The Employees Compensation Act, 1923

The Employees Compensation Act, 1923

Workmens compensation Act, 1923

The Employees Compensation Act, aims to provide workmen and/or their dependents some relief in case of accidents arising out of and in the course of employment and causing either death or disablement of workmen. It provides for payment by certain classes of employers, to their workmen, compensation for injury by accident arising out of and in the course of employment.

Objectives
The Act, aims to provide workmen and/or their dependents some relief or compensation in case of accidents arising out of and in the course of employment and causing either death or disablement (partial or total) of workmen.

Scope of the act

The Act extends to the whole of India. It applies to workmen employed in factories, mines, plantations, transport establishments, construction work, railways, ships, circuses, & other hazardous occupations & employments specified in Schedule II to the Act. The coverage of this act is also to cooks employed in hotels and restaurants. The Act does not apply to members of Armed Forces of the Union & workmen who are covered by the ESI Act, 1948

Features of the act

Act provides for cheaper and quicker mode of disposal of disputes through special proceedings than possible under Civil Laws. Act provides compensation to workmen for injury caused by accident and occupational disease arising out of and in the course of employment. The act is applicable to apprentices also. Procedure for settlement of claim is through Commissioners.

Employees not eligible

Employees compensation is not payable to persons insured under ESI Act, 1948 if the workmen is under the influence of drugs or drinks if the workmen willfully disobeys instructions or rules framed or safety guards or other devices if total or partial disablement does not exceed 3 days

Employees Compensation Act, 1923 vs ESI Act, 1948

EC Act, 1923

ESI Act,1948

1.

The EC Act is restricted to providing compensation to the workmen for injury caused to workmen arising out of and in the course of employment.

1.

The act provides benefits to workmen in case of sickness, maternity and employment injury.

EC Act, 1923 2. The act offers non contributory set up wherein the employer has to pay the entire compensation.

ESI Act,1948 2. The act offers contributory schemes wherein both the employer and the employee contribute. 3. The act provides for 6 benefits namely sickness benefit, medical benefit, maternity benefit, disablement benefit, death benefit and funeral expenses.

3. The act provides only disablement benefit and dependants benefit.

EC Act, 1923

ESI Act,1948

4. The responsibility of payment lies with the employer. 5. Compensation is a one time lump sum cash payment. 6. No provision of rehabilitation and reemployment under this act.

4. The responsibility of payment lies with ESIC.

5. Compensation is paid periodically. 6.Section 19 provides for rehabilitation and reemployment of insured persons who have been disabled

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Definitions[Sec.2]
Commissioner Dependant Employer Disablement Wages Workman

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Commissioner
Sec.2(1)(b) Commissioner means a Commissioner for Workmens Compensation appointed under Sec.20.

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Dependant[Sec.2(1)(d)]
Dependant means any of the following relatives of a deceased workman, namely:
(I) a widow, a minor legitimate or adopted son and unmarried legitimate or adopted daughter, or a widowed mother. (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) And any of the following were wholly or partly dependent on the workman at the time of his death a widower, a parent other than a widowed mother, a minor illegitimate son, a unmarried illegitimate daughter or a daughter legitimate or illegitimate or adopted if married & a minor or if widowed & minor, a minor brother or an unmarried sister or a widowed sister if a minor, a widowed daughter-in-law, a minor child of predeceased son & daughter where no parent of the child is alive & a paternal grandparent if not the parent of the workman is alive.

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Employer[Sec.2(1)(e)]
"employer" includes Any body of persons whether incorporated or not; Any managing agent of an employer; and The legal representative of a deceased employer.

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Disablement
Disablement means loss of capacity to work or to move. Disablement of workman may result in loss or reduction of his earning capacity. In the later case, he is not able to earn as much as he used to earn before his disablement.

Disablement may be 1. partial, or 2. total. Further it may be (i) permanent, or (ii) temporary.

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Partial Disablement-2.1(g)
This means any disablement as reduces the earning capacity of a workman as a result of some accident. It may be temporary or permanent. Temporary partial disablement means any 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. Permanent partial disablement is one which reduces the earning capacity of a workman in every employment which he was capable of undertaking at that time of injury.

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Total disablement-2.1(l)
Total disablement means such disablement, whether of a temporary or 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

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Wages[Sec.2(1)(m)]
wages includes any privilege or benefit which is capable of being estimated in money, other than a travelling allowance or the value of any travelling concession or a contribution paid by the employer a workman towards any pension or provident fund or a sum paid to a workman to cover any special expenses entailed on him by the nature of his employment.

