The document summarizes the key aspects of the Employee Compensation Act, 1923 in India. The Act provides for payment of compensation by certain classes of employers to their workmen who suffer injury or disease arising out of and in the course of employment. Some of the main points covered include definitions of employee, wages and disablement; employer's liability for compensation in cases of death, injury or occupational disease; procedures for claiming compensation; and calculation of compensation amounts for death, permanent total or partial disablement.

1. Employee Compensation
Act,1923(Part 1)
Prepared by Ms. Shery Asthana
Asst. Prof. (Greater Noida
Institute of Management)

2. Concept
❖ Employee Compensation Act,1923 is the new name given to
the Workmen’s Compensation Act,1923. In this way the word
“workmen” is substituted by the word “employees”.
❖ This amendment is done by the workmen’s Compensation
(Amendment) Act 2009 and the definition of employee includes
clerical employees and casual employees also.
❖ However, The act is not applicable upon those workers who
are insured under the Employees State Insurance Act,1948.
❖ The Employee Compensation Act, 1923 is a social welfare
legislation that aims to provide payment to individuals
employed in certain types of employment with expeditious
compensation for injuries sustained in accidents during the
course of their employment. It also provides exceptions for the
employer’s liability.

3. History
• Prior to the Workmen’s Act,1923
The Workman suffering a personal injury caused by an accident could claim
damage in a civil court under the Common law.
• They have to file the suit for claiming damage and had to prove
– Employer had fail in has duty to provide safe workplace , safe plant &
appliance.
– Employer’s negligence
– Due to Employer’s Ignorance
• It was extremely difficult, expensive and time consuming and often impossible for
individual for industrial workers of India, ignorant and illiterate as they are to
secure favourable judgments from the civil court in the face of shift opposition
from the side of employer.
• With Industrialization and mechanisation when accidents become more frequent
and injury to life & limbs become common, protest were raised against Careless
Attitude of Employers and the movement for reform in the common law started in
India also.
• So the defence built by the Employers were sought to be demolished one by one
by the enactment of various statutes in England & the Same trend were reflected
in India also.

4. Objective
• Enabling an employee to get compensation irrespective of his
negligence.
• Laying down the various amounts payable in case of an
accident, depending upon the type and extent of injury. The
employer now knows the amount of compensation he has to
pay and saved of many uncertainties to which he was subject
before the act came into force.
• Considering compensation payable by an employer to his
employee in case of an accident as a measure of relief and
social security.

5. Coverage of the act Applicable to: -
Mines
Factories
Plantations
Transport Establishments
Construction Works
Railways
Ships
Circuses
Not applicable to: -
Members of armed forces of union
Employees covered by ESI Act, 1948. (Dependent‟s benefits available)
Casual Workers & workers employed otherwise than for employer‟s
trade or business Employees Compensation Act, 1923

6. Latest Amendments of Workmen’s
Compensation Act, 1923 (2017)
• The employer inform to employee about rights to compensation
under the Act in writing as well as through electronic media. If it is
not to do so, Employer fisable to penalty.
• Penalties have been increased from a Rs. 5000 to a definite penalty
of (>=Rs. 50000) which may be extends to Rs. 1 lakh.
• The minimum amount involved in a dispute for which an appeal may
be filled with the high court has been increased from Rs. 300 to Rs.
10,000 or higher amount.
• Sec 30A has been omitted.
If an Employer has appealed against a Commissioner’s order, any
payment towards the Employee can be temporarily withheld, the
commissioner may to do so only by an order of an High court until
the matter is disposed by the Court.

