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The Workmen’s Compensation Act, 1923.

The objectives are to know

 The scope and application of the Act

 The concept of accident arising out of and in the course of employment
 Various types of disablement
 Liability of employer to pay compensation
 Methods of calculation of compensation

Introduction

The law of granting compensation to the workmen for fetal or serious injuries at the
workplace was first enacted in India in 1923 under the name Workmen’s Compensation
Act. It is based on the model of English law which was first passed in the year 1897 and
was thereafter amended in the year 1922. This Act was the first step towards social
security in India. It provides for payment of compensation by the employer to his
workman, if the workman sustains a personal injury during the course of his employment
and as a result, suffers from disability to work.

Under the common law, a workman could claim such compensation from his employer
by taking an action under tort, but he had to establish the negligence on the part of his
employer. Unless the workman sustaining employment-injury and consequently suffering
from physical disability could prove that his employer was responsible for the same due
to his negligence, it was not possible for the workman to succeed in his claim. Apart from
the difficulties faced by workmen in establishing the case against the employer, there
were counter-claims made by the employers in the nature of contributory negligence on
the part of workman. In other words, if there was any allegation by the employer about
any negligence on the part of workman leading to the employment-injury, it was very
difficult, almost impossible, for the workman to prove that the negligence of the
employer was the decisive one. As such, recovery of compensation from the employer
was a very remote possibility.

Additionally, many employers were not natural persons, in the sense that they were
registered corporate bodies with several owners and therefore, for this reason also an
action against employer under tort was very difficult.
With this background, the Act gave a great relief to the workmen, particularly those
employed in factories and mines. It provided for the compensation by the employer
regardless of any negligence on the part of the concerned workman. The Factories Act,
1881 required the employers of factories to take adequate measures for safety of the
workers. The Workmen's Compensation Act further increased the importance of these
safety measures by making the payment of compensation compulsory irrespective of
negligence of the concerned workman, except in certain cases.
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It should be noted that the workmen and their dependents, while claiming compensation
under the Act, however, have to give up their common law right to prosecute the
employer for compensation for any injury covered under the Act.

One more important point that should be noted is that this Act is based on the British
model of Workmen's Compensation Act. The law on Workmen's Compensation in
England does not provide for the compulsory insurance to be obtained by the employer in
respect of his liability to pay Workmen's Compensation to his workmen. Such insurance
is optional. The British law of Workmen's Compensation was based on the German law
and it borrowed many concepts and principles from the German law. The German law
provided for the compulsory insurance, but the British law did not incorporate this
principle. Since the Indian law is based on the British model, it also does not provide for
compulsory insurance. However, it is now felt desirable that provisions relating to
compulsory insurance for the employers, as found in the Payment of gratuity Act, be
introduced in this Act also.

The Employees’ State Insurance Act, 1948, which extends similar and perhaps more
comprehensive benefits to the employees, provides that insured person (i.e. employee) or
his dependents shall not be entitled to receive or recover, whether from the employer of
the insured person or from any other person, any compensation or damages under the
Workmen's Compensation Act, 1923 or any other law for the time being in force or
otherwise, in respect of an employment injury sustained by the insured person as an
employee under E. S. I. Act. It is thus clear that any person who is not insured under the
provisions of the E. S. I. Act, 1948 is entitled to get compensation under this Act, if he
fulfils the conditions laid down.

Scope and Application:

Initially the Act applied to a few employments only. Even in these employments, the
employees drawing wages up to a certain limit only were covered. Gradually the Act was
made applicable to many more employments and the wage limit for the employees was
enhanced from to time.

The present position is that there is no wage limit fixed for the purpose of application of
the Act. In fact, the employees who are not covered under the E.S.I. Act due to their
wages exceeding the wage limit fixed under that Act are covered under the Workmen's
Compensation Act. Similarly, the Act was initially applicable to workers employed
railways, tramways, factories, mines etc. The coverage has been extended from time to
time to give protection and benefits to more and more workers and at present the
employees working in 48 different employments (which are specified in schedule II of
the Act) are workmen within the meaning of the Act and hence are entitled to the benefits
under the Act.

Important definitions:

Dependent means any of the following relatives of a deceased workman, namely-

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i. a widow, a minor legitimate or adopted son, an unmarried legitimate or adopted

daughter or a widowed mother and
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;
iii. if wholly or in part dependent 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 a 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

Explanation: For the purposes of sub-clause (ii) and items (f) and (g) of sub-clause (iii),
reference to a son, daughter or child include an adopted son, daughter or child
respectively.

Explanation:

The Workmen's Compensation is payable to the workman in the first place if he is alive
after the employment-injury. The question of payment of compensation to the relatives of
the workman arises only in the event of death of the workman. Only those relatives of
the deceased workman who are defined as dependent under the Act are entitled to
the Workmen's Compensation.

The definition of the term dependent divides the relatives of the deceased workman into
three classes. These three classes are mentioned in the definition and serially numbered in
roman figures. An analysis of the definition would show that the distinction has been
made among the relatives on the basis of their dependency on the earnings of the
deceased workman at the time of his death. The relatives mentioned in clause (i) are
considered to be dependents on the earnings of the deceased workman irrespective of
whether they were actually dependent or not. The relatives mentioned in class (ii) must
be wholly dependent on the earnings of the deceased workman in order to be considered
as dependent for claiming compensation. The relatives mentioned in class (iii) can get
compensation only when they can establish that they were wholly or in part dependent on
the earnings of the deceased workman.

