THE EMPLOYEES COMPENSATION
ACT, 1923
Introduction & Historical Background:
• This Act may be called the Workmen's Compensation
Act 1923.
• It extends to the whole of India.
• It has come into force on the first day of July 1924.
Objective
• This act is to provide for the payment of
certain classes of employers to their
employees, of compensation for injury or
death by accident.
Who is an Employer?
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 employee are
temporarily lent or
let on hire to
another person by
the person with
whom the employee
has entered into a
contract of service
or apprenticeship,
means such
other person
while the
employee is
working for
him.”
Employee:
• not permanently employed in any administrative
district or sub-divisional office of a railway
a railway
servant • not employed in any such capacity as is specified in
Schedule II;
Ship &
aircraft
• a master, seaman a ship
OR
• a captain of an aircraft
OR
• other members of the crew of a ship & aricraft
Employee (contd..)
Motor
vehicle
Recruitmen
ts outside
India
i.) Driver
ii) Helper
iii) Mechanic
iv) Cleaner
v) Any other capacity in connection with a
motor vehicle
• any capacity as is specified in Schedule II
• the ship, aircraft or motor vehicle, or company
registered in India
Employee (contd..)
Employed in
any other
capacity as
specified in
Schedule II
But does
not
include
• Whether contract of employment was:
• made before or after the passing of this Act
• expressed or implied, oral or in writing;
•member of the Armed Forces of the Union;
• any reference to any employee who has been
injured shall, where the employee is dead, include
a reference to his dependants or any of them
• Clerical staff
Lakshminarayana Shetty vs Shantha And Anr. on 16
April, 2001
Employer's liability for compensation:
Accident arising out of
and in the course of his
employment
If any injury results in the
total or partial disablement
of the workman for a period
exceeding three days.
Pratap Narain Singh Deo v. Srinivas Sabata, 1976
Employer's liability for compensation: Sec 2
Part A of
Schedule
III
a)contracts any
disease
specified
therein as an
occupational
disease
peculiar to that
employment
Part B of
Schedule
III
a) continuous
period of not
less than six
months
b) period shall
not include a
period of service
under any other
employer in the
same kind of
employment
Part C of
Schedul
e III
a) Continous
period as
specified by
Central
Government
b) whilst in the
service of one
or more
employers
c) Unless
contrary proved
Employer's liability for compensation: Sec 2(A)
Part C of
Schedule
III
a) Continous
period as
specified by
Central
Government
b) while in the
service of one
or more
employers
c) Unless
contrary proved
All employers shall be liable for
the payment of the
compensation in such
proportion as the Commissioner
may in the circumstances deem
just.
• Sec 3. The Central Government or the State Government after
giving by notification in the Official Gazette not less than
three months' notice of its intention so to do may by a like
notification add any description of employment to the
employments specified in Schedule III and shall specify in the
case of employments so added the diseases which shall be
deemed for the purposes of this section to be occupational
diseases peculiar to those employments respectively and
thereupon the provisions of sub-section (2) shall apply in the
case of a notification by the Central Government within the
territories to which this Act extends or in case of and
notification by the State Government within the State as if
such diseases had been declared by this Act to be
occupational diseases peculiar to those employments.
Sec 4. Save as provided by sub-sections (2), (2A) and (3) no
compensation shall be payable to a workman in respect of any
disease unless the disease is directly attributable to a specific
injury by accident arising out of and in the course of his
employment.
Blanning v. C. H. Bailey Ltd., 1942
Sec 5.Nothing herein contained shall be deemed to confer any
right to
compensation on a workman in respect of any injury if he has
instituted in a civil court a suit for damages in respect of the
injury against the employer or any other person; and no suit
for damages shall be maintainable by a workman in any court
of law in respect of any injury –
if he has instituted a claim to compensation in respect of
the injury before a Commissioner;
or
if an agreement has been come to between the workman and
his employer providing for the payment of compensation in
respect of the injury in accordance with the provisions of this
Act.
