Employees’ Compensation Act,

1923
(CHAPTER VII OF THE CODE ON SOCIAL
SECURITY, 2020)
• Historical Background
• The legislation came into the picture to
resolve situations where the question of
granting workmen compensation for fatal and
serious accidents.
• A Committee was set up in 1920-21 for framing a
legislation to answer relevant questions, which
was followed by the passing of Workmen’s
Compensation Act (now Employees’ Compensation
Act, 1923).
• The measure followed the British Act but it
also contained provisions that were designed to
meet special conditions were relevant in the
Indian context.
• This act was the first step towards social
• Aims and Objects of the Act
• The Act aimed at covering only employees whose
occupations were hazardous and who were engaged
in industries which were more or less organized
(factories, mines, railways, construction etc)
• The intent of this legislation is to provide
adequate compensation and safety to workmen who
work with machinery and are therefore exposed
to the dangers of working with such machines.
It is to make this a standard industry practice
• Places an onus on the employer to implement
adequate safety devices. Also encourages
employers to provide adequate medical treatment
for their workmen to mitigate the effects of
such accidents.
• It increases sense of security and make
industrial life more attractive and thus
• Prior to this Act, if an employee in a factory was
injured or killed on account of accident due to
his employment, the employee or his dependents
could file a suit for damages and could recover
them only if the injury or death could be
attributed to the negligence of the employer.
• Under the ECA, it became beneficial to both the
workmen and employer because:
• For the workmen, it became easier to institute a legal
proceeding and defend the same
• For the employer, he was liable to pay only a limited and
fixed amount and the employee is entitled to get the
amount without much / any litigation
• The Act assumes that the injuries to workmen are
no longer due to the result or fault or
negligence, but they are the product of industry
itself. Therefore, the employer has been made
liable to pay for an accident arising out of and
• The Act provides for a simple, cheap and prompt
procedure for the recovery of compensation in
case of injury to or death of an employee.
• However, the Act does not take away the
employee’s common law right to claim damages
which may be quite substantial, if he can prove
negligence on the part of the employer.
• Thus the employee or his dependents may either file
a civil suit for damages against the employer and
take the risk of the employer’s escape the liability
on any of the three defences or made a claim for
compensation under the Act.
• The injured employee or his dependents in case of
his death have to choose the remedy which they will
like to resort to.
• Salient Features of the Act
• The Act is applicable only to those workmen, who are
working in industries as specified in the Act.

• The payment is compulsory on all employers – for

personal injury ‘arising out of and in the course of
employment’.

• The various categories of workmen have been specified

in the definition of ‘employee’ in section 2(1) (n) of
the Act.

• The amount of the compensation payable to the

dependents are ‘capped’ by prescribing compensation
calculation method.

• The liability of payment of compensation doesn’t depend

upon the neglect or wrongful act on the part of the
employer, the liability arises out of the relationship
of the employer and employee, which is a new type of
• The most important feature is that it provides
for an obligation on the employers whose
employees are entitled to claim benefit under
the Act.
• Workman or his dependents may claim
compensation if the injury is caused by
accident arising out of and in the course of
employment.
• It is not necessary that the accident should
have been caused by some wrongful act of the
employer.
• In the event of injury not resulting in death,
the workman could not claim compensation:
• if at the time of accident he was under the
influence of drinks/drugs or
• if there was any willful disobedience of
rules/orders or
• if there was any disregard of safety.
• Any claim must be made within 2 years if the
occurrence of the accident or in case of death
within 2 years from the date of death.
• The amount of compensation payable depends in
case of death on the average monthly wages of
the deceased workman.
• The amount of compensation in case of an
injured workman:
• On the basis of average monthly wages, and
• The Act is administered by the Commissioner, who is a
quasi-judicial authority appointed by the State
Government to ascertain compensation.
• Also empowered to grant immediate relief.
• Also empowered to ascertain (in case of default of agreement
between the parties to arrive at a conclusion), the question as
to:
• Whether a person injured is a workman,
• The quantum of liability to be paid to the workman
• The nature or extent of disablement.

• There is a right to appeal under Sec. 30 to the High

Court, albeit for a limited purpose.
• Principles governing compensation
• Four conditions need to be established so as to
fasten the liability on the employer:
• A causal connection between the injury and the
accident, and the accident and the work done in the
course of employment.
• The onus is upon the claimant to establish that the
injury was the outcome of the work and resulting
strain.
• It is not necessary that the employee must actually
be working at the time of death or that death
occurred at the time he was working or he had ceased
to work.
• If the evidence adduced shows greater probability
which satisfies a reasonable man that the work
contributed to the causing of personal injury, it
would be sufficient ground for the employee to
• Definitions
• Commissioner:
• In terms of Section 2 (b) "Commissioner" means a
Commissioner for Employee's Compensation appointed
under section 20 of the Act.

• Reference to Commissioner: Commissioner is entitled to

settle any question as to liability to pay compensation
or amount of compensation u/s 19 of the Act.

• Civil Court jurisdiction is barred to decide any matter

pertaining to this Act.

• Appointment of Commissioner: Official gazette – from

member of state judicial services, advocates (not
having less than 5 yrs of exp.), for a particular area.
Commissioner may chose any person to assist them.
• Two commissioners may be appointed for any area where
government will regulate the distribution of business
between them.
• Power and Procedure of Commissioner
• Same powers of a civil court for the following
purposes:
• Power for the purpose of receiving evidence,
• Administering oaths,
• Enforcing the attendance of witnesses, and
• Compelling the discovery and production of
documents and material objects.

