Schedule II, or
⚫(b) a master, seaman or other member
of the crew of a ship, etc
⚫It does not include a person whose
employment is of casual nature.

75. Rules Regarding
Workmen’s
Compensation
75

76. Employer’s Liabilities For
Compensation[Sec.3]
76
An employer is liable to pay compensation
to workman for-
⚫ 1. Personal injury by accident-An employer
is liable to pay compensation to workman if
personal injury is caused to him by accident
arising out of & in the course of his
employment.
⚫ 2. Occupational diseases- workers employed
in certain occupations are exposed to certain
diseases which are inherent in those
occupation.

77. Employer is not Liable For
Compensation
77
⚫ (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 - (i) the workman having been at the time thereof
under the influence of drink or drugs, or
⚫ (ii) 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
⚫ (iii) the willful removal or disregard by the workman of any
safety guard or other device which he knew to have been
provided for the purpose of securing the safety of workmen

78. Doctrine of Notional Extension:
78
⚫ The expression in the course of his employment', connotes not
only actual work but also any other engagement natural and
necessary thereto, reasonably extended both as regards work-
hours and work-place. It refers to the time during which the
employment continues. . However, this is subject to the theory
of notional extension of the employer's premises so as to include
an area which the workman passes and re-passes in going to
and in leaving the actual place of work. There may be some
reasonable extension in both time and place and a workman
may be regarded as in the course of his employment even
though he had not reached or had left his employer's premises.
This is also called as the Doctrine of Notional Extension. The
doctrine of notional extension could not be placed in a strait
jacket; it was merely a matter of sound common sense as to
when and where and to what extent this doctrine could be
applied.

79. Amount Of
Compensation[Sec.4]
79
⚫ The amount of compensation payable to a
workman depends on
the nature of injury caused by accident,
the monthly wages of the workman
concerned, and
the relevant factor for working out lump sum
equivalent of compensation amount as
specified in Schedule IV.
⚫ There is no distinction between an adult and
a minor worker with respect to the amount of
compensation.

80. Compensation For Death
80
⚫In case of death resulting from
injury, the amount of compensation
shall be equal 50% of the monthly
wages of the deceased workman
multiplied by
the relevant factor.
⚫Or an amount of Rs 80,000/- whichever
is more.

81. Example:
81
⚫ Aworkman is employed in a factory on a monthly wage of Rs
3000. While working he met with an accident and dies on oct
2000. His date of birth is July 18 , 1970. The amount of
compensation payable to his dependent would be
50* monthly wages* Relevant factor of age 30
100
0r 80,000 whichever is higher
50* 3000* 207.98 = 3,11,970
100
Since Rs 311970 is more than 80000 the compensation payable to
him shall be Rs 311,970

82. Compensation For Permanent
Total Disablement
82
⚫ In case of permanent total disablement resulting
from the injury, the amount of compensation shall be
60% of the monthly wages of the injured workman
multiplied by the relevant factor or Rs 90,000/-
thousand whichever is more.
⚫For the above example the compensation would be
60* 3000* 207.98 = 3,74,365
100
Since Rs 3,74364 is more than 90,000 the amount of
compensation payable should be Rs 3, 74364

83. Compensation For Permanent
Partial Disablement
83
⚫ Where permanent partial disablement occurs, the amount of compensation
payable shall be as follows:
 in case of an injury specified in part II of the schedule I, the amount of
compensation shall be such percentage of the compensation which would have
been payable is the percentage of loss of earning capacity caused by that
injury.
 in case of an injury not specified in schedule I, such percentage of the
compensation is payable which is proportionate to the loss of earning capacity
(as assessed by a qualified medical practitioner) permanently caused by the
injury.