In other words, the dependents mentioned in class (i) need not be dependents on the
earnings of the deceased workman at the time of his death but the persons in the second
clause must prove that they were wholly dependent on such earnings. Similarly, the
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persons mentioned in clause (iii) must prove that they were wholly or in part dependent
on the earnings of the deceased workman at the time of his death.

It is necessary to note two points here with respect to the claim for the amount of
compensation. The three classes of Dependents mentioned in the definition do not have
any hierarchical order among them, in the sense that once the condition of dependency is
satisfied by the relatives of second and third class, they stand on the same footing as the
dependents of the first class. Thereafter, all the relatives are treated as Dependents under
the Act and they possess the same right to compensation. (It is for the Commissioner to
distribute the amount of compensation among these Dependents as per his discretion)

Secondly, if there is no Dependent as mentioned in the definition, no compensation is

payable by the employer. No other relative can claim the compensation from the
employer on the ground that there is no such Dependent in existence as described in the
definition.

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 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.

Explanation:

It can be seen from the definition that any person who gives employment is an employer.
It includes natural persons as well as artificial persons and body corporate, whether
registered under the law or not. The definition also includes the legal representatives of
the deceased employer. Similarly, when the employer lends the services of a workman
out to another person, such other person becomes the employer for the workman during
the period the services are so lent.

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 sub ordinate to an employer.

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, and, where the
disablement is of a permanent nature, such disablement as reduces his earning capacity in
every employment which he was capable of undertaking at that time: provided that every
injury specified in Part II of Schedule I shall be deemed to result in permanent partial
disablement.

Explanation:
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When a workman meets with an accident and sustains injuries, it results in loss of his
earning capacity. Such incapacity of doing work is his disablement. Such disablement can
be either partial or total. The definition of partial disablement further classifies it as
temporary partial disablement and permanent partial disablement. For example, a foreign
object penetrating in the eye of a workman and temporarily disabling him to work
because of blindness is a case of temporary partial disablement. On the other hand, if the
eyesight of the workman is injured forever, it is permanent partial disablement. If the
earning capacity of the workman is reduced as result of disablement only in the particular
employment in which he was engaged at the time of his accident, it is partial disablement
of temporary nature.

If, on the other hand, the earning capacity of the workman is reduced as a result of
disablement in every employment which he was capable of undertaking at the time of the
accident, it is partial disablement of permanent nature. Therefore, the difference between
the two is that in temporary partial disablement the earning capacity of the workman is
reduced in the particular employment in which he was engaged whereas in permanent
partial disablement the earning capacity of the workman is reduced in every employment
which he was capable of undertaking at the
time of the accident.

It is further provided that every injury specified in the Part II of Schedule I shall be
deemed to result in permanent partial disablement. There are 48 injuries specified in part
II of Schedule I such as loss of thumb, loss of one eye, without complications, the other
being normal etc.

It is important to note here that even if the workman is continued in the employment on
the same terms and conditions after the partial disablement has occurred, the employer
cannot be absolved from liability to pay the Workmen's Compensation. Only because the
employer pays to the workman the same wages even after the accident resulting in
permanent disablement, it cannot be said that there is no loss of earning capacity. If it
were so, the employer could easily avoid payment of compensation by continuing the
employment of the workman. If the workman is constrained to look for another
employment in future, his disability would certainly be a handicap in getting the wages as
per the then existing market rates and at that time he would not be entitled to claim
compensation also at a belated stage.

Part II of Schedule II gives the list of injuries, which are deemed to result in permanent
partial disablement. However, the list is not exhaustive. There can be many other types of
injuries causing permanent partial disablement. Under such circumstances, medical
examination of the workman becomes necessary. Loss of earning capacity has to be
determined by taking into account the destruction of physical capacity supported by the
medical evidence. What has to be assessed is the extent to which the destruction of
physical capacity can be taken to have disabled the workman from performing the work,
which a workman of his class ordinarily performs.
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It is worthwhile to note that a medical expert can only state what the injury is and its
effect on the body of the workman. It is ultimately for the Court to find whether the
disablement is partial or total, by taking into account the nature of injury, the nature of
work, which the workman was capable of performing at the time of accident and its
availability to him. For example, loss of one hand for a worker may be a permanent
partial disablement, of course, having regard to the normal conditions of work. However,
it is certainly a permanent total disablement if the same worker is employed as a driver.
Medical examination in both the cases, however, would disclose the same destruction of
physical capacity.

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:

Provided that permanent total disablement shall be deemed to result from every injury
specified in Part I of Schedule I or from any combination of injuries specified in Part II
thereof where the aggregate percentage of the loss of earning capacity, as specified in the
said Part II against those injuries amounts to one hundred percent or more.

Explanation:

Total disablement can be either temporary total disablement or permanent total

disablement. Temporary total disablement renders the workman incapable for all work
which he was capable of performing at the time of accident, but for a temporary
period. Permanent total disablement incapacitates the workman for all work, which he
was capable of performing at the time of accident, permanently and forever. The term
can be yet better understood by making a reference to the partial disablement. In partial
disablement, the earning capacity of the workman (who has met with the accident and
sustained personal injuries) is reduced whereas in total disablement the workman
concerned becomes incompetent for all work, which he was capable of performing at the
time of accident.

