A person 'X', aged 48 years, was working in a mine where he met a fatal accident while working underground. He was receiving monthly wage of 12,000 when this unfortunate incident occurred. What is the amount of compensation payable to him under the Employees' Compensation Act, 1923? (Relevant factor being 159.80)

Correct option is C

The correct answer is: (c) ₹9,58,800

Explanation:

Under Section 4(1)(a) of the Employees' Compensation Act, 1923, compensation for death is 50% of monthly wages × relevant factor, or ₹1,20,000 (whichever is more).​

Step-by-Step Calculation:

• Monthly Wage: ₹12,000 (Note: The current statutory wage ceiling is ₹15,000. Since ₹12,000 is below this limit, we take the actual wage).
• 50% of wages: 0.5×12,000=₹6,000
• Relevant factor for age 48: 159.80​
• Compensation: ₹6,000×159.80=₹9,58,800₹6,000×159.80=₹9,58,800​

Information Booster

The calculation of compensation under this Act is not arbitrary; it is designed to replace the lost "earning capacity" of the worker or provide for their dependents.

• Wage Ceiling: As per the 2020 notification by the Central Government, the maximum wage considered for calculation is capped at ₹15,000. If Mr. X had earned ₹25,000, we would still use ₹15,000 as the base.
• Age and Factor: The "Relevant Factor" (found in Schedule IV) is inversely proportional to age. A younger worker has a higher factor because they have more remaining years of potential work.
• Minimum Compensation: In case of death, the law mandates a minimum compensation of ₹1,20,000, regardless of how low the wages were.
• Funeral Expenses: In addition to the calculated amount, the employer is liable to pay ₹5,000 for funeral expenses to the eldest surviving dependent.