• The commissioner shall be deemed to be civil

court for all purposes of section 195 and of
chapter XXXVI of the Code of Criminal
Procedure, 1973.
• Compensation
• “Compensation" means compensation as provided
for by this Act under Section 2(c ).
Ordinarily, compensation means a payment made
for loss or injury to person or property or as
recompense.
• Compensation for the purpose of this Act means
payment by the employer to an Employee under
the Act. This is different from damages in the
sense that in the case of the latter indemnity
is payable for loss suffered by an aggrieved
party owing to a breach of contract or tort,
and it may be nominal, actual or exemplary one,
but in the former case, it is usually an
equivalent amount for loss or injury to person
• Employer:
• "Employer" , u/s 2( e) includes any body of
persons whether incorporated or not and any
managing agent of an employer and the legal
representative of a deceased employer and when
the services of a workman are temporarily lent
or let on hire to another person by the person
with whom the workman has entered into a
contract of service or apprenticeship means
such other person while the workman is working
for him. The last combination of words also
brings contractor under the meaning of this
definition.
• Wages:
• "Wages”, u/s 2(m) includes any privilege or
benefit which is capable of being estimated in
money other than a
• (i) traveling allowance or the value of any traveling
concession or
• (ii) a contribution paid by the employer of a workman
towards any pension or provident fund or
• (iii) a sum paid to a workman to cover any special
expenses entailed on him by the nature of his employment.

• Wages is used here in broad sense, it includes all

payments made to an employee arising out of the
relationship unless the meaning of this term is
restricted otherwise by way of special statute. In
• But it seems that it is a calculation on the
basis of a remote reward and as such out to be
avoided. It is clear from the Act that the
compensation payable to a workman to be
computed on the basis of the wages and not on
the basis of any ‘basic wages’. Dearness
allowance and amenities of free water come
under the privilege and benefit and is thus
within the definition of wages.

• However, the term ‘wages’ must not include some

specified privileges or benefits expressly
excluded from the meaning of the term in the
definition of the Act.
• Accident:
• Accident not defined in the Act. But the accident should
arise ‘out of employment’. The word ‘accident’ has been used
in the popular and ordinary sense and means ‘mishap’ or
‘untoward event not expected or designed’.

• Dictionary meaning: an unexpected event which causes damage

or harm; something which happens without planning or
intention; by chance may be called as an accident.

• The Act is a beneficial legislation intended to protect the

interest of the employee who generally belong to the less
fortunate section of the society. Therefore, meaning of the
word accident should be given wider import.

• If a workman suffers a personal injury unexpectedly or

suddenly and such personal injury suffered by the employee
can be attributed to the work undertaken by the employee or
has some connection to the nature of the duties discharged
by an employee, such an injury suffered can be treated as an
accident.
• Whether an employer will be liable for payment of
compensation when the employee is ‘not performing his duty’?
• Even when a workman was not performing his actual duties and
dies, the employment will be liable for payment of
compensation under the Act. When an accident took place at 7
p.m. whereas the duty hours of the deceased were 8 a.m. to 4
p.m., the compensation will be payable and the appeal
against the order of the commissioner will not be tenable
since such a pleas has not been taken before the
Compensation Commissioner. – Southern Eastern Coal Fields v
Sukrita Bai, 2000 LLR 880 (MP HC)

• Once a workman reports to duty at the work place and an

accident occurs, the further question as to whether he has
reported to duty to his immediate superior or supervisor,
become irrelevant as such an employer cannot escape its
lability for payment of compensation on an accident to the
dependent of the deceased workman that at the time of
accident the workman was not discharging his duty.

• When an employee receives injury at the place of his work

which results into his death, his/ her dependents(s) would
be entitled to receive compensation irrespective of the fact
that he had reached his place of work earlier than the fixed
timings as such an injury amounts to ‘employment injury’ as
• Dependants u/s 2(d):
• In order to give clarity in case of a conflict,
the definition divides the dependants into
three categories:

• The First category dependants are a widow, a minor

legitimate or adopted son, unmarried legitimate or
adopted daughter, and a widowed mother. They are
deemed as dependants whether they are dependent on
the earnings of the workman or not.
• The second category is that of son and daughter of
18 years or above.
• In order to claim compensation, they must be infirm
and must be wholly dependent on the earnings of the
workman at the time of his death.
• The third category dependants are
• A widower
• A parent otherwise than a widowed mother,
• A minor illegitimate son, an unmarried illegitimate daughter, a daughter
legitimate/illegitimate/adopted if married and a minor, or if widowed and
a minor,
• A minor brother or an unmarried sister or a widowed sister if minor,
• A widowed daughter-in-law,
• A minor child of a pre-deceased son,
• A minor child of a pre-deceased daughter (where no parent of the child is
alive,
• A paternal grand parent.
• For the third category dependants, they need to be wholly or in
part dependent on the earnings of the workman at the time of his
death.

• NOTE: Question of dependency is a question of fact and the persons

who wants to claim compensation as a dependent have to prove that
he is dependent under the Act.
• Employee’s Definition

• Employee" means a person, who is--

• a railway servant as defined in clause (34) of section 2
of the Railways Act, 1989 (24 of 1989), not permanently
employed in any administrative district or sub-divisional
office of a railway and not employed in any such capacity
as is specified in Schedule II; or

• (ii) (a) a master, seaman or other members of the

crew of a ship,
(b) a captain or other member of the crew of an
aircraft,
(c) a person recruited as driver, helper,
mechanic, cleaner or in any other capacity in
connection with a motor vehicle,
(d) a person recruited for work abroad by a
company, and who is employed outside India in any
such capacity as is specified in Schedule II and
the ship, aircraft or motor vehicle, or company, as
(iii) employed in any such capacity as is specified in Schedule II
(containing 48 headings of employees), whether the contract of
employment was made before or after the passing of this Act and
whether such contract is expressed or implied, oral or in
writing; but does not include any person working in the
capacity of a member of the Armed Forces of the Union; and any
reference to any employee who has been injured shall, where the
employee is dead, include a reference to his dependants or any of
them;]

*[Clause (dd) inserted by Workmen’s Compensation (Amendment) Act,

2009, section 6]

Liability of an employer for compensation when accident takes place

in foreign country?
• Section 2(n)(d) of the Act inter alia provides that the definition
of a ‘workman’ will include a person recruited for work abroad by
a company, as the case may be, is registered in India and if he
meets with an accident he or his dependents as the case may be,
can claim compensation in India under the Act as amended in 1995.
• Are daily rated/ casual employees entitled to
compensation under the Act?

