Employees’ Compensation Act | Failure To Frame Issue On Employer-Employee Relationship Vitiates Commissioner’s Award: Kerala High Court

"Existence of employer-employee relationship is a basic jurisdictional fact. Non-existence of the relationship would disentitle the claimant from obtaining compensation under the Employees’ Compensation Act." Kerala High Court, in a significant ruling dated September 2, 2026, held that an award passed by the Commissioner for Employees’ Compensation is legally unsustainable if the authority fails to frame and adjudicate upon the fundamental issue of the employer-employee relationship.

A bench of Justice S. Manu observed that such a relationship constitutes a "jurisdictional fact" that must be strictly established before any liability can be fastened upon an alleged employer.

The appellant, an owner of a building under construction, challenged an order passed by the Employees’ Compensation Commissioner directing him to pay Rs. 1,91,424/- as compensation for injuries sustained by the first respondent, a worker who fell from a height in December 2001. The appellant consistently maintained that he had not directly engaged the claimant, contending that the work was entrusted to a contractor, thereby denying the existence of an employer-employee relationship.

The court was primarily called upon to determine whether the failure of the Commissioner to frame a specific issue regarding the existence of an employer-employee relationship rendered the award legally faulty. It also examined whether the claimant, having been engaged for work of a casual nature, fell within the definition of a "workman" under the Act post the 2000 amendment.

Commissioner's Failure to Frame Issues

The High Court observed that in proceedings under the Employees’ Compensation Act, the existence of an employer-employee relationship is a condition precedent for the exercise of jurisdiction. Despite the appellant emphatically disputing this relationship in his pleadings and evidence, the Commissioner failed to frame a specific issue on the point. The court found that the discussions in the impugned order regarding whether the claimant was a "workman" were insufficient to address the core jurisdictional dispute.

"The order passed by the learned Commissioner is legally faulty on account of the omission to frame issues appropriately and properly consider whether there was employer-employee relationship."

Casual Nature of Employment

Addressing the appellant's contention that casual workers were excluded from the Act, the court clarified that the position changed following the 2000 Amendment. Specifically, Section 2(1)(n) was amended to omit the exclusion of persons whose employment was of a casual nature, provided the employment was for the purposes of the employer’s trade or business. As the accident occurred in 2001, the court held that the claimant's status as a "casual worker" did not automatically disqualify him from claiming compensation.

"Even if the engagement of the 1st respondent was casual in nature, he would be a workman for the purpose of the Act."

Applicability of Section 12

The court further criticized the Commissioner for disregarding the potential application of Section 12 of the Act, which deals with the liability of the principal employer when work is executed through a contractor. The Commissioner had erroneously remarked that the distinction between being employed by the owner or engaged through a contractor had "no much relevance" in the case. The High Court clarified that this finding was fundamentally incorrect as it directly impacted the determination of liability.

"The learned Commissioner omitted to bear in mind that if the engagement was through a contractor, then the appellant would have a fair chance of getting the benefit of Section 12 of the Act."

Concluding that the matter required a de novo determination to ensure the rights of all parties, the High Court set aside the impugned order. The case was remanded to the Commissioner with directions to frame appropriate issues, allow the parties to lead further evidence if necessary, and pass a fresh order within six months.

Date of Decision: 02 September 2026