EMPLOYEE

COMPENTATION ACT 1923

BY
DR.ANSHUL PANDEY
ASSISTANT PROFESSOR

DR.ANSHUL PANDEY 1
 Introduction
• Employee's Compensation Act 1923: Before
2010, Employee’s Compensation Act, 1923
was known as Workmen's Compensation Act.
It provides for compensation to an employee
who dies or suffers partial or total disablement
due to accident on duty.

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 Objective
The Workmen's Compensation Act, 1923 is
one of the important social security
legislations. It aims at providing financial
protection to workmen and their dependants in
case of accidental injury by means of payment
of compensation by the employers.

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 Definition
Section 3(1) of the Workmen Compensation Act, 1923
says that – “If personal injury is caused to a workman
by accident arising out of and in the course of his
employment, his employer shall be to pay
compensation in accordance with the provision of this.
There are three components in the definition which are –
(1) personal injury
(2) accident
(3) arising out of and in the course of the employment .

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 DEFINITIONS(Section 2)
• COMMISSIONER
• DEPENDANT
• EMPLOYER
• DISABLEMENT
• WAGES
• WORKMAN

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 Commissioner
• Sec.2(1)(b)
A Commissioner means a Commissioner for
Workmen’s Compensation appointed under section 20

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 Dependent
• Means any of the following relatives of a deceased workman, namely
(i) a widow, a minor legitimate or adopted son, and unmarried legitimate or
adopted daughter, or a widowed mother; and
(ii) if wholly dependent on the earnings of the workman at the time of his
death, a son or a daughter who has attained the age of 18 years and who is
infirm;
a) a widower,
b) a parent other than a widowed mother,
c) a minor illegitimate son, an unmarried illegitimate daughter or a daughter
legitimate or illegitimate or adopted if married and a minor or if widowed
&minor,
d) a minor brother or an unmarried sister or a widowed sister if a minor,
e) a widowed daughter-in-law,
(f) a minor child of a pre-deceased son,
g) a minor child of a predeceased daughter where no parent of the child is
alive,
h) a paternal grandparent if no parent of the workman is alive.
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 EMPLOYER (SEC 2(1)E)
• Any body of persons whether incorporated or
not
• Any managing agent of an employer; and
• The legal representative of a decease employer

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 Disablement
• Disablement means any loss of capacity to work or
move
• May result in loss or reduction of his earning
capacity
• Disablement may be
- Total
- Partial
- Temporary
- permanent

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 Wages {sec.2.1(m)
“wages” includes any privilege or benefit
which is capable of being estimated in money,
other than travelling concession or a
contribution paid by the employer to the
workman towards any pension or provident
fund or a sum paid to a workman to cover any
special expenses entailed to him by the nature
of his employment.

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 WORKMAN {sec.2.1}
Any person who is:
(a) a railway servant as defined in clause (34) of
section 2 of The Railways Act 1989not
permanently employed in administrative,
district or sub-divisional office of a railway
and employed in any such capacity as is
specified in schedule II or,
(b) a master, seaman, or other member of the
ship or crew

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 Contd.
It does not include a person whose employment is of
a casual nature
• A captain or other member of the crew on an
aircraft.
• A person recruited as driver, helper, mechanic,
cleaner or in any other capacity in connection with
a motor vehicle.
• A person recruitedforwork abroad
by company as is mentioned in schedule ll.

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 Person to be treated as workmen

• There must be a contract of employment.

• There must be a relationship of master and
servant between the employer and the
employee.
• The employment is for the purposes of
employer’s trade or business.
Employer’s liability to pay compensation (Sec 3)
As per Section 3(1) of the act, the following conditions must
necessarily be satisfied in order to qualify for compensation:
1. He must be a workmen within the meaning of this act.
2. Personal injury must have been caused by accident.
3. The injury must have been caused by accident.
4. The accident must have arisen out of and in the course of
employment.
5. The injury caused by the accident must have resulted in
the workman’s death or permanent total disablement
or temporary disablement.
 Employers Liability
• To compensate any employee:
Who has suffered an accident arising out of and in
the course of his employment, resulting into:
(i) death,
(ii) permanent total disablement,
(iii) permanent partial disablement,
(iv) temporary disablement whether total or partial,
or
• who has contracted an occupational disease.

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 CONTD.
HOWEVER THE EMPLOYER SHALL NOT BE LIABLE
• In respect of any injury which does not result in the total or partial
disablement of the workmen for a period exceeding three days;
• In respect of any injury not resulting in death, caused by an
accident which is directly attributable to-
• the workmen having been at the time thereof under the influence
of drugs, or
• the willful disobedience of the workman to an order expressly
given, or to a rule expressly framed, for the purpose of securing
the safety of workmen, or
• the willful removal or disregard by the workmen of any safeguard
or other device which he knew to have been provided for the
purpose of securing the safety of workmen.

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Accident arising out of & in the course of his
employment

• The employer is liable to pay compensation in case of

personal injury and occupational disease.

