“The laws we have

reflect the times we

live in”
Hari
Parmeshwar
Employees Compensation Act 1923
(ECA)
Till January 2010 it was known as the
Workmen’s Compensation Act.
Why ECA first
Oldest and basic act ( ILO (1919) joined UN only in
1946).
Applicable to large work areas
Frequently amended
So what does ECA provide
Employer’s liability for compensation.
3. (1) If personal injury is caused to an employee by
accident arising out of and in the course of his
employment, his employer shall be liable to pay
compensation in accordance with the provisions of this
Chapter
Sec 3(1) linkages

●
personal injury by
●
accident

event
Sec 3(1) Exclusions
employer not liable
for any injury not exceeding three days of disablement
;
 for any injury ( not leading to death or Permanent
total disablement) where the worker is under the
influence of drugs or alcohol ; or there is willful
disobedience and disregard of safety rules ; removal of
safety guards /devices…
Some obvious questions
Who …. Employee
By whom…. Employer
What is the compensation or how is it
calculated..
When does it arise
 Employee - 1
(1)Employee means a person employed in any
such capacity as mentioned in Schedule 2 to be
read along with the state amendments. The list is
vast and has 32 sub parts detailing different types
of employments. State amendments add to this list.
The contract of employment may be oral or in
writing; express or implied. In case of death of
workman the dependant can apply the provisions
of this act on his behalf.
(2) Employees of the railways other than those
permanently employed in the administrative and
district offices.
 Employee -2
(3) Employees working on the crew
(including Captain) of a ship/aircraft in any
capacity on a motor vehicle.
(4) employees outside India in any capacity
mentioned in Schedule 2 and the ship,
aircraft, motor vehicle or company is
registered in India.

contd…
 Employee - 3
(5) Excludes the Armed Forces because
they are covered by their own Acts and the
nature of their injuries is in combat and
compensation is also determined according
to the provisions of the Act.
(6) exercise and performance of the powers
and duties of a local authority or
government department will be deemed to
be the trade or business of such authority.
 Employee - 4
IMP: Both central and State Government
can add to the list of Sch 2 where it believes
they are subject to hazardous tasks.
Pose Q : Is domestic employee covered ?
Why ?
 Employer- 1
Employer includes body or persons whether
incorporated or not ; their managing agent;
their legal representative in case of death of
employer . When the services of a workman
are lent by one employer to another employer
then the employer with whom the workman is
working becomes the employer.
cont..
 Employer -2
Employees engaged through contractor. Where
employees are engaged through a contractor in the
trade and business of the employer (principal),
then the Act in terms of Section 12 places the
liability of compensation on the principal employer
and the principal employer in turn can be
indemnified by the contractor. Of course the
employee is not prevented from claiming from the
contractor directly.

cont..
 Employer -3
Also in case a liability for damages lies on a
person (other than the employer) then the
employer can be indemnified from such
person after having paid (as per Section 12)
the employee the compensation.
Section 17 makes any contract null and void
which removes or reduces the liability of the
employee under the provisions of this Act.
Calculation of Compensation
What would be the factors that would go into this
calculation?

 Naturally the extent of the loss which in turn would be

dependent on the injury. Loss of one hand as compared to
both hands. Loss of fingers as compared to an arm. Death
as compared to loss of both eyes.
The nature of the injury. Temporary or permanent or death.
Monetization of physical loss (as determined from (1) and
(2)). That is linkage to earnings. Higher earnings will mean
more loss.
Period of loss. Age factor. Younger person loses more than
a person about to retire.
Nature and Extent of injury-1
Death
Permanent Incapacitates the Further provided Part 1 Sch 1 - Loss of
employee for all work injuries mentioned in both hands; loss of
Total which he was capable
Part 1 of Schedule 1 both legs; both eyes ;
Disablement are PTD and hearing loss in both
of performing at the
combination of injuries ears ; severe
(PTD) time of the accident
mentioned in Part 2 of disfigurement of face.
Schedule 1 totaling
100 % is also PTD.

Permanent Reduces his earning Injuries mentioned in Part 2 Sch 1 – loss of

capacity in every Part 2 of Schedule 1 . finger(s) ; loss of toes ;
Partial employment which he
Part of arm or part of
Disablement leg etc..
was capable of doing
(PPD) at that time
Nature and Extent of injury-2
Temporary Incapacitates the Example: fracture of
employee from all both legs or hands.
Total work which he was Total yet temporary.
disablement capable of performing
at the time of the
(TTD) accident but
temporarily
Temporary Reduces his earning Example: Say fracture
capacity in any of one hand or leg.
Partial employment which he
Disablement was engaged

(TPD)
Occupational Schedule 3 – list of Separate box item on Infectious diseases
industries and Occupational diseases contracted in an
Diseases treated occupational diseases . placed below. occupation. Diseases
as injury by caused by chemicals.
accident
 Monetization- 1
Type of Injury Compensation Limits Additional points
calculation

Death 50 % of wages * UPPER: Limit on Relevant Factor is

Relevant Factor + maximum wages that can based on age
a sum of Rs be considered to be (completed years) of
5000/- for funeral decided by Central the employee at the
Government. time of the accident.
expenses.
LOWER: Compensation It is provide age wise
cannot be lesser than Rs in Schedule 4 of the
1,20,000 in any case. act.