It is important to note that in partial disablement, the reference is to the reduced earning
capacity whereas in total disablement the reference is to the total incompetence of the
workman for all work, which he was capable of performing at the time of accident.

The definition further provides that the injuries specified in Part I of Schedule I shall be
deemed to result in permanent total disablement and that if different permanent partial
disablements together cause a loss of earning capacity of one hundred percent (or more),
it shall be deemed that there is permanent total disablement. Part I of Schedule I specifies
six injuries which are deemed to result in permanent total disablement such as loss of
both hands, loss of hand and a foot, absolute deafness etc.
Whether the permanent disablement is partial or total is a very crucial question in every
case for the simple reason that the amount of compensation would vary substantially
depending on the nature of disablement.
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Qualified Medical Practitioner means any person registered under any Central Act,
Provincial Act or an Act of legislature of a 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 traveling allowance or the value of any traveling concession or a contribution
paid by the employer of a workman towards any pension or provident fund or a sum paid
to a workman to cover special expenses entailed on him by the nature of his employment.

Explanation:

The definition does not attempt to restrict the meaning of wages, but rather seeks to
include what ordinarily may not be included in the concept of wages. Any benefit or
privilege given by the employer to his workman, which can be calculated in terms of
money, is wages under this Act, except contributions paid the employer towards any
pension or provident fund, traveling allowance or concession or reimbursement of special
expenses incurred on the workman. Hence, in addition to monetary wages, all other
benefits or privileges given by the employer, which are capable of being estimated in
money, are wages. The value of amenities such as free house accommodation, supply of
light and water etc. are the service benefits which are to be included in wages. Bonus is
no longer regarded as an ex-gratia payment given by the employer and hence is a
privilege enjoyed by the workmen and as such it is also included in the wages.

Workman means-

1. 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) who is-
a) a railway servant as defined in clause (34) of Section 2 of the Railways Act,
1989, not permanently employed in any administrative, district or sub-divisional
office of a railway and not employed in any such capacity as us specified in
Schedule II, or
b) a master, seaman or other member of the crew of a ship,
c) a captain or other member of the crew of an aircraft,
d) a person recruited as driver, helper, mechanic, cleaner, or in any other capacity in
connection with a motor vehicle,
e) a person recruited to work abroad by a company,
and who is employed outside India in any such capacity as is specified in schedule
II and the ship, aircraft or motor vehicle or company as the case may be, is
registered in India,
f) employed in any such capacity as is specified in Schedule II.
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g) whether the contract of employment was made before or after the passing of this
Act and whether such contract is express or implied, oral or in writing; but does
not include any person working in the capacity of a member of the Armed Forces
of the Union and any reference to a workman who has been injured shall, where
the workman is dead, include a reference to his dependents or any of them.
(2) The exercise and performance of the powers and duties of a local authority or of any
department acting on behalf of the Government shall, for the purposes of this Act, unless
a contrary intention appears, be deemed to be the trade or business of such authority or
department.
(3) The Central Government or the State Government, by notification in the Official
Gazette, after giving not less than three months’ notice of its intention so to do, may, by a
like a notification, add to Schedule II any class of persons employed in any occupation
which it is satisfied is a hazardous occupation and the provisions of this Act shall
thereupon apply, in case of a notification by the Central Government, within the
territories to which the Act extends, or, in the case of the notification by the State
Government, within the State, to such classes of persons.
Provided that in making addition, the Central Government or the State Government, as
the case may be, may direct that the provisions of this Act shall apply to such classes of
persons in respect of specified injuries only. (Section 2 (l) (n).

Explanation:

The persons in the various employments which are included in the definition are
workmen within the meaning of this Act. They are entitled to the benefits and protection
under the Act. Additionally, those who are employed to do the work specified in
Schedule II are also workmen under the Act. At present, Schedule II lists 48 different
types of employment. Thus in order to find out whether a person employed is a workman
within the meaning of the Act, it is always necessary to look into the contents of
Schedule II. The said Schedule is reproduced below.

Schedule II

List of persons who, subject to the provisions of Section 2(1) (n), are the included in
the definition of workman.
The following persons are workmen within the meaning of Section 2 (1) (n) and subject
to the provisions of that section, that is to say any person who is-
i. employed, otherwise in a clerical capacity, or on a railway, in connection with the
operation, repair or maintenance of lift or a vehicle propelled by steam or other
mechanical power or by electricity or in connection with the loading or unloading
of any such vehicle; or

ii. employed, otherwise in a clerical capacity, in any premises wherein or within the
precincts whereof a manufacturing process is as defined in clause (k) of section 2
of the Factories Act, 1948, is being carried on or in any kind of work whatsoever
incidental to or connected with any such manufacturing process or with article
made, whether or not employment in any such work is within such premises or
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precincts and steam water or other mechanical or electrical power is used; or

