Definitions - Employees State Insurance Act(1948), Industrial Laws | Industrial Laws - B Com PDF Download
Definitions:
1. Employment Injury:
Section 2(8) defines employment injury as “a personal injury to an employee caused by accident or an occupational disease arising out of and in the course of his employment, being an insurable employment, whether the accident occurs or the occupational disease is contracted within or outside the territorial limits of India.”
Figure 2: Essentials of ‘Employment Injury’
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Value Addition 4: Understand It Better |
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Case Laws |
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P, the deceased workman was a milk vendor. He distributed milk on bicycle. One day, he sustained chest pain and fell down from his bicycle on which he was carrying milk. While in the hospital for treatment, he died of heart attack. He was servant of milk society and was insured under the ESI Scheme. The High Court held that the deceased died on account of employment injury on the plea that ESI Act should be liberally interpreted in favour of the person for whose benefit the legislation has been enacted. Case: Chandra Matti vs. ESIC 2003, (4) LLN 1143 (Ker. HC) |
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T, while returning home from the factory received injury from his personal enemies on account of property disputes. Held, it is not an Employment Injury. Case: T.Rajappa vs. ESIC 1992, 2 LLJ. 714. |
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Worker died due to natural lightning. SC held that since the workman was exposed to lightning only because of the job, employer is liable to pay compensation. Case: State of Raj vs. Ram Prasad 2001 SC. |
2. Factory:
Section 2(12) of the Act defines ‘factory’ as “any premises including the precincts thereof whereon ten or more persons are employed or were employed on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on or is ordinarily so carried on, but does not include a mine subject to the operation of the Mines Act, 1952 (35 of 1952), or a railway running shed.”
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Value Addition 5: Understand It Better |
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Case Laws |
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Separate buildings even though located at some distance apart when used for one continuous manufacturing process will constitute a single factory. Case: Agents and Manufacturers Delhi vs ESIC, (1973) 2LLJ 447. |
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While readymade garments were made on the premises without the aid of power, but the ironing of those garments was done with the aid of power. The premise was held a factory. Case: Kalpana Dress vs. ESIC 1977, (50) FJR 219(BOM. HC) |
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All the persons employed in a factory need not be employed in the manufacturing process. Case: T.W. cooperative Production and Sale Society Ltd. Vs ESIC, 1977 Lab IC 1514. |
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An establishment, namely Ajanta Hotel was not held to be a factory as the number of workers employed there is less than 10. Case: Moinoddin s/o Khodboddin vs. State of Maharashtra 2003, (2) LLN 479 (BOM. HC) |
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A bakery where slicing machine was being operated electrically was held to be a factory. Case: New Grand High Class Bakery vs. ESIC 1974, Lab. IC 533 (BOM.) |
3. Manufacturing Process:
Section 2(14 AA) states that “manufacturing process” shall have the meaning assigned to it in the Factories Act, 1948.
Section 2(k) of the Factories Act 1948 defines “manufacturing process”. “It means any process for—
- making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal,
- pumping oil, water, sewage or any other substance; or
- generating, transforming or transmitting power; or
- composing types for printing, printing by letter press, lithography, photogravure or other similar process or book binding; or
- constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels; or
- preserving or storing any article in cold storage.”
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Value Addition 6: Understand It Better |
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Case Laws |
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In a hotel, a refrigerator was kept only for the purpose of preservation of milk and curd; this did not amount to manufacturing process. Case: Ritz Hotel, Pune vs. ESIC 1995, (1) Mah. LLJ 63. |
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A cooperative society used to sell milk by purchasing it from the cattle owners. The milk that remains unsold was kept in the cold storage so that it can be sold later. Held, the activity is a manufacturing process. Case: Velli Palayam Cooperative Supply Society vs. ESIC 2004, LLR 887. |
4. Wages:
Section 2(22) of the ESI Act defines “wages” as “all remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled and includes any payment to an employee in respect of any period of authorised leave, lock-out, strike which is not illegal or layoff and other additional remuneration, if any, paid at intervals not exceeding two months, but does not include —
- any contribution paid by the employer to any pension fund or provident fund, or under this Act ;
- any travelling allowance or the value of any travelling concession ;
- any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment ; or
- any gratuity payable on discharge.”
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Value Addition 7: Understand It Better |
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Case Laws |
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Remuneration received by managing director of a company for discharging his duties is wages. Case: ESIC vs. M&R Oil Co. (P) Ltd. 1984, Lab IC 844 (Kant). |
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Wages includes ‘HRA’, ‘night shift allowance’, ‘incentive allowance’ and ‘heat, gas and dust allowance’. Case: Harihar Poly Fibres vs. Regional Director ESIC, (1984) 4 SCC 324: 1984 SCC (L&S) 747 SCC. |
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Wages includes ‘incentive bonus’, though paid at the end of each quarter. Case: Modella Woollens Ltd. Vs. ESIC, (1994) Supp(3) SCC 580: 1995 SCC (L&S) 164 (SC). |
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Conveyance allowance forms part and parcel of wages and the same cannot be excluded while calculating contribution. Case: 2002 LabIC 3138 (Kant) 2002 AIR Kant HCR 2515. |
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Reward for good work paid for exceeding the production target is not considered as wages. Case: Malabar Fruits co. vs. ESIC 1992, 2 LLJ 786. |
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‘Tea allowance’ and ‘milk allowance’ is not considered as wages. Case: ESIC vs. Gedore Tools India (P) Ltd.., (1987) 1 LLN 653 (P&H): 1987 Lab IC 570 (P&H). |
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Bonus by way of ex-gratia payment as a gesture of goodwill by branch factories of the company to their workmen is not considered as wages. Case: Regional Director ESIC vs. Bata Shoe Co., (1985) 4 SCC 460: 1986 scc (L&S) 129 SCC. |
5. Permanent Partial Disablement:
Section 2(15 A) defines “permanent partial disablement” as “such disablement of a permanent nature, as reduces the earning capacity of an employee in every employment which he was capable of undertaking at the time of the accident resulting in the disablement.”
Injuries specified in Schedule II, Part II are deemed to result in permanent partial disablement.
6. Permanent Total Disablement:
Section 2(15 B) defines “ permanent total disablement ” as “such disablement of a permanent nature as incapacitates an employee for all work which he was capable of performing at the time of the accident resulting in such disablement.”
Injuries specified in Schedule II, Part I or combination of injuries specified in part II where loss earning capacity aggregates to 100% or more, are deemed to result in permanent total disablement.
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Oct 25, 2024 Last updated |
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