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Comparative Analysis Of Compensation Provisions For Workers In India And US

The term "compensation" refers to the entire package of perks and awards received by employees from their employers in exchange for their work and services. It encompasses various components such as wages or salaries, bonuses, incentives, and employee benefits. Compensation is a critical aspect of the employment relationship as it not only serves as a mean to attract and retain talented individuals but also motivates and rewards employees for their contributions.

It plays a crucial role in determining an individual's standard of living, job satisfaction, and overall well-being. Effective compensation strategies are designed to align with organizational goals, industry standards, and market trends while ensuring fairness and equity within the workforce.

One of the first laws to provide compensation to employees in India was the Employees Compensation Act of 1923. In Danjee V. Maung Hia Seen, AIR 1939 Rangoon 369 it was held that the objective of the Employees Compensation Act is to compensate the employee for the genuine loss he has suffered, not to offer solatium to the employee.

Provisions of compensation in India and the United States differ in several ways due to variations in labor laws, economic conditions and cultural factors.

Compensation typically comprises two main components ,i.e, monetary and non-monetary rewards.
  1. Monetary Rewards:
    Monetary rewards include base salary, bonuses, commissions, profit sharing, and various allowances. Base salary forms the foundation of an employee's compensation and is determined by factors such as job responsibilities, qualifications, experience, and market rates. Bonuses and commissions provide additional incentives tied to individual or team performance, while profit sharing allows employees to share in the organization's financial success.
     
  2. Non-monetary Rewards:
    Non-monetary rewards encompass a wide range of benefits and perks that contribute to the overall compensation package. These may include health insurance, retirement plans, paid time off, flexible work arrangements, professional development opportunities, employee recognition programs, and work-life balance initiatives. Non-monetary rewards enhance the employee experience, promote work-life integration, and support employees' personal and professional growth.
Provisions of compensation in India and the United States differ in several ways due to variations in labor laws, economic conditions and cultural factors.

Employees Compensation Act, 1923

The Employees' Compensation Act, also known as the Workmen's Compensation Act, is a crucial legislation in India that provides financial protection and compensation to employees in the event of work-related injuries or occupational diseases. The Act ensures that employers fulfill their responsibility towards the well-being of their workers and offers legal recourse for employees to seek compensation.

Applicability of Act:

  • The Act applies to employees working in various sectors, including factories, mines, plantations, construction sites, and other hazardous occupations. It covers both permanent and temporary employees, irrespective of their remuneration.
  • This act does not apply to members of the armed forces of the Union & Workmen who are covered under the ESI (Employee State Insurance) Act.
Narayan V. Southern Railway 1980, 395 Kerala
The question in issue was whether licensed porters come under the definition of workman or not. The court held that licensed porters are workmen though they are not listed under Schedule II because the relationship of employer and employee exists, and they are also registered with the railways.

Employer's Liability:

  • It is given under Section-3 of the Act; the employer is liable to pay compensation for any injury or death caused to an employee arising out of and during the course of employment. The liability is not dependent on the fault or negligence of the employer, as the Act follows the principle of "no-fault liability."
M. Mackenzie V. IM Issak AIR 1970 SC 1906
If the accident was caused by a risk that was an occurrence of the job, the claim for compensation must be successful unless the worker has exposed himself to further risk through his own imprudence.

Amount of compensation:

  • The Act provides for the payment of compensation to the employee or their dependents in case of injury, disability, or death. The compensation amount is determined based on the nature of the injury, the employee's monthly wages, and the relevant provisions of the Act. Section-4 of the Act provides the amount of compensation:
    • Injury that results in death: Amount equivalent to 50% of the deceased employee's monthly wages × the appropriate factor, or 80,000 or more.
    • Compensation for an injury that leaves a person totally and permanently disabled: Either 90,000 or 60% of the injured worker's monthly salary multiplied by the applicable factor.
    • For injuries that result in temporary disability: The worker will get a half-monthly payment equivalent to 25% of his or her regular monthly wage.
Steel Authority of India v. Anuradha Saha
The Supreme Court, in this case, emphasized the importance of providing just and fair compensation to the dependents of an employee who died due to negligence. The court held that the compensation amount should adequately reflect the loss suffered by the dependents and should be based on factors such as the employee's age, income, and future prospects.

Federal Employees' Compensation Act, US

The Federal Employees' Compensation Act (FECA) is a significant legislation in the United States that provides compensation and benefits to federal employees who suffer work-related injuries or illnesses. Administered by the Office of Workers' Compensation Programs (OWCP), FECA ensures that federal workers receive appropriate medical care, rehabilitation, and financial support.

Applicability:

  • According to Section-8101 of United States Code, FECA applies to all the civilian employees of the federal government, including postal workers, non-appropriated fund employees, and certain other categories. It provides compensation for both traumatic injuries and occupational diseases that arise out of and in the course of employment.
United States v. Smith 18 US 153, 1820 This case clarified that FECA covers a wide range of injuries and illnesses, including those resulting from work-related stress. The court held that employees who suffer mental health issues due to job-related stress are eligible for compensation under FECA if they can demonstrate a causal relationship between their work and the condition.
  • Medical Benefits: It is provided under Section-8103 of the United States Code, that federal employees are entitled to receive necessary medical treatment for their work-related injuries or illnesses. The Act covers various medical expenses, including doctor visits, hospitalization, medications, prosthetic devices, and vocational rehabilitation services.
Estate of Kirchgessner v. Department of Labor: In this case, the court held that if an employee's work contributes to the onset or aggravation of a medical condition, it qualifies as an occupational disease under FECA. The OWCP must determine the causal relationship between the employment and the disease to award compensation.
  • Wage Loss Compensation: Section-8105 of United States Code provides wage loss compensation to federal employees who experience a temporary or permanent loss of earning capacity due to their work-related injury or illness. The compensation amount is determined based on the severity of the disability and the employee's pre-injury wage.
CSX Transp. v. Casale 247 Va. 180: Plaintiff provided documentation of lost wages, expected pay growth, projected cost of living increases, and fringe benefits. The question of whose responsibility it was to bring future damages into balance arose. The court ruled that the defendant had the burden under FELA.
  • Survivor Benefits: Section-8102 of United States Code outlines the entitlement to benefits for the survivors of federal employees who died as a result of work-related injuries or illnesses. It provides for a variety of benefits, including compensation for surviving spouses, children, and other dependents of the deceased federal employee. The benefits may include monthly monetary payments as well as allowances for burial expenses.
DeSanto v. Department of Labor: This case established that a widow(er) must prove dependency in order to be eligible for survivors' benefits under FECA. Dependency can be shown through financial reliance on the deceased federal employee.
  • Rehabilitation Services: Section-8104 of United States Code facilitates vocational rehabilitation services to help injured federal employees return to suitable employment. The OWCP assists in assessing the employee's vocational abilities, providing training, and securing job placement opportunities.
Banks v. US Postal Inspection Serv., 4: 18CV00596 (ND Ohio Aug. 31, 2018): In this case, the Court of Appeals for the Federal Circuit held that an injured federal employee is entitled to vocational rehabilitation services that will allow them to return to suitable employment, even if the employee's former position is no longer available.

Several provisions of compensation for employees differ between India and the United States:
  • Minimum Wage:
    • In India, minimum wages are set by the government at the state and industry levels. Rates vary across states, regions, and industries.
    • In the United States, the federal government sets a minimum wage, but individual states can establish their own minimum wage rates, which can be higher than the federal rate.
  • Overtime Pay:
    • In India, the Factories Act, 1948, mandates overtime pay for work beyond the standard working hours. The rate of overtime pay is typically 1.5 to 2 times the regular wage.
    • In the United States, the Fair Labor Standards Act (FLSA) requires eligible employees to receive overtime pay at a rate of 1.5 times their regular rate of pay for hours worked beyond 40 hours per week.
  • Benefits:
    • Employee benefits in India can include paid leave, gratuity, provident fund, and health insurance. These benefits vary based on employment type, industry, and organizational policies.
    • In the United States, employee benefits commonly include paid leave (such as vacation and sick leave), health insurance, retirement plans (like 401(k)), and other benefits like life insurance and disability insurance. The specific benefits offered can vary depending on the employer's policies and employment agreement.
  • Maternity and Paternity Leave:
    • In India, the Maternity Benefit Act, 1961, provides for paid maternity leave of up to 26 weeks for eligible female employees. Paternity leave is not mandated by law but can be granted at the employer's discretion.
    • In the United States, the Family and Medical Leave Act (FMLA) provides eligible employees with up to 12 weeks of unpaid, job-protected leave for the birth or adoption of a child. Paid maternity and paternity leave policies vary by employer and are not mandated at the federal level.
  • Severance and Termination:
    • In India, the Industrial Disputes Act, 1947, governs severance and termination. It requires employers to provide notice or compensation in lieu of notice to employees in cases of retrenchment or closure of establishments.
    • In the United States, there is no federal law mandating severance pay, and employment termination is generally at-will, meaning employers can terminate employees without cause, except in cases of discrimination or violation of employment contracts.

Conclusion
There are both similarities and differences between the compensation provisions in India and US.
Some of them are:
  • Similarities:
    • Coverage: Both India and the US have legislation in place to provide compensation to workers for work-related injuries and illnesses. In India, the Employees' Compensation Act, 1923, governs the compensation provisions, while in the US, the Federal Employees' Compensation Act (FECA) covers federal employees, and individual states have their own workers' compensation laws for private sector employees.
    • Employer Liability: In both countries, employers are generally held liable for providing compensation to their employees for work-related injuries or illnesses, regardless of fault or negligence.
  • Differences:
    • Scope of Coverage: The scope of coverage differs between the two countries. In India, the Employees' Compensation Act covers both temporary and permanent disabilities resulting from occupational injuries or diseases, while the FECA in the US primarily covers federal employees.
    • Benefit Calculation: The methods for calculating compensation differ. In India, compensation is determined based on the employee's wages and the nature and extent of the disability. In the US, FECA provides wage loss compensation based on a percentage of the employee's regular salary.
    • Rehabilitation Services: The provision of rehabilitation services varies. FECA in the US has specific provisions for vocational rehabilitation services to assist injured federal employees in returning to suitable employment. In India, rehabilitation services may be included under the state-specific workers' compensation laws, but the focus is primarily on compensation for disabilities.
    • Legal Framework: The legal framework governing compensation also differs. In India, the Employees' Compensation Act provides the primary legal framework for compensation, while in the US, FECA is the key legislation for federal employees, with separate state-level laws for private sector employees.

Bibliography
Books:
  • Labour and industrial law by Avatar Singh
  • Labour laws e book
  • Bare Acts
    • Employees Compensation Act, 1923
    • Railways Act, 1989
    • Equal Opportunities, Protection of Rights and Full Participation Act, 1995
Websites:
  • https://www.indialegallive.com/legal/employees-compensation-act-1923-study-of-employers-liability-non-liability-for-compensation/
  • https://blog.ipleaders.in/employees-compensation-act-1923-amazing-facts-to-know-about-it/
  • https://www.casemine.com/
  • https://casetext.com
  • https://supreme.justia.com/
  • https://www.dol.gov/agencies/owcp/FECA/regs/statutes/feca

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