Synopsis of the EMPLOYEES’ COMPENSATION ACT 1923

(formerly known as WORKMEN’S COMPENSATION ACT 1923)

As amended in 2010

Applicability to all persons covered under definition of employees

S.2(1)(dd) {earlier S . 2 (1)(n)}
A railway servant not in administrative capacity or as per sch II.
Members of crew of aircraft, ship or employee in motor vehicle.
Persons working outside India in any capacity under Sch. II and Co. regd. in
India.
Employed in any capacity under Sch. II.
Important Note-
Act applies to establishments in Maharashtra by virtue of Sec. 38-A of Bombay
Shops & Establishment Act, 1948

Non-applicability of the Act-

Employees employed in clerical cadre or administrative capacity
Factory where ESI Act applies [S. 10B(3)]

S. 2(1)(d) Dependant- A widow, minor son and unmarried daughter (legitimate

or adopted), widowed mother Those who are wholly or partially dependent on
employee.

S. 2(1)(m) Wage-
Maximum wage for calculation is Rs. 8,000 wef. 31.5.2010. (S. 4 Expln.)
Does not include TA, value of travelling concession, contribution to pension/PF
funds by employer.
S. 3(1) Liability for Compensation-
For injuries arising out of & in course of employment which includes injury
under Part I and II of Sch. I and Occupational diseases under Part A, B, C of
Sch. III. Injury not exceeding 3 days and not resulting in Total or Partial
disability is excluded)

No liability: – If accident is due to influence of drinks/drugs.

Willful disobedience or any order or disregard to safety guard for the safety of
employees [S. 3(1)(b)]
S. 3(2) Occupational disease-
Disease contracted while in employment under Part A, B, C of Sch. III
It is deemed accident arising out of and in course of employment.

S. 4(1) Calculation of Compensation-

Death – 50% of monthly wages X Relevant factor or Rs. 1,20,000 whichever is
more.
Permanent Total Disablement – 60% of monthly wages X relevant factor or
Rs. 1,40,000 whichever is more.
(Relevant Factor is mentioned in column II of Sch. IV)
Permanent Partial Disablement–
If scheduled injury- applicable % of compensation for permanent total
disablement as loss of earning capacity.
If non-scheduled injury - % of compensation for permanent total disablement
in proportion to loss of earning capacity.
Loss of earning capacity to be assessed by qualified medical practitioner.

Temporary disablement – 25% of monthly wages in half monthly payments.

S. 4A(3) Penalty-
Not exceeding 50% of compensation is payable in case of default of 1 month in
paying compensation, a/w interest. (Penalty not payable as per policy contract)
Interest @12% p.a. (interest not payable if claim under WC policy)

S. 8(1) Compesation for deceased etc.-

Cannot be made directly by the employer, it is to be deposited with the
Commissioner.

S. 10(1) Limitation-
For claiming compensation – 2 years from the date of accident/death.

S. 12 Contracting
Principal employer is liable to pay compensation to contract employees
employed in connection with his trade/business with right of indemnity from
contractor.

S. 14 Insolvency of employer-
In case of insolvency of employer, insurer is liable to pay compensation. If
liability of insurer is less balance is recoverable from insolvency/liquidation
proceedings.

S. 21 Venue of proceedings and transfer – Jurisdiction to deal with matter

under the Act is with the Commissioner of the area of the accident, or where
employee/dependant resides, or employers’ regd. office, matters or money can
be transferred from one Commissioner to another who can proceed originally.

S.28 Registration of agreements-

Agreement between employer and employee as to amount of compensation to
be registered within 7 days, if genuine.

S. 30 Appeals- Is made from orders of Commissioner regarding amount of

compensation, interest, penalty etc. within a period of 60 days to High Court.