Employees Compensation Act
Section 5: Method of calculating wages
In this Act and for the purposes thereof the expression "monthly wages" means the amount of wages deemed to be payable for a months service (whether the wages are payable by the month or by whatever other period or at piece rates), and calculated as follows, namely-
(a) where the employee has, during a continuous period of not less than twelve months immediately preceding the accident, been in the service of the employer who is liable to pay compensation, the monthly wages of the workman shall be one-twelfth of the total wages which have fallen due for payment to him by the employer in the last twelve months of that period;
(b) where the whole of the continuous period of service immediately preceding the accident during which the workman was in the service of the employer who is liable to pay the compensation was less than one month, the monthly wages of the employee shall be the average monthly amount which, during the twelve months immediately preceding the accident , was being earned by a employee employed on the same by the same employer, or, if there was no workman employed, by a workman employed on similar work in the same locality;
(c) in other cases including cases in which it is not possible for want of necessary information to calculate the monthly wages under clause (b), the monthly wages shall be thirty times the total wages earned in respect of the last continuous period of service immediately preceding the accident from the employer who is liable to pay compensation, divided by the number of days comprising such period.
Explanation.- A period of service shall, for the purposes of this section, be deemed to be continuous which has not been interrupted by a period of absence from work exceeding fourteen days.