The Employees’

Compensation Act, 1923

Unit IV
Labour Laws [Open Elective]
SS B. Com. III
 The Employees’ Compensation Act, 1923
Before passing this Act, worker who received injury in course of
employment had to seek court for the determination of compensation.
The Employees’ Compensation Act, 1923 was passed in 1923 and was
amended several times.
It came into force from 1st July 1923
The object of the Act is to provide social security (in form of compensation)
to an employee who dies or suffers disablement (partial or total or temporary
or permanent) due to an accident at workplace or occupational diseases from
the employer.
 Applicability
The Employees’ of the ActAct, 1923
Compensation
It extends to whole of India.
The Act is applicable to those factories, mines, transport
establishment, construction works etc. which are not covered
under The Employees’ State Insurance Corporation Act, 1948
(ESIC Act).
It means employees covered under ESIC Act, 1948 are not
entitled to get compensation under the Employees’
Compensation Act, 1923.
 Definitions
The Employees’ Under the Act
Compensation Act, 1923
Commissioner means a commissioner for Workmen’s
Compensation appointed under the Section 20.

 Compensation means compensation as provided for by

this act. It is determined by the commissioner on the basis
of a medical certificate issued by a qualified medical
practitioner.
 Definitions
The Employees’ Under the Act
Compensation Act, 1923
Dependent means any the following relatives of a deceased workman
namely
i. The first category includes a widow, a minor legitimate or adopted son
and unmarried legitimate or adopted daughter or a widow 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 (ill or not in good health) – Second Category of Dependent.
iii. If wholly or in part dependent on the earnings of the workman at the time
of his death – the third category of dependents (please see the reading
material for the same.)
 Definitions
The Employees’ Under the Act
Compensation Act, 1923

Disablement

Total Partial
Disablement Disablement

Temporary Permanent Temporary Permanent

Disablement Disablement Disablement Disablement
 Definitions
The Employees’ Under the Act
Compensation Act, 1923
Disablement reduces the earning capacity of workman. Injury caused to a
workman by an accident resulting in the loss of earning capacity is technically
called disablement.
Partial Disablement means where the disablement is of a temporary
nature, such disablement 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.
Where the disablement is of a permanent nature, such disablement reduces
his earning in every employment which he was capable of undertaking at that
time.
 Definitions
The Employees’ Under the Act
Compensation Act, 1923
Total Disablement means disablement, whether
permanent or temporary, is said to be total when it
incapacitates a workman for all work he was capable
of doing at the time of accident in such disablement.
 Definitions
The Employees’ Under the Act
Compensation Act, 1923
 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 practitioner or 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.
 Definitions
The Employees’ Under the Act
Compensation Act, 1923
 Wages includes any privilege or benefit which is capable of being estimate in
money, other than a travelling allowance or the value of any travelling 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 any special expenses incurred
on him by the nature off his employment.
Privilege or Benefit: The following privileges and benefits are included in the wages
i. Free Accommodation

ii. Maternity benefits payable to a workman delivering a child

iii. Dearness Allowance
iv. Overtime Pay
 Definitions
The Employees’ Under the Act
Compensation Act, 1923
v. Benefits in the form of food or clothing

vi. Value of any other concession, benefits or privileges capable of being estimated in money

vii. Gratuity payable to a workman on retirement

viii. Bonus earned on the date of accident.

Notes: The following are not wages:

a. Travelling Allowance

b. Contribution paid by the employer of a workman towards; any pension or any provident
fund

c. Sums paid to a workman to cover any special expenses incurred on him by nature of
employment and

d. Leave carried forward to the next year.

 Obligation
The Employees’ of EmployerAct, 1923
Compensation
 To pay compensation for the personal injury arising out of and in course of
employment

 Not to deduct from compensation, amount paid for the medical treatment of the
injured worker.

 To pay compensation as soon as it falls due

 To deposit compensation with commissioner in respect of a workman whose injury has

resulted into death

 To maintain a notice book that should be readily accessible at all reasonable time to the
injured workmen for recording the accidents

 To submit a statement giving the circumstances, attending that death of workman,

whether he is or is not to deposit
 Obligation
The Employees’ of EmployerAct, 1923
Compensation
 To send a report to the authority of any accident occurring his premise
which results in serious bodily injury within 7 days of occurrence.

 To pay compensation to a workman employed through contractor for the

construction of any work.