• Personal injury includes physical/mental injury, strain

or shock caused by excitement.
 CONDITION FOR RECEIVING
COMPENTATION FOR PERSONAL INJURY

The three tests for determining whether an accident

arose out of employment are :
• At the time of injury workman must have been
engaged in the business of the employer and must
not be doing something for his personal benefit;
• That accident occurred at the place where he was
performing his duties; and
• Injury must have resulted from some risk
incidental to the duties of the service, or inherent
in the nature or condition of employment.
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 Occupational Diseases
• Workers employed in certain types of
occupations are exposed to the risk of
contracting certain diseases which are peculiar
and inherent to those occupations. A worker
contracting an occupational disease is deemed
to have suffered an accident out of and in the
course of employment and the employer is
liable to pay compensation for the same.

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 Accident Report
• Where the accident results in death or serious
bodily injury, the employer should send a
report to the Commissioner, within 7 days of
the accident, in the prescribed form giving the
circumstances attending the death or serious
bodily injury.

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 Notice of accident
A 'notice of accident' should be sent to the
Commissioner, by the concerned employee as soon
as practicable after the happening thereof. The
notice should contain such particulars as the name
and address of the person injured, the date and
cause of accident, etc. A Copy of the notice should
also be sent to the establishment wherein he was
employed. The notice of accident may be served
either personally or by registered post or by means
of an entry in the notice-book maintained by the
employer.

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 Amount of compensation
The amount of compensation payable to a workman depends on
• the nature of injury caused by accident
• the monthly wages of the workman concerned and the relevant
factor
• the Relevant Factor is specified in schedule IV for working out
the lump sum amount of compensation
• THERE IS NO DISTINCTION BETWEEN AN ADULT
AND A MINOR WORKER WITH RESPECT TO THE
AMOUNT OF COMPENSATION.

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 For calculation
• Before the calculation of settlement
under workmen compensation insurance policy
following points should be noted:
• Maximum monthly wage allowed for the
calculation of compensation under the Act is Rs.
8000
• Workers from the age of 18 years and above are
eligible for the compensation
• Relevant Factor is an age-based multiplier defined
in Schedule IV of the Workmen Compensation Act

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 Changes
• The Central government has changed the
amount of wages to be considered for
calculation of compensation to workers under
the Employee’s Compensation Act 1923 vide
notification S.O.71 (E) dated January 3, 2020.
The amount of wages considered previously
for the calculation of compensation was just Rs
8,000. Now, it will be Rs 15,000, according to
the notification by the Ministry of Labour and
Employment.
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 Relevant Factor
Relevant Factor Schedule IV of
Workmen Compensation Act
Age is the completed years of age, of the
workman or employee on the last birthday.
The last birthday is the latest birthday of the
workman which is immediately preceding the
due date of compensation liability.

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Relevant factor

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 Compensation for Death
• In case of death resulting from injury, the
amount of compensation shall be equal 50% of
the monthly wages of the deceased workman
multiplied by the relevant factor.
• Or an amount of Rs 1,20,000/- whichever is
more.

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 Example
• A workman is employed in a factory on a monthly wage of Rs
3000. While working he met with an accident and dies on oct
2000. His date of birth is july 18 , 1970. The amount of
compensation payable to his dependent would be
Formula:
50 x monthly wages x Relevant factor of age 30
100

0r 1,20,000 whichever is higher

50x 3000x207.98 = 3,11,970
100
• Since Rs 311970 is more than 1,20,000 the compensation payable
to him shall be Rs 311,970

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 Compensation For Permanent Total
Disablement
• In case of permanent total disablement
resulting from the injury, the amount of
compensation shall be 60% of the monthly
wages of the injured workman multiplied by
the relevant factor or Rs 1,40,000/- whichever
is more.

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Compensation for Permanent Partial
Disablement
Where permanent partial disablement occurs, the
amount of compensation payable shall be as follows:
• In case of an injury specified in part II of the schedule
I, the amount of compensation shall be such percentage
of the compensation which would have been payable
for the percentage of loss of earning capacity caused by
that injury.
• In case of an injury not specified in schedule I, such
percentage of the compensation is payable which is
proportionate to the loss of earning capacity (as
assessed by a qualified medical practitioner)
permanently caused by the injury.

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 Compensation For Temporary
Disablement (Total or Partial)
• If the temporary disablement, whether total or
partial results from the injury, the amount of
compensation shall be a half monthly payment
of the sum equivalent to 25% of the monthly
wages of the workman to be paid in
accordance with the provisions.

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Compensation to be paid when Due and
Penalty For Default
• As per this section, compensation has to paid as soon as it is
due
• In case the employer does not accept the liability of paying
the compensation, he is bound to make provisional
payment to the extent of the liability he accepts. Such
amount has to be deposited with the commissioner or paid
to the workman. If he defaults, the commissioner may order:
• the payment of the amount with interest at12 % per
year
❖ if the default to be unjustifiable then the commissioner
may order payment of a further sum not exceeding 50%
of the amount due, by way of penalty.

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 Funeral Expenses
• In case of death of a workman funeral
expenses amount of 5000/- shall be payable to
the dependent of the decease workman or to
anyone who incurs the expenses of the funeral.

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