Law of Torts
Employment: Vicarious Liability, the Employer's Own Negligence, and the Employees' Compensation Act, 1923
An injury at work may engage three different bodies of law, and they do not all run together. Vicarious liability makes the employer answer for the employee's tort committed in the course of employment, without any fault of his own. The employer's own negligence, examined in TORT 103, requires proof of fault but needs no course of employment, and so survives a frolic. The Employees' Compensation Act, 1923 is a no fault statutory scheme with a capped award, and, crucially, section 3(5) makes it and the civil suit alternatives rather than cumulative: the employee must elect.
The three routes, section 3(5) and the election, and the exceptions under section 3
1. The Three Routes
Vicarious liability | The employer's own negligence | The statutory scheme | |
Whose wrong | The employee's, attributed to the employer | The employer's own breach of his personal duty | Nobody's. Liability arises from the accident |
Is fault required | Yes, in the employee. None in the employer | Yes, in the employer | No |
Course of employment | Essential. It fails on a frolic | Not required. It survives a frolic | The accident must arise out of and in the course of employment |
Who is the claimant | Ordinarily a third party injured by the employee | The employee, or a third party | The employee or his dependants |
The amount | Full compensation on ordinary principles | The same | A capped statutory formula |
The forum | A civil court | A civil court | The Commissioner |
Where examined | TORT 047 to 050 | TORT 103 | This note |
2. Vicarious Liability in Employment
- The employer answers for the employee's tort committed in the course of employment, and no fault in the employer is required or alleged.
- An unauthorised mode of doing an authorised act is within the course of employment, even where the mode was expressly forbidden: Limpus v. London General Omnibus Co.
- An act altogether outside the employment is not: Beard v. London General Omnibus Co.
- A detour keeps the employee within the course of employment; a frolic of his own takes him outside it until he returns to the master's business.
- For an intentional wrong the modern test is the close connection test in Lister v. Hesley Hall: was the wrong so closely connected with what the employee was employed to do that it would be fair and just to hold the employer liable. Opportunity alone is not enough.
- The distinction between an employee and an independent contractor is made on the multiple or economic reality test in Ready Mixed Concrete, and the label the parties chose does not decide it: TORT 049.
- All of this is examined fully in TORT 047 to TORT 050.
3. The Employees' Compensation Act, 1923
Section 3, Employee's Compensation Act, 1923 Section 3(1): if personal injury is caused to an employee by accident arising out of and in the course of his employment, his employer shall be liable to pay compensation in accordance with the provisions of this Chapter. Provided that the employer shall not be so liable in respect of any injury, not resulting in death or permanent total disablement, caused by an accident which is directly attributable to the employee having been at the time thereof under the influence of drink or drugs; or the wilful disobedience of the employee to an order expressly given, or to a rule expressly framed, for the purpose of securing the safety of employees; or the wilful removal or disregard by the employee of any safety guard or other device which he knew to have been provided for the purpose of securing the safety of employees. And provided that the employer shall not be liable in respect of any injury which does not result in the total or partial disablement of the employee for a period exceeding three days. |
- No fault need be shown at all. The employee proves the accident, the employment, and the injury.
- The amount is fixed by a statutory formula by reference to the monthly wages and the age of the employee, and is capped.
- The forum is the Commissioner for Employee's Compensation, and not a civil court.
- A schedule of occupational diseases creates a presumption in favour of the employee for listed diseases contracted in listed employments, which is a substantial advantage over a common law claim.
- The exceptions in the first proviso do not apply where the injury resulted in death or permanent total disablement, so an employee who was drunk and was killed is still covered, which is a deliberate policy choice in favour of dependants.
4. Arising Out of and in the Course of Employment
The requirement | What it asks |
In the course of employment | Whether the accident occurred during the period of employment, at a place where the employee might reasonably be, and while he was doing what was incidental to his employment |
Arising out of employment | Whether there was a causal connection between the employment and the accident. The employment must have exposed the employee to the risk, or contributed to it |
- Both requirements must be satisfied, and they are not the same. An employee who dies of an unconnected illness while at work is injured in the course of employment but not by an accident arising out of it.
- The notional extension doctrine extends the course of employment to a reasonable area and time outside the actual premises and working hours, so that an employee injured entering or leaving the premises, or at a place he was required to be, may be covered.
- The doctrine does not extend to the ordinary journey between home and work, which is not in the course of employment unless the employer provided or required the transport.
