TL;DR
- Under section 76 of the Code on Social Security 2020, compensation for death is 50% of monthly wages multiplied by the relevant factor for the employee's age, and for permanent total disablement 60%, or the notified amount if higher.
- The relevant factor comes from the Sixth Schedule: 184.17 at age 40.
- Monthly wages for the calculation are capped at ₹15,000 under a 2020 notification continued by the Code, and unpaid compensation carries 12% interest after one month.
Quick Answer: Employee compensation under the Code on Social Security 2020 is a percentage of monthly wages multiplied by an age-based relevant factor. Section 76 sets 50% for death and 60% for permanent total disablement, or the notified amount if higher. Monthly wages are capped at the 2020 figure of ₹15,000, and unpaid compensation carries 12% interest after one month.
The Employees' Compensation Act 1923 was repealed when the Code on Social Security 2020 commenced on 21 November 2025. Chapter VII of the Code now governs compensation for employment injury, with the formula in section 76. The structure is familiar, but the minimum amounts are no longer written into the statute.
Employee compensation at a glance
| Injury | Compensation | Provision |
|---|---|---|
| Death | 50% of monthly wages × relevant factor, or the notified amount, whichever is more | Section 76(1)(a) |
| Permanent total disablement | 60% of monthly wages × relevant factor, or the notified amount, whichever is more | Section 76(1)(b) |
| Permanent partial disablement | A percentage of the permanent total disablement amount | Section 76(1)(c); Fourth Schedule, Part II |
| Temporary disablement | Half-monthly payment of 25% of monthly wages | Section 76(1)(d) |
| Funeral expenses on death | Not less than ₹15,000, or as the State prescribes | Section 76(7) |
What Is the Formula for Employee Compensation?
Section 76(1) of the Code on Social Security 2020 sets the formula by type of injury. For death and permanent total disablement, the employer computes a percentage of monthly wages, multiplies it by the relevant factor, and compares the result with the amount the Central Government notifies. The higher figure applies.
How Is Permanent Partial Disablement Calculated?
As a percentage of the permanent total disablement amount. Part II of the Fourth Schedule lists injuries with their percentage of loss of earning capacity; for an unlisted injury, the medical practitioner assesses the loss.
How Is Temporary Disablement Paid?
As a half-monthly payment of 25% of monthly wages, under section 76(1)(d). Under section 76(4) it is payable from the sixteenth day, with a three-day waiting period where disablement lasts less than 28 days, for up to five years. Actual medical expenses are reimbursed under section 76(5). A person eligible for dependants' benefit or disablement benefit from the Employees' State Insurance Corporation (ESIC) cannot claim employee compensation from the employer under section 41(7)(a), so check coverage first in the guide to ESIC applicability and contribution rates.
How Are Monthly Wages and the Relevant Factor Worked Out?
Monthly wages follow section 78, and section 76(3) lets the Central Government notify a ceiling for the calculation. The last ceiling, ₹15,000, was notified as S.O. 71(E) of 3 January 2020 under the repealed Act. It continues under section 164(2)(a), which keeps notifications under the repealed Acts alive until replaced. This is an interpretation: the deeming words sat in the repealed Act's section 4(1), and section 76(3) of the Code has no equivalent, so watch for a fresh notification.
What Is the Relevant Factor for Each Age?
The relevant factor comes from the Sixth Schedule to the Code, by the employee's completed age on the last birthday before compensation fell due.
| Age | Relevant factor |
|---|---|
| 16 or under | 228.54 |
| 20 | 224.00 |
| 25 | 216.91 |
| 30 | 207.98 |
| 35 | 197.06 |
| 40 | 184.17 |
| 45 | 169.44 |
| 50 | 153.09 |
| 55 | 135.56 |
| 60 | 117.41 |
| 65 or more | 99.37 |
What Does a Worked Example Look Like for a Death Claim?
Take an employee aged 40 earning ₹22,000 a month who dies from an employment injury. Monthly wages for the calculation are capped at ₹15,000.
| Step | Calculation | Result |
|---|---|---|
| 1. Monthly wages used | Lower of ₹22,000 and the ₹15,000 ceiling | ₹15,000 |
| 2. Percentage for death | 50% × ₹15,000 | ₹7,500 |
| 3. Relevant factor at 40 | Sixth Schedule | 184.17 |
| 4. Compensation | ₹7,500 × 184.17 | ₹13,81,275 |
| 5. Funeral expenses | Not less than ₹15,000 | Added on top |
For permanent total disablement at the same age, the figure is 60% × ₹15,000 × 184.17, which is ₹16,57,530. If the Central Government notifies a higher minimum amount, that amount applies instead. A death in service can also trigger other employer benefits, such as those in the guide to gratuity eligibility. State variations in labour rules are set side by side in the multi-state labour law compliance checklist.
When Must Compensation Be Paid?
As soon as it falls due, under section 77(1). The employer must make a provisional payment of the admitted liability under section 77(2) where liability is disputed in part.
| Delay | Consequence | Provision |
|---|---|---|
| Not paid within one month of falling due | Simple interest at 12% a year from the due date | Section 77(3)(a); Central Rule 57 |
| Delay without justification | Damages of up to 50% of the arrears, after a show-cause notice | Section 77(3)(b) |
| Recipient of interest and damages | The employee or the dependant | Section 77(4) |
Rule 57 and the other Central Rules are summarised in the note on the Social Security Central Rules 2026. These payment duties sit beside the wider Code duties handled by LexComply's labour law compliance software.
How Are Compensation Claims Tracked?
A claim runs through dates the employer cannot miss: the injury, the date compensation falls due and the one-month line after which interest starts. A compliance management platform holds each claim with those dates and the payment evidence.
LexComply does not decide or pay claims. The employer pays under section 77, but death compensation, and any lump sum due to a woman or a person under a legal disability, must be deposited with the competent authority under section 81; a direct payment to the family does not count. To see how claims would be tracked, get in touch.
Common Mistakes to Avoid
- Citing the Employees' Compensation Act 1923. It was repealed with effect from 21 November 2025, and Chapter VII of the Code on Social Security now applies.
- Stating ₹1,20,000 and ₹1,40,000 as current minimums. Those figures were in the repealed Act; section 76(1) now refers to an amount notified by the Central Government.
- Using the full salary. Section 76(3) allows a notified ceiling, and the ₹15,000 notified in 2020 is treated as saved by section 164(2)(a) until replaced.
- Taking the factor from the wrong schedule. The relevant factor is in the Sixth Schedule; the Fourth Schedule lists injuries.
- Treating 50% damages as automatic. Section 77(3)(b) sets damages of up to 50%, only after a show-cause notice and only for unjustified delay.
- Confusing the ESI funeral benefit with compensation. The ESI benefit sits elsewhere; section 76(7) sets compensation funeral expenses at not less than ₹15,000.
Legal Disclaimer
This article is general information on Indian labour law, current as at the date shown above. It is not legal advice and does not take account of any particular claim's facts. State rules may differ. Obtain professional advice before acting on any position described here.