Employees’ Compensation Act, 1923 (EC Act) – Does it
provide compensation for pandemic, e.g., COVID
The EC Act, 1923 is a social welfare legislation that
aims to provide payment to individuals employed in certain types of employment
with expeditious compensation for injuries sustained in accidents during the
course of their employment. It also provides exceptions for the employer’s
liability, for example, where there is wilful disobedience or negligence on
part of the employee. The Act also provides for a scheme of distribution of
compensation to dependents in case of an employee’s death. In addition to the
above, it provides criteria for computing the amount of compensation and
liability of the insurer.
The act is applicable to employees/persons who are
subject to the provisions of Section-2(1) (dd) which defines employees, this
must be read with Schedule-II which provides greater clarity on who may be
considered an employee for the purposes of the Act. It does not apply to
establishments where the ESI Act, 1948 is in operation.
Section-3 of the Act covers both fatal and non-fatal
accidents provided they occur during or in the course of employment, and
do not suffer from any vitiating circumstances such as wilful disobedience
of the employer, to an order expressly given, or to a rule expressly framed,
for the purpose of securing the safety of employees.
Schedule-IV of the Act lays down the criteria for
determining the lump sum equivalent of compensation in case of permanent
disablement or death. Schedule-I of the Act describes the percentage of loss of
earning capacity due to permanent total and permanent partial disablement which
is the basis for calculating the quantum of compensation.
Employees’ Compensation Act & COVID-19
What would be an employer’s liability in the event of a
worker/employee’s death due to COVID-19?
Section-3 of the Act provides an explanation with
regards to the employer’s liability to compensate, limiting the same to
accidents arising out of and in the course of employment. There are exceptions
to liability provided, like in cases where the injury is minor, where the
employee is under the influence of alcohol, etc.
Is COVID-19 an ‘occupational disease’?
Certain diseases are within the meaning of ‘accident’
under Section-3. Occupational diseases are covered by the act and are dealt
with in the schedule, which divides them on the basis of the type of
employment. Under Entry-I of Part-A under Schedule-III infectious and parasitic
diseases are included. This is subject to the condition that the same is
contracted in an occupation where there is a particular risk of contamination.
These are listed as being any work that involves:-
(4) Other work
carrying a particular risk of contamination
This point allows for the inclusion of other forms of
work. Especially because clause-(4) of Section-3 empowers Central/State
Governments to add any description of employment and occupational diseases
peculiar to the same. For example, the establishments that are engaged in
activities deemed to be essential can be included by the government.
In a pandemic, almost any establishment that operates
does so with a significant risk of having its employees contract an ‘infectious
disease’ as per the ‘other work carrying a particular risk of contamination’
clause under the Schedule of the Act. This is especially true because employers
are liable to provide protective equipment, disinfect, and enforce social
distancing in all establishments. Any lapses in the same that leads to
employees being infected may give rise to claims for compensation through
litigation. Therefore, it is imperative that employers outside the
above-mentioned types of employment continue to take adequate measures to
prevent the transmission of the virus. This is more so where the employment is
field based, e.g., sales promotion, deployment at client/customer locations,
deliveries, home services, etc.,
The scope of employer liability with respect to COVID-19
is confined to certain types of employment. COVID-19, being an infectious
disease that results in total/partial disablement for a period exceeding three
days, which exceeds the threshold in the exception provided under the act.
Therefore, there is ample room for interpretation when it comes to sub-clause
(d) under Entry-1 of Part-A under Schedule-III of the EC Act.
Illustration
The employer company provide off-shore and on-shore services and depute its
employees, at various field sites. Few of such employees contracted COVID basis
standard tests and they were quarantined
(confined) to an Employer provided Hotel accommodation with medical attendance
and care. During this confinement period daily treatment basis periodical
reports by a physician was provided by the Employer.
Case:
One of the employee left the above confinement/accommodation when his
relative visited the premises and travelled to his home. He did reach home but
sooner succumbed to illness. The family did his final rites basis death
certificate issued by the local authorities and the certificate usually does
not contain the cause of death.
