Objective, Scope and Coverage

The Workmen's Compensation Act, 1923,

aims to provide workmen and/or their
dependents some relief in case of
accidents arising out of and in the course
of employment and causing either death or
disablement of workmen.

The Act extends to the whole of India . The

Workmen's Compensation (Amendment)
Act, 2000. has brought all the workers
within its ambit irrespective of their nature
of employment except those covered by
Employment State Insurance Act 
• The State Governments administer the provisions of this Act
Administrative Authority

through the Commissioners appointed for specified areas.

• Any matter under this Act, to be done by or before a
Commissioner, shall be done by or before the Commissioner for
the area in which
– the accident resulting in the injury, took place or
– the workman, or his dependent, claiming the compensation
ordinarily resides, or
– the employer has his registered office. Where a Commissioner is
satisfied that any proceedings can be more conveniently disposed of
by any other Commissioner, he may transfer the matter to such other
Commissioner.
 Compensation- When Payable?
• An employee has suffered an accident arising out
and in the course of his employment and resulting
into:

(i) death,
(ii) permanent total disablement,
(iii) permanent partial disablement, or
(iv) temporary disablement
(v) contracted an occupational disease
 Conditions for receiving compensation

The three tests for determining whether an accident arose out of

employment are :

At the time of injury, workman must have been engaged in the
business of the employer and must not be doing something for his
personal benefit;

That accident occurred at the place where he was performing his

duties; and

Injury must have resulted from some risk incidental to the duties of
the service, or inherent in the nature or condition of employment.
 When in an employer not liable to pay
compensation?
If the injury did not result in total or partial disablement of a
workman for a period exceeding three days,

If the workman was at the time of the accident under the influence
of drink of drug, or

If the workman willfully disobeyed an order expressly given or a rule

expressly framed for the purpose of securing safety of workman, or

If the workman willfully removed or disregarded any safety guard or

other device which to his knowledge was provided for the purpose
of securing his safety.
 Amount of Compensation
• The amount of compensation payable to a
workman depends on:

• the nature of injury caused by accident,

• the monthly wages of the workman concerned,
and
• the relevant factor for working out lump sum
equivalent of compensation amount as specified
in Schedule IV.
 Compensation for death
• In case of death resulting from
injury, the amount of
compensation shall be:

• equal 50% of the monthly wages of

the deceased workman multiplied
by the relevant factor. Or

• an amount of Rs 80,000/-
whichever is more.
 Example
A workman is employed in a factory on a monthly wage of Rs 3000. While
working he met with an accident and dies on Oct 2010. His date of birth is
July 18 , 1980.

The amount of compensation payable to his dependent would be

50%* monthly wages* Relevant factor of age 30
0r
80,000 whichever is higher

50* 3000* 207.98 = 3,11,970

Since Rs 311970 is more than 80000 the compensation

payable to him shall be Rs 311,970
 Compensation for permanent total
disablement
The amount of compensation shall be 60%
of the monthly wages of the injured
workman multiplied by the relevant factor
or Rs 90,000/- thousand whichever is more.

For the above example the compensation

would be 60* 3000* 207.98 = 3,74,365.

Since Rs 3,74364 is more than 90,000 the

amount of compensation payable should be
Rs 3, 74364
 Compensation for permanent partial
disablement
• The amount of compensation payable shall be as follows:
• In case of an injury specified in part II of the schedule I, the
amount of compensation shall be such percentage of the
compensation which would have been payable is the
percentage of loss of earning capacity caused by that
injury.
• In case of an injury not specified in schedule I, such
percentage of the compensation is payable which is
proportionate to the loss of earning capacity (as assessed
by a qualified medical practitioner) permanently caused by
the injury.
 Example
• A worker whose monthly wages is RS 3000 loses
one eye . AS A RESULT OF Injury caused to him on
Nov 15, 1995. On Oct 1, 1995, he had completed
20 years of age.

• The amount of compensation payable to him

would be:

40% of 60* 3000* 224 = 1,61,280 100

 Compensation to be paid when due and
penalty for default
As per this section, compensation has to be paid as soon as
it is due
Incase the employer does not accept the liability of paying
compensation, he is bound to make the provisional payment
to the extent of the liability he accepts. Such an amount has
to be deposited with the commissioner or paid to the
workman. If he defaults, the commissioner may order:
the payment of the amount with interest at 12% per year
If the default is found to be unjustifiable, then commissioner
may order payment of a further sum not exceeding 50% of
the amount due, by way of penalty
Payment of compensation to contract labour
& for occupational disease
The principal employer is liable to pay compensation to
contract labour in the same manner as his departmental
labour. However he shall not be liable to pay any interest
and penalty leviable under the Act

Workers employed in certain types of occupations are

exposed to the risk of contracting certain diseases which
are peculiar and inherent to those occupations. A worker
contracting an occupational disease is deemed to have
suffered an accident out of and in the course of
employment and the employer is liable to pay
compensation for the same
 Liability of the employer
• It does not make a difference if death is
caused due to deceased workman’s
negligence or improper performance of work,
provided that accident arose out of and in
course of employment
 Contracting out
• Section 17 : Any agreement whereby worker
relinquishes any right for compensation from
the employer for any injury arising out of or in
the course of employment is declared null and
void
 Case Law
Mrs. K. Dias v. H.M. Coria & Sons
• Widow accepts lesser amount of
compensation relinquishing her entire claim
• This contract is hit by provisions of section 17
• She could file a claim for the whole amount
 Case laws
Parvatibai v. Rajkumar Mills
• Medical report says workman died due to
cardiac failure
• Not connected to with work. No evidence to
prove the connection
• Employer not held liable to pay compensation
 Case laws
Indian News Chronicles v. Mrs. Luis Lazarus
• Workman dies of pneumonia
• Workman had to frequently got to a heating
room from a cooling plant
• Injury arises out of and in the course of
employment. Hence employer held liable to
pay for compensation
 Schedules
I : List of injuries
II : List of persons included in the definition of
workman
III : List of occupational diseases
IV : List of compensation payable
 Min Wage Act Payment of Bonus Act

Act to enforce minimum rates Act to enforce bonus to

of wages in different scheduled employees earning less than
industries.  10000 p.m.