Section 38 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 38 provides for periodical payments to the dependants of an Insured Person who dies as a result of an employment injury. It names who is paid first, who is paid if there is no such dependant, and lets the Corporation review and change the benefit when family circumstances or facts change.
If an Insured Person dies as a result of an employment injury, dependants' benefit is payable to the dependants in sub-clauses (a) and (b) of section 2(24), at rates, for periods and on conditions prescribed by the Central Government (s.38(1)). If there are none, it goes to other dependants (s.38(2)). The Corporation may review a decision at any time for non-disclosure or misrepresentation, or because of a birth, death, marriage, re-marriage, end of infirmity or a claimant reaching twenty-five (s.38(3)). On review it can continue, increase, reduce or discontinue the benefit (s.38(4)).
Who can claim
Employers meet this section only when a tragedy happens, which is why a periodic labour law compliance review of insurance and records is worth doing in advance.
Section 38(1) applies where an Insured Person dies as a result of an employment injury sustained as an employee under Chapter IV, whether or not he was getting temporary disablement payments for that injury. The benefit is payable to the dependants specified in sub-clauses (a) and (b) of clause (24) of section 2. For the definition itself, see our article on section 2 terms on employment injury, dependant and family.
Rule 22(6)(a) of the Central Rules, 2026 lists first-tier dependants: the widow, children and widowed mother. If the deceased leaves none of them, rule 22(6)(b) lists the second tier, and section 38(2) of the Code makes the benefit payable to "other dependants".
How much: rule 22 of the Central Rules
The Code leaves rates to the Central Government. Rule 22(7) fixes the daily rate of dependants' benefit at ninety per cent of the standard benefit rate in the contribution period corresponding to the benefit period in which the employment injury occurs, rounded to the next higher rupee, with special rules where the injury happens before the first benefit period begins. Rule 22(6) then divides this amount, described there as the "full rate" for disablement purposes.
| Dependant (rule 22(6)(a)) | Share of full rate | Until |
|---|---|---|
| Widow (equally divided between widows if more than one) | Three-fifths | Life or re-marriage |
| Each legitimate or adopted son | Two-fifths | Age twenty-five (continues while infirm and wholly dependent) |
| Each legitimate or adopted unmarried daughter | Two-fifths | No age is stated in the rule; she must be unmarried (continues while infirm and wholly dependent) |
| Widowed mother | Two-fifths | Life |
If the total distributed exceeds the full rate at any time, each share is proportionately reduced so the total does not exceed the full rate.
If there is no widow, child or widowed mother, rule 22(6)(b) provides:
| Other dependant | Share of full rate | Until |
|---|---|---|
| Widower | Three-fifths | Life or re-marriage |
| Parent other than widowed mother, or grandparent (divided equally if more than one) | Two-fifths | Life |
| Any other male dependant | Two-tenths | Age eighteen |
| Any other female dependant | Two-tenths | Age eighteen or marriage, whichever is earlier; if widowed, age eighteen or re-marriage, whichever is earlier |
The same proportional reduction applies to this tier. Rule 22(7) also states that the minimum total monthly payment to all eligible dependants of a deceased employee shall be as notified by the Corporation. Rule 22(8) lets the Corporation review and alter the scale of any benefit and its period when its funds permit.
These are the Central Rules. Where a State Government is the appropriate Government, its own rules apply.
Worked example
An Insured Person dies of an employment injury leaving a widow, a 20-year-old son and a widowed mother. Suppose the full rate works out at 100 rupees a day purely for illustration. The rule 22(6)(a) shares would be 60 + 40 + 40 = 140 rupees, which exceeds the full rate, so each share is proportionately reduced so the total equals 100: about 42.86, 28.57 and 28.57 rupees. The numbers are illustrative; the actual full rate is computed from the standard benefit rate as rule 22 describes.
Review: s.38(3) and (4)
The Corporation can review any decision awarding dependants' benefit at any time if satisfied by fresh evidence that:
- the decision was given in consequence of non-disclosure or misrepresentation of a material fact by the claimant or another person, whether or not fraudulent; or
- the decision is no longer in accordance with the Chapter because of any birth or death, or because of the marriage, re-marriage, or ceasing of infirmity, or attainment of the age of twenty-five years by a claimant.
On review the Corporation may direct that the benefit be continued, increased, reduced or discontinued (s.38(4)). A dependant should therefore inform the Corporation of a marriage or re-marriage, because the benefit can be reduced or stopped. A dispute about a direction the Corporation issues on review falls within the Employees' Insurance Court's jurisdiction under s.49(1)(f); see sections 48 and 49.
Interaction with employee compensation
Section 41(7)(a) says a person eligible for dependants' or disablement benefit under Chapter IV cannot claim Employees' Compensation from the employer under Chapter VII. Choose-one rules for cash benefits are covered in our article on sections 39 to 41. For related background, see our existing post on dependants' benefit under ESI.
What employers should do
- Make sure every employee is insured before an accident, because late insurance can lead to recovery from the employer under section 42.
- Keep family particulars current on the ESI portal, since these support later claims.
- Report the accident promptly, and help the family with documents.
Need help with employment injury claims and ESI compliance?
A death at work is the worst time to find gaps in insurance or records. If you want your registration and accident procedure checked before that point, our labour law compliance team can assist.
Key takeaways
- Dependants' benefit is paid when an Insured Person dies as a result of an employment injury.
- First-tier dependants: widow, children, widowed mother; else other dependants (s.38(1)-(2); rule 22(6)).
- Daily rate: ninety per cent of the standard benefit rate (rule 22(7)); shares are fractions of the full rate and are proportionately reduced if they exceed it.
- The Corporation can review for misrepresentation, birth, death, marriage, re-marriage, end of infirmity or a claimant turning twenty-five.
- A person eligible for dependants' or disablement benefit cannot also claim Employees' Compensation under Chapter VII (s.41(7)(a)).
Read next
- Sections 36 and 37: Occupational diseases and the medical board
- Sections 39, 40 and 41: Medical benefit and general provisions on benefits
- Dependants' benefit under ESI on the death of an insured person
- ESI benefits: medical, sickness, maternity and disability
Disclaimer: Based on the Code on Social Security, 2020 (as enacted) and, where noted, the Code on Social Security (Central) Rules, 2026 (G.S.R. 344(E), 8 May 2026), as on 30 September 2026. The Code is in force from 21 November 2025; some provisions may be notified later, and State Governments make their own rules for establishments where the State is the appropriate Government. Verify the current position before acting.