84. Example:
84
⚫A worker whose monthly wages is RS
3000 loses one eye AS A RESULT OF
Injury caused to him on Nov 15, 1995.
On Oct 1, 1995. He had completed 20
years of age. The amount of
compensation payable to him would be
40% of 60* 3000* 224 = 1,61,280
100

85. Compensation For Temporary
Disablement(Total or Partial)
⚫ If the temporary disablement, whether total
or partial results from the injury, the amount
of compensation shall be a half monthly
payment of the sum equivalent to 25% of the
monthly wages of the workman to be paid in
accordance with the provisions.
⚫ The half monthly payment shall be payable
on the sixteenth day from the date of
disablement
⚫ In cases where such disablement lasts for a
period of 28 days or more compensation is
payable from the date of disablement
⚫ In other casesAfter the expiry of a waiting
period of three days from the date of
disablement. 23

86. Compensation to be paid when due &
penalty for default[Sec.4A]
86
⚫ As per this section, compensation has to paid as soon as it is due
⚫ In case the employer does not accept the liability of paying the
compensation, he is bound to make provisional payment to the
extent of the liability he accepts. Such amount has to be
deposited with the commissioner or paid to the workman. If he
defaults, the commissioner may order:
 the payment of the amount with interest at12 % per year
 if the default to be unjustifiable then the commissioner may
order payment of a further sum not exceeding 50% of the
amount due, by way of penalty.

87. Method of calculating monthly
wages[Sec.4A]
87
⚫ The monthly wages of the workman shall be one-twelfth of the total
wages which have fallen due for payment to him by the employer in the
last twelve months of that period.
⚫ where the whole of the continuous period of service immediately
preceding the accident during which the workman was in the service of
the employer who is liable to pay the compensation was less than one
month, the monthly wages of the workman shall be the average
monthly amount which, during the twelve months immediately
preceding the accident, was being earned by a workman employed on
the same work by the same employer, or, if there was no workman so
employed, by a workman employed on similar work in the same
locality.
⚫ in other cases [including cases in which it is not possible for want of
necessary information to calculate the monthly wages under clause
(b), the monthly wages shall be thirty times the total wages earned in
respect of the last continuous period of service immediately preceding
the accident from the employer who is liable to pay
compensation, divided by the number of days comprising such period.

88. Distribution of
Compensation[sec.8]
• The compensation payable for death and
• The compensation payable to a woman or person of legal
disability shall be through the commissioner only.
• Employer can make advance payment directly to dependents in
case of death equivalent to three months salary of the deceased
person.
• Employer is exonerated from his liability if he deposits the
compensation amount with the commissioner within the
stipulated time.
• The commissioner shall call all dependents of the deceased and
determine the method for distribution of compensation among
them.
• If no dependents are found then amount shall be refunded to
the employer.
• On request by the employer the commissioner shall furnish the
details of disbursement. 26

89. Notice & Claim[Sec.10]
89
To claim the compensation:
• The claimant shall give notice of accident to the employer or by
entering in the notice book within the reasonable period.
• Every such notice shall give the name and address of the person
injured, the cause of the injury and the date on which the
accident happened and
• Submit the claim application to the commissioner within two
years from the date of accident.
• In case of occupational disease the accident is deemed to have
occurred on the first day of disease.
• Defect if any in the notice or not giving notice or delayed
application will not bar the claim for compensation.

90. Commissioners[Sec.20]
90
• The State Government may, by notification in the
Official Gazette, appoint any person to be a
Commissioner for Workmen's Compensation for
such area as may be specified in the notification.
• Any Commissioner may, for the purpose of deciding
any matter referred to him for decision under this
Act, choose one or more persons possessing special
knowledge of any matter relevant to the matter
under inquiry to assist him in holding the inquiry
• Every Commissioner shall be deemed to be a public
servant within the meaning of the Indian Penal Code
(45 of 1860).

91. Appeals[Sec.30]
91
⚫ (1)An appeal shall lie to the High Court from the following orders of a
Commissioner, namely :-
⚫ (a) an order awarding as compensation a lump sum whether by way of
redemption of a half-monthly payment or otherwise or disallowing a
claim in full or in part for a lump sum;
⚫ (aa) an order awarding interest or penalty under section 4A;
⚫ (b) an order refusing to allow redemption of a half-monthly payment;
⚫ (c) an order providing for the distribution of compensation among the
dependants of a deceased workman, or disallowing any claim of a
person alleging himself to be such dependant;
⚫ (d) an order allowing or disallowing any claim for the amount of an
indemnity under the provisions of sub-section (2) of section 12
⚫ (2) The period of limitation for an appeal under this section shall be
sixty days.
⚫ (3) The provision of section 5 of the LimitationAct, 1963 (36 of 1963)
shall be applicable to appeals under, this section.

