PSDA - Labour Law-II
Q. How does the Employee Compensation Act of 1923 impact the rights and
entitlements of workers in the context of workplace injuries or occupational diseases,
and what are the key provisions employers need to adhere to under this legislation?
Solution
There is no doubt that employees are an organisation's pillars of success. Thus, it falls upon
employers to ensure that their workforce receives proper financial compensation in case they
meet with an unfortunate accident at the workplace.
Now, to ensure proper enforcement of this facility, several laws like the 1884 Compensation
Act and the Fatal Act of 1885 were implemented. However, they were not enough to
financially compensate workers in case they met with harm while performing their duties.
Thus, the Indian Parliament passed the Workmen’s Compensation Act in 1923.
Definition and Scope
The Workmen Compensation Act 1923 aims to provide financial compensation to employees
in case they meet with an unfortunate accident while performing their duties.
All employees working full-time, part-time, temporarily or casually are liable to receive
financial protection under this law. It comes into effect in case they secure injuries,
incapacity, and disfigurement or die while performing their duties.
Front-line workers in the following industries are liable to protection under this law:
Non-permanent employees of the Railways who do not fall under the sub-divisional, district
or administrative offices.
Captains and crew members on an aircraft.
Labours employed abroad as per Schedule II of the Workmen Compensation Act 1923.
Individuals working in construction sites, mines, docks, factories and specific places as per
Schedule II of the above mentioned Act.
Drivers, mechanics, helpers and any other person associated with working with vehicles.
According to this Act, any company or establishment operating in the sector highlighted
above and having more than 10 employees are liable to abide by its rules.
Coverage receivable under the Workmen Compensation Act 1923
The type and extent of financial coverage as well as its applicable terms and conditions fully
depend on the insurance company that is affiliated with the employer. Here are some basic
things which all insurers cover:
Bodily or other injuries during an accident while on duty
Temporary disablement
Permanent disablement (complete or partial)
Death due to an accident at work
Injury, disease or death resulting from working conditions
All legal or any other expenses incurred by an employee in the above circumstances
Workmen's Compensation Act 1923 - Amount of compensation
According to Section 4 of the Workmen's Compensation Act 1923, the amount of
compensation workers are liable to receive is as follows:
Temporary disabilities
For temporary disabilities, the Workmen's Compensation Act 1923 provides financial
compensation of up to 25% of the concerned employee’s monthly wages.
Permanent total disabilities
In an unfortunate event when an employee suffers from permanent disablement, that
individual has the right to receive 60% of his/her monthly wage or Rs.1,20,000, whichever is
higher.
Permanent partial disabilities
Injuries that fall under permanent partial disabilities are stated in Part II Schedule I of the Act.
The payable corpus is a certain percentage of earnings loss by the employee due to his/her
injury.
Death
When an employee dies due to an accident at his/her workplace, their family is liable to
receive 50% of the deceased’s monthly wages or Rs.1,20,000, whichever is higher.
Note – Individuals who are liable to receive compensation under the Employees' State
Insurance Scheme of India (ESIC) cannot get financial benefits from the above mentioned
Act.
Updates in the Workmen Compensation Act 1923
Since its inception in 1923, there have been two major changes in the Workmen
Compensation Act. They are as follows:
In 2010, this law’s name was changed to Employee’s Compensation Act.
On January 3, 2020, the Ministry of Labour and Employment raised the amount on which
compensation was calculated as per the Act from Rs. 8,000 to Rs. 15,000.
Features of the Workmen Compensation Act 1923
Employers are under the obligation to provide financial compensation as per the Workmen
Compensation Act 1923 in the following circumstances:
An accident or injury occurs at the workplace while carrying out a task.
If the applicant provides proof that the injury or accident that has occurred at the workplace is
aggravating his/her medical condition.
In case a worker becomes disabled or dies while on duty.
When is the employer not liable to pay compensation?
As per the Act, employers are not liable to financially compensate their employees under the
following circumstances:
Employee suffers from an injury or accident by disregarding the safety norms.
Injury resulting in partial or total disablement for less than three days.
For accidents or injuries under the influence of alcohol or drugs.
Final Word
It is mandatory as per government rules for employers to provide insurance benefits to their
workforce under the Workmen Compensation Act 1923. This ensures that even in the case of
unfortunate accidents, employees can get financial security, which can help them and their
families deal with the situation.