• The Karnataka High Court has held that an

employer will be liable for payment of
compensation even when a casual employee
employed abroad meets with an accident. Even a
casual employee will be entitled to
compensation if he meets with an accident
during the course of employment. - - Mammed v
Gopalan, 1996 LLR 426 (Kerala HC)

• Compensation will be payable for an accident

resulting into death of the tanker driver
because of blast, hence it will be immaterial
whether the deceased was in regular employment
or a daily wager. – Usha Paten v. Dilip
• Schedule II provides for an exhaustive list of
the various classes of Employees employed in
various kinds of occupation.
• Therefore, if the person does not fall under the
Schedule, would not be entitled to receive
compensation.
• Workmen’s Compensation (Amendment) Act, 2000:
• Employment of casual nature and employment otherwise
than for the purposes of the employer’s trade or
business have been included within the definition of
employee.
• Casual Labour: One who does casual or occasional job
i.e. appointed for a particular purpose.
• Persons working on daily wages also held to be
employee.
• There needs to be a relationship of an employer
and an employee in order for the definition of
employee to be applied.
• A contract may be express or implied, oral or
in writing.
• The relationship is established if the employer
has some measure of control and could regulate
the action of the employee during the time he
is engaged in doing his work, i.e. there is a
contract of service.
• An independent contractor is not a employee
• An independent contractor is one who, in the pursuit
of an independent business, undertakes to do
specific work without any direct control in respect
of the work.
• There is a contract for service.
• DISABLEMENT UNDER THE ACT
• Partial Disablement:
• Sec. 2(1)(g) of the Act talks about partial disablement.
• It can be of two kinds:
• Temporary Partial Disablement:
• If the earning capacity of a workman is reduced in relation to the
employment he had been at the time of the accident resulting in the
disablement.
• Permanent Partial Disablement:
• If such disablement reduces his earning capacity in every
employment which he was capable of undertaking at that time.
• Every injury specified in Part II of Schedule I shall be deemed to
result in permanent partial disablement.
• The focus is on the earning capacity of the
workmen and not his earnings.
• Loss of earning capacity is a question of fact.
• It has to be determined by taking into account the
diminution or destruction of physical capacity as
disclosed by the medical evidence and then it is to be
seen to what extent such diminution or destruction would
reasonably be taken to have disabled the affected
employee from performing the duties which an employee of
his class ordinarily performs.
• Disablement means any loss of capacity to work or to make
movement. Disablement makes a person unable or unfit; it
weakens or destroys the capability of the person.

• Ordinarily, disablement means incapacity or deprivation of

physical, moral or intellectual strength. Disablement may
result in loss or reduction of his earning capacity;

• The extent of deprivation is measured in terms of money.

Where the earning capacity of a person is reduced partially
by reason of disablement, it is commonly known as partial
disablement. Total disablement strictly means the loss of
earning capacity equal to 100 %.
• Disablement may be-
• Partial
• Temporary [Decided by the competent authority]
• Permanent [Schedule I - Part II]
• Total
• Temporary [Decided by the competent authority]
• Permanent [Schedule I - Part I]
• Partial Disablement:
• Sec. 4(1)(c) provides for the amount of compensation
where ‘permanent partial disability’ results from
the injury:
• In case of an injury specified in Part II of Schedule I,
such percentage of the compensation which would have been
payable in the case of permanent disablement as is specified
therein.
• In case of an injury not specified in Schedule I, such
percentage of the compensation payable in case of permanent
total disablement as is proportionate to the loss of earning
capacity (as assessed by the qualified medical practitioner)
permanently caused by the injury.
• The medical practitioner shall have due regard to the
percentage of loss of earning capacity.
• Where the earning capacity of a person is reduced partially by
reason of disablement, it is commonly known as partial
disablement. This means any disablement as [reduces the earning
capacity] of a workman as a result of some accident.

• Partial disablement may be classified as temporary or permanent: -

• Temporary partial disablement means any disablement as reduces the
earning capacity of a workman in any employment in which he was
engaged at the time of the accident resulting in the disablement.
In other words, in such cases reduction of earning capacity of a
disabled workman is confined exclusively to the kind of employment
in which he/she was engaged immediately before the accident.

• No prescribed compensation is provided in any Schedule to the Act

for partial disablement of a temporary nature. The competent
authority determines the quantum of compensation payable to an
injured workman in such cases with reference to surrounding
circumstances and the extent of temporary loss of earning capacity
of the workman due to the accident.
• Partial Disablement:
• Once the reduction or loss in earning capacity is
established, the workman is entitled to compensation
even if he is earning the same wages as he did
before the injury.
• Rise in wages is not decisive of any loss of earning
capacity.
• Therefore, A, an injured workman, might be earning
the same amount, or even more, despite a reduction
in his capacity to earn. This will not be a factor
while calculating the loss of earning capacity.
• The percentage of the loss of earning capacity
stated against the injuries in Part II of Schedule I
• Permanent Partial Disablement
• Permanent partial disablement is one which
reduces the earning capacity of a workman in
every employment which he was capable of
undertaking at that time of injury.

• In other words, disablement of such nature

reduces the earning capacity of a workman not
only in the employment he was engaged
immediately before the accident but also in
every employment which he was capable of
performing immediately before the accident, had
he/she not been injured by the accident
resulting in his/her disablement.

• All injury in Part II of Schedule I shall be

• It is only in the case of a schedule injury
that such loss is presumed.
• The loss of earning capacity cannot be proved
by mere medical evidence. It must be proved
evidence which will establish that the workman
as a result of the injury was unable to earn as
much as he did before.
• The onus is therefore on the workman to
establish the fact that there was any
diminution in his earning capacity.
• Total Disablement
• Section 2(1)(l) defines Total Disablement:
• Means such disablement whether of a temporary or
permanent nature as incapacitates a workman for all
work which he was capable of performing at the time
of the accident resulting in such disablement :
• Provided that permanent total disablement shall be deemed to
result from every injury specified in Part I of Schedule I
or from any combination of injuries specified in Part II
thereof where the aggregate percentage of the loss of
earning capacity as specified in the said Part II against
those injuries amount to one hundred percent or more.
• ‘Total disablement’ means such disablement, whether of
a temporary or permanent nature, as [incapacitates] a
workman for all work which he was capable of performing
at the time of the accident resulting in such
disablement. Total disablement strictly means the loss
of earning capacity equal to 100 %.

• It is sub-divided into disablement of a temporary

nature and disablement of a permanent nature. Total
disablement of a temporary nature is such disablement
that incapacitates a workmen, for all work which he was
capable of performing at the time of the accident
resulting in such disablement.

