Employee's Compensation under the Code

In one line

An employer must pay compensation on a formula for a personal injury caused to his employee by an accident arising out of and in the course of employment, and fault is irrelevant on both sides.

In the wording a student can write in an exam: Chapter VII of the Code on Social Security, 2020, sections 73 to 99, imposes on an employer a liability to pay compensation where personal injury is caused to an employee by accident or by a listed occupational disease arising out of and in the course of his employment; the liability is a no fault one, subject to three defences in the proviso to section 74(1); the amount is fixed by the formula in section 76 and the Sixth Schedule; and disputes go to a competent authority appointed under section 91, from whom an appeal lies to the High Court under section 99.

The repeal, which every textbook still gets wrong

The Employee's Compensation Act, 1923, is repealed. So is the Employees' State Insurance Act, 1948. Section 164(1) of the Code on Social Security, 2020, contains a list of nine repeals, and S.O. 5319(E) of 21 November 2025 commenced items 1 and 2 and items 4 to 9 of that list, from which date those eight Acts ceased to have effect. They are the Employee's Compensation Act, 1923; the Employees' State Insurance Act, 1948; the Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959; the Maternity Benefit Act, 1961; the Payment of Gratuity Act, 1972; the Cine-Workers Welfare Fund Act, 1981; the Building and Other Construction Workers' Welfare Cess Act, 1996; and the Unorganised Workers' Social Security Act, 2008.

A commencement notification is a list, and only what it names is commenced. Item 3 alone was withheld. It repeals the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, and because it is not in the notified list that Act is still in force, together with the Provident Funds Scheme, 1952, the Deposit Linked Insurance Scheme, 1976, and the Pension Scheme, 1995, made under it. A student must not assume that a Code repeals everything in its schedule at once, nor that it repeals nothing.

And the chapters are the other trap. Chapter IV of the Code is Employees' State Insurance. Chapter VII is Employee's Compensation. Textbooks and solved volumes state it the other way round.

When the employer is liable: section 74

Section 74(1). If personal injury is caused to an employee by accident or an occupational disease listed in the Third Schedule arising out of and in the course of his employment, his employer shall be liable to pay compensation in accordance with the Chapter.

The classic phrase "arising out of and in the course of employment" has two limbs and both must be satisfied. "In the course of" is a question of time and place, whether the employee was doing what he was employed to do, when and where he was employed to do it. "Arising out of" is a question of causal connection between the employment and the injury.