•Doctrine of Notional Extension:
The expression in the course of his employment', connotes not only actual
work but also any other engagement natural and necessary thereto,
reasonably extended both as regards work-hours and work-place. It refers to
the time during which the employment continues. . However, this is subject
to the theory of notional extension of the employer's premises so as to
include an area which the workman passes and re-passes in going to and in
leaving the actual place of work. There may be some reasonable extension
in both time and place and a workman may be regarded as in the course of
his employment even though he had not reached or had left his employer's
premises. This is also called as the Doctrine of Notional Extension. The
doctrine of notional extension could not be placed in a strait jacket; it was
merely a matter of sound common sense as to when and where and to what
extent this doctrine could be applied.
Employer is not liable to pay compensation to a worker in
the following cases:If the injury did not result in total or partial disablement for a period
exceeding three days .This three days was substituted for seven days
by a amendment in the act in 1959(w.e.f 1-6-1959).
In respect of any injury not resulting in death caused by an accident
which is directly attributed to :-
The workman having been at the time of accident under the influence
of drug or drink.
The willful disobedience of the workmen to an order expressly given ,
or to a rule expressly framed for the purpose of securing the safety of
workmen.
The willful removal or disregard by the workman of any safety guard
or other devices which he knew to have been provide for the purpose
of securing the safety of workmen.
Following are the some more other remedies in favor of Employer:Sec (10)(i) Notice and claim :- No Claim for compensation shall be entertained by
the commissioner unless notice of the accident has been given in prescribed
manner as soon as practicable after the happening thereof two years of the
occurrence of the accident . Although there are some provisions available in favour
of workmen.
Sec(11)(ii) Medical Examination:- workman has to submit himself for medical
examination by a qualified medical practitioner if so required by the employer or
commissioner . if not his right to compensation shall be suspended during the
continuance of such periods if he does not give sufficient cause of refusal.
Sec(30)(i) Appeal :- An appeal shall lie to the high court from certain order of the
commissioner , where substantial question of law is involved within 60 days.
AMOUNT OF COMPENSATION SEC 4:
The amount of compensation payable to a workman depends on:
 the nature of injury caused by accident,
 the monthly wages of the workman concerned, and
 the relevant factor for working out lump sum equivalent of compensation
amount as specified in Schedule IV.
• There is no distinction between an adult and a minor worker with respect
to the amount of compensation.
In accordance with Section 4 of the Act, the amount of compensation payable will be as
under :
 Where death results from an injury, an amount equal to fifty percent of the monthly
wages of the deceased workman multiplied by the relevant factor given in Schedule IV
of the Act or an amount of One lakh and twenty thousand rupees whichever is more.
•
Examples:
Shailesh , a worker aged 35 meets with an accident and dies while at work (i.e. in
the course of employment). At the time he drew a monthly wage of Rs.2,500/-. As
per Schedule IV of the Act the relevant factor applicable to his case would be Rs.
197.06. As such, the amount of compensation payable to his dependants will be
arrived at in the following way:
(i) 50% of Rs. 2,500 = 1,250
(ii) 1,250 x relevant factor (i.e.197.06) = Rs.2,46,325.00/- (total compensation
payable)

Where the monthly wages of a worker is more than Rs.4000 /-, it is taken to be
only Rs.4,000/- for calculating other compensation in case of the death , or
permanent disablement.
 Where permanent total disablement results from the injury an amount equal to sixty percent
of the monthly wages of the injured workman multiplied by the above mentioned relevant
factor or an amount of One lakh and fourty thousand rupees whichever is more.
•
Examples:
Sanjay Iyer , a worker aged 35 meets with an accident and suffers permanent total
disablement while at work (i.e; in the course of the employment ) At the times he drew a
monthly wage of Rs.2,500 /- The amount of compensation payable will be arrived at as
follows :
(i) 60 % of Rs.2,500=1,500
(ii) 1,500 X relevant factor (i.e; 197.06)=2,95,590.00/- (total compensation payable)
 Where permanent partial disablement results from the injury(i) in the case of an injury specified in part II of schedule I , such percentage of the
compensation which would have been payable in the case of permanent total disablement as
is specified therein as being the percentage of the loss of earning capacity caused by that
injury, and
(ii) in the case of an injury not specified in schedule I , such percentage of the compensation
payable in the case of permanent total disablement as is proportionate to the loss of earning
capacity (as assessed by the qualified medical practitioner) permanently caused by the injury.

