Wage ceiling under Employee’s Compensation Act 1923 is enhanced to Rs.15,000

The Ministry of labour and employment vide notification dated 3rd January 2020 has enhanced the wage ceiling for payment of compensation on death from the injury and permanent disablement under the Employee’s Compensation Act, 1923 to 15,000 Rupees per month. This new wage ceiling is effective from 3rd January 2020. Prior to the amendment, the wage ceiling under this Act was 8,000 Rupees per month.

As per the Employee’s Compensation Act 1923, an employer is liable to pay compensation of death and personal injury caused to an employee during an accident arising out of and in course of his/her employment. As per Section 4(IB) (1) of the Employee’s Compensation Act 1923, the Central Government may, by notification in the Official Gazette, specify such monthly wages in relation to an employee for the purpose of Section 4(1). Here, Section 4(1) deals with amount of compensation and provides that-

  1. where death results from the injury the compensation payable to employee’s family shall be equal to 50% of the monthly wages of the deceased employee multiplied by the relevant factor; or an amount of 1.20 lakh and, whichever is more;
  2. where permanent total disablement results from the injury the compensation payable to the employee shall be equal to 60% of the monthly wages of the injured employee multiplied by the relevant factor; or 1.20 lakh whichever is more;

With this current Notification, the new monthly wage-ceiling limit of Rs. 15,000 is introduced for the purpose of calculation of the above two compensation amount.  For example, in case of death, the maximum compensation shall be 50% of 15,000 which comes to Rs. 7,500 that shall be multiplied by relevant factor. The relevant factors are mentioned in Schedule IV appended to the Employee’s Compensation Act 1923 which relates to completed years of age on the last birthday of the workman immediately preceding the date on which the compensation fell due.

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