Employee Compensation Act & COVID -19


Animay Singh
Simpliance COE




Employee Compensation Act


The Employee Compensation 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 willful 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 Employee State Insurance 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 and negligence. It is a common practice, especially in industries/undertakings that involve significant risks, for employers to provide insurance to their employees that cover injuries/disablement and even death.

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.

Employee Compensation & COVID-19

Is there any provision for compensation for employees contracting COVID-19 under the Employee Compensation Act, 1923?

What would be an employer’s liability in the event of a worker/employee’s death due to COVID-19? 

These have been amongst the top questions received by Simpliance from numerous clients and users.

The answer to the same requires us to examine Section-3 of the Employee’s Compensation Act, 1923. It 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. 

Can COVID-19 be considered an ‘occupational disease’?

First, we must note that 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. This leads us to the question of whether COVID-19 can be considered an ‘occupational disease’.

Under Entry-I of Part-A under Schedule-III of the act, 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:-

• Exposure to health/laboratory work

• Exposure to veterinary work

• Handling animals, animal carcasses, part thereof or merchandise contaminated by the same

• Other work carrying a particular risk of contamination

It is evident from the above that exposure to health/laboratory work presents a clear example of when an employer might be liable to compensate a worker. It must also be noted that contraction in the above situations must arise within the course of employment to make the employer liable.

However, the inclusion of the fourth 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.

As seen in the above paragraph, the scope of employer liability with respect to COVID-19 is confined to certain types of employment as per the Act. However, the same should not be relied on or used as a ground to avoid liability. This is because COVID-19 is 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 Employee Compensation Act, 1923. 

In summary, it must be understood that until more types of employment are included within the scope of Entry-I of Part-A under Schedule-III of the act, the same only applies to the establishments listed above. This conclusion applies to individuals who have succumbed to the disease as well as those who have recovered from it.

Do you think workers/employees in other sectors need to be included under the scope of the Act? 

Drop your thoughts and queries below.

Disclaimer: This blog is meant for informational purposes and discussion only. It contains only general information about legal matters. The information provided is not legal advice and should not be acted upon without seeking proper legal advice from a practicing attorney.
Simpliance makes no representations or warranties in relation to the information on this article.

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13 thoughts on “Employee Compensation Act & COVID -19”

  1. Dear Animay,
    So can we imply that if its proved that contraction of COVID-19 took place during the course of employment, then only employer liability arises.

    1. And to add to this question from Dayanand, regardless of the type of company will the liability fall on the employer?

    2. Its only applicable when the contraction is born out of the very nature of an employee’s occupation and not because of a general widespread epidemic which anybody can be exposed to at workplace

    3. In our opinion, contraction of COVID-19 in the course of employment only gives rise to liability for compensation if it falls under one of the occupations for which infectious diseases are listed as an occupational disease under the Employee Compensation Act read with the Schedule. With regards to other types of employment and contraction in the course of employment we might have to wait for the courts to shed some light on the matter, as of now there is no rule under which we may draw this inference.

      Disclaimer: The views and opinions expressed herein are in no way to be considered legal or consultative advice, this comment merely represents the author’s opinion with regards to the question posed and should not be the basis for any legal/administrative decision-making. The views and opinions do not necessarily represent those of Simpliance Pvt. Ltd, its staff or any other contributors to the blog

  2. @ Adv Sunil Gaikwad, What if I didnt want to come to office but my company has compulsorily asked us to come to office and I get infected in office. Should not the company bear all my expenses.

    1. First of all, as per your terms of employment, you are supposed to join your office, once your office has opened after lockdown. You cannot choose to not to go to office out of fear of Corona. If you remain absent for 8 or more days without company’s authorisation, you loose your lien on your employment with the company. Now, if you choose to join your office, you are liable for your health why should company bear cost of your treatment. You must have taken your mediclaim. You manage your empenses through this. Why company should bear your medical costs.. Its different matter, if you are covered either under WC Policy or ESI, then in that case, you will get applicable benefits in case of hospitalization/disablement etc.

  3. In the situation of Work From Home, how would the condition of employee compensation act be applicable. A person may be working 8 to 12 hours for the company may have developed musculoskeletal ailments, can he or she claim under the provisions.

    1. Hi Sachin, The benefit will be availed mainly in case of death. The Dependant of the deceased employee can claim for compensation within two years of the death of the employee in case the death is due to any occupational disease occurred in the course of the employment.

  4. Covid 19 is a contagious infection which may lead to death. It is neither considered to be an accident nor occupational disease in spite of the fact employee is working.
    Insurance companies will never accept such death to be employment injury.
    As per my view there may be two solutions to the same.
    1. We ask our insurance company to cover death arising out of Covid-19 in the policy/ contract and pay additional premium.
    2. If insurance company doesn’t agree, to send proposal to appropriate government to incorporate the same under occupational disease.

    We all are aware that death arising out of Covid-19 has been considered by ESIC and this means earlier it was not covered. Now family members of the deceased will be eligible for pension & death benefits under ESIC.
    Please suggest if anyone wants to add more. Regards

  5. When employees are working for company which is coming under Essential service and many employees got infected and lost their life .in this case , is there any option to claim for compensation from employer

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