7. Section 1. Short title, extent and commencement-
(1) This Act may be called the *[Employee's] Compensation Act, 1923.
(2) It extends to the whole of India .
(3) It shall come into force on the first day of July, 1924.
Section 2. Definitions:-
• "Commissioner" means a Commissioner for *[employee]'s Compensation
appointed under section 20.
• “ Compensation” money that pay employer to employee because in working
time employee injured, or lost or damaged.
• "Dependant" means any of the following relatives of a deceased workman,
namely:--
(i) a widow, a minor legitimate son, and unmarried legitimate daughter, or a
widowed mother; and father,
(ii) if wholly dependent on the earnings of the workman at the time of his
death, a son or a daughter who has attained the age of 18 years and who
is infirm;
Some Definitions

8. • " 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 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.
• "managing agent" means any person appointed or acting as the representative
of another person for the purpose of carrying on such other person' s trade or
business, but does not include an individual manager subordinate to an
employer.
• " minor" means a person who has not attained the age of 18 years.
• “ Disablement:- connotes to loss of capacity to work or to move about.
Disablement of an employee may result in loss or reduction of his earning
capacity.
" partial disablement" means, where the disablement is of a temporary nature,
such 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.
" total disablement" means such disablement, 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.

9. • " qualified medical practitioner" means any person registered 2 under any
3 Central Act, Provincial Act or an Act of the Legislature of a 4 State]]
providing for the maintenance of a register of medical practitioners, or, in
any area where no such last- mentioned Act is in force, any person
declared by the State Government, by notification in the Official Gazette,
to be a qualified medical practitioner for the purposes of this Act;
• " seaman" means any person forming part of the crew of any ship, but
does not include the master of the ship.
• " wages" includes any privilege or benefit which is capable of being
estimated in money, other than a travelling allowance.
• " workman" means any person (other than a person whose employment is
of a casual nature and who is employed otherwise than for the purposes of
the employer's trade or business).

10. Section 3:- Employer's Liability for Compensation
Liability of the employer shall be subject to following conditions:-
• Personal Injury must have been caused to an employee,
• Such injury must have been caused by a accident,
• The accident must have arisen out of and in the course of employment,
• The injury must have resulted either in death of the employee or in his total or
partial disablement for a period exceeding 3 days,
• If employee employed in certain types of industries of occupation risk exposure
to certain occupational disease peculiar to that employment,
• An injury by accident within the meaning of the Act and compensation is payable
to the employee who contracts such disease,
There are certain occupations which due to their nature expose employees to
particular diseases that are inherent, like-
• Diseases caused by work in compressed air,
• Infrared radiations;
• Skin diseases due to chemical or leather processing units;
• Hearing impairment caused by noise;
• Lung cancer caused by asbestos dust and
• Diseases due to effect of extreme climatic conditions.

11. The employee shall not be liable:-
• If injury did not result in total or partial disablement of the employee for
a period exceeding 3 days.
• That the employee was at the time of accident under the influence of
drinks or drugs.
• That the employee willfully disobeyed an order expressly given or framed
for the purpose of securing safety of employees,(Doctrine of added peril)
• That the employee was not using certain safety guards or safety devices,
• When the employee has contracted a disease which is not directly
attributable to a specific injury caused by accident or to the occupation.
Amount of Compensation that is payable under the
provision:-
• The monthly wages of the employee concerned,
• The relevant factor for working out lump sum equivalent of
compensation amount,
• The nature of injury caused by accident.

12. Some Cases
Agra Road Service Centre v Commissioner:-
In this case, the deceased was a driver of employer’s vehicle. His duty was to
fill petrol in the petrol tank of the vehicles coming for the purpose, it is
alleged that some dacoits came there and stabbed Nand Ram and Nanda
succumbed to fatal blows. Finally, the person died and the Court ordered the
employer to pay compensation under Sec 4A of the Workmen’s
Compensation Act,1923.
Assumption of death due to the person involved being missing:-
Sri Laxman v Divisional Manager, Oriental Insurance Company In this case, a
workman went missing after his work and the High Court ordered the
Commissioner to pay compensation to the workman’s dependants under Sec
3 of the Workmen’s Compensation Act,1923. High Court held that under Sec
108 and 109 of the Evidence Act a person is assumed to be dead if he is found
missing for 7 years. The person in this case was missing since 7 years. But, the
Supreme Court reversed the High Court’s order and held that the accident did
not arise in the course of employment and hence holding the employer liable
for compensation is not correct.

