Making Way For Mental Health Disorders – Seeking Compensation Under Employee’s Compensation Act, 1923 & Employees’ State Insurance Act, 1948

Making Way For Mental Health Disorders – Seeking Compensation Under Employee’s Compensation Act, 1923 & Employees’ State Insurance Act, 1948

          I.     Introduction

COVID-19 the pandemic has prompted grave mental health repercussions, along with its evident jeopardization of physical health at large. The Finance Minister, Mrs. Nirmala Sitharaman, ruled out a “National Tele Mental Health Program” from the Annual Budget for 2022-23 on account of the escalation of mental health illnesses during the continuing pandemic. Against this background, this article seeks to analyse the concept of “accident and injury” as enunciated in the Employees Compensation Act, 1923 and the Employee State Insurance Act, 1948 to explore whether the expanse of these terms can allow for compensation on account of mental health illnesses triggered in/out of the course of employment.

With new variants of COVID emerging every now and then, people have started ruminating over the old days wherein they had a separate workplace and did not have to juggle between their professional and personal life simultaneously. Work from home setup/policies have adversely affected the routine/standard working hours of employees. It demands alternating between personal and professional spaces, requires prompt and smooth transition between the two, such fading/diminishing segregation, between the two aspects accompanied with a lack of certainty drains a person mentally. A recent survey also highlights the fact that 36% of Indian employees are suffering from mental health issues. This makes us wonder whether we have statutory backing to claim compensation from our employer in case we are suffering from any mental disease in the process of getting acquainted with the ‘new normal’.

The article begins by dealing with the legal provisions and the corresponding interpretation accorded by the Indian judiciary. Later, we delve into developed countries’ jurisdictions to assess if their approach could be adopted and made successful in the Indian scenario. The article concludes by mapping the difficulties with the current wording of the statute and simultaneously attempting to identify the possible arguments from the employer’s that may hinder an expansive interpretation aimed at benefitting the employees. 

       II.     Legal Provisions

The Indian legislative framework is comprised of Section 3 of the Employee Compensation Act, 1923 (“EC Act”) and Section 2(8) of the Employee State Insurance Act, 1948 (“ESIA Act”), which mandate the employer to compensate the employee, in the event of the employee suffering a personal injury occasioned by an accident (occupational disease) that occurs out of or in the course of employment.

The Code on Social Security, 2020, has consolidated these two laws, among others, without much change to the earlier provisions. Consequently, the only two alternatives that now trigger the employer to release compensation in the event of a personal injury to an employee, are that of “accident” or an “occupational disease”.

The scope of occupational diseases is well defined; it is restricted by the III Schedule, which enlists all kinds of occupational diseases. Hence, the employee can only plead for compensation on account of mental health illness if it can be proved to result in death or total or partial disablement which lasts for more than 3 days and is occasioned by an accident arising out of or in course of employment.

     III.     Interpretation accorded by Indian Courts – ambit of the word ‘accident’ suffices to include occasioning of mental health illness

To quote a general approach adopted by the Indian courts, these statutes are welfare legislations and hence the presumption is usually in favour of awarding compensation unless there is express evidence to the contrary presented from the employer’s side.”[i] The test used is of Balance of Probabilities, unlike the heavy onus placed in criminal cases to prove the accused’s guilt. As observed in Narayan Ganesh Dastane v. Sucheta Narayan Dastane, the test simply refers to weighing the varied probabilities. If a prudent man concludes that the preponderance is in favour of existence of the fact; the likeliness of the occurrence of the fact in issue suffices the discharge of the burden.

To prove a case of mental health illness under Section 3 of the EC Act or Section 74 of the Code on Social Security 2020, the conditions to be fulfilled for a successful claim for compensation include: personal injury to workman, which is triggered or occasioned by an accident, arising in or out of the course of employment. The proviso clause to Section 3 also requires that in the case of partial or total disablement, it should exceed the period of three (3) days. The terms “injury” or “accident” haven’t been defined or ascertained by the legislation, they have been left to the interpretation accorded by the judiciary on a case-to-case basis. To conclude, we must consider the following questions-

Does the psychological suffering on account of Mental Health illness tantamount to personal injury?

In Sundarbai v. The GM, Ordinance Factory,[ii] the terms “injury” and “accident” were discussed. Significantly, it patently stated injury to mean a physiological injury. However, the wording of the legislation nowhere qualifies the word “injury” to confine it to a physical injury. The injury must be personal, sustained on/by oneself. Further, if we read into former English jurisprudence, post accidental insanity resulting in suicide was within the scope of the Act, hence injury did include adverse psychological effects as well.[iii]

Although the Indian Penal Code, 1860 operates in a different context, if we exclusively consider the term injury, Section 44 defines it as any harm illegally caused to a person, in body, mind, reputation, or property. Therefore, the age-old British jurisprudence, which usually limits the meaning of injury to mean physiological/bodily harm, is redundant. Considering the societal and anthropological developments of today, the law must evolve to include psychological injuries.