iii. employed for the purposes of making, altering, repairing, ornamenting, finishing
or otherwise adapting for use, transport or sale of any article or part of an article
in any premises wherein or within the precincts whereof twenty or more persons
are so employed.
Explanation: For the purposes of this clause, persons employed outside the
precincts but in any work incidental to or connected with the work relating to
making, altering, repairing, ornamenting, finishing or otherwise adapting for use,
transport or sale any article or part of an article shall be deemed to be employed
within such premises or precincts; or

iv. employed in the manufacture or handling of explosives in connection wuth the

employer’s trade or business; or

v. employed in any mine as defined in clause (j) of section 2 of the Mines Act, 1952
in any mining operation or in any kind of work, other than clerical work
incidental to or connected with any mining operation or with the mineral
obtained, or in any kind of work whatsoever below the ground; or

vi. employed as the master or as a seaman of-

(a) any ship which is propelled wholly or in part by steam or other mechanical
power or by electricity or which is towed or intended to be towed by a ship so
propelled; or
(b) any ship not included in sub-clause (a) of twenty five tons net tonnage or
over; or
(c) any sea going ship not included in sub-clause (a) or sub-clause (b) provided
with sufficient area for navigation under sails alone; or

vii. employed for the purpose of-

(a) loading, unloading, fuelling, constructing, repairing, demolishing, cleaning or
painting any ship of which he is not the master or a member of the crew or
handling or transport within the limits of the Major Port Trusts Act, 1963 of
goods which have been discharged from or are to be loaded into any vessel; or
(b) warping a ship through the lock; or
(c) mooring and unmooring ships at harbour wall berths or in pier; or
(d) removing or replacing dry dock caissons when vessels are entering or leaving
dry docks; or
(e) the docking or undocking or any vessels during an emergency; or
(f) preparing splicing coir springs and check wires, painting depth marks on lock-
sides, removing or replacing fenders whenever necessary, landing or gangways,
maintaining life-buoys up to standard or any other maintenance work of a like
nature; or
(g) any work on jolly-boats for bringing a ship’s line to the wharf; or

viii. employed in the construction, maintenance, repair or demolition of

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a) any building which is designed to be or is or has been more than one

storey in height above the ground or twelve feet or more from the ground
level to the apex of the roof; or
b) any dam or embankment which is twelve feet or more in height from its
lowest to its highest point; or
c) any road, bridge, tunnel or canal; or
d) any wharf, quay, sea-wall or other marine work including any moorings of
ships; or

ix. employed in setting up, maintaining, repairing or taking down any telegraph or
telephone line or post or any overhead electric line or cable or post or standard or
fittings and fixtures for the same; or

x. employed otherwise than in a clerical capacity, in the construction, working

repair or demolition of any aerial ropeway, canal, pipe-line, or sewer; or

xi. employed in the service of any fire brigade; or

xii. employed upon a railway as defined in clause (31) of section 2 and sub-section (1)
of section 197 of the Railways Act, 1989 either directly or through a sub-
contractor, or by a person fulfilling a contract with the railway administration; or

xiii. employed as an inspector, mail guard, sorter, or can peon in the Railway Mail
Service or as a telegraphist or as a postal or railway signaler or employed in any
occupation ordinarily involving outdoor work on the Indian Posts and Telegraphs
Department; or
xiv. employed, otherwise than in a clerical capacity, in connection with operation for
winning natural petroleum or natural gas; or

xv. employed in any occupation involving blasting operations; or

xvi. employed in the making of any excavation in which on any one day of the
preceding twelve months more than twenty five persons have been employed or
explosives have been used, or whose depth from its highest to its lowest point
exceeds twelve feet; or

xvii. employed in the operation of any ferry boat capable of carrying more than ten
persons; or

xviii. employed, otherwise than in a clerical capacity, on any estate which is maintained
for the purpose of growing cardamom, cinchona, coffee, rubber, tea and on which
on any one day in the preceding twelve months twenty five or more persons have
been so employed; or

xix. employed, otherwise than in a clerical capacity, in the generating, transforming,

transmitting or distribution of electrical energy or in generation or in supply of
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gas; or

xx. employed in a light house as defined in clause (d) of section 2 of the Indian Light
House Act, 1927; or

xxi. employed in producing cinematograph pictures intended for public exhibition or

in exhibiting such pictures; or

xxii. employed in the training, keeping or working of elephants or wild animals; or

xxiii. employed in the tapping of palm trees or felling or logging of trees, or the
transport of timbre by inland waters, or the control or extinguishing of forest fires;
or
xxiv. employed in the operations for the catching or hunting for elephants or other wild
animals; or

xxv. employed as a driver; or

xxvi. employed in the handling or transport of goods in, or within the precincts of –
a) any warehouse or other place in which goods are stores, and in which on any
one day of the preceding twelve months ten or more persons have been so
employed, or
b) any market in which on any one day of the preceding twelve months fifty or
more persons have been so employed;

xxvii. employed in any occupation involving the handling and manipulation of radium
or X-rays apparatus, or contact with radioactive substances; or

xxviii. employed in or in connection with the construction, erection, dismantling,

operation or maintenance of an aircraft as defined in section 2 of the Indian
Aircraft Act, 1934; or

xxix. employed in horticulture operations, forestry, bee-keeping or farming by tractors

or other contrivances driven by steam or other mechanical power or by electricity;
or

xxx. employed, otherwise than in a clerical capacity, in the construction, working,