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Workman[Sec.2(1)(n)]
workman means any person who is (a) a railway servant as defined in clause (34) of section 2 of the Railways Act, 1989 (24 of 1989), not permanently employed in any administrative, district or sub-divisional office of a railway and not employed in any such capacity as is specified in Schedule II, or (b) a master, seaman or other member of the crew of a ship, etc It does not include a person whose employment is of casual nature.

Employers liability ( Sec 3)

The employer of any establishment covered under this Act, is required to compensate an employee : Who has suffered an accident arising out of and in the course of his employment, resulting into (i) death, (ii) permanent total disablement, (iii) permanent partial disablement, or (iv) temporary disablement whether total or partial, or Who has contracted an occupational disease

The employer shall not be liable

In respect of any injury which does not result in the total or partial disablement of the workmen for a period exceeding three days; In respect of any injury not resulting in death, caused by an accident which is directly attributable to1. the workmen having been at the time thereof under the influence or drugs, or 2. the willful disobedience of the workman to an order expressly given, or to a rule expressly framed, for the purpose of securing the safety of workmen

The employer shall not be liable

3. The willful removal or disregard by the workmen of any safety guard or other device which he knew to have been provided for the purpose of securing the safety of workmen. 4. When the employee has contracted a disease which is not directly attributable to a specific injury caused by the accident caused by the accident or to the occupation ; and 5. When the employee has filed a suit for damages against the employer or any other person, in a Civil Court.

Case- Saurashtra Salt manufacturing Co. v. Bai Valu Raja, SC provided the meaning and scope of the phrase arising out of and in the course of employment

Arising out of and in the course of employment

As a rule, the employment of a workman does not commence until he has reached the place of employment and does not continue when he has left the place of employment, the journey to and from the place of employment being excluded. It is now well settled, however, that this is subject to the theory of notional extension of the employers 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.

Arising out of and in the course of employment

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 facts and circumstances of each case will have to be examined very carefully in order to determine whether the accident arose out of and in the course of the employment of a workman, keeping in view at all times this theory.

Arising out of and in the course of employment

The expression arising out of refer to a causal connection between the employment and the accident

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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.

Arising out of and in the course of employment

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The onus is on the claimant to prove that the accident arose out of and in the course of employment. The employee must show that he was at the time of injury, engaged in the employers business or in furthering that business and was not doing something for his own benefit or accommodation. The question that should be considered is whether the workman was required or expected to do the thing, which resulted the accident, though he might have disobediently or imprudently done the same.

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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.

Amount of compensation
1. In case of death: an amount equal to 50% of the monthly wage multiplied by the relevant factor as given in Schedule IV of the act or Rs. 1,20,000 whichever is more

1.

In case of permanent total disablement, it is 60% or Rs.1,40,000 whichever is more

2. In case of permanent partial disablement occurs then the compensation is proportionate to the disability arrived as at (2) above

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Example:
A workman is employed in a factory on a monthly wage of Rs 3000. While working he met with an accident and dies in Oct. 2000. His date of birth is July 18 , 1970. The amount of compensation payable to his dependent would be 50* monthly wages* Relevant factor of age 30 100 0r 1,20,000 whichever is higher

50* 3000* 207.98 = 3,11,970 100

Since Rs 311970 is more than 1,20,000 the compensation payable to him shall be Rs 311,970

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Compensation For Permanent Total Disablement

In case of permanent total disablement resulting from the injury, the amount of compensation shall be 60% of the monthly wages of the injured workman multiplied by the relevant factor or Rs 1,40,000/- thousand whichever is more. For the above example the compensation would be 60* 3000* 207.98 = 3,74,365 100 Since Rs 3,74364 is more than 1,40,000 the amount of compensation payable should be Rs 3, 74364

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Compensation For Permanent Partial Disablement

Where permanent partial disablement occurs, the amount of compensation payable shall be as follows: in case of an injury specified in part II of the schedule I, the amount of compensation shall be such percentage of the compensation which would have been payable is the percentage of loss of earning capacity caused by that injury. in case of an injury not specified in schedule I, such percentage of the compensation is payable which is proportionate to the loss of earning capacity (as assessed by a qualified medical practitioner) permanently caused by the injury.

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Example:
A worker whose monthly wages is RS 3000 loses one eye as a result of injury caused to him on Nov 15, 1995. On Oct 1, 1995, he had completed 20 years of age. The amount of compensation payable to him would be 40% of 60* 3000* 224 = 1,61,280 100

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Compensation For Temporary Disablement(Total or Partial)

If the temporary disablement, whether total or partial results from the injury, the amount of compensation shall be a half monthly payment of the sum equivalent to 25% of the monthly wages of the workman to be paid in accordance with the provisions. The half monthly payment shall be payable on the sixteenth day from the date of disablement In cases where such disablement lasts for a period of 28 days or more, compensation is payable from the date of disablement In other cases after the expiry of a waiting period of three days from the date of disablement.