In recent times, words such as stress and strain have been deployed in relation to over exhaustion which triggered the existent heart condition of the workman and may result in fatal death. In arguendo, the technical meaning of “physiology” is a branch of science that deals with the study of physical and chemical functioning of the organs.[iv] An analysis of chemicals would include hormonal assessment, which has a direct nexus with the mental health of a person.

Whether causing a mental health disorder would qualify as an accident?

The courts, beginning with Fenton v. Thorley & Co., Ltd.[v] and Clover, Clayton & Co., Ltd. v. Hughes[vi] were referred to in Sundarbai,[vii] c where the court held the term “accident” to mean an unforeseeable event. This implies that the event which triggers the mental distress of employees must have an element of unexpectedness on part of the employee. This means the employee mustn’t have designed/schemed/plotted the accident himself, making it accidental in nature. Additionally, certain principles were laid down to attribute a new perspective to accident; it can be construed as an external as well as internally occurring phenomenon. This has been referred to in Param Pal Singh case in the context of a heart attack owing to stressful work conditions. An injury and an internal accident may concur and can be mutually exclusive. Causation of the injury can be attributed to an ordinarily strenuous work in the usual course of employment, if the work has in any way contributed to, accentuated, or hastened the injury.

Whether mental health disorders can be linked to the employment conditions/course of employment?

It is rational to believe that accidents as propounded by the Indian courts, have always been used to refer to a single event or incident or mishap. In the case of mental health illnesses, there may not always be a single incident or event as the cause or genesis of the deprecated mental state of the employee. It is a chain of events, a series of circumstances that lands the person in a depressed mental state. A holistic and sensitive appreciation of the terms would include these aspects. A hyper technical view/perspective can defeat the objective of the Act, as it may render the welfare objective futile.

As observed by the Apex Court in Malikarjuna G. Hiremath v. The Branch Manager, The Oriental Insurance Co. Ltd. and Another, the wording of Section 3 outrightly calls for a causation link or nexus to be established between the employment and the accident so caused. Further in Dennis v. White and Co.,[viii] it was rightly observed that, out of/in course of employment is usually construed by the ambit of place of employment, time of the accident and working hours, continuation of period of employment and the nature of risk undertaken as compared to the hazard incidental to work allocated.

In cases of mental health disorders, it would be difficult to establish that direct nexus, however a single event/accident that triggers a fatal step on the employee’s end can still be considered as an accident.

      IV.     Position of Law in the US and the UK

United Kingdom

Since we follow the common law system and have adopted multiple statutes from the UK even in the post-independence era, an analysis of the jurisprudence developed in the UK is a prerequisite to understand our legal framework holistically.

Working Time Regulations 1998

It tries to address the issues of overwork and excessive working hours by inter alia limiting the average work week to 48 hours. However, the said provision also contains an ‘individual opt-out’ option. In Hone v. Six Continents Retail Ltd[ix] the claimant, who worked as a licenced house manager, claimed that his workload was excessive, causing him stress and psychiatric harm as a result. The England and Wales Court of Appeal (Civil Division) ruled in favour of the claimant and held there was a breach of duty in relation to the Working Time Regulations especially considering that the claimant communicated the fact of being working for long hours and the resultant impact, and still the employer did not pay any heed to it.[x]

Corporate Manslaughter and Corporate Homicide Act, 2007

This Act further clarifies the situation with respect to mental health diseases wherein the employer can be held liable for the death of an employee if the death has been caused as a result of suicide owing to depression brought on by excessive overtime or demands.

United States of America

The purpose of enumerating the laws present in the US is not to draw a parallel between any provisions of law but just to emphasise that the repercussions of mental disease owing to employment are not only being acknowledged but also rapidly addressed by developed countries provisions of the law in other countries’ as well. Hence, the Indian judiciary should also accord a wider meaning to the word ‘accident’ to include the situations elaborated above.

The Workers’ Compensation Law, 1914

It establishes strict liability by compelling employers to compensate employees for injuries arising out of and in the course of employment, regardless of the employer’s fault or carelessness, or whether the employee contributed to the injury.[xi] The strict liability inherent in these schemes lends itself to claims of death by suicide, which is again a state of mind which gets exacerbated by the presence of any mental disease.[xii]

        V.     Conclusion

Developing countries like India have multiple issues like unemployment, poverty and hunger to deal with, while mental health issues are often considered less serious. However, this should not be the case. Gone are the times when mental health issues were only first world issues, or disorders of the entitled class. During the pandemic, due to the societal and economic unrest, a majority of employees have become rather prone to developing adverse psychological conditions. Hence, there is an urgent need to take immediate and effective steps in this direction.