repair or maintenance of a tube-well; or

xxxi. employed in the maintenance, repair or renewal of electric fittings in any

building; or

xxxii. employed in a circus; or

xxxiii. employed as a watchman in any factory or establishment; or
xxxiv. employed in any operation in the sea for catching fish; or
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xxxv. employed in any employment which requires handling of snakes for the purpose
of extraction of venom or for the purpose of looking after snakes or handling any
other poisonous animals or insects; or
xxxvi. employed in handling animals like horses, mules and bulls; or

xxxvii. employed for the purpose of loading or unloading any mechanically propelled
vehicle or in the handling or transport of goods which have been loaded in such
vehicles; or

xxxviii. employed in cleaning of sewer lines or septic tanks within the limits of local
authority; or
xxxix. employed on surveys and investigation, exploration or gauge or discharge
observation of rivers including drilling operations, hydrological observation and
flood forecasting activities, ground water surveys and explorations; or

xl. employed in cleaning of jungles or reclaiming land or ponds in which on any one
day of the preceding twelve months more than twenty five persons have been
employed; or

xli. employed in cultivation of land or rearing and maintenance of livestock or forest

operations or fishing in which on any one day of the preceding twelve months
more than twenty five persons have been employed; or

xlii. employed in installation, maintenance or repair of pumping equipment used for

lifting of water from wells, tube-sells, ponds, lakes, streams and the like; or

xliii. employed in the construction, boring or deepening of an open well or dug well,
bore-well, bore-cum-dug well, filter point and the like; or

xliv. employed in spraying and dusting of insecticides or pesticides in the agricultural

operations or plantations; or

xlv. employed in mechanized harvesting and threshing operations; or

xlvi. employed in working or repair or maintenance of bulldozers, tractors, power

tillers and the like; or

xlvii. employed as artist for drawing pictures on advertisement boards at a height of

3.66 meters or more from the ground level; or

xlviii. employed in any newspaper establishment as defined in the Working Journalists

and other News paper employees (conditions of service ) and Miscellaneous
Provisions Act, 1955 and engaged in outdoor work.
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Explanation: - In this schedule, “the preceding twelve months” relates in any particular
case to the twelve months ending with the day on which the accident in such case
occurred.

Employer’s liability to pay compensation

Section 3 of the Act provides for the circumstances under which an employer shall be
liable to pay Workmen's Compensation as per the provisions of the Act. The said section
reads as follows:
1. If personal injury is caused to a workman by accident arising out of and in the
course of employment, his employer shall be liable to pay compensation in
accordance with the provisions of this Chapter:

Provided that the employer shall not be so liable-

a) in respect of any injury which does not result in total or partial

disablement of the workman for a period exceeding three days;

b) in respect of any injury not resulting in death or permanent total

disablement caused by an accident which is directly attributed to-

i. the workman having been at the time therefore under

the influence of drink or drugs, or

ii. . 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 workman, or
iii. the willful removal or disregard by the workman of any safety
guard or other device which he knew to have been provided for the
purpose of securing the safety of workman

(2) If a workman employed in any employment specified in Part A of Schedule III

contracts any disease specified therein as an occupational disease peculiar to that
employment, or if a workman whilst in the service of an employer in whose service he
has been employed for a continuous period of not less than six months, which period
shall not include a period of service under any other employer in the same kind of
employment in any employment specified in Part B of Schedule III, contracts any disease
specified therein as an occupational disease peculiar to that employment, or if a workman
whilst in the service of one or more employers in any employment specified in Part C of
Schedule III or such continuous period as the Central Government may specify in respect
of the each such employment, contracts any disease specified therein as an occupational
disease peculiar to that employment, the contracting of the disease shall be deemed to be
an injury by accident within the meaning of this section and, unless the contrary is
proved, the accident shall be deemed to have arisen out of and in the course of the
employment:
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Provided that if it is proved-

a. that a workman whilst in the service of one or more employers in any

employment specified in Part C of schedule III has contracted a disease specified
therein as an occupational disease peculiar to that employment during a
continuous period which is less than the period specified under this sub-section
for that employment, and

b. that the disease has arisen out of and in the course of the employment, the
contracting of such disease shall be deemed to be an injury by accident within the
meaning of this section

Provided further that if it is proved that a workman who having served under any
employer in any employment specified in Part B of schedule III or who having served
under one or more employers in any employment specified in Part C of that schedule for
a continuous period specified under this sub-section for that employment and he has after
the cessation of such service contracted any disease specified in the said Part B or said
Part C, as the case may be, as occupational disease peculiar to the employment and that
such disease arose out of the employment, the contracting of the disease shall be deemed
to be an injury by accident within the meaning of this section.

(2-A) If a workman employed any employment specified in Part C of schedule III

contracts any occupation disease peculiar to that employment, the contracting whereof is
deemed to be an injury by accident within the meaning of this section, and such
employment was under more than one employer, all such employers shall be liable for
the payment of the compensation in such proportion as the Commissioner may, in the
circumstances, deem just.

(3) The Central Government or the State Government, by notification in the official
gazette, after giving not less than three months’ notice of its intention so to do, may, by a
like notification, add any discretion of employment to the employment 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 the case of 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.

(4) Save as provided by sub-sections (2), (2-A) 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.

