2. Compensation law
Workers' compensation is insurance that provides
cash benefits and/or medical care
for workers who are injured or become ill as a
direct result of their job.
Employers pay for this insurance, and shall not
require the employee to contribute to the cost
Workers’ compensation system to enforce a series
of state laws that requires employers to pay workers
for their work-related injuries and illnesses with no
relationship to who caused the injury or illness.
In the nineteenth century, before implementation
of workers’ compensation laws in the number of
countries, employees were rarely paid for work-
related injuries. 12/27/2019
3. Workers’ compensation is often referred to as a grand
bargain between workers and employers.
Under workers’ compensation, workers receive defined
benefits for covered injuries, illnesses, and deaths
without regard to fault or liability.
In exchange for this coverage, employees are prohibited
from suing their employers for workplace injuries,
illnesses, and deaths.
Workers’ compensation is the exclusive remedy available
Employers are protected from lawsuits but must pay
defined benefits in all cases, regardless of fault,
liability, or defense.
Employers are able to purchase insurance to mitigate their
financial risks and increase cost predictability or, in a
majority of systems, can self-insure.
The injured employee’s ability to recover damages was
hindered further by the fact that even a negligent employer
could use three common law defenses to deny liability for
The fellow-servant rule, 12/27/2019
4. Under the fellow-servant rule, an employee who
was injured as a result of the conduct of a fellow
worker could not recover damages from the
The assumption of risk doctrine provided that
an employee who knew, or should have known, of
unsafe conditions of employment assumed the
risk by remaining on the job.
If an employee was injured through negligence of
the employer but was partly at fault, the employee
was guilty of contributory negligence.
Any contributory negligence, regardless of how
slight, relieved the employer of responsibility for
Coverage under workers’ compensation is either
inclusive or exclusive. Further, it is compulsory or
elective, depending on state law. A major feature is
that only injuries and illnesses that “arise out of and
in the course of employment” are covered.
Inclusive or Exclusive
Inclusive laws list all the types of employment that
are covered under workers’ compensation;
Exclusive laws cover all the types of employment
under workers’ compensation except those that are
Typically, domestic service and casual labor (for some
small jobs) are excluded. Agricultural workers are
excluded in nineteen jurisdictions of US law, whereas
their coverage is compulsory in twenty-seven
jurisdictions and entirely voluntary in four jurisdictions.12/27/2019
6. Compulsory or Elective
The laws regarding workers’ compensation are
compulsory. Some of the states, with elective
laws, either the employer or the employee can
elect not to be covered under workers’
Chapter 6. Welfare arrangements (2048)
Section 38. Compensation. If any worker or
employee sustains any physical injury, becomes
disabled, or dies while working in an
establishment, such worker or employee or his
family shall be paid compensation as prescribed.
7. ILO and Compensation Law
C017 - Workmen's Compensation (Accidents)
Convention, 1925 (No. 17)
The laws and regulations as to workmen's
compensation shall apply to workmen, employees
and apprentices employed by any enterprise,
undertaking or establishment of whatsoever
nature, whether public or private.
It shall nevertheless be open to any Member to make
such exceptions in its national legislation as it deems
necessary in respect of:
(a) persons whose employment is of a casual nature and
who are employed otherwise than for the purpose of the
employer's trade or business;
(c) members of the employer's family who work exclusively
on his behalf and who live in his house;
(d) non-manual workers whose remuneration exceeds a
limit to be determined by national laws or regulations.12/27/2019
8. Definition of dependant
Generally, the dependent means any of the
following relatives of a deceased workman,
(i) a widow, a minor legitimate or adopted son, an
unmarried legitimate or adopted daughter, or a
widowed mother; and
(ii) if wholly dependent on the earnings of the
workman at the time of his death, a son or a
daughter who has attained the age of 18 years
and who is infirm;
(iii) if wholly or in part dependent on the earnings of
the workman at the time of his death 12/27/2019
9. Disability Compensation-If disability is caused
by accident while on duty to any employee or
worker, he/she is entitled to disability
compensation depending on degree of disability.
For 100% disability a lump sum amount
equivalent to 5 years’ salary should be paid
(2048) v. from insurance amount on the basis of
degree of disability (2074).
Compensation against Injury-The Proprietor
should pay the whole amount incurred on
treatment of worker or employee as
compensation in case such worker or employee is
injured while doing a work designated by Entity,
on the recommendation of the medical
practitioner recognized by Government of Nepal
10. Death Compensation-The entity is to be pay the
nearest successor of an employee who dies while
on duty a lump sum amount equivalent to 3 years’
salary of such employee (2048) V. The Act
provides that the nearest successor is entitled to
the amount of accident insurance (2074).
11. Partial and total disablement
Permanent total disability means that you are
completely disabled as a result of your injury or
work-related illness and can no longer work in the
capacity for which you were trained.
Permanent partial disability means that the
worker is still able to function in his or her chosen
work, but not at full capacity.
As per the insurance coverage, the protection is
guaranteed to people.
12. Doctrine of notional extension
There is need to have ‘casual connection with place
The coverage of employees under Workman's
Compensation Act 1923 has enlarged after the
amendments carried out in 2009. The name of the Act
stands amended to Employees Compensation Act.
The earlier law covered only workmen. Now all
employees are covered irrespective of the wages
drawn by them provided they belong to categories
mentioned in schedule II of the Act.
As per section 3(1), an employer is liable to pay
compensation if a personal injury is caused to an
employee by accident arising out of and in the course
of his employment. Thus the three tests are:
1. There should be accident
2. The accident should be arising out of and in the
13. Exception to doctrine of notional
In respect of any injury which does not result in the total or partial
disablement of the workmen for a period exceeding three days;
In respect of any injury not resulting in death, caused by an
accident which is directly attributable to-
The workmen having been at the time thereof under the
influence or drugs, or
The willful disobedience of the workman to an order expressly
given, or to a rule expressly framed, for the purpose of securing
the safety of workmen, or
The willful removal or disregard by the workmen of any
safeguard or other device which he knew to have been provided
for the purpose of securing the safety of workmen.
The burden of proving intentional disobedience on the part of
the employee shall lie upon the employer.
When the employee has contacted a disease which is not
directly attributable to a specific injury caused by the accident or
to the occupation; or
When the employee has filed a suit for damages against the
employer or any other person, in a Civil Court. 12/27/2019