Employees Compensation Act

Employees Compensation Act

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Employees Compensation Act

Employees Compensation Act, 1923 is one of the important social security legislation. The act aims to provide financial protection to employees and their dependents through compensation in case of any accidental injury occurs during employment which results in either death or disablement of the worker. In this article, we view the various aspects of the Employees Compensation Act in detail.

Applicability of the Act

The Employees Compensation Act applies to the following entities are listed below:

  • It applies to employees working in factories, mines, docks, construction establishments, plantations, oilfields and other establishments listed in Schedule II of the Employee’s Compensation Act.
  • It applies to persons recruited for working abroad and who is employed outside India as in Schedule II of the Act.
  • It applies to a person recruited as the driver, helper, mechanic, cleaner or any other in connection with a motor vehicle and to a captain or other member of the crew of an aircraft.
  • Also, the act does not apply to the members of armed forces of the Union & Workmen who are covered under ESI (Employee State Insurance) Act.

Employer’s Liabilities for Compensation

An employer is responsible for paying compensation to the employee under the following circumstances are:

  • Personal injury by accident- An employer is responsible for paying compensation to workman if personal injury is let to him by accident arising out during his employment.
  • Occupational diseases- workers employed in certain occupations are exposed to certain diseases which are inherent in that occupation.

An employer who is not liable for paying compensation to workers under the following conditions:

  • In case of any injury which does not result in the partial or total disablement of the workers for a period exceeding three days.
  • In case of any injury, not resulting in death or permanent total disablement, caused by an accident which is directly attributable to the following:
    • the workman present at the time thereof under the influence of drink or drugs.
    • the intentional disobedience of the workman to an order expressly given, or to a rule framed, to secure the safety of workers,
    • the willful removal or disregard by the workman of any safety guard or other devices which he knew to have been provided for securing the safety of workers.

Determination of Compensation

According to the provisions of this Act, the amount of compensation depends upon the nature of the injury, average monthly wages and age of the workers and the same are tabulated below:

CasesAmount of Compensation
In case of injury resulting in DeathAmount equal to 50% of the monthly salaries of the deceased employee multiplied by the appropriate factor or with the amount of 80,000 or more.
In case of injury resulting in permanent total disablementAmount equal to 60% of the monthly wages of the injured workmen multiplied by the relevant factor or an amount of 90,000 or more.
In case of an injury occurring in permanent partial disablement

In case of an injury mentioned in part-II of schedule I, such percentage of the compensation which will be payable in the case of permanent total disablement as is defined as being the percentage of the lack of earning capacity caused by that injury.

In case of an injury not mentioned in schedule I, such percentage of the compensation payable for permanent total disablement as is proportionate to the lack of earning capacity (as examined by the medical practitioner) permanently caused by the injury.

In case of injury resulting in temporary disablement.Half-monthly payment which is equal to 25% of the monthly salaries of the workmen, to be paid by the provisions of section 4(2).

Half-Monthly Payment

Half-Monthly payment will be reviewed by Commissioner on the application by the Employer or employee. A certificate of qualified medical practitioner needs to accompany the application that there has been changed in the condition of the employee. On review, Half-Monthly payment may be extended, decreased, continued or ended or converted into lump-sum under Employees Compensation Act, 1923.

Registration of Agreements

The amount payable as compensation can be settled in the manner of agreement, the employer should send a memorandum to the Commissioner. The commissioner will verify and record the memorandum in a registered manner if satisfied.

In case if the agreement has been obtained by fraud or undue influence or another improper manner in such cases, the commissioner will refuse to record the agreement.

Procedure to Claim the Compensation

The process for filing claims is explained here.

  • The applicant has to give notice of accident to the employer or by entering in the notice book within an appropriate period.
  • Every notice submitted should be with the name and address of the person injured and also by including the cause of the injury and the date on which the accident occurred.
  • Then submit the claim application to the commissioner within two years from the date of the accident.
  • In the event of an occupational disease, the accident is deemed to have occurred on the first day of illness.
  • In case of any defect if any in the notice or not giving notice or delayed application will not reject the claim for compensation.

Due and Penalty for Non-Payment

The employer becomes responsible for paying the compensation immediately when the personal injury occurs to the employee by accident during the work.

The amount of compensation paid will be calculated from the date of the accident happened.

If the amount is not paid within a month from the date of the accident, the Commissioner will ask the employer to pay simple interest at the rate of 12% per annum or as prevailing in any scheduled bank along with the compensation amount.

Moreover, if there is no justification for the delay, the Commissioner will demand an apology from the employer after giving a reasonable opportunity of being heard, direct the employer to pay a further sum not exceeding 50% of the compensation, through penalty. The amount of penalty and also interest should be paid to the workman or his dependent in the following cases:

The half-monthly instalments of compensation (payable in case of temporary disablement) should be paid within the time specified. The half-monthly instalments can be converted into a lump sum payment, by an agreement between the employer and the employee or by applying to the Commissioner.


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