(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
 15

shall be maintainable by a workman in any Court of law in respect of any injury-

a. in he has instituted a claim to compensation in respect of the injury before a

Commissioner; or

b. if an agreement has been arrived at 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.

Explanation:

Section 3 lays down the conditions under which an employer is liable to pay Workmen's
Compensation. A plain reading of the section would show that an employer is liable to
pay compensation his workman if he meets with an accident while on duty and so also
when the workman contracts any occupational disease which is peculiar to the nature of
employment in which he was engaged. In other words, there are two conditions under
which an employer is liable to pay compensation; first in case of personal injury caused
by an accident arising out of and in the course of employment and the second in the case
of occupational disease contracted by the workman, which is peculiar to the nature of his
employment.

Liability of employer to pay compensation or entitlement of workman (or his dependents)

to claim compensation, under both the conditions mentioned above is, of course, subject
to the conditions as mentioned in the same section. Let us now consider each condition
separately.

Sub-section (1) of Section 3 provides for the employer’s liability to pay compensation in
case of personal injury caused to a workman by an accident. The analysis of the section
tells us that the employer is so liable only when the following conditions are fulfilled.

(1) The workman must have sustained a personal injury

The word personal injury has not been defined under the Act. However, it is not restricted
to only bodily injuries. It also includes psychological disorders caused by the work
tensions. Psychological imbalance can be caused by mental and intellectual strains, to
which a workman is subjected while discharging his duties. It is undisputedly a case of
personal injury as it affects the efficiency of the workman. The person of a workman
includes both his body and mind and therefore anything that causes damage to the
workman, either physically or mentally, is a personal injury.

(2) The personal injury must have been caused by an accident out of and in the course of
employment.
The term ‘accident’ has also not been defined under the Act. However, it is now settled
position of law that accident means some unexpected, sudden mishap or an untoward
 16

event. If the injury is caused gradually to the person of a workman, it would be a

development of an ailment and hence would be covered under occupational disease. It
includes falling down from a height as also receiving sunstroke. What is necessary to
constitute an accident is the sudden occurrence or happening of something which is
unexpected and undesired.

Furthermore, such accident must arise out of and in the course of employment. What is
an accident arising out of and in the course of employment has always been the issue of
great debate and discussion among the judicial and jurisprudential authorities. It is not
possible to frame a regulation or lay down a rule which could be applied to determine
whether any accident is such accident or not. It depends on the merits of each case. From
the various judicial pronouncements, it can be gathered that an accident arising out of and
in the course of employment is an accident, which has a close relation or nexus with the
employment. It need not be due to the risks, which are inherent to the nature of
employment. For example, if a worker working on a metal sheet-cutting machine gets his
fingers cut accidentally during the operation of the machine, it is obviously an accident
out of and in the course of employment. This is so not because the risk of cutting fingers
is involved in working on the cutting machine. If the same worker is going from one
department to another to fetch tools for his working and if he slips on the floor, falls
down and receives a head-injury, it is yet an accident arising out of and in the course of
employment. The cutting of the fingers and the fall on the floor of the workman are both
mishaps which are connected with and incidental to his employment. Both the
occurrences have a nexus with his employment. The expression ‘out of employment’
refers to the very broad area of service of the workman, whereas the expression ‘in the
course of employment’ refers to something happening while performing the duties or
discharging the functions, which are part of his employment.

It shall be thus seen that accidents arising out of and in the course of employment have a
very wide coverage. In fact, the Courts in India including the Supreme Court, have
attached a very extensive and liberal meaning to the same and the expression has been
often interpreted for the benefit of the workmen meeting with accidents. This liberal
interpretation was popularly known as the doctrine of notional extension. It extended
the area of work premises to cover the accidents to workmen while on their way to the
place of work and back to the residence after the duty hours. Thus a workman traveling
home from the place of work after his duty hours is still employed with reference to any
accident on the way, making the employer liable to pay compensation. This extension
was sought to be justified on the ground that what is relevant is whether the workman
meeting with an accident was there at the place of accident as a member of general public
or by virtue of his employment. If the presence of the workman at the place where the
accident takes place is occasioned by his employment, howsoever remotely, it is an
accident arising out of and in the course of employment. Hence, a workman at a bus-stop
waiting for a bus to take him to the work-place is run over by any vehicle, it will be an
accident arising out of and in the course of employment, because at the time of accident
the workman was at the bus stop owing to his employment, and not as a member of
general public.
 17

This interpretation, though obviously far-fetched and illogical was not seriously objected
to by the employers in India in organised sector, because most of the employers in this
sector had obtained insurance against their liability under the Act. In unorganised sector,
due to the ignorance of workmen no claims under the Act were vigorously made and the
employers hardly bothered to comply with the provisions of the Act. As a result, since
large number of employers were unaffected by this unwarranted liberal interpretation, the
theory of notional extension became the rule. However, in 1996, a Government agency
like E.S.I. Corporation took up the issue to the Supreme Court. In the case of ESI
Regional Director v/s Francis D’ Costa (1996), the Supreme Court finally restricted the
notional extension of the work premises and ruled that unless the workman was within
the premises of the establishment, his employment cannot be deemed to have begun.
Therefore, accident occurring on the way to the work-place or back after duly hours were
specifically held to be not the accidents arising out of and in the course of employment.
The only exception made was the accident to the vehicle provided by the employer for
his workmen to travel to and fro the work place.