Permanent 60% of wages * UPPER: Limit on PTD gets higher

maximum wages that can compensation than
Total Relevant Factor be considered to be death as the
Disablemen decided by Central employee has to
t Government. sustain himself too.
LOWER: Compensation
cannot be lesser than Rs
1,40,000 in any case.
 Monetization- 2
Permanent % of injury * Limits as in In other words we first
Partial (compensation PTD will apply. calculate compensation as if
as if it is PTD i.e it is 100 % disablement and
Disablement 100%) then depending on the
percentage of injury reduce
it proportionately.

Temporary 25 % wages Upper It must be noted that full

payable limit of wages wages is based on some
fortnightly till as prescribed value addition. It would be a
recovery by CG from miscarriage of justice if there
time to time is full wages without any
would apply. work done. Also should not
be seen as an incentive.
Monetization- 3
Occupational Depending on
Diseases extent of injury
viz death/PTD
etc..

Medical Reimbursement of
Expenditure actual
expenditure by
the employer.

Forum for Employee To prevent dual Also if he chooses

claim prohibited from compensation. to approach civil
approaching civil court then he
court once he is cannot claim from
claiming/claimed ECA.
from ECA.
 Note on Wages :

“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 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;
Upper limit of Wages
(1B) The Central Government may, by notification in
the Official Gazette, specify, for the purposes of sub-
section (1), such monthly wages in relation to an
employee as it may consider necessary.
Occupational Diseases
Occupational Diseases-1
Section 4 places liability on the employer to
compensate the employee in case of injury caused by
the employee’s exposure to occupational hazards. Such
occupational diseases are mentioned in Schedule 3 and
it is divided into three parts:
 Occupational Diseases-2
Part A • no minimum time period of employee engagement in
the industry specified
• example poisoning by nitrous fumes ; diseases caused by
lead and toxic compounds

Part B  employee must have worked with the employer for a

continuous period of not less than 6 months to make the
employer liable
 example diseases caused by phosphorous ; mercury;
benzene or their toxic compounds respectively
Occupational Diseases-3
Part C  where the employee has worked for several
employers for such periods specified by the Central
Government compensation will be in proportion as
determined.
 in case the disease is contracted in a lesser period and
yet it is proved that it has arisen from such
employment then it is a disease arising out of
employment .
 external allergic alveetis caused by inhalation of
organic dusts; acute pulmonary oedema of higher
altitude.
Occupational Diseases-4
Note:
If disease is caused post employment but
employee has served periods specified in
Part B and Part C then too it is a disease
arising out of employment.
 Some intricate issues

Personal Injury – meaning and scope; what

is included and what is not.
Accident –
Arising out of and in the course of
employment
Personal injury
Not defined but not confined to physical injury but
it may include a mental strain or mental imbalance.
Includes sunstroke, nervous collapse, traumatic
neuorisis, hysterical paralysis and neurasthenia.
In Indian News Chronicle Ltd vs Luis Lazarus an
electrician had to frequently go to a heating room
and thereafter a cooling room fell ill and contracted
pneumonia and died. Injury may include a strain.
There must be a causal link between the
employment and the injury.
Accident
Means some unexpected event happening
without design i.e an unlooked for mishap or
untoward event.
It includes not only such occurrences such as
collision, tripping, falls of roofs but also less
obvious ones causing injury e.g strain which
causes rupture , exposure to a draught
causing chill, shock causing neurasthenia.
Out of and in the course of
employment
Out of employment ….due to
In course … during
To and fro to employment considered as
“notional extension of employment” and so far
mostly compensation has been given by courts
because it is perceived as socially beneficial.
Numerous case laws : each varies based on facts
of the case.
Authority under this Act
Commissioner : State government by notification in the
Official Gazette, appoint any person who is or has been a
member of a State Judicial Service for a period of not less
than five years or is or has been for not less than five years
an advocate or a pleader or is or has been a Gazetted
Officer for not less than five years having educational
qualifications and experience in personnel management,
human resource development and industrial relations to be
a Commissioner for employees’ Compensation for such
area as may be specified in the notification.

Appeal lies with High Court

Commissioner
Every Commissioner shall be deemed to be a public
servant within the meaning of the Indian Penal Code
(45 of 1860).
The Commissioner shall have all the powers of a Civil
Court under the Code of Civil Procedure, 1908 (5 of
1908) for the purpose of taking evidence on oath
(which such Commissioner is hereby empowered to
impose) and of enforcing the attendance of witnesses
and compelling the production of documents and
material objects and the Commissioner shall be
deemed to be a Civil Court for all the purposes of
section 195 and of Chapter XXVI of the Code of
Criminal Procedure, 1973 (2 of 1974).
 Commissioner
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 an employee) 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.

(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.