Where temporary disablement, whether total or partial, results from the injury, a half
monthly payment of the sum equivalent to twenty five percent of monthly wages of the
employee, to be paid in accordance with the provisions of sub section (2).
 It may be borne in mind that the age given in first column of Schedule IV is the completed
years of age on the last birth day of the workman immediately preceding the date on which
the compensation fell due. The same may be worked out accordingly.
 Where the monthly wages of a workman exceed Four thousand rupees, his monthly wages
for the purpose of calculation of amount of compensation shall be deemed to be Four
thousand rupees only.
 For computing the monthly-wages, charges on the following counts shall also be included:•
•
•
•
•
•
Bonus
Accommodation
Ration
Clothing
Medical re-imbursement
Washing Allowance
 The above charges will be calculated based on the SSR(standard schedule of rates) rates as
circulated from time to time.
METHOD OF CALCULATING WAGES
SEC 5:
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(whether the wages are
payable by the month or by whatever other period or at piece rated),and calculated as
follows, namely:
(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
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 employed on similar work in the
same locality.
(c).
In other cases including cases in which it is not possible for want of necessary
information to calculate the monthly wages under Para 11 above, the monthly wages shall be
thirty times the total wages earned in respect of the last continuous period of service
immediately preceeding the accident from the employer who is liable to pay compensation
divided by the number of days comprising such period.
Dependency on employee.
Sec 2(d) "Dependent" means any of the following
relatives of a deceased workman namely
(i) a widow a minor legitimate or adopted son an
unmarried legitimate or adopted daughter or a widowed
mother; and
(ii) if wholly dependant 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;
(iii) if wholly or in part dependant on the earnings of the workman at the time
of his Death(a) a widower
(b) a parent other than a widowed mother
(c) a minor illegitimate son an unmarried illegitimate daughter or a daughter
legitimate or illegitimate or adopted if married and a minor or if widowed and
minor.
(d) a minor brother or an unmarried sister or a widowed sister if a minor
(e) a widowed daughter-in-law
(f) a minor child of a pre-deceased son
(g) a minor child of a pre-deceased daughter where no parent of the child is alive
or
(h) a paternal grandparent if no parent of the workman is alive;
COMMISSIONER
Definition:-According to this act “ commissioner” means a commissioner for
workmen’s Compensation appointed under section 20.
Reference to commissioner:Sec 19 (1) if any question arises in any proceedings under this act as to the liability to
the person to pay compensation (including any question as to whether a person
insured is or is not a workman) or as to the amount or duration of compensation
(including any question as to the nature or extent of disablement), the questionshall ,
in fault it of agreement, be settled by a commissioner.
Sec 19(2) No civil court shall have jurisdiction to settle, decide or deal with any
question which is by or under this act required to be settled, decided or dealt with by a
commissioner or to enforce any liability incurred under this act.
Appointment of commissioner
Sec20(1) the state government may, by notification in the official gazette
appoint any person to be a commissioner for workmen compensation.
Sec 20(1A) a subject to the provision of sub section (1), no application for the
settlement of any matter by a commissioner,(other than an application by a
dependent or dependents for compensation ) shall be made unless and until
some question has arisen between the parties in connection therewith which
they have been unable to settle by agreement.
Sec 20(2) an application to a commissioner may be made in such a form and
shall be accompanied by such fee,if any, as may be prescribed , and shall contain ,
in addition to any particulars which may be prescribed , the following particulars
namely ,
a concise statement of the circumstances in which the application is made and
the relief and order which the applicant claims
in the case of a claim for compensation against an employer , the date of
service of notice of the accident on the employer and ,and if such notice has not
been served and or has not been served in due time, the person for such
omission .
The names and address of the parties
Except in the case of an application by dependants for compensation a concise
statement of matters on which agreement has and of those on which agreement
has not been come to.
Sec 22(3) if the applicant is illiterate or for any other reason is unable to furnish the
required information in writing, the application shall, if the applicant so desires, be
prepared under the direction of the commissioner.
Thank You