1LABOUR LAW SEMINAR (PAPER-III)TOPIC: - CONCEPT OF DISABLEMENTNAME:-PRAKASH MARATHECLASS: - SECOND YEAR LL.MSUBJECT: - LABOUR LAW (PAPER III)
2INDEXSR.NO.TOPICPG.NO.CONCEPT OF DISABLEMENT1.INTRODUCTION32.DISABLEMENT UNDER WORKMEN’S COMPENSATION ACT,41923A. Historical Background4a. Workmen’s Compensation in England4b. Workmen’s Compensation in US7c. Workmen’s Compensation in India8B. Partial and Total Disablement9a. Partial Disablement9b. Total Disablement11C. Amount of Compensation14a. Compensation in case of Permanent Total Disablement14b. Compensation in case of Permanent Partial Disablement14c. Compensation in case of Temporary Disablement whether Total18or Partiald. Compensation payable to an employee in respect of accident19occurred outside India3.4.DISABLEMENT UNDER ESI ACT, 194820A. Historical Background20B. Disablement under ESI Act20a. Permanent Partial Disablement21b. Permanent Total Disablement21c. Temporary Disablement22C. Disablement Benefit22CONCLUSION23SCHEDULE I24SCHEDULE IV28BIBLIOGRAPHY30
3CONCEPT OF DISABLEMENT1. INTRODUCTIONIt was strongly felt after World War I that universal peace based on social justice wasessential. In order to achieve this, the International Labour Organization (ILO) wasformed in 1919. In the first session of ILO held at Washington in 1919, India alsoparticipated as an original member.The role of ILO since its inception has been very significant in creating internationalstandards of social insurance and in promotion of social security. It was on the initiativeand influence of the ILO that the first legislation of its kind towards social security in thecountry namely, Workmen’s Compensation Act, 1923 was enacted. Later on theEmployee’s State Insurance Act, 1948 replaced the Workmen’s Compensation Act in theareas where the Employee’s State Insurance Act has been made applicable. 1The concept of ‘disablement’ is relevant under both the Workmen’s Compensation Act toclaim compensation and the Employee’s State Insurance Act to claim disablementbenefit. But it is to be noted that the term ‘disablement’ has not been defined specificallyunder both the Acts. The Workmen’s Compensation Act provides for partial and totaldisablement while the ESI Act provides for permanent total, permanent partial andtemporary disablement.In common parlance the term disablement can be understood as follows:When an accident occurs and the workman sustains injury, it results into loss of capacityto work and in turn it results into loss of earning capacity of that workman. Suchcondition of incapacity of doing work and subsequently resulting into loss of earningcapacity is called as disablement.1Sharma J. P., Simplified Approach to Labour Laws, (Bharat Law House, New Delhi, 3rd Ed.2009) at 73
42. DISABLEMENT UNDER WORKMEN’S COMPENSATION ACT, 1923A. Historical BackgroundThe law of Workmen’s Compensation was introduced firstly in Germany where it hadbeen introduced in 1884 by the Iron Chancellor, Bismarck. He was the first among theEuropean statesmen to understand fully the implications of the Marxist challenge and totake some steps towards forestalling the threatened revolution of workers by providingfor their security in various forms. One of the benefits secured to the workers by a newlaw was a right to receive compensation from their employer for injuries suffered in thecourse of employment, irrespectively of any fault or breach of duty on the part of theemployers. Later on, Austria followed Germany in 1887. 2a. Workmen’s Compensation Act in England 3In England the Workmen’s Compensation Act (1897) had come from Germany. Thoughit is believed that in Germany the law of compensation was introduced against theimplications of the Marxist challenge, in England the law of compensation seems to havebeen caused by broad consideration of justice and humanity rather than a motive ofneutralizing the revolutionary potentialities of the working class.The British Act of 1897 fell short of the German precedent in one respect. While theGerman Act required employers to indemnify injured workmen, or in the case of fatalaccidents, their families, and it also set up an insurance system under which theemployers were obliged to insure the risk, the British Act only made indemnification atprescribed rates obligatory, but left insurance of the risk to remain optional.It is a matter of history that from an early period up to the middle of the 18th century, thepolitical and economic philosophy holding sway over Europe was ‘mercantilism’,according to which it was necessary and proper to exercise a strict control over privateenterprise, whether joint or individual. Gradually, however, a reaction set in. towards themiddle of the 18th century, it began to be felt that there was too much of Governmentwhich was destroying individual initiative and affecting the prosperity of the nation. The2Goswami V.G. Dr., Labour and Industrial Laws, Vol.1 (Central Law Agency, Allahabad9th Ed.2011) at273Id at 24