13. Nisbet vs. Rayne & Burn:-
In this case, Nisbet was a cashier employed by the appellants and
in the course of his duty he was carrying large sum of money to pay
the wages of the colliers and while travelling in the train in the
discharge of his duty, the bag of money was stolen and he was also
killed. Though it was a criminal act, the claim of compensation by
the widow of Nisbet was allowed considering that it was an
accident arising out of and in the course of the employment.

14. Section 4:-Amount of Compensation
1. For Death:- Where death results from an injury, the amount of compensation shall be equal
to 50 percent of the monthly wages of the deceased employee multiplied by the relevant
factor, or an amount of 1,20,000, whichever is more.
50* Monthly wages * Relevant factor
100
or
Rs. 1,20,000
1. For Permanent Total Disablement:- In the case where permanent disablement results
from injury, the amount of compensation payable shall be equal to 60 percent of the
monthly wages of injured employed multiplied by the relevant factor or an amount of
1,40,000 whichever is more.
60* Monthly wages * Relevant factor
100
or
Rs. 1,40,000
1. For Permanent partial Disablement:-

15. Method of calculating wages.- In this Act and for the purposes thereof the
expression" monthly wages" means the amount of wages deemed to be
payable for a month' s service:-
(a) where the workman has, during a continuous period of not less than
twelve months immediately preceding the accident, been in the service of
the employer who is liable to pay compensation, the monthly wages of the
workman shall be one- twelfth of the total wages which have fallen due for
payment to him by the employer in the last twelve months of that period;
(b) where the whole of the continuous period of service immediately
preceding the accident during which the workman was in the service of the
employer who is liable to pay the compensation was less than one month,
the monthly wages of the workman shall be the average monthly amount
which, during the twelve months immediately preceding the accident, was
being earned by a workman employed on the same work by the same
employer, or, if there was no workman so employed, by a workman
Section 5:- Calculating wages

16. (c) in other cases including cases in which it is not possible for want
of necessary information to calculate the monthly wages under
clause (the monthly wages shall be thirty times the total wages
earned in respect of the last continuous period of service
immediately preceding the accident from the employer who is
liable to pay compensation, divided by the number of days
comprising such period.
Explanation.-- A period of service shall, be deemed to be
continuous which has not been interrupted by a period of absence
from work exceeding fourteen days.

17. Section 6:- Review
(1) Any half- monthly payment payable under this Act, either under an agreement
between the parties or under the order of a Commissioner, may be reviewed by
the Commissioner, on the application either of the employer or of the workman
accompanied by the certificate of a qualified medical practitioner that there has
been a change in the condition of the workman or, subject to rules made under
this Act, on application made without such certificate.
(2) Any half- monthly payment may, on review under this section, subject to the
provisions of this Act, be continued, increased, decreased or ended, or if the accident
is found to have resulted in permanent disablement, be converted to the lump sum to
which the workman is entitled less any amount which he has already received by way
of half- monthly payments.
Section 7:- Commutation of half-monthly payments
Any right to receive half-monthly payments may, by agreement between the parties
or, if the parties cannot agree and the payments have been continued for not less
than six months, on the application of either party to the Commissioner, be redeemed
by the payment of a lump sum of such amount as may be agreed to by the parties or
determined by the Commissioner, as the case may be.

18. Section 8:- Distribution of Compensation
● Employer can not pay direct to Employee, firstly he would deposit the
amount in Commissioner Account.
● In case of Employee dead, Employer paid 3 month wages paid to
dependent and further payment will deduct in main amount.
● Minimum amount (10/-) deposit in commissioner account and
commissioner has duty to issue the receipt against the amount.
● Distribution of amount can distribute among the dependent or allotted
to one dependent.
● If employee entitled the one person, then they should not be women
and person not come under disability.
● if in employee’s family no other person expect women or PUD, then
commissioner invested these benefits.
● If PUD is entitled, then in this case commissioner can pay this money to
other person (Care taker) or can invest according to take care the
person.
● Variation order:-
○ Neglect of Children
○ Change in circumstances like if any PUD person is fit and fine
○ If commissioner found that amount recovered by fraud.

