EMPLOYEES

COMPENSATION
ACT 1923
Dr. Shailendra Nigam
shailendra@imi.edu
9350514052

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Employee Compensation Act 1923

The Workmens Compensation (Amendment) Act,

2009 enacted by Parliament and received assent

of the President on 22nd December 2009 in the
long title of Workmens Compensation Act 1923
for
the
word
workmens
the
word
employees shall be substituted.
Throughout the

Principal Act for the words

workman and workmen, wherever they
occur, the words employee and employees
shall be substituted.

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Object of the Act

Moreover, provision for compensation is not the only

benefit flowing from workmens compensation

legislation; it has important effects in furthering work
on the prevention of accidents, in giving workmen
greater freedom from anxiety, and in rendering
industry more attractive.The growing complexity of
industry with the increasing use of machinery and
consequent danger to the workmen along with
comparative poverty of the workmen themselves
renders it advisable that they should be protected, as
far as possible from the hardships arising from
accidents
---Royal Commission on Labour in India

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Preamble of the Act

An Act to provide for the payment by certain

classes of employers to their workmen of

compensation for the injury by accidents.
Short title, extent and commencement (sec

1)
This Act may be called the Workmens
Compensation Act, it extends to whole of India
and it shall come into force on the first day of
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July,1924

Definitions (sec 2)
Commissioner means a commissioner for Workmens

Compensation appointed under section 20 -- sec 2(b)

Compensation means compensation as provided for by this

Act -- sec 2(c)

Employer 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 workmen are temporarily lent or let on hire to another
person by the person with whom the workmen has entered into
a contract of service or apprenticeship, means such other
person while the workmen is working for him. - sec 2(e)
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Contd
Dependant means any of the following

relatives of a deceased workmen, namely

A widow, a minor legitimate son and
unmarried legitimate daughter, or a widowed
mother, and
II. If wholly dependant on workmens earnings at
the time of his death, a son or a daughter who
has attained the age of eighteen years and
who is infirm;
III. If wholly or in part dependant on the earnings
of a workmen at the time of his death,
I.

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( other stipulated relatives)

Contd

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Contd
(m) Wages include any privilege or benefit

which is
capable of being estimated in
money, other than a travelling allowance or
the value of travelling concession or a
contribution paid by the employer of an
employee towards any pension or provident
fund or a sum paid to an employee to cover
any special expenses entailed on him by the
nature of his employment

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Employers liability to pay

compensation to an
employee (sec 3)
On death or personal injury resulting into total

or partial disablement or occupational disease

caused to an employee by accident arising out
of and during the course of employment

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Accident - Meaning
It is not formally defined in the Act. It

generally means, some unexpected event

happening without design. The word accident
has been used in the popular and ordinary
sense and means mishap or untoward
event not expected or designed, may be
even due to negligence on the part of the
employee.

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Negligence: Carelessness, inattention,

slackness,
neglect,
Disobedience: Defiance, breaking the rules,

naughtiness, non compliance

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When an employee is not

liable for compensation -Sec 3(a) & (b)
In respect of any injury which does not result in the total or

partial disablement of the employee for a period exceeding

three days
In respect of any injury, not resulting in death or permanent
total disablement caused by an accident which is directly
attributable to;
The employee having been at the time thereof under the

influence of drink or drugs, or

Willful disobedience of the employee to an order expressly
given, or to a rule expressly framed, for the purpose of
securing safety of employee, or
Willful removal or disregard by the employee of any safety
guard or other device which he knew to have been provided for
the purpose of securing the safety of employee.
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Amount of Compensation

Sec 4

Where death of a employee results from the injury;

An amount equal to 50% of the monthly wages of
the deceased employee multiplied by the relevant
factor or an amount of One lac twenty thousand
rupees, whichever is more
Where permanent total disablement results from

the injury:
An amount equal to 60% of the monthly wages of

the deceased employee multiplied by the relevant

factor or an amount of One lac forty thousand
rupees, whichever is more
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Procedure for Calculation

Relevant factor specified in second column of

Schedule IV giving slabs depending upon the

age of the concerned employee.
Examples:

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Completed year of
Age

Factors

Not more than 16

228.54

Not more than 36

194.64

65 or more

99.37

List of Injuries deemed to

result in Permanent Total
Disablement
Loss of both hands or amputation on higher sites
Loss of a hand and a foot
Double amputation through leg or thigh, or

amputation through leg or thigh on one side and

loss of other foot
Loss of sight to such an extent as to render the
claimant unable to perform any work for which
eye sight is essential
Absolute deafness
Very severe facial disfigurement
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List of Injuries deemed to

result in Permanent Partial
Disablement
Amputation cases upper limbs
Amputation cases lower limbs
Other injuries
Loss of one eye
Loss of fingers of right or left hand
Toes of right or left foot

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Explanation
Where the monthly wages of a workman exceeds

eight
thousand rupees, his monthly wages for the purpose of
clause(a) and (b) of Sec. 4 shall be deemed to be Eight
thousand only;
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
to exceed the amount which would have been
payable if permanent total disablement had resulted
from the injuries;
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Where temporary disablement, whether total or partial

results from the injury, a half monthly payment of the

sum equivalent to twenty five percent of the monthly
wages of the workman, to be paid in accordance with
the provisions of sub section (2).
The half monthly payment referred to above shall be

payable on the sixteenth day

(i) from the date of disablement where such

disablement lasts for a period of 28 days or more; or
(ii) after the expiry of waiting period of three days
from the date of disablement where such disablement
lasts for
a period of less than 28 days; and thereafter
half monthly during the disablement or during a period
of five years, whichever period is shorter.
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Compensation to be paid
when due and penalty for
default (S. 4A)
Compensation shall be paid as soon as it falls due
Where the employer does not accept the liability for

compensation to the extent claimed, he shall be bound

to make provisional payment based on the extent of
liability which he accepts, and such payments shall be
deposited with the commissioner or made to the
workman, as the case may be, without prejudice to the
right of the workman to make any further claim.
In case of default, in addition to the arrears, pay
simple interest @12% per annum or any such higher
rate not exceeding the maximum lending rate of any
scheduled bank
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