The Amount of Compensation

In one line

Death is fifty per cent of monthly wages times an age multiplier; permanent total disablement is sixty per cent; a listed partial injury is a stated percentage of that; and temporary disablement is a quarter of monthly wages, paid fortnightly.

In exam wording: section 76 of the Code on Social Security 2020 fixes compensation at fifty per cent of monthly wages multiplied by the relevant factor where death results, sixty per cent where permanent total disablement results, the Fourth Schedule percentage or a medically assessed proportion where permanent partial disablement results, and a half-monthly payment of twenty-five per cent of monthly wages where temporary disablement results, in each case or the amount notified by the Central Government, whichever is more.

Why the law has this at all

Because the whole point of a no fault scheme is that the amount is known in advance. If the compensation had to be assessed case by case, the employer could not insure against it and the worker would have to litigate for it, and both of the things the scheme was built to avoid would come back.

So section 76 is a formula, and the formula does three jobs at once. It scales with the wage, so a better paid worker gets more. It scales with age, through the relevant factor in the Sixth Schedule, so a young worker with forty years of earning ahead of him gets a larger multiplier than a man of sixty. And it scales with the severity, through the four heads.

The trade-off is the standard criticism and it belongs in any essay: the formula is predictable but it is not full compensation, and a worker who has lost a career will very often recover far less than his actual loss.

Some words this chapter uses

Relevant factor is the multiplier in column (3) of the Sixth Schedule, read against the employee's completed age on his last birthday before the compensation fell due. Half-monthly payment is a payment made every fortnight. Waiting period is a time at the start of a disablement for which nothing is paid. Commutation is converting a stream of payments into a lump sum. Monthly wages is defined by section 78 and is not simply the wage the worker was on. Arrears are amounts overdue.

Section 76(1): the four heads

(a) Where death results from the injury:

fifty per cent of the monthly wages of the deceased employee multiplied by the relevant factor, or an amount notified by the Central Government from time to time, whichever is more.

(b) Where permanent total disablement results:

sixty per cent of the monthly wages of the injured employee multiplied by the relevant factor, or the notified amount, whichever is more.