94. Under section - 1 ( 3), Every Factories or Establishments employing 20 (Twenty) or
more persons from the date of its setup are covered under the Act. Cinema Theatres
employing 05 (Five) or more persons are covered under the Act.
Under section - 2A, where an establishment consists of different departments or has
branches, whether situated in the same place or in different places, al such
departments or branches shal be treated as parts of the same establishment.
Government of India after giving two-months notice may apply the provisions of this
Act to Establishments where less than 20 ( Twenty) persons are employed. The
Employees’ Provident Fund & Misc. Provision Act 1952, applies to the whole India,
(except Jammu & Kashmir).
The existing Wages ceiling limit for coverage under the Act, is Rs.6,500/- ( Basic +
DA) per month W. e. f:- 01st June 2001, earlier it was Rs:- 5000/-.
Establishments to which this Act once applies shal continue to be governed by this
Act notwithstanding that the number of persons employed therein at any time fal s
below then 20 (Twenty) person.

95. The co-operative societies employing less than 50 persons and working without the
aid of power. 16( 1)( a).
The establishment to which this Act applies shal continue to be governed by this Act
, even if the number of employees fal s below 20 at a later date. [ 1( 5)].
16( 1)( b) Establishments under the control of state/central Govt.& employees who
are get ing benefits in the nature of 16(1) ( b) contributory P.F. or old age pension
as per rules framed by the Govt.
16( 1)( c) Establishment set up under any central, provincial or state act and the
employees who are get ing benefits in the nature of contributory P.F. or old age
pension as per rules.
Voluntary Coverage :
If any of the establishment is not satisfying the above two conditions for coverage
and if the employer and majority of the employees are wil ing , the Act may be
applicable to such establishment ( voluntary coverage under section 1( 4) )

96. Employee’s Share
(to EPF Fund)
Employer’s Share
(to EPF & Pen. fund)
12 %
of Basic + DA
8.33%
of Basic + DA
3.67%
of Basic + DA
Provident Fund
Total:- 15.67%
Pension Fund
Total:- 8.33%

97. What is EDLI ? ?
Employee’s Deposit Linked Insurance is basical y an Life Insurance for al covered
employees since – 1976. Here deposit means average deposit in EPF. When an
employee dies while in service, his or her family wil get some compensation based
on deposit in EPF Ac ount ( Maximum 20 months wages or Rs:- 130000/- w.e.f:-
May 2010).
To get the claim, the employer has to pay 0.50% of ( Basic+DA) as its monthly
premium with total contribution on behalf on Employees.
Admin. Charges for Relocation of Fund & Inspection:
1.10% of total (Basic+DA) towards EPF Admin. Charges subject to a minimum Rs.
5/-.
0.01% of total (Basic+DA) towards EDLIscheme subject to a minimum Rs. 2/-.
There is no fee paid by employer towards pension fund.
Total Monthly Contribution (Employee + Employer+ EDLI+ Admin Charges):-
(1 2%+1 2%+050%+1 .1 0%+0.01 %)= 25.61 %

98. Total amount of contribution ( Employee’s & Employer’s share) is to be
deposited through on-line submission w.e.f. April 2012, of Monthly
Contribution to EPFO website in respctive A/c No:- 01, 2,10, 21 & 22. On-
line generated Combined Chal an is to be submit ed with a cheque of
equal amount in favor of SBI EPF A/C to the authorized bank of EPFO
( State Bank Of India) in triplicate on or before 15th day + 5 days grace
period i.e. 21st day of month fol owing the calendarmonth.
The 02nd copy of chal an wil be received at the time of submission of
chal an for clearing of Cheque or draft at SBI & 03rd Copy of chal an wil be
available at bank after clearing of cheque, which should be file in records
for any future cor ospondance with EPFO. 01st copy of chal an wil be kept
by bank for records.