5feeling led to the evolution of the doctrine of the laissez faire which means “let thingsalone”.After it had been formulated the doctrine of laissez faire found a rapid and wideacceptance particularly in England and it ushered in a period during which the agenciesof production operated under conditions of complete economic freedom. In the sphere ofemployment the doctrine translated into terms of concrete policy, meant that everyindividual was free to enter any occupation or service that he might choose and thatwages and other conditions of service were to be determined entirely by free bargainingbetween the employer and the employee. The bargain, thus concluded would thereafterrule.The experiment with a policy of complete economic freedom was carried on for aconsiderable period but, in the end, laissez faire in its turn, began to reveal its owndefects. Taking again the sphere of employment alone, it was found that not only werethe employers imposing, in the name of freedom of contract, cruelly harsh terms on theemployees who had no equal bargaining power and forcing them to work forunconsciously long hours and under appalling conditions but the employees had even noadequate means of relief against the employers for injuries sustained in their service. Fordeath or disablement by industrial injuries, the only legal remedy that a workman or hisdependents would seek was damages at common law, but that law having been evolved atan earlier stage of industrial development to govern for simpler relations of master andservant afforded little real protection in the complicated circumstances of modernindustry.At common law, workmen’s claim could be allowed only if he was able to establish somenegligence or breach of duty on the part of the employer as the sole cause of the accidentresulting in the injury. But it was not easy to prove either of those torts, first because thecourts’ hesitating perhaps to saddle the growing industries with too much liability to theemployee, were apt to construe the duties of the employer very narrowly and secondly,because in the majority of cases, the employer had ceased to be a human individual andcome to be a limited company which it was difficult to find guilty of a tort.
6Apart from these hurdles in the way of proof, the workman had also to contend againstthe bar of contributory negligence which meant that if there was some negligence on hispart which had contributed to the occurrence of the accident either wholly or to such anextent that it was not possible to determine whether his or the employer’s negligence hadbeen the decisive cause, he could not recover.There was again, the doctrine of common employment or “the fellow servants rule”, as itis called in America. It meant that there was always an implied term in a contract ofservice that the servant agreed to accept the risk of injury from the negligence of a fellowservant and consequently, when such negligence was the cause of the injury, he could notclaim damages from the master.The result of these limitations was that an injured workman or, in the case of fatality, hisdependents could rarely recover damages at common law. In that state of conditionsunder which workmen were being compelled to work by their insensitive employers andthe inadequacy of the relief available to them for injuries, a reaction against the doctrineof laissez faire inevitably set in and comprehensive series of labour legislation camegradually to be enacted with a view to liberating the workers from there helplessnessagainst the power of the men who owned the factories and establishment where theyworked. First came the Factories Act which were directed at improving the conditionsprevailing in the factories and compelling the employers to adopt suitable safetymeasures for the prevention of accidents.Next legislation was the Workmen’s Compensation Act, which provided for compulsorypayment by the employer, some compensation, calculated by reference to the wages, fordeath or disablement of a worker by accident while at his work, independently of anynegligence or breach of duty on the part of the employer. When first enacted in 1897, theAct was limited to injuries caused directly by accidents and it covered only a fewindustries and occupations, but the list was enlarged by subsequent amendments and by afresh Act passed in 1906, occupational diseases were added. The benefit of the Act was,however, limited to workmen drawing remuneration up-to a certain amount.