• The main difference between partial disablement of a

temporary nature and total disablement of a temporary
nature is that the former relates to partial loss of
earning capacity of a workman as a result of the
accident whereas the latter relates to the total loss
of earning capacity of a workman as a result of the
accident.
• Total disablement assessment: Assessment of total
disablement should be made with reference to the
work the employee was employed to perform at the
time of the accident. If due to the accident a
driver becomes incapable of performing his duties
as a driver, there is a total disablement as far
as he is concerned.

• The certificate of medical expert can only say

what the injury is, its effect temporary or
permanent on the limp and the extent of physical
incapacity of a workman. It is for the court to
find having regard to the evidence before it
whether the workman has suffered partial or total
disablement.

• The court under such circumstances must take into

account the nature of the injury, the nature of
the work which the workman was capable of
undertaking and its availability to him. In this
connection the employer’s willingness to employ
• Part II of Schedule I lists down the injuries
that fall within the ambit of permanent total
disablement:
• 1. Loss of both hands or amputation at higher sites
100
• 2. Loss of a hand and a foot 100
• 3. Double amputation through leg or thigh, or
amputation through leg or thigh on one side and loss
of other foot 100
• 4. Loss of sight to such an extent as to render the
claimant unable to perform any work for which eye-
sight is essential 100
• 5. Very severe facial disfigurement 100
• 6. Absolute deafness 100
• 100 denotes 100% loss of earning capacity i.e.
‘incapacity for all work’.
• Distinction between Partial and Total
Disablement:
 Both refer to earning capacity. In partial, there is
a direct reference to earning capacity. In total, it
is referred in the schedule.
 If, the workman, is unable to perform his duty and
is incapacitated for all work, which he was capable
of performing at the time of accident, that is total
disablement.
 If the accident reduces the workman’s capacity in
any employment in which he was engaged at the time
of the accident, or even if the disablement is of a
permanent nature, the disablement does no more than
to reduce his earning capacity in every employment,
which he was capable of undertaking at the time of
accident, that is partial disablement.
•
• Employer’s Liability
• Section 3 of the Act: Under S. 3(1), the
liability on the employer can only be fastened
upon the following four conditions:
• Personal injury must have been caused to a workman;
• Such injury must have been caused by an accident;
• The accident must have arisen out of and in the
course of employment;
• The injury must have resulted either in death of the
workman or in his total or partial disablement for a
period exceeding three days.
• An employer is liable to pay compensation to
workman for:
• Personal injury by accident –
• An employer is liable to pay compensation to workman
(including those employed through a contractor but
excluding casual employees) if personal injury is
caused to him by accident arising out of & in the
course of his employment.

• Occupational diseases –
• Workers employed in certain occupations are exposed
to certain diseases which are inherent in those
occupation.
• A worker contracting an occupational disease is
deemed to have suffered an accident out of and in
• ‘Personal Injury’:
• Does not only mean physical or bodily injury but
also includes mental injury.
• ‘Accident’:
• Any unexpected mishap, untoward event etc.
• Some unanticipated or undesignated act.
• ‘Arising out of and in course of employment’:
• The accident must have a connection with the
employment and must arise out of it.
• Therefore, the employer’s liability arises only
during the course of employment, and when the injury
has resulted from the risk which was incidental to
the duties of the service.
• Personal Injury:
• The expression ‘personal injury’ is wider than
bodily injury.
• Personal injury includes not only physical or
bodily injury but also a nervous shock, a mental
injury or strain which causes chill.
• The personal injury caused to a workman must be
due to an ‘accident’. The word accident has not
been defined.
• In Mackinson Mackenzie and Co. Ltd. v. Miss Valma
Williams, AIR 1964 Cal. 94, it was held that
suicide is not an accident.
• It must be noted that the Act contemplates
• There must be a causal connection between the
injury/ accident and the work done in the
course of employment;
• The onus is upon the applicant to show that it
was the work and the resulting strain which
contributed to or aggravated the injury;
• It is not necessary that the workman must be
actually working at the time of his death or that
death must occur while he was working or had just
ceased to work; and
• Where the evidence is balanced, if the evidence
shows a greater probability which satisfies a
reasonable man that the work contributed to the
causing of the personal injury it would be enough
for the workman to be entitled.
• When Employer not liable:
• Proviso to Sec. 3(1):
• The proviso gives certain exceptions where the employer
is absolved from the liability of paying compensation to
the employee:
• Where the injury does not result in the total or partial
disablement of the workman for a period of exceeding
three days.
• For injury not resulting in death or permanent
total disablement:
• If the influence is under the influence of drugs or
drinks at the time of employment.
• If the workman willfully disobeys an order expressly
given, or to a rule expressly framed.
• If the workman willfully disregards any safety provision
or removes a safety device provided to the workman.
• The above defences are not available to an employer in
respect of death or permanent total disablement.
• Doctrine of Added Peril:
• This doctrine is from the perspective of the
employer and helps the employer to escape his
liability to pay compensation.
• According to the doctrine, where the employee is on
duty and he does some acts beyond the tasks assigned
to him, and consequently exposes himself to danger,
the employer could not be held liable. This is
called “doctrine of added peril”.
• But where the accident involved a risk common to all
humanity and did not involve any peculiar or
exceptional danger resulting from the nature of the
employment or where the accident was the result of an
added peril to which the workman by his own conduct
exposed himself, which peril was not involved in the
normal performance of the duties of his employment,
then the employer will not be liable.