99. Employees’ Provident Fund Scheme -
1948
 Retirement Medical Care Housing
 Family Obligations Education of Children
 Financing of Insurance Policy
 Employees Pension Scheme 1995
 Monthly Member’s Pension Scheme. Widow & Children Pension.
 Orphan Pension. Reduced Pension.
Disablement Pension.

100. Type of Benefits Terms & Condition % of Share of Amt.
1 . Withdrawal from the fund for
a) The purchase of House
b) Construction of House
5yrs. Of membership of the fund.
(Min. balance in member’s a/c
should be Rs.1000/-)
36 months wages (Basic &
D.A.) OR Member’s own
share & co’s share of cont.
2. Advance from the fund for
repayment of loan
10 yrs membership of the fund &
member should have taken loan
from Govt. Body.
Same as above
3. Advance from the fund for
il ness viz hospitalization for more
than a month, major surgical
operation or suffering from T.B. .
Cancer etc.
Stay in Hospital at least for a
month
Stay in Hospital at least
for a month
4. Advance from the fund for
mariage of self/son/
daughter/sister/brother etc
07 years membership of the fund
& min.bal.in members a/c should
be Rs.1000/-
50% of member own
share of contribution
5. Advance from the fund for
education of daughter /son
Same as above Same as above
6. Grant of advance in abnormal
condition.(natural calamities etc.)
a)Certificate of damage from
appropriate authority.
b) State Govt. Declaration
Rs.500/- or 50% of
member own share of
contribution.
(To apply within 4
months.)

101. Enrol the eligible employees as Employees’ Provident Fund subscriber
from the very first date of his/herservice into the Organization.
Maintain EPFEligibility Register consists of (a) Employee Information, (b)
Employee PF/Pension Registration, Nomination and A/c No. details.
To maintain the Inspection Book for an inspectorto record his observation.
Maintain such ac ounts in relation to the amounts contributed to the fund
and by his employees.
To comply with al the directives issued by the Central Board for proper
implementation of the scheme.
Pay to the fund within 15 days of the close of the month both the shares
of contribution and administrative charges or inspection charges.
Deposit the claim from of Left or Retired employee's to the EPFO to set le
the claim, without any objection.

102. For Organization:-
Performa Registration form to registerthe Organization under the act .
Form –5A, for details of Directors /Proprietors of the Organization.
Form – 9, for al covered Employee Details at the time of Registration.
For New Entrance:-
Form –2, Nomination Form with details of Employees, Nominee & PF A/c No.
Form –11, Declaration Form to find the New Joinees is eligible for EPFmembers
or Not through his/herdeclaration about last employment.
For Monthly Return:-
Combined Chal an triplicate Copy after clearing of Cheque.
Form – 5 for al new Joinees Details
Form – 1 0 for al left or retired employees.
Form –12A with al summaries details of al above three forms.
For Annual Return:-
Form 3-A, Monthly contribution details of employee & employer .
Form 6-A, Summary of Form 3A of al the employees covered employees.
Reconciliation Statement of PF cont. due & Deposited to the Bank towards the
EPF.
Contribution Details of al Covered Employees as soft copy in CD(DBFversion)

103. Form - 1 9 :- Withdrawal form of Provident Fund Amount.
Form - 10C :- Withdrawal form of Pension Scheme Amount.
Form -1 3 :- For Transfer of Provident Fund /Pension Scheme.
From - 31 :-
Form - 20 :-
For application of advance from Provident Fund.
Withdrawal form of Provident Fund ( In case of Death).
Form -1 0 D :- Application for pension ( In case of Death).
Form - 5 (IF) :- EDILClaim Amount Form. ( In case of Death).
Form – 8 :- For change the Nominee.
Form –ASR :- To receive the Claim cheques again of Set le Ac ount.
( in case of first cheque rejected by Bank due to any mistake).

104. Less then 2 months :- @ 17% p.a. on total due Contribution.
02 months & above, but less then upto 04 months:- @ 22%
p.a.
04 months & above, but less then upto 06 months:- @ 27%
p.a.
06 months & above :- @ 37 % p.a. on total due contribution.