Employee Compensation Act 1923

Workmen’s Compensation Act, 1923, is a crucial piece of legislation in India aimed at providing financial compensation to workers who suffer injuries or occupational diseases arising out of and in the course of their employment. The Act outlines the responsibilities of employers towards their employees in case of workplace accidents and provides a framework for calculating and disbursing compensation.

Scope and Coverage

• Applicability:

The Act applies to all workers employed in factories, mines, plantations, construction sites, railways, and certain other hazardous occupations specified in Schedule II of the Act.

• Exclusions:

The Act does not apply to members of the armed forces or casual workers who are employed otherwise than for the purposes of the employer’s trade or business.

Employer’s Liability

• Compensation for Injury:

Employers are liable to pay compensation for personal injuries caused to a worker by accident arising out of and in the course of employment.

• Occupational Diseases:

Compensation is also payable for diseases that are contracted due to the nature of the employment, as specified in Schedule III of the Act.

• Death or Permanent Disablement:

In case of death or permanent total disablement of the worker, the employer is liable to pay compensation as per the prescribed formula.

Amount of Compensation

• Calculation:

Compensation amount is determined based on the nature and severity of the injury, the worker’s wages, and age. There are specific formulas for calculating compensation for death, permanent total disablement, permanent partial disablement, and temporary disablement.

• Payment Schedule:

Compensation should be paid as soon as it is due. In case of delay, the employer may be liable to pay interest or a penalty.

Medical Examination

• Right to Examination:

The employer has the right to get the injured worker medically examined by a qualified medical practitioner.

• Refusal to be Examined:

If the worker refuses to submit to medical examination, the employer’s liability to pay compensation may be suspended.

Notice and Claim of Accident

• Notice of Accident:

The worker or their representative must give notice of the accident to the employer as soon as practicable after the accident occurs.

• Claim Submission:

A formal claim for compensation must be submitted to the employer. The claim should include details of the accident and the resulting injury or disease.

Distribution of Compensation

• Dependents:

In case of death of the worker, the compensation is distributed among the dependents as defined in the Act. Dependents include the worker’s spouse, children, parents, and other specified relatives.

• Lump Sum Payments:

Compensation is usually paid as a lump sum amount. However, under certain conditions, periodic payments may also be made.

Commissioners for Workmen’s Compensation

• Appointment:

The Act provides for the appointment of Commissioners for Workmen’s Compensation to adjudicate disputes and oversee the implementation of the Act.

• Powers and Functions:

Commissioners have the authority to decide claims, determine compensation, enforce settlements, and ensure compliance with the Act. They also have the powers of a civil court for matters related to the Act.

Appeals

• Right to Appeal:

Any party aggrieved by the decision of the Commissioner may appeal to the High Court within 60 days from the date of the decision.

• Grounds for Appeal:

Appeals can be made on questions of law or substantial questions related to the calculation of compensation.

Penalties for Non-Compliance

• Failure to Pay Compensation:

Employers who fail to pay compensation as required by the Act may be subjected to penalties, including fines and imprisonment.

• Obstruction of Commissioner:

Obstructing the Commissioner in the discharge of their duties can also attract penalties.

Insurance

Employers are encouraged to take out insurance policies to cover their liabilities under the Act. This ensures that they have the financial resources to pay compensation in the event of an accident.

Miscellaneous Provisions

• Contracting Out:

Any contract or agreement relinquishing the worker’s right to compensation under the Act is null and void.

• Prohibition of Assignment:

Compensation payable under the Act cannot be assigned, attached, or charged by creditors.