- Where the employment exposed the employee to a heightened risk of a general hazard, such as lightning, heat or an assault, the accident may be held to arise out of the employment even though the hazard was not peculiar to the work.
5. The Election Under Section 3(5)
Section 3(5), Employee's Compensation Act, 1923 Nothing herein contained shall be deemed to confer any right to compensation on an employee in respect of any injury if he has instituted in a civil court a suit for damages in respect of the injury against the employer or any other person. And no suit for damages shall be maintainable by an employee in any court of law in respect of any injury if he has instituted a claim to compensation in respect of the injury before a Commissioner; or if an agreement has been come to between the employee and his employer providing for the payment of compensation in respect of the injury in accordance with the provisions of this Act. |
The statutory claim | The civil suit | |
Proof required | The accident, the employment and the injury | Negligence, or breach of the employer's personal duty |
The amount | A certain sum, fixed by formula and capped | An uncapped assessment of the actual loss |
Speed and cost | Quicker and cheaper, before the Commissioner | Slower and costlier |
Risk | Very low. Liability rarely contested on the merits | Real. The employee may prove nothing and recover nothing |
When it is preferable | Where negligence cannot be proved, or where the loss is modest | Where negligence is clear and the loss substantially exceeds the statutory cap |
- The employee must elect, and the election is made by the act of instituting one proceeding or the other, or by entering into an agreement under the Act.
- The choice turns on the strength of the negligence case and the size of the loss. Where the employer's breach is plain and the injury catastrophic, the civil suit is worth the risk; where the accident happened without any identifiable fault, or the injury is moderate, the statutory route is plainly better.
- The election should be made advisedly and early, because an employee who begins in the wrong forum may find the other closed to him.
6. The Parallel Schemes
- The Employees' State Insurance Act, 1948 applies to the establishments it covers, and where it applies it ousts the Employees' Compensation Act and bars a civil suit for damages in respect of an employment injury, providing instead a comprehensive scheme of medical and cash benefits.
- The Factories Act, 1948 and the occupational safety and health legislation impose statutory duties on the occupier, breach of which is evidence of negligence and may found a claim for breach of statutory duty: TORT 078.
- The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 places affirmative obligations on an employer, examined in TORT 048, which run alongside any claim in vicarious liability or in the employer's own negligence.
- The labour codes consolidate much of this legislation, and where they are brought into force the statutory sources will change while the tortious principles will not.
⚠ Why an employee should almost always be advised on both routes The commonest error in advising an injured workman is to treat the statutory claim as the automatic route because it is quicker, or the civil suit as the automatic route because it is larger, and to make the choice without first asking the two questions that actually decide it. The first is whether negligence can be proved: not whether the accident was regrettable, but whether there is evidence of a want of reasonable care or of a breach of the employer's personal duty that will survive cross examination. Where there is none, the civil suit is worthless and the statutory claim is the whole of the employee's entitlement. The second is the size of the loss: where the injury is catastrophic, the statutory cap may be a small fraction of what a civil court would award, and a claim before the Commissioner forecloses the larger remedy for good. Only when both questions have been answered can the election be made, and section 3(5) gives no second chance once the wrong door has been opened. |
7. The Position Stated Shortly
1. An injury at work may engage vicarious liability, the employer's own negligence, and the statutory no fault scheme.
2. Vicarious liability requires the employee's tort in the course of employment and no fault in the employer; the employer's own negligence requires fault but no course of employment.
3. Section 3(1) of the Employee's Compensation Act, 1923 makes the employer liable where personal injury is caused by accident arising out of and in the course of employment.
4. No fault need be shown, the amount is fixed by statutory formula and capped, and the forum is the Commissioner.
5. Compensation is not payable where the disablement does not exceed three days, or where an injury not resulting in death or permanent total disablement is attributable to drink, wilful disobedience or wilful disregard of a safety device.
6. Both limbs must be satisfied: the accident must occur in the course of employment and must arise out of it, the second requiring a causal connection.
7. The notional extension doctrine extends the course of employment to a reasonable area and time outside the premises and hours.
8. Section 3(5) makes the statutory claim and the civil suit alternatives: instituting one bars the other, so the employee must elect.
9. The election turns on whether negligence can be proved and on whether the loss substantially exceeds the statutory cap.
10. The Employees' State Insurance Act, 1948 ousts the 1923 Act where it applies and bars a civil suit for employment injury.