The jurisprudence pertaining to the statute clearly indicates that accident is interpreted to cover both external and internal occurrences, yet the mental state of the person and the resultant suffering owing to the mental health disorders should also ideally be construed as an injury. As an arguendo, even if a mental health disorder can’t simply fit the ambit of wording deployed in the Act, they still can be referred to as an accident. The external events prompting such an injury can be construed as an accident, while the injury is the real time psychological trauma suffered by the employee.

Hence, the scope of the term injury suffices to include psychological injuries. Moreover, the purview of an accident can also be explored in a different context, as a chain of events that are most proximate to setting off an adverse mental health condition of an employee.

Even though the authors advocate for mental health compensation but we need to flip the mirror also and see what challenges we might encounter in this endeavour. Primarily, it is an uphill task to prove a mental health condition was caused primarily by your work, as it can have a variety of origins. The onus of establishing a causal link between the injury, accident, and the work done in course of employment is difficult in this scenario. The employer might raise a contention that the mental health condition was owing to other reasons such as family conflicts, hostile personal relationship with colleagues, childhood history of neglect/abuse, genetic traits which makes someone prone to such conditions. In the process of levelling and rebutting such claims, an individual’s right to privacy, as pronounced in K.S. Puttswamy case, might also be compromised while revealing certain facts about the individual.

Moreover, if a threshold is laid down to assess the loss in earning capacity based the category of permanent partial or permanent total disablement of an employee, analogous thresholds can’t possibly be laid down for mental health disorders. These conditions, being very subjective, may pose difficulty in determining the extent of incapacitation caused. Unless India develops a strong infrastructure for behavioural assessment working in tandem with the labour commissioner, an accurate examination of the claim and adjudication of the dispute would be a mirage. This also requires a conscious financial investment by private companies towards the sound mental health of their staff and attempts to rehabilitate an employee over and above the compensation paid.

As has been laid down in numerous cases, an accident shouldn’t be one designed by the employee himself. With regard to mental health disorders, it may be an easy way out for the employer to argue that it majorly depends on the perception of the employee and their behavioural tendencies, and hence is a design of the employee himself. A legislative overhaul, according to the authors, is required to prescribe measures on the part of employers to rehabilitate, provide proper counselling to the affected employee, and provide regular psychological assessments to achieve safe and healthy working conditions as part of the social security code.

That being said, allowing compensation for mental health disorders under the current Act can expose the courts to a flood gate of cases, thereby being deployed to earn wrongful gains unless there is a minimum requisite medical infrastructure in place to administer such conditions. In the authors’ opinion, a legislative overhaul is incumbent in order to prescribe measures on part of employers to rehabilitate, provide proper counselling to the affected employee and provide regular psychological assessments to achieve safe and healthy working conditions. It could have been well pursued as part of the recently developed social security code.


[i] Sundarbai v. General Manager, Ordinance Factory, (1976) 2 LLN 58.

[ii] Sundarbai v. General Manager, Ordinance Factory, (1976) 2 LLN 58.

[iii] Grim v. Fletcher, [1915] 1 KB 734.

[iv] John E. Hall, Textbook of Medical Physiology (13th ed., Saunders, 2015).

[v] Fenton v. Thorley & Co. Ltd., 1903 A.C. 443.

[vi] Clover, Clayton & Co., Ltd. v. Hughes, 1910 A.C. 242.

[vii] Sundarbai v. General Manager, Ordinance Factory, (1976) 2 LLN 58.

[viii] Dennis v. White, [1917] UKHL 517.

[ix] Hone v. Six Continents Retail Ltd, [2005] EWCA Civ 922 (CA).

[x] Pakenham-Walsh v. Connell Residential, [2006] EWCA Civ 90 (CA).

[xi] E.S. Tipon, Compensability Under Occupational Disease Statutes of Emotional Distress or Like Injury Suffered by Claimant as Result of Nonsudden Stimuli, (2003) 5 American Law Reports 115.

[xii] Tamie Kobayashi & Sam Middlemiss, Employers’ Liability for Occupational Stress and Death from Overwork in the United States and the United Kingdom, 38(2) Common Law World Rev. (137).

This article is authored by Ojaswini Mandhan and Parikshit Singh Bhati, students at National Law University, Jodhpur.