 To produce documents, materials and objects before commissioner as

required by the commissioner

 To send to the commissioner a memorandum or the agreements made

with a workman settling the amount of any lump sum payable as
compensation.
 RightsCompensation
The Employees’ of Employer Act, 1923
 To defend in certain cases a claim of compensation made by a workman

 To apply the commissioner to review half monthly payment to

workman on the ground of change in condition of workman

 To get workman, medically examined by a qualified medical

practitioners

 To appeal high court against the order of commissioner if he feels

aggrieved by any of the order
 Obligations
The Employees’ of EmployeeAct, 1923
Compensation
 Not to disobey any order expressly given or a rule expressly framed for the
safety of workmen and not to remove or disregard any safety guard or
devise.

 To give notice of the accident and occupational diseases in the prescribed

format and to prefer the claim within two years from date of death or
contracting occupational diseases.

 To submit himself for a medical examination in case of an accident when he

is so required by the employer and not to disregard the treatment and
instruction of medical practitioner.
 RightsCompensation
The Employees’ of Employee Act, 1923
 To receive compensation for disablement and death resulting from
personal injury caused by accident or occupational disease arising out of
and in the course of employment

 To apply the commissioner to review half monthly payment if his condition

deteriorates

 To apply to the commissioner for determining the claims for and the
amount of compensation

 To appeal to the high court against the order of commissioner if he feels

aggrieved by any of these orders
 Amount of
The Employees’ Compensation
Compensation Act, 1923
 Where death results from the injury in course of employment

An amount equal to 50 % of the monthly wages of the deceased workman multiplied

by the relevant factor

[50% of monthly wages (X) Relevant factor]

OR

An amount of Rs.1,20,000

Whichever is more

Note: for relevant factor refer schedule IV, section 4

 Amount of
The Employees’ Compensation
Compensation Act, 1923
 Where death results from the injury in course of employment

For example, a workman during a monthly wage of Rs.1500 meets with an accident on 12th
Oct, 2015 while working on a machine and dies on that date. His date of birth was 14th July,
1982. The amount of compensation payable to him is determined as under

Complete years of age on 14th July, 2015 = 33

Relevant factor for age 33 = 201.66 (refer schedule IV, section 4)

Amount of compensation = 50% of Rs.1500 X 201.66 = Rs.1,51,250 OR Rs.1,20,000 whichever

is more

= Rs.1,51,250.
 Amount of
The Employees’ Compensation
Compensation Act, 1923
 Where permanent total disablement results from the injury

An amount equal to 60 % of the monthly wages of the injured workman

multiplied by the relevant factor

OR

An amount of Rs.1,40,000.

Whichever is more.
 Amount of
The Employees’ Compensation
Compensation Act, 1923
 Where permanent total disablement results from the injury

A worker whose monthly wags is Rs.1500 and received permanent total disablement as result of
injury caused to him on 14th October, 2016. On the 1st August 2016, he had completed 30 years of
age. Calculate the amount of compensation payable to him.

Complete years of age on 1st August 2016 = 30 years

Relevant factor for age 30 = 207.93 (refer schedule IV, section 4)

Amount of compensation = 60% of Rs.1500 X 207.93 = Rs.1,87,137 OR Rs.1,40,000 whichever is

more

= Rs.1,87,137
 Amount of Compensation
Compensation in case of Permanent Partial Disablement

Percentage payable in case of Permanent Total

Disablement of [(Percentage of loss of earning capacity
X monthly wages )X relevant factor]

For percentage of loss of earning capacity: please refer

Schedule I of Part II
 Amount of Compensation
Compensation in case of Permanent Partial Disablement
For example, A worker whose monthly wage is Rs.1500 loses four fingers of one hand as a
result of an injury caused to him on 14th October, 2016. On 1st August, 2016, he had
completed 30 years of age. Calculate the amount of compensation.

Percentage payable in case of permanent total disablement = 60 %

Percentage of loss of earning capacity = 50% (please refer Schedule I of part II)

Relevant factor for age 30 years = 207.93

Amount of compensation= 60 % of [50% of 1500 X 207.93]

=Rs.93,568.50
 Amount of Compensation
Compensation in case of Permanent Partial Disablement
Note:

Where the monthly wages of a workman exceeds Rs.4,000 , his monthly wages for the
above purposes it shall be deemed to be Rs.4,000 only.

For relevant factor, please refer schedule IV, Section 4 of the Act and take the value given
against the completed years of age

For the percentage of loss of earning capacity, please refer Part II Schedule I of the Act
 Amount of Compensation
Compensation in case of temporary disablement whether total
or partial
 Compensation, in case of temporary disablement whether total or partial is payable in
form of recurring half monthly payment of sum equivalent to 25 % of monthly wages
of workman.

 The first such payment becomes due on the 16th day after the expiry of waiting period
of three days. Thereafter, the payments are to be made half-monthly during the period
of the disablement lasts or during a period of during five year, whichever is shorter.