7The Act of 1906 was replaced by a new Act in 1925 with no change in the provisions.The National Insurance (Industrial Injuries) Act 1946, which coming into force in 1948introduced an insurance system under which insurance benefits were payable to victimsof the industrial accidents and to sufferers from certain industrial diseases. The solatiumreceivable by workmen was given the name of ‘benefit’ in lieu of ‘compensation’.b. Workmen’s Compensation Act in United States 4By the end of 19th century, the coincidence of increasing industrial injuries anddecreasing remedies had produced in the United States a situation ripe for radical change,and when, in 1893, a full account of the German system written by John Graham Brookswas published as the fourth special Report of the Commissioner of Labour, legislators allover the country seized upon it as a clue to the direction which efforts at reform mighttake place. The stimulus was also provided by the enactment of the first BritishCompensation Act in 1897, which later became the model Act in many respects.In 1910, New York became the first State to enact a workmen’s compensation lawsufficiently comprehensive to meet the problem effectively with compulsory coverage ofcertain hazardous employments. It was held unconstitutional in 1911 by the Courts ofAppeals, on the ground that the imposition of liability without fault upon the employerwas a taking of property without due process of law under the State and FederalConstitutions in Ives v. South Buffalo Rly. Co.In New York the Ives decision was answered by the adoption in 1913 by a ConstitutionalAmendment permitting a compulsory law, and such law was passed in the same year. In1917 this compulsory law was held Constitutional by the United States Supreme Court.By 1920 all States except one had adopted compensation Acts and on January 1, 1949 thelast State, Mississippi, came under the system.4Id at 27
8c. Workmen’s Compensation Act in India5The origin of labour welfare activity in India goes back to 1833 when slavery wasabolished. But the earliest legislative approach could be traced back to the passing of theApprentices Act 1850. The next Act was the Fatal Accidents Act 1855 that aimed atproviding compensation to the families of workmen who lost their life as a result of“actionable wrong”. The Act had the Preamble “whereas no action or suit is nowmaintainable in any Court against a person who, by his wrongful act, neglect or default,may have caused the death of another person, and it is often right and expedient that thewrongdoer in such case should be answerable in damages for the injury so caused byhim”.It was way back in 1884 when the question of granting workmen’s compensation forserious and fatal accidents was first raised in India in 1884 and the need for properlegislation was emphasized by factory and mining Inspectors. But it took about 40 yearsfor Government of India to frame a full-fledged comprehensive Workmen’sCompensation Act. Only towards the end of 1920-21, Government of India initiated stepsfor framing legislation by constituting a small committee in June 1922, comprisingmembers of Legislative Assembly, Employer’s and Worker’s representatives and medicaland insurance experts. The Committee’s detailed recommendations for framinglegislation were accepted and Workmen’s Compensation Act was passed in 1923.The Workmen’s Compensation Act 1923 followed the British Act in its main principlesand in some of its details, but it contained a large number of provisions designed to meetthe special conditions in India. Under this enactment the responsibility for payment ofcompensation rested with employer, a system which led to certain hardship.By the Amendment Act 2009, the title of the Act i.e. Workmen’s Compensation Act 1923was made as the Employees’ Compensation Act 1923 and in place of the word‘workmen’, the word ‘employees’ was substituted.5Sharma J. P., Simplified Approach to Labour Laws, (Bharat Law House, New Delhi, 3rd Ed.2009) at 715
9B. Partial and Total Disablementa. Partial DisablementIt has been defined under Section 2 (1) (g) to mean where,the disablement is of a temporary nature, such disablement as reduces the earningcapacity of a workman in any employment in which he was engaged at the time of hisaccident resulting in the disablement, and where,the disablement is of permanent nature, such disablement as reduces the earning capacityin every employment which he was capable of undertaking at that time provided thateve
Sharma J. P., Simplified Approach to Labour Laws, (Bharat Law House, New Delhi, 3. rd. Ed.2009) at 73. 4 2. DISABLEMENT UNDER WORKMEN’S COMPENSATION ACT, 1923 A. Historical Background The law of Workmen’s Compensation was introduced firstly in Germany where it had been introduced in 1884 by the Iron Chancellor, Bismarck the first among the . He was European statesmen to understand fully ...