19. Section 9. Compensation not to be assigned, attached or
charged-
Save as provided by this Act no lump sum or half-monthly payment
payable under this Act shall in any way be capable of being assigned or
charged or be liable to attachment or pass to any person other than
the employee by operation of law nor shall any claim be set off against
the same.
Section 10:- Notice and Claim-
• Notice of claim should be with in 2 year of accident.
• In case of death it should be within 2 years of death.
• In case of Occupational Diseases-
– then notice of period start from when employee start absent
from work and take leave.
– In case employee not absent from work then period start from
when employee informs employer.
– In case employee quit the job and employee suffer any
problem with O.D, then employee will have to inform to
employer with in a 2 year.

20. • Commissioner can enter into those claim in which employee did
not serve any notice, but it is a discretionary power.
• Content of notice should involve the term- Employee Name, Age,
Accident Date, Place of Accident in factory.
• All such notice shall be served upon the employer. It may be
served by delivering at registered post of the office or residence.
• while giving a notice of accident, an employee should submit
himself for medical examination if required by the employer.
• and such medical examination shall take place within 3 days from
the date the notice of the accident has been served upon the
employer.

21. Section 10 A:- Power to require from employers statements
regarding fatal accidents.
• Where a Commissioner receives information from any source that a
workman or workmen have died as a result of an accident arising out of and
in the course of his employment, he may send by registered post a notice to
the workman' s employer requiring him to submit, within thirty days of the
service of the notice, a statement, in the prescribed form, giving the
circumstances attending the death of the workman, and indicating whether,
in the opinion of the employer, he is or is not liable to deposit compensation
on account of the death.
• If the employer is of opinion that he is liable to deposit compensation, he
shall make the deposit within thirty days of the service of the notice.
• If the employer is of opinion that he is not liable to deposit compensation,
he shall in his statement indicate the grounds on which he disclaims liability.
• Where the employer has so disclaimed liability, the Commissioner, after such
enquiry as he may think fit, may inform any of the dependants of the
deceased workman, that it is open to the dependants to prefer a claim for
compensation, and may give them such other further information as he may
think fit.

22. Section 10 B:- Reports of Fatal Accidents & Serious Bodily Injuries
● In case of F.S or S.B.I, employer shall be liable to submit the report in which
mentioned all reason behind F.A or S.B.I within 7 days to commissioner.
●
Section 11:- Medical Examination
● When employee give notice of accident, then employer offers to him free
medical examination by qualified medical practitioner and submit half
monthly payment in commissioner account.
● In case an employee refuse to submit himself for examination by qualified
medical practitioner, then his right to compensate shall be suspended.
● If an employee, before the expiry of the period within which he submit
himself for medical examination, voluntarily leaves without having been so
examined the vicinity of the place in which he was employed, his right to
compensation shall be suspended until he returns and offers himself for
such examination.
● if employee dies without having submitted himself for medical
examination as required by either of those sub-sections, the Commissioner
may, if he thinks fit, direct the payment of compensation to the
dependants of the deceased [employee].

23. • Where an injured employee has refused to be attended by the
doctor whose services have been offered to him by the employer
free of charge or having accepted such offer has deliberately
disregarded the instructions of such medical practitioner, then, if it
is proved that the employee has not thereafter been regularly
attended by a qualified medical practitioner or having been so
attended has deliberately failed to follow his instructions and that
such refusal, disregard or failure was unreasonable in the
circumstances of the case and that the injury has been aggravated
thereby, the injury and resulting disablement shall be deemed to
be of the same nature and duration as they might reasonably have
been expected to be if the employee had been regularly attended
by a qualified medical practitioner whose instructions he had
followed, and compensation, if any, shall be payable accordingly.

24. Section 12 Contracting:-
(1) Where any person (referred to as the principal) in t
business contracts with any other person (referred to as the
contractor) for the execution, the principal shall be liable to
pay to any workman employed in the execution of the work
any compensation which he would have been liable to pay if
that workman had been immediately employed by him.
(2) Where the principal is liable to pay compensation under
this section, he shall be entitled to be indemnified by the
contractor, and all questions as to the right to and the
amount of any such indemnity shall, in default of agreement,
be settled by the Commissioner.