(3) The personal injury must result in either total or partial disablement of the workman
for a period exceeding three days or death.
In order to give rise to a claim by workman for compensation under the Act, it is
necessary that he must be either partially or totally disabled to do work at least for a
period of three days. Section 3 (a) expressly provides that there is no liability on the part
of the employer in respect of any injury, which does not result in the total or partial
disablement of the workman for a period exceeding three days. Death of the workman is
total disability of the workman for ever and hence obviously can give rise to a rightful
claim.

Circumstances when the employer is not liable to pay compensation:

There are circumstances where, even after the above conditions are satisfied, the
employer shall not be liable to pay any Workmen's Compensation to his workman under
the Act. In other words, even if a workman has met with an accident arising out of and in
the course of employment causing personal injury to him and which has resulted in
partial or total disablement lasting for three days or more, he shall not have any claim
against his employer for Workmen's Compensation, under certain circumstances. These
situations are mentioned in sub-clause (i), (ii) and (iii) of clause (b) of section 3 itself.
The reading of said section, which is reproduced before, would show that the employer
shall not liable to pay compensation under this Act, if the accident is caused by any of the
following reasons: -

i. If the workman is under the influence of drink or drugs; or

ii. If the workman willfully disobeys an order or rule which is expressly framed for
the purpose of securing his safety; or

iii. If the workman willfully removes or disregards any safety guard or device, which
he knows to have, been provided by the employer for the purpose of securing his
 18

safety.

Under the above circumstances, the employer shall not be liable to pay any compensation
to the workman, provided the accident does not result in death of the workman.

Similarly, the employer shall also not be liable to pay any compensation if the workman
does not present himself for medical examination when required, or if he fails to take
proper medical treatment, which aggravates the injury or disease.

The employer shall be liable to pay the compensation, if the accident results in the death
of the workman even if the cause of the accident is workman being under the influence of
alcohol or his wilful removal of safety device or wilful disobedience of any safety
instruction.

Employer’s liability for occupational disease:

We have already noted that employer’s liability to pay compensation arises in two events.
The first is when any workman sustains personal injury due to accident arising out of and
in the course of employment disabling him, permanently or partially, for a period
exceeding three days.

The second is when any workman contracts any occupational disease which is peculiar to
the employment. Occupational disease is a disease which is contracted by a person
because of his occupation. For example, persons who have to work in extremely hot or
extremely cold weather are often subjected to the diseases caused by such weather or the
lung functioning of a workman can be affected due to working with cotton. Schedule III
of the Act contains the list of such occupational diseases. This schedule has three parts;
Part A, Part B and Part C.

Part A:

If a workman contracts any disease specified in Part A of Schedule III, the contracting of
such disease is deemed to be an injury by accident and unless proved otherwise, such
accident shall be deemed to have arisen out of and in the course of employment.
Therefore, if a workman contracts any disease, which is peculiar to his employment, and
when such disease is specified in the schedule, the employer is liable to pay Workmen's
Compensation to the workman as if the contracting of such disease is an accident causing
personal injury and that such accident is out of and in the course of employment.

Part B:

If a workman while in the service of an employer in whose employment he has been

employed for a continuous period of not less than six months (excluding the period in
which the workman was in employment with another employer) in any employment
specified in Part B of the Schedule III, contracts any disease specified as occupational
 19

disease peculiar to that employment, the contracting of such disease shall also be
similarly treated as an accident arising out of and in the course of employment.

Part C

If a workman whilst in the service of one or more employers in any specified

employment as mentioned in schedule III, contracts any disease peculiar to that
employment, it shall be also treated as an accident arising out of and in the course of
employment. However, it is necessary that the workman must have employed for a
minimum period as specified by the Central Government in this behalf.

Amount of Compensation

The amount of compensation is to be calculated in accordance with the provisions of

Section of 4 of the Act. There are four methods of calculating the Workmen's
Compensation amount/
 Where the injury results in the death of the workman, the amount of compensation
would be equal to fifty per cent of his monthly wages multiplied by the relevant
factor or Rs. 80,000/- whichever is higher.

 Where the injury results in permanent total disablement of the workman, the
amount of compensation would be sixty per cent of the monthly wages of the
workman multiplied by the relevant factor or Rs. 90,000/- whichever is higher.

Relevant Factor is factor, which depends on the age of the workman at the time of the
accident. It is the highest at the lowest age. It goes on reducing as the age advances. For
example, the relevant factor (as given in the schedule IV of the Act) for a workman at his
age of 18 years is 226.38, whereas the relevant factor for a workman at his age of 58
years is 124.70.

The reason for the gradual reduction in the relevant factor corresponding to the increase
in the age of the workman is that the amount of compensation ought to be more when the
disability occurs at the young age. As the age of a workman draws towards his
retirement, the span of work-life is reduced and therefore the amount of compensation is
also correspondingly reduced.

For the purpose of computing the compensation, the wages of the workman are taken to
be maximum Rs. 4000/- per month. In other words, where the monthly wages of a
workman exceed Rs. 4000/- his wages shall be deemed to be Rs. 4000/- only.