• Therefore, it is clear that employer’s liability to pay

compensation depends on the fulfillment of the
following conditions:
• Personal injury caused the death;
• Such injury is caused by an accident;
• Accident arises “out of” and “in the course of” ‘employment’ of
the workman;
• The injury results either in the death of the workman or in his
total or partial disablement for a period exceeding three days.
• What are the conditions for claiming compensation?
• In order to enable the claimant to come within the purview
of the Act, it is not enough that the injury has taken place
in the course of employment.
• It must be further established that it arose out of the
employment.
• Thus it is for the claimant claiming the compensation to
establish casual connection between the death of the
employee and the employment.
Détermination test
The three tests for determining whether an accident arose out
of employment are :
1. 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;
2. That accident occurred at the place where he was
performing his duties; and
3. Injury must have resulted from some risk incidental to the
duties of the service, or inherent in the nature or
condition of employment.
• “ARISING OUT OF” & IN THE “COURSE OF EMPLOYMENT”
• There is a personal duty of an employer to his servant.
• The employer is, no doubt, bound to provide for the safety of his
servant in the course of his employment to the best of his
judgment, information and belief.
• At common law, the master or employer, is under certain duties of
care.
• The employer is under legal obligation to furnish the employees
with adequate materials and resources for the works.
• On him rests ‘the duty of taking reasonable care to provide
appliances, and to maintain them in a proper condition, and so to
carry on his operations as not to subject those employed by him to
unnecessary risk’.
• Secondly, the master is under strict obligation to take all
reasonable precautions so that safety of his servant or
employee is ensured.
• Thirdly, the master is liable for his own negligence causing
injury to his servant,
• Where an employer fails to discharge his common law duty of
care towards his servant, he is liable for personal injury
caused to the servant in the course of his employment.
• In India, this lability is strictly statutory under the
Employee’s Compensation Act.
• Generally, two factors are required to hold an employer
personally liable for compensation when a personal
injury is caused to his employee by accident.
• First of all the accident must arise out of employment of the
employee.
• Secondly, the accident must also arise in the course of the
employment of the employee.
• Casual relationship between the injury and the duty is
sufficient to establish a claim for compensation.
• It is not necessary that there should be a direct connection.
• The Courts are not required to look into the minute
details of the pleadings and the evidence which has
been produced in the court.
• But it is to be seen whether on broad analysis of the material
before the court, it can be said that the accident which
resulted in any injury was in the course of employment or arose
out of the employment.
• If the strenuous duties and working condition in which
the deceased was working accelerated his death and as
such the dependents would be entitled to get
• If the accident had occurred on account of a risk
which is inherent in the employment, the claim for
compensation must succeed, unless, of course, the
workman has exposed himself to an added peril by
his own imprudent act.

• Examples: Bomb explosion in office premises,

bullet firing by police in office premises etc. Or
if the death has resulted from stress and strain
related to the nature of the duty.

• Even if some workman dies at the hand of other

person, not related in any manner whatsoever to
the employer, such death stems out of and in the
course of the employment and compensation ought to
be allowed.

• Thus, we see that granting of compensation would

depend on many factors and some of which may
change along with the facts.
• IN COURSE OF EMPLOYMENT
• The expression ‘arising out of’ and ‘in the course of’ are
not synonymous.
• These two tests are separate and distinct and only when an
accident satisfies them, an aggrieved workman is entitled to
compensation in accordance with the provisions of the Act.

• The expression ‘in the course of employment’ means not only

the actual work which the man employed is to do but also
what is incidental to it in the course of his service. The
expression is not to be regarded as confined in the ‘nature
of employment’. It applies to employment that is to say to
its nature, its conditions, its obligations and its
incidents.

• It would thus include not only the period when he is doing

the work but also the time when he is at a place where he
would not be but for his employment.
• Judged from this viewpoint, it will appear that even an accident
occurring while returning from or going to work by recognized
conveyance supplied by the employer is one that arises in the
course of employment.
• Where the workmen are supplied with carriage to bring them to work
or return them from work, they will be deemed to be in the course
of employment, even though that period does not fall in the strict
scheduled hours of duty.
• ARISING OUT OF
• The terminology ‘arising out of’ ought to have a direct or
proximate connection between the accident and the
employment. Where a workman employed as a railway mukadam
was murdered by some unknown assailants while on his way to
duty, it was held that the accident arose out of his
employment.

• An accident cannot be said to arise out of an employment

unless the risk of such accident has been, even before the
accident, inherent in the employment itself to a greater or
less extent.
• The risk of a ship carrying explosives exploding in the docks and
knocking down a godown wall and, through the ruins, discharging a
heavy piece of iron on the leg of an employee working in the
godown, is a risk which though remote, is inherent at times of war
and such accident must therefore be held to arise out of the
workman’s employment.

• A test has been laid down by Lord Summer in Lancashire and

Yorkshire Railway v Highway, 1917 AC 352, to determine
whether an accident has arisen out of employment or not. The
test is: “Was it a part of the injured person’s employment
to hazard, to suffer or to do that which caused his injury?
If yes, the accident arose out of his employment, if any, it
• Employer’s Liability in Case of Occupational
Disease
• Sec. 3(2) to S. 3(4):
• Where workman suffers with occupational diseases due
to the nature of work, such occupational injury
comes within the meaning of ‘accidents arising out
of and in course of employment’ unless the contrary
is proved.
• The list of occupational disease if mentioned in
Schedule III of the Act, which can be divided into
three parts viz. A, B and C.
• For diseases mentioned in Part A, no specific period of
employment is necessary.
• For those in Part B, workman must be in continuous
employment of the same employer for 6 months
• For Part C, the period of employment would be such as is
specified by the Central Government for each such employment
whether in service of one or more employers.
• Sec. 3(2) to S. 3(4):
• If any such disease mentioned in Part A of Schedule
III develops after a workman has left the
employment, no compensation shall be payable to him.
• However, where a workman contracts any disease
specified in Part B/Part C after he left employment,
the employer shall be liable to pay compensation if
the conditions specified have been satisfied and it
is proved that such disease arose out of employment.
• Alternative remedy:
• Civil Suit
• No claim for compensation shall be maintainable by
an employee in respect of any injury if the workman
or dependants have already instituted a civil
proceeding for damages in respect of the same
injury.
• No suit for damages will be instituted by an
employee in any court of law:
• If such employee has made a claim to compensation in respect
of such injury before a Commissioner; or
• If the amount of compensation in respect of the injury has
been settled by an agreement between the employee and the
employer in accordance with the provisions of the Act.
• Doctrine of Notional Extension of Employment
• Under S. 3(1), the term used is ‘employment’
and not ‘work’.
• Employment vs. Work:
• ‘Employment’ is wider than ‘work’.
• ‘Work’ restricts itself to events pertaining to work
place only.
• However, employment connotes a relatively broader
meaning and extends beyond employer’s premises.
• The term ‘arising out of and in course of
employment’ is not limited to accidents arising
in the workplace, but may also extend to the
outer sphere. Therefore, the employer’s
liability is not limited merely to the
• The notional extension of office premises means that office
premises do not begin when the workman enters the gate of
the office and do not end when he leaves the gate in the
evening.
• There is notional extension of both the entry and exit by
time and space.
• When a workman starts his journey from his home towards
office or factory and when he leaves his office or factory,
all the way (reasonably) is included under the notional
extension of the office premises.
• However, this is subject to the theory of notional extension
of the employers premises so as to include an area which the
workman passes and re-passes in going to and in leaving the
actual place of work.
• There may be some reasonable extension in both time and
place and a workman may be regarded as in the course of his
employment even though he had not reached or had left his
employers premises. This is also called as the ‘Doctrine of
Notional Extension’.
• The scope of such extension must necessarily depend on the
circumstances of a given case.
• The doctrine of notional extension could not be placed in a
• AMOUNT OF COMPENSATION
• The amount of compensation payable to a workman depends
on:
• nature of injury caused by accident,
• monthly wages of the workman concerned, and
• relevant factor for working out lump sum equivalent of
compensation amount as specified in Schedule IV.

