In any industrial society the problem of labour management relations becomes so important

that some sort of social insurance becomes necessary to provide adequate protection from
losses caused to the labourers by accidents. With the view to improve the condition of the
employees some social insurance legislations have been enacted. This employee’s
compensation Act is one of the earliest measures adopted to benefit the labourers. It was
passed in 1923 and enforced on 1st July, 1924. Since then a number of amendments have been
made from time to time so as to suit the changing needs and conditions of the employees. The
object of the Act was to make provision for the payment of compensation by certain class of
employers to their employees for injury by accident. Originally the Act was applicable to
employees of certain specified industries, employed otherwise than in clerical capacity; and
receiving monthly wages no exceeding Rs. 300. The employees were entitled to
compensation from the employer in case of personal injury caused by accident arising out of
and in the course of employment with certain reservations to the duration of incapacity and
negligence of employee himself. The payment of compensation was mainly dependent upon
the incapacity or disablement of employees. The Employees’ Compensation Act creates a
new type of liability. It is not strictly a liability arising out of tort, but is a sort of liability
arising out of the relationship of the employer and the employee. An employer under this Act
is liable to pay compensation at a rate fixed in the Act itself to any employee incapacitated by
an accident arising out of and in the course of his employment. The main principle governing
the compensation is not dependent on the suffering caused to the employee or expenses
incurred by him in his treatment but on the difference between his wage earning capacity
before and after the accident. The liability for the payment of compensation is not dependent
upon the neglect or wrongful act on the part of employer.1

1
Misra, S. N. Labour and Industrial Law. 26th ed. Allahabad: Central Law Publications, 2011, p. 401.