Lost Wages Benefits Under Workers' Compensation Laws under Employment Law
Lost Wages Benefits under Workers’ Compensation Laws
1. Introduction
Workers’ Compensation Laws are designed to provide financial support to employees who suffer injuries or illnesses arising out of and in the course of employment. One of the key entitlements under these laws is compensation for lost wages, which ensures that employees who cannot work due to a workplace injury or occupational disease still receive a portion of their income.
2. Concept of Lost Wages Benefits
Lost wage benefits (also called wage replacement benefits) are payments made to employees who are temporarily or permanently unable to perform their job due to a work-related injury or illness.
They generally cover:
Temporary Total Disability (TTD): Full incapacity to work for a temporary period.
Temporary Partial Disability (TPD): Ability to work but at reduced capacity or lower wages.
Permanent Total Disability (PTD): Complete inability to work permanently.
Permanent Partial Disability (PPD): Permanent impairment but not a total loss of earning capacity.
3. Calculation of Lost Wages
The wage replacement is usually a percentage of the employee’s average weekly wage (AWW), often around 60%–70%, depending on jurisdiction.
There are maximum and minimum limits prescribed under law.
Payments are generally tax-free, as they are considered compensation, not income.
4. Conditions for Claiming Lost Wages
To claim lost wages under workers’ compensation laws, an employee must show:
The injury or illness was work-related.
The injury caused inability to work (total or partial).
Proper medical certification supporting the disability.
5. Case Laws
(a) Pratap Narain Singh Deo v. Shrinivas Sabata & Anr. (1976 AIR 222)
Facts: A carpenter lost the use of his left arm in a workplace accident.
Held: The Supreme Court of India held that the injury rendered him totally disabled for the work of a carpenter. Thus, he was entitled to wage compensation for loss of earning capacity.
Principle: If the workman cannot perform the work he was capable of before the injury, he is entitled to lost wages compensation.
(b) Kerala State Electricity Board v. Valsala K. (1999)
Held: Compensation becomes payable as soon as personal injury by accident arising out of and in the course of employment is established.
Principle: Wage loss compensation does not depend on employer’s negligence; it arises out of statutory liability.
(c) New India Assurance Co. Ltd. v. Harshadbhai Amrutbhai Modhiya (2006)
Facts: A driver met with an accident and lost his capacity to drive.
Held: He was entitled to compensation for loss of wages and earning capacity since his profession was directly impacted.
Principle: The compensation amount must reflect the employee’s loss of income caused by the injury.
6. Employer’s Liability
Employers (or their insurers) are liable to pay wage-loss compensation from the date of injury until the employee returns to work or reaches maximum medical improvement (MMI).
Delay or denial without just cause can attract penalties and interest.
7. Conclusion
Lost wage benefits under workers’ compensation laws ensure that employees do not face undue financial hardship when injured at work. Courts consistently hold that these benefits are a statutory right and must be liberally interpreted in favor of employees.
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