What are the defences available to an employer regarding payment of compensation?

TANMOY MUKHERJEE INSTITUTE OF JURIDICAL SCIENCE

Dr. Tanmoy Mukherjee

Advocate

What are the defences available to an employer regarding payment of compensation?

(Employees’ Compensation Act, 1923)

 

Tanmoy Mukherjee

Advocate

Under the Employees’ Compensation Act, 1923 (formerly Workmen’s Compensation Act), the employer’s liability to pay compensation is not absolute. The Act recognises certain statutory and judicially evolved defences which an employer can plead to avoid or reduce liability.

Injury not arising out of and in the course of employment-

→The most important defence is that the injury or death did not arise out of and in the course of employment.

→There must be a causal connection between employment and the accident.

→If the accident occurs due to a personal act unrelated to employment, compensation is not payable.

Case law:

Regional Director, ESI Corp. v. Francis De Costa (1996) – Accident must have a nexus with employment.

Accident due to employee’s own willful misconduct (Section 3(1) (b))-

→The employer is not liable if the injury is directly attributable to:

→Willful disobedience of an express order or safety rule.

→Willful removal or disregard of safety guards or devices.

→Being under the influence of alcohol or drugs.

Exception:

→This defence does not apply if the injury results in death or permanent total disablement.

Case law:

State of Rajasthan v. Ram Prasad – Willful breach of safety rules disentitles compensation.

Injury caused outside employment hours or place-

If the accident occurred:

→Outside duty hours, or

→At a place not connected with employment,

→The employer can deny liability.

However, courts apply the doctrine of notional extension of employment in appropriate cases.

Case law:

Saurashtra Salt Manufacturing Co. v. Bai Valu Raja – Limits of notional extension explained.

Injury due to natural causes or disease not connected with employment-

An employer is not liable where:

→Death or injury is due to natural causes (e.g., heart attack),

→Unless employment aggravated or accelerated the condition.

Case law:

Mackinnon Mackenzie v. Ibrahim Issak – Employment must contribute to the injury.

Injury caused by act of God or third party unconnected with employment-

If the injury is caused due to:

→Earthquake, flood, lightning, etc., or

→Assault by a stranger for personal reasons,

and there is no employment nexus, compensation can be denied.

Employee not covered under the Act-

Employer can plead that:

→The person is not an “employee” under Section 2(1) (dd), or

→Employment does not fall under Schedule II.

Failure to give notice of accident (Section 10)-

If the employee:

→Fails to give notice of accident as required,

→And employer was prejudiced by such failure,

the claim may be resisted.

Courts generally adopt a liberal approach in this matter.

Claim barred by limitation-

If the claim is-

→Filed after two years from the date of accident or death,

→And no sufficient cause is shown,

the employer can raise limitation as a defence.

Injury not resulting in disablement for more than three days-

Under Section 3(1):

→No compensation is payable for injuries causing disablement for less than three days.

Contractual exclusion not allowed (but relevant to rebut claims)-

Though Section 17 prohibits contracting out of liability, the employer may rebut:

→False claims,

→Exaggerated injuries,

→Absence of medical proof.

The Employees’ Compensation Act is a beneficial legislation, and courts interpret defences strictly against employers.

However, employers can successfully avoid liability where they prove:

→Absence of employment nexus,

→Willful misconduct of the employee,

→Injury due to personal or natural causes,

→Procedural lapses such as limitation or notice (in rare cases).