• Compensation amount would strictly be calculated as per

Act (section 4) and not on sentiments.

• Can double accident benefit be claimed by the employee/

his dependents?
• Sometimes an employee who is on duty or deemed to be on duty
meets with an accident with a vehicle and the question arises
as to whether a workman has a right to get compensation for
work injury under the Act, as well as under Motor Vehicles Act.
It is made clear that both the forums are available to the
workman but at the same time, double recovery in case of same
(identical injury) is not permissible. The workman or his
dependents has/ have to choose one forum but not under both. –
Oriental Insurance Co. Ltd. v Sudha Devi, 1997 II LLJ 1006 (MP
HC)
• Section 4:
• (1) Subject to the provisions of this Act the
amount of compensation shall be as follows
namely :-
• (a) where death results from the injury an amount
equal to fifty per cent of the monthly wages of the
deceased workman multiplied by the relevant factor;
or an amount of one lakh twenty thousand rupees
whichever is more;
• 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.

i.e. 50* monthly wages* Relevant factor of age (as per

schedule IV)
100
Or 1,20,000 whichever is higher

Example: A workman is employed in a factory on

a monthly wage of Rs 8,000. While working he
met with an accident and dies on October 2000.
His date of birth is July 18, 1970. The amount
of compensation payable to his dependent would
 • 50* monthly wages* Relevant factor of age 30
100
0r 1,20,000 whichever is higher

• 50 * 8,000 * 207.98 = Rs. 8,31,920

100

Since Rs 8,31,920 is more than Rs. 1,20,000, and therefore amount of

compensation payable to the workman shall be Rs 8,31,920.
• Section 4:
• (1) Subject to the provisions of this Act the
amount of compensation shall be as follows
namely :-

• (b) where permanent total disablement results from

the injury an amount equal to sixty per cent of the
monthly wages of the injured workman multiplied by
the relevant factor (last schedule); or an amount of
one lakh forty thousand thousand rupees whichever is
more.
• 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.

• For the above example the compensation would

be:
60 * 8,000 * 207.98 = Rs. 9,98,304
100

• Since Rs. 9,98,304 is more than Rs. 1,40,000,

• Explanation I: Where more injuries than one are
caused by the same accident the amount of
compensation payable under this head shall be
aggregated but not so in any case as to exceed
the amount which would have been payable if
permanent total disablement had resulted from
the injuries.

• Explanation II: In assessing the loss of

earning capacity for the purpose of sub-clause
(ii) the qualified medical practitioner shall
have due regard to the percentages of loss of
earning capacity in relation to different
injuries specified in Schedule I;
• (d) where temporary disablement whether total
or partial results from the injury a half
monthly payment of the sum equivalent to twenty
• In the above example, the compensation would be
(say for e.g. for loss of thumb i.e. 30 % and
Loss of one eye, without complication, the
other being normal 40 %):

[30+40]% of 60 * 8,000 * 207.98

100
= 70 % X Rs. 9,98,304
= Rs. 6,98,812.80

• Since Rs. 6,98,812.80 is more than Rs.

1,40,000, the amount of compensation payable to
the workman shall be should be Rs. 6,98,813.
• 4 (1)(d) where temporary disablement whether
total or partial results from the injury a half
monthly payment of the sum equivalent to twenty
five per cent of monthly wages of the workman
to be paid in accordance with the provisions of
sub-section (2).
• 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.

• The half monthly payment shall be payable on the

sixteenth day;
• from the date of disablement, where such disablement
lasts for a period of 28 days or more or;
• in other cases, after the expiry of a waiting period of
three days from the date of disablement.

• Note: Thereafter, the payments are to be made half

monthly during the period the disablement lasts or
during a period of five years, whichever is
• An employee, on ceasing of his disablement before
the date on which any half-monthly payment falls
due, is entitled to a sum proportionate to the
duration of the disablement in that half-month.

• If the injury of the workman results in his death,

the employer shall, in addition to the
compensation under sub-section (1), deposit with
the Commissioner a sum of [five thousand rupees]
for payment of the same to the eldest surviving
dependent of the workman towards the expenditure
of the funeral of such workman or where the
workman did not have a dependent or was not living
• Section 4 (Contd.):
• (1A) Notwithstanding anything contained in sub-
section (1) while fixing the amount of
compensation payable to a workman in respect of
an accident occurred outside India the
Commissioner shall take into account the amount
of compensation if any awarded to such workman
in accordance with the law of the country in
which the accident occurred and shall reduce
the amount fixed by the amount of compensation
awarded to the workman in accordance with the
law of that country.