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Compensation to be paid when due & penalty for default[Sec.4A]

As per this section, compensation has to paid as soon as it is due
In case the employer does not accept the liability of paying the compensation, he is bound to make provisional payment to the extent of the liability he accepts. Such amount has to be deposited with the commissioner or paid to the workman. If he defaults, the commissioner may order:

the payment of the amount with interest at 12 % per year if the default to be unjustifiable then the commissioner may order payment of a further sum not exceeding 50% of the amount due, by way of penalty.

Method of calculating monthly wages[Sec.4A]

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.

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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 employed on similar work in the same locality.

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Method of calculating monthly wages[Sec.4A]

in other cases [including cases in which it is not possible for want of necessary information to calculate the monthly wages under clause (b), 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.

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Distribution of Compensation[sec.8]
The compensation payable for death and The compensation payable to a woman or person of legal disability shall be through the commissioner only. Employer can make advance payment directly to dependants in case of death equivalent to three months salary of the deceased person. Employer is exonerated from his liability if he deposits the compensation amount with the commissioner within the stipulated time. The commissioner shall call all dependants of the deceased and determine the method for distribution of compensation among them. If no dependants are found then amount shall be refunded to the employer. On request by the employer, the commissioner shall furnish the details of disbursement.

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Notice & Claim[Sec.10]

To claim the compensation:
The claimant shall give notice of accident to the employer or by entering in the notice book within the reasonable period. Every such notice shall give the name and address of the person injured, the cause of the injury and the date on which the accident happened and Submit the claim application to the commissioner within two years from the date of accident. In case of occupational disease the accident is deemed to have occurred on the first day of disease. Defect if any in the notice or not giving notice or delayed application will not bar the claim for compensation.

Time of payment of Compensation (Sec 4A)

In cases, where the employer does not accept the liability for compensation to the extent claimed, he shall be bound to make provisional payment on the extent of liability which he accepts & such provisional payment shall be deposited with the Commissioner or made to the workman, as the case may be Where the employer is in default in paying the compensation due under this Act within one month of the date, the commissioner shall direct the employer (a) To pay simple interest @ 12% p.a. or such higher rate as specified by Central Government(b) To pay further sum not exceeding 50% of such amount ( dues + interest ) as penalty

Distribution Of Compensation(Sec 8)
If injury resulted in death No payment of compensation( including to a woman or disable person) otherwise than by deposit with the Commissioner, provided that in case of deceased workman, advances on account of compensation can be made Any other sum not less than Rs.10 ( as compensation) may be deposited with the Commissioner The receipt of the Commissioner shall be a sufficient discharge in respect of deposited compensation On the deposit of compensation money, the Commissioner shall issue notice to be published/served on each dependent , to appear before him on the date fixed and the Commissioner after enquiry, shall return the amount to employer if no dependants exist.

Contracting (Sec 12)

Normally the principal is not held liable to pay compensation to a contractor if an injury is caused by an accident to any of the workers because such workers are not employed by him.

The principal employer is liable when (Sec12 (1)) : a) The contractor is engaged to do a work which is part of the trade or business of the principal employer b) The workmen were engaged in the course of or for the purpose of his trade or business c) The accident occurs in or about the premises on which the principal employer undertakes to execute the work

Jurisdiction of Commissioners (Sec 19)

If any question arises in any proceedings under this Act as to the liability of any person to pay compensation (including any question as to whether a person injured 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 question shall, in default of agreement, be settled by a Commissioner.

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.

Powers and Duties of Commissioners

Deposit & distribution of Compensation Powers to require from employers statement regarding fatal accident Power of settlement of disputes Power of transfer Power to require further deposit in cases of fatal accident Power of Civil Court Power to order costs

Appeals ( Sec 30)

An appeal shall lie to the High Court from the following orders of a Commissioner, namely :(a) an order awarding as compensation a lump sum whether by way of redemption of a half-monthly payment or otherwise or disallowing a claim in full or in part for a lump sum (aa) an order awarding interest or penalty under section 4A (b) an order refusing to allow redemption of a half-monthly payment (c) an order providing for the distribution of compensation among the dependants of a deceased workman, or disallowing any claim of a person alleging himself to be such dependant (d) an order allowing or disallowing any claim for the amount of an indemnity under the provisions of sub-section (2) of section 12;