The Employees Compensation Act, 1923

The Act is to provide for the payment by certain classes of

employers to their Employees of compensation for injury by
accident.

Whereas it is expedient to provide for the payment by certain

classes of employers to their workmen of compensation for injury
by accident
Dependent
Any of the following relatives of deceased employee

(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 employee 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 employee at

the time of his death
A widower

A parent other than a widowed mother

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

A minor brother or an unmarried sister or a widowed sister if a

minor

A widowed daughter-in-law
A minor child of a pre-deceased son,

A minor child of a pre-deceased daughter where no parent of the

child is alive, or

A paternal grandparent if no parent of the employee is alive;

Employer

Includes anybody of persons whether incorporated or not and any

managing agent of an employer and the legal representative of a
deceased employer, and, when the services of a employee are
temporarily lent or let on hire to another person by the person with
whom the employee has entered into a contract of service or
apprenticeship, means such other person while the employee is
working for him
Partial Disablement

Disablement of a temporary nature, such disablement as reduces

the earning capacity of an employee 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
Total disablement

Disablement, whether of a temporary or permanent nature, as

incapacitates an employee for all work which he was capable of
performing at the time of the accident resulting in such disablement
Wages

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 of a
employee towards any pension or provident fund or a sum paid to a
employee to cover any special expenses entailed on him by the
nature of his employment
Personal Injury
Personal injury does not mean only physical or bodily injury but
includes a nervous shock or a mental injury.
In Indian News Chronicle v. Mrs. Lazarus, an employee died of
pneumonia as he had to frequently got to heating room from cooling
plant.

The court held that the injury caused by an accident in the instant
case is not physical injury and the injury was due to his working and
going from a heating room to a cooling point as it was his duty.

In case of personal injury caused to an employee by an accident

arising out of and in the course of the employment unless the right to
compensation is taken away under, the employer becomes liable to
pay compensation as soon as the aforesaid personal injury is caused
to the employee
 Amount of compensation

(a) Where death results an from the injury :

An amount equal to fifty per cent. of the monthly wages of the

deceased employee multiplied by the relevant factor; or an amount
notified by the Central Government from time to time, whichever is
more
(b) Where permanent total disablement results from the injury

An amount equal to sixty per cent. of the monthly wages of the

injured employee multiplied by the relevant factor; or an amount
notified by the Central Government from time to time, whichever is
more
(c) Where permanent partial disablement result from the injury:

In the case of partial disablement result from the injury, such

percentage of the compensation which would have been payable in
the case of permanent total disablement as is specified therein as
being the percentage of the loss of earning capacity caused by that
injury
The employee shall be reimbursed, the actual medical expenditure
incurred by him for treatment of injuries caused during the course of
employment, by his employer

On the ceasing of the disablement before the date on which any

half-monthly payment falls due, there shall be payable in respect of
that half-month a sum proportionate to the duration of the
disablement in that half-month
If the injury of the employee results in his death, the employer shall,
in addition to the compensation, deposit with the competent
authority a sum of not less than fifteen thousand rupees or such
amount as may be prescribed by the State Government, for the
payment of the same to the eldest surviving dependent of the
employee towards the expenditure of the funeral of such employee
or where the employee did not have a dependent or was not living
with his dependent at the time of his death, to the person who
actually incurred such expenditure.
Calculation of Compensation

Employees’ Compensation Act, 1923 (ECA) stipulates that an

employer is required to compensate an employee (other than one
covered under Employees’ State Insurance Act, 1948) if such
employee

1. Suffers personal injury due to an accident arising out of and in the

course of employment; or

2. Contracts any disease peculiar to the employment.

Injury resulting in

1) Death

Higher of — 50% of deceased employee’s “monthly wages”

multiplied by relevant factor;

OR INR 1,20,000 i.e. rate of compensation

2) Permanent total disablement

Higher of — 60% of such employee’s “monthly wages” multiplied by

relevant factor;

OR

INR 1,40,000 i.e. rate of compensation

3) Total or partial temporary disablement

Half-monthly payment of the sum equivalent to 25% of “monthly

wages”
Compensation when due

Compensation shall be paid as soon as it falls due.

In case where the employer does not accept the liability for
compensation to the extent claimed, he shall be bound to make
provisional payment based on the extend of liability which he
accepts, and, such payment shall be deposited with the competent
authority or made to the employee, as the case mat be, without
prejudice to the right of the employee to make any further claim
Where any one employer is in default in paying, the compensation
due within one month from the date, the competent authority shall

a) Direct that the employer shall, in addition to the amount of the

arrears, pay interest at such rate as mat be prescribed by the
Central Government on the amount due

b) If no justification for the delay, direct that the employer shall, in

addition to the amount of the arrears and interest thereon, pay a
further sum not exceeding fifty per cent of such amount of arrears
by way damages.
Distribution of Compensation

No payment of compensation in respect of an employee whose

injury has resulted in death,

and

No payment of a lump sum as compensation to a woman or a

person under a legal disability, shall be made otherwise than by
deposit with the Commissioner, and no such payment made
directly by an employer shall be deemed to be a payment of
compensation
In the case of a deceased employee, an employer may make to any
dependent advances on account of compensation of an amount
equal to three months' wages of such *employee and so much of
such amount as does not exceed the compensation payable to that
dependent shall be deducted by the Commissioner from such
compensation and repaid to the employer.
Any other sum amounting to not less than ten rupees which is
payable as compensation may be deposited with the Commissioner
on behalf of the person entitled thereto