• (1B) The Central Government may, by

notification in the Official Gazette specify,
(2) The half-monthly payment referred to in clause (d) of sub-section (1)
shall be payable on the sixteenth day -
 from the date of disablement where such disablement lasts for a period
of twenty-eight days or more;
 or after the expiry of a waiting period of three days from the date of
disablement where such disablement lasts for a period of less than
twenty-eight days; and thereafter half-monthly during the disablement
or during a period of five years whichever period is shorter:
 Provided that -
 there shall be deducted from any lump sum or half monthly payments
to which the workman is entitled the amount of any payment or
allowance which the workman has received from the employer by way
of compensation during the period of disablement prior to the
receipt of such lump sum or of the first half monthly payment as
the case may be; and
 no half monthly payment shall in any case exceed the amount if any
by which half the amount of the monthly wages of the workman before
the accident exceeds half the amount of such wages which he is
earning after the accident.
 Explanation : Any payment or allowance which the workmen has received
from the employer towards his medical treatment shall not be deemed to
be a payment or allowance received by him by way of compensation
within the meaning of clause (a) of the proviso.
• In assessing the net claim there shall be
deducted from any lump sum or half-monthly
payment payments to which the employee is
entitled the amount or allowance already paid
to him by the employer by way of compensation
during the period of his disablement prior to
the receipt of such lump sum or of the first
half-monthly payment a the case may be.

• But no payment or allowance received by the

employee from the employer towards his medical
treatment shall be deemed to be a ‘payment’ or
‘allowance’ within the meaning of lump sum or
half-monthly payment.
• (2A): The employee shall be reimbursed the
actual medical expenditure incurred by him for
the treatment of injuries caused during the
course of employment.
Section 4 (Contd.):
• (3) On the ceasing of the disablement before
the date on which any half monthly payment
falls due there shall be payable in respect of
that half monthly a sum proportionate to the
duration of the disablement in that half month.

• (4) If the injury of the workman results in

his death the employer shall in addition to the
compensation under sub-section (1) deposit with
the Commissioner a sum of not less than five
thousand rupees for payment of the same of the
eldest surviving dependant of the workman
towards the expenditure of the funeral of such
workman or where the workman did not have a
dependant or was not living with his dependant
at the time of his death to the person who
actually incurred such expenditure.
• Section 4A:
Sub-section (1) of S. 4-A provides that the
compensation shall be paid as soon as it
becomes due.
Sub-section (2) provides that if there is a
dispute regarding amount of compensation
claimed by an employee, where the employer
accepts his liability but not to the extent
claimed, the employer shall either
provisionally pay the amount accepted by him
to the employee or deposit it with the
Commissioner.
• CASES
• Mackinnon Mackenzie and Co. Private Ltd. V. Ibrahim Mahommad
Issak, AIR 1970 SC 1906
• Facts:
• Sheikh Hassan Ibrahim (“missing seaman”) was employed as a deck-hand on a ship
owned by the British India Steam Navigation Co. Ltd. (“the appellant”).
• The medical log book of the ship showed that on December 13, 1961 Shaikh Hassan
complained of pain in the chest and was therefore examined but nothing abnormal
was detected clinically.
• The medical examiner on board prescribed some tablets and he was reported fit for
work on the next day.
• On the 15th, however, he complained of insomnia and pain in the chest for which
the medical officer prescribed sedative tablets.
• The official log book of the ship shows that on the 16th , Shaikh Hassan was near
the bridge of the ship at about 2:30 a.m..
• He was sent back, but at 3:00 a.m. he was seen on the Tween dock when he told a
seaman on duty that he was going to bed.
• Later, at 6:15 a.m., he was not to be found anywhere and the search was
undertaken.
• The ship arrived alongside Ashar Jetty at 8 a.m. when a representative of Messrs
Gray, Mackenzie & Co. Ltd., who are the agents for the British India Steam
Navigation Co.. Ltd., in the Persian Gulf was informed that the said seaman was
missing.
• The representative in turn passed on the information to the local police and the
Port authorities.
• Issue:
• Whether the alleged death of the missing seaman
was "in the course of his employment?"

• RULE:
• Section 3, Workmen’s Compensation Act,1923:
• Set aside decision of HC.
• Alleged death not caused during the course of the
employment.
• Two conditions precedent for s.3 to apply-
• Accident must arise out of the employment – Injury has resulted
from some risk incidental to the duties of the service.
• Accident must be in the course of employment – In the course of
the work which the workman is employed to do and which is
incidental to it.
• Causal relationship between accident and employment
should be established
• Lancashire and Yorkshire Railway Co. v. Highley –
• Was it a part of the injured person’s employment to
hazard, to suffer, or to do that which caused his
injury?
• If yes, the accident arose out of his employment.
• If not, it did not, because, what it was not part of
the employment to hazard , to suffer, or to do, cannot
well be the cause of an accident arising out of the
employment.
• Application of principles –
 Insufficient evidence to show that alleged death
occurred during the course of employment. Hence,
burden of proof was not discharged.
 Circumstantial evidence – Dead body never found;
wasn’t a stormy night; bulwark more than 3.5 feet.
 No evidence to show that the accident had occurred
during the course of the employment or to show that
the seaman has actually died.
• Conclusion:
• The Commissioner made a local inspection of the
ship and saw the position of the bridge and deck
and found that there was a bulwark more than 31/2
feet.
• Nobody saw the missing seaman at the 'so-called
place of accident.
• The Additional Commissioner held that there was no
material for holding that the death of the seaman
took place on account of an accident which arose
out of his employment.
• In our opinion the Additional Commissioner did not
commit any error of law in reaching his finding
and the High Court was not justified in reversing
it.
• For these reasons we hold that this appeal must be
• General Manager, B.E.S.T. Undertaking, Bombay v. Mrs.
Agnes AIR 1964 SC 193
• Facts:
• P. Nanu Raman is a bus driver employed by Bombay
Electric Supply and Transport (BEST) Undertaking which
is public utility transport service run by Bombay
Municipal Corporation (Corporation).
• The efficiency of bus driver’s service depends inter
alia on the facility given to a driver for his journey
to and from his house and the depot for Rule 19 of the
Standing Rules of Bombay Municipality BEST Undertaking
permits a specified number of traffic outdoor staff in
uniform to travel standing in a bus without payment of
fares.
• While traveling back from work in a bus that collided
with a stationary lorry parked at an awkward angle,
Nanu Raman was thrown out on the road and eventually
died while in the hospital.
• The Respondent, his widow filed an application in the
Court of the Commissioner for Workmen’s Compensation,
Bombay claiming Rs.3500 as compensation by reason of
the death of her husband in an accident alleged to have
arisen “out of and in the course of his employment”
• Majority Opinion
• Under Section 3(1) the question of when does an
employment begin and ceases depends upon the facts
of each case. An employment may end or begin not
only when the employee begins to work or leaves
his tools but also when he used the means of
access and egress to and from the place of
employment.
• After analyzing the Standing Rules the court
concluded that to enable him to keep up
punctuality and to discharge his onerous
obligations, he is given the facility in his
capacity as a bus driver to travel in any bus
belonging to the Undertaking. Therefore, the right
to travel in the bus in order to discharge his
duties punctually and efficiently is a condition
of his service.
• There is no difference between the employer
providing a separate bus for the employees and
throwing open their entire fleet of buses for
giving employees the facility of using the bus
• Dissenting Opinion
• Raghubar Dayal, J – In his view, Nanu Raman was off duty
when he received injuries as he had finished his duties and
left the bus that he drives to board the other bus as a
passenger.
• The concession provided under the Standing rules was not
part of the contract of service or a condition of his
service as there was a limitation on the number of seats for
the employees travelling by a particular bus. It is merely a
concession also because they can take advantage of the
concession whenever they have to travel by bus, simply by
putting on the uniform. Further, the bus driver is not bound
to travel by bus and put on his uniform while travelling, if
they prefer to travel comfortably by paying necessary fare
to occupy a seat, he can do so.
• Before boarding the bus, the bus driver is not on actual
duty and he is also not on duty subsequent to his leaving
the bus after the expiry of his duty hours.
• Therefore, Nanu Raman did not die of injuries received in an
accident arising out of and in the course of his employment.