Query:
(a) Whether the Employer is liable to pay compensation as per the EC Act!
(b) The Employer has insures its employees under COVID special insurance,
for treatment/fixed compensation – whether the Insurance company is liable to
pay the sum assured!
Response:
(a) Whether the Employer is liable to pay compensation as per the EC Act! – NO. The reasons are discussed below
(b) COVID Insurance is a special policy to provide relief and a contract
between the Insurance Co. and the Employer. Basis this contract, the Insurance Is
obligated to provide the relief
as per the policy.
Ref: Section 3 The Employee's Compensation Act, 1923
3 Employer's
liability for compensation.
(1) If personal injury is caused
to an employee 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 [employee] 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 [employee]
having been at the time thereof under the influence of drink or drugs, or
(ii) the wilful disobedience of the [employee]
to an order expressly given, or to a rule expressly framed, for the purpose of
securing the safety of [employees], or
(iii) the wilful removal or
disregard by the 21 [employee] of any safety guard or
other device which he knew to have been provided for the purpose of securing
the safety of employee
2.If an employee 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 [an
employee], whilst in the service of an employer in whose service he has been 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 specific Section 3 of the 1923 Act would be attracted only when the
conditions precedent therefor are fulfilled and not otherwise……..
Abstract of
Supreme Court’s Ruling:
In Oriental Insurance Company Ltd vs Sorumai Gogoi & Ors on 14 February, 2008, (2008
II LLK863), the, Supreme Court, inter alia, cited the following principals
enunciated by the SC.
The view which we have taken find support from
a judgment of this Court in Mackinnon Machenzie & Co. (P) Ltd. v. Ibrahim
Hameed Issak [(1969) 2 SCC 607], holding :
To come within the Act the injury
by accident must arise both out of and in the course of employment. The words
in the course of the employment mean in the course of the work which the
workman is employed to do and which is incidental to it. The words arising out
of employment are understood to mean that during the course of the employment,
injury has resulted from some risk incidental to the duties of the service,
which, unless engaged in the duty owing to the master, it is reasonable to
believe the workman would not otherwise have suffered. In other words there
must be a causal relationship between the accident and the employment. The
expression arising out of employment is again not confined to the mere nature
of the employment. The expression applies to employment as such to its nature,
its conditions, its obligations and its incidents. If by reason of any of those
factors the workman is brought within the zone of special danger the injury
would be one which arises out of employment .
In Jyothi Ademma v. Plant
Engineer, Nellore & Anr. [(2006) 5 SCC 513] also this Court held
Under Section 3(1) it has to be established
that there was some causal connection between the death of the workman and his
employment. If the workman dies as a natural result of the disease which he was
suffering or while suffering from a particular disease he dies of that disease
as a result of wear and tear of the employment, no liability would be fixed
upon the employer.
But if the employment is a
contributory cause or has accelerated the death, or if the death was due not
only to the disease but also the disease coupled with the employment, then it
can be said that the death arose out of the employment and the employer would
be liable
The expression accident
means an untoward mishap which is not expected or designed. Injury means
physiological injury. In Fenton v. Thorley & Co. Ltd. it was observed that
the expression accident is used in the popular and ordinary sense of the word
as denoting an unlooked for mishap or an untoward event which is not expected
or designed.
The above view of Lord Macnaghten
was qualified by the speech of Lord Haldane, A.C. in Trim Joint District School
Board of Management v. Kelly as follows: I think that the context shows that in
using the word designed Lord Macnaghten was referring to designed by the
sufferer . 9/25/21, 3:55 PM Oriental Insurance Company Ltd vs Sorumai Gogoi
& Ors on 14 February, 2008 . Furthermore,
the rights of the parties were required to be determined as on the date of the
incident, namely, 9.10.1996. It is, therefore, difficult to hold that a
subsequent event and that too by raising a presumption in terms of Section 108
of the Evidence Act can give rise to fructification of claim, save and except
in very exceptional cases.
.
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