 Where the injury results in permanent partial disablement, the amount of

compensation would be such percentage of the compensation which would have
been payable in the case of permanent total disablement as the percentage of loss
of earning capacity caused by the injury.
 20

Explanation

As already noted above, a permanent partial disability is one where a workman is

permanently but partially disabled, for instance loss of fingers or one hand. In such event,
the compensation should be calculated as if the injury has resulted in the permanent total
disablement. Permanent total disablement is always hundred percent disablement.

The next step is to ascertain the percentage of loss of earning capacity of the workman
due to the injury. For example, the loss of earning capacity in the case of loss of one eye
is specified in the Act to be 40%.

Now the compensation payable is 40% of the amount of compensation, which would
have been payable if the injury, had resulted in the permanent total disablement.

 Where the injury results in temporary disablement, whether total or partial, the
amount of compensation is the periodical payment of 25% of monthly wages for
every period of fifteen days. In other words, the employer has to pay to the
workman 25% of his monthly wages after every fifteen days during the period of
his disablement. This compensation is called payment of half monthly wages.

Funeral expenses

The Act further lays down that where the injury of the workman results in his death, the
employer shall, in addition to the compensation as explained above, deposit a sum of Rs.
2500/- with the Commissioner appointed under the Act for payment of the same to the
eldest surviving dependent of the workman towards the expenditure of the funeral of such
workman or where the workman did not have a dependent or was not living with his
dependent at the time of his death to such person who actually incurred such expenditure.

Method of calculating monthly wages

Monthly wages means the amount of wages deemed to be payable for a month’s service,
(whether the wages are payable by month or otherwise) and calculated as follows:

 Where the workman has been in continuous employment for not less than twelve
months, his monthly wages would mean the total wages of the workman for the
last twelve months divided by twelve.

 Where the period of continuous employment of the workman is less than one
month, his monthly wages would be the average of wages for the previous twelve
months earned by another workman employed on the same kind of work with the
same employer or in the same locality,
 21

 In other cases including the ases in which it is not possible to calculate the
monthly wages for want of information, the monthly wages would be the total
wages earned by the workman divided by the number of days worked multiplied
by thirty.

Distribution of Compensation

 Section 8 of the Act deals with the distribution of compensation. It states that the
amount of compensation has to be paid through the Commissioner appointed
under the Act. This is in order to ensure that amount is computed correctly and
there is no malpractice.

 It provides that no payment of compensation in respect of workman whose has

resulted in death and no payment of a lump sum as compensation to a workman or
a person under legal disability shall be made otherwise than by deposit with the
Commissioner, and no such payment made directly y an employer shall be
deemed to a payment of compensation

 However, the Act permits an employer to make an advance to any dependent on

account of compensation upto three months’ wages.

 On deposit of any money by employer on the death of the workman , the

Commissioner shall issue notices to the dependents asking them to appear before
him on a specified day for distribution of compensation among them. The amount
of compensation shall be apportioned among the dependents at the discretion of
the Commissioner or it may be allotted to any one dependent.

Notice and Claim

 In order to claim compensation from the employer, it is necessary that a notice is

issued to the employer as soon as practicable. The claim has to be filed before the
Commissioner within a period of two years from the date of accident or from the
date of death of the workman. In the case of occupational disease, the accident is
deemed to have occurred on the first of the days during the workman was
continuously absent from work due to such disease.

 If the partial disablement, which does not require the workman to remain absent
from work, the period of two years shall be counted from the day when the
workman gives notice of the disablement to the employer.

The Commissioner
 22

Commissioner is the judicial authority under the Act appointed by the State Government
for adjudication of disputes. As regards the functions and powers of the Commissioner,
the following points may be noted.

 If any question arises in any proceedings as to the liability of any person to pay
compensation or the amount or the duration of compensation or any question
relating to nature or extent of disablement, such question shall be settled by the
Commissioner. No Civil court shall have power to deal with such questions.

 The Commissioner is appointed by the State Government for a specified local

area and every Commissioner is deemed to be a Public Servant under the Indian
Penal Code.

 A Commissioner may choose one or more persons as experts possessing special

knowledge in any matter to assist him in adjudicating any matter.

 The Commissioner shall have all the powers of a Civil Court under the Code of
Civil Procedure for the purpose of taking evidence on oath, enforcing attendance
of witnesses and production of documents etc.

 He has the power to direct the employer to deposit additional amount with him,
if in his opinion the amount of deposited by the employer is insufficient.

 If any question of law in involved, he may submit the question for the decision
of the High Court.

 An Appeal can be preferred against the order of the Commissioner only in the
High Court and that too if a substantial question of law in involved.

Contracting Out

Any contract or agreement, by which a workman relinquishes or gives up any of his

rights under this Act, shall be null and void to the extent it removes or reduces the
liability of employer to pay Workmen's Compensation.

Self-assessment questions

1. Explain the term “Accident arising out of and in the course of employment”.

2. When is an employer liable to pay compensation under the Workmen's

Compensation Act? When is he not so liable?
 23

3. What are the methods of computation of Workmen's Compensation? Explain.

4. Write short notes on:

a. Doctrine of notional extension
b. Calculating of monthly wages
c. Permanent total disablement

5. Explain the following under the Workmen's Compensation Act:

a. Occupational disease
b. Dependent
c. Commissioner