• Held: The accident occurred to Nanu Raman during the course

of his employment and therefore, the wife is entitled to
compensation.
• Kerala State Electricity Board v. Valsala K

• Facts:
• The main question that this case addresses is
whether the amendment of sections 4 and 4-A of
the Workmen’s Compensation Act, 1923 in 1995
which increased the compensation and rate of
interest, should be attracted when claims in
respect of death or permanent disablement
resulting from an accident caused during the
course of employment should have retrospective
effect.
• The Court agreed with the practice followed by most High Courts
throughout the country in dealing with this issue have taken the
common view of computing damages payable to employee should start
from the date of the accident.

• To substantiate their argument, the Court relied on the case of

Pratap Narain Singh Deo v. Srinivas Sabata, which also held that
employees that suffer injury during the course of their employment
with their respective companies are to be compensated from the
date of the injury caused, and not the date of adjudication of the
claim.

• However, the Court also looked at an alternative approach that was

adopted in the case of New India Assurance Co. Ltd. v. V.K.
Neelakandan. In this case, the Court saw the Workmen’s
Compensation Act as a special legislation for the benefit of
workmen. This benefit which the Act laid out for the workmen was
only available to them on the date of the adjudication and not the
compensation which was payable on the date of the accident. The
Court in the present case pointed out that the above judgment of
the Court was passed without any regard to the case of Pratap
Narain Singh Deo v. Srinivas Sabata (which had a larger bench) and
therefore was not the correct approach.
• Finally, the Court had looked at the judgement of
United India Assurance co. ltd v Alavi, where the
full bench presiding over the matter considered
the same question and examined both judgements,
ultimately taking the view that the injured
workman becomes entitled to receive compensation
the moment he suffers personal injuries which fall
under the provisions of the Workmen’s Compensation
Act. On top of that, the amount of damages payable
to that injured worker would be on the date of the
accident and not the amount of compensation
payable with respect to the amendment made in
1995.

• The Court found that this particular judgement was

in line with the judgement laid down by the Kerala
High Court in the case of Pratap Narain Singh Deo
• The Court in this case ultimately found that accident in
this case took place a long time back. They ruled that
compensation would be paid to the workman as it was not a
disputed fact that the accident took place during the course
of employment, prior to the amendment made to the Workmen
Compensation Act in 1995.

• With respect to the amount for compensation liable to be

paid to the injured worker, the Supreme Court ruled that
they were not inclined to interfere with the impugned orders
decided on the basis of the 1995 amendment, and via Article
136 of the Constitution, they dismissed this special leave
petition, as they found the High Court’s judgement to be
‘unexceptionable’ and in accord with the judgement of Pratap
Narain Singh Deo v. Srinivas Sabata (Which as mention
earlier during their analysis, was found to be a correct and
valid judgement).

• FINAL- No Merit in this Appeal. It is dismissed.

• Smt. Rita Devi & Ors. V. New India Assurance Co.
Ltd. & Anr.
• Facts:
• Dasarath Singh was a driver of an auto rickshaw
owned by Lalit Singh. Some unknown passengers
hired the above auto rickshaw from rickshaw stand
at Dimapur between 5 to 6 p.m. It is also not in
dispute that the said auto rickshaw was reported
stolen and the dead body of driver Dasarath Singh
was recovered by the police on the next day.
• The Motor Accidents Claims Tribunal, Nagaland as
per its judgment dated 24th of June, 1996 came to
the conclusion that the death of the driver of the
auto rickshaw (Dasarath Singh) was caused by an
accident coming within the purview of the Motor
Vehicles Act, therefore, held that the owner of
the vehicle was liable to compensate the death of
the driver in money value.
• The High Court overturned the decision of the
tribunal and held that there was no motor accident
as contemplated under the Act and it was in fact a
• Issue:
• Whether the death of Dashrath Singh was an
accident as defined under the Motor vehicles
Act, 1988?
• Court made distinction between murder simplicitor and
accidental murder. In this case it was the latterà if the
dominent intention of the Act of felony is to kill any
particular person then such killing is not an accidental
murder but is a murder simplicitor, while if the cause of
murder or act of murder was originally not intended and the
same was caused in furtherance of any other felonious act
then such murder is an accidental murder.
• Driver was duty bound to accept the demand of fare paying
passengers to transport them to the place of destination.
During the course of this duty, if the passengers had
decided to commit an act of felony of stealing the auto
rickshaw and in the course of achieving the said object of
stealing the auto rickshaw, they had to eliminate the driver
of the auto rickshaw then it cannot but be said that the
death so caused to the driver of the auto rickshaw was an
accidental murder. Intention was to steal the auto, with the
murder being incidental.
• Thus, entitled to compensation as the accident arose in the
course of employment.