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Section 38: Method of payment of contribution

The Code on Social Security, 2020 (Act No. 36 of 2020) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter IV: Employees' State Insurance Corporation
Competent Labour Forum
Act No. 36 of 2020
Section 37 All 163 Sections of Code on Social Security, 2020 Section 39

Legal Commentary & Landmark Judgments: Section 38

Section 38 of the Code on Social Security, 2020 codifies the statutory entitlement to Dependants' Benefit, providing lifelong periodic maintenance pensions to the surviving family of an insured employee who dies as a result of an employment injury, replacing lump-sum payouts with secure income protection.

  • Eligible Dependant Categories & Statutory Hierarchy: Section 38(1) mandates payment of dependants' pension to the widow during her life or until remarriage, legitimate or adopted sons and unmarried daughters until reaching prescribed age (presently 25 years), and infirm children for life; dependent parents qualify in the absence of widow and children.
  • Apportionment Formula & Daily Pension Rate: Section 38(2) establishes that the aggregate dependants' benefit is calculated at the full standard benefit rate (ordinarily ninety percent of the deceased employee's average daily wage), apportioned among eligible beneficiaries in statutory shares.
  • Inalienability & Protection from Creditor Execution: Dependants' benefit payments are statutorily protected against attachment by civil courts, bankruptcy receivers, or employer set-offs, guaranteeing continuous family sustenance.
Key Landmark Precedents:
  • Royal Western India Turf Club v. E.S.I.C. (2016) 4 SCC 521: The Supreme Court emphasized that dependants' benefit under social security legislation provides an indispensable safety net to prevent destitution and economic ruin of worker families following fatal workplace accidents.
  • ESIC v. Francis De Costa (1996) 6 SCC 1: The Supreme Court held that entitlement to dependants' benefit requires proof that death resulted from an employment injury sustained out of and in the course of employment.
  • Mackinnon Mackenzie & Co. (P) Ltd. v. Ibrahim Mahmmod Issak (1969) 2 SCC 607: Affirmed that dependants claiming fatal accident compensation are entitled to the benefit of reasonable evidentiary probabilities regarding the employment nexus.
Courtroom Practice & Strategic Litigation Guidance:

Upon the occurrence of a fatal industrial accident, the employer's HR department must submit Form 12 to the ESIC Branch Office within 24 hours. HR should proactively assist the deceased worker's family in collecting family lineage certificates, death certificates, and bank account details, and facilitate prompt submission of Form 18 (Claim for Dependants' Benefit) to ensure pension disbursements commence without bureaucratic delay.

Section 37 All 163 Sections of Code on Social Security, 2020 Section 39