Workers Compensation Act, 1923

The Workers Compensation Act, 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. It provides for payment by certain classes of employers to their workmen compensation for injury by accident. The latest amendment to the Act was made in 1984.

Object and scope of the Act:

The passing of the Act in 1923 was the first step towards social security of workmen. The main objective of the Act is to provide for the payment of compensation by certain classes of employers to their workers for injury by accident.

The theory of Act is that “The cost of the product should bear the blood of the workmen”.

The Act came into force on the first day of July, 1924. The growing complexity of industry with increasing use of machinery and consequent dangers to workmen rendered it advisable that they and their families should be protected, as far as possible, from hardship arising from accidents. Keeping in view this fact an Act called the Workmen’s Compensation Act was passed which came into force on 1st July 1924.it applies to the whole of India except the state of Jammu & Kashmir. The Act provides for cheaper & quicker disposal of disputed relating to compensation through special tribunals than possible under the Civil Law. The Act looks upon compensation as relief to the workmen & not as damages payable by the employer for a wrongful act.

Position before the Act:

Prior to the passing of the Workmen’s Compensation Act, the position was very unsatisfactory. The employer was liable to pay compensation only when the injury was caused to the worker on account of his (employer’s)negligence, & here also, the employer could escape liability on any of the following grounds:

  • The doctrine of common employment.
  • The doctrine of assumed risks.
  • The doctrine of contributory negligence.

Who is Workman?

Workman means 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- i. a railway servant as defined in section 3 of the Indian Railways Act, 1890 not permanently employed in any administrative, district or sub-divisional office of a railway and not employed in any such capacity as is specified in Schedule II, or
ii. Employed in any such capacity as is specified in Schedule II,
Whether the contract of employment was made before or after the passing of this Act and whether such contract is expressed or implied, oral or in writing.
The provisions of the Act have been extended to cooks employed in hotels, restaurants using power, liquefied petroleum gas or any other mechanical device in the process of cooking.

Employees Entitled To Compensation:

Every employee (including those employed through a contractor but excluding casual employees), who is engaged for the purposes of employer’s business and who suffers an injury in any accident arising out of and in the course of his employment, shall be entitled for compensation under the Act.

Employer’s Liability For Compensation (Accidents):

The employer of any establishment covered under this Act, is required to compensate an employee:
a. Who has suffered an accident arising out of and in the course of his employment, resulting into (i) death, (ii) permanent total disablement, (iii) permanent partial disablement, or (iv) temporary disablement whether total or partial, or
b. Who has contracted an occupational disease.

However The Employer Shall Not Be Liable:

a. In respect of any injury which does not result in the total or partial disablement of the workmen for a period exceeding three days;
b. In respect of any injury not resulting in death, caused by an accident which is directly attributable to-
i. the workmen having been at the time thereof under the influence 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 workmen, or
iii. The willful removal or disregard by the workmen of any safeguard or other device which he knew to have been provided for the purpose of securing the safety of workmen.
The burden of proving intentional disobedience on the part of the employee shall lie upon the employer.
iv. When the employee has contacted a disease which is not directly attributable to a specific injury caused by the accident or to the occupation; or
v. When the employee has filed a suit for damages against the employer or any other person, in a Civil Court.

Contracting Out:

Any contract or agreement which makes the workman give up or reduce his right to compensation from the employer is null and void insofar as it aims at reducing or removing the liability of the employer to pay compensation under the Act.

What Is Disablement?

Disablement is the loss of the earning capacity resulting from injury caused to a workman by an accident.
· Disablement’s can be classified as (a) Total, and (b) Partial. It can further be classified into (i) Permanent, and (ii) Temporary, Disablement, whether permanent or temporary is said to be total when it incapacitates a worker for all work he was capable of doing at the time of the accident resulting in such disablement.
· Total disablement is considered to be permanent if a workman, as a result of an accident, suffers from the injury specified in Part I of Schedule I or suffers from such combination of injuries specified in Part II of Schedule I as would be the loss of earning capacity when totaled to one hundred per cent or more. Disablement is said to be permanent partial when it reduces for all times, the earning capacity of a workman in every employment, which he was capable of undertaking at the time of the accident. Every injury specified in Part II of Schedule I is deemed to result in permanent partial disablement.
Temporary disablement reduces the earning capacity of a workman in the employment in which he was engaged at the time of the accident.

Accident Arising Out Of And In The Course Of Employment:

An accident arising out of employment implies a casual connection between the injury and the accident and the work done in the course of employment. Employment should be the distinctive and the proximate cause of the injury. The three tests for determining whether an accident arose out of employment are:
1. 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;
2. That accident occurred at the place where he as performing his duties; and
3. Injury must have resulted from some risk incidental to the duties of the service, or inherent in the nature condition of employment.
The general principles that are evolved are:
· There must be a casual connection between the injury and the accident and the work done in the course of employment;
· The onus is upon the applicant to show that it was the work and the resulting strain which contributed to or aggravated the injury;
· It is not necessary that the workman must be actually working at the time of his death or that death must occur while he was working or had just ceased to work; and
Where the evidence is balanced, if the evidence shows a greater probability which satisfies a reasonable man that the work contributed to the causing of the personal injury it would be enough for the workman to succeed. But where the accident involved a risk common to all humanity and did not involve any peculiar or exceptional danger resulting from the nature of the employment or where the accident was the result of an added peril to which the workman by his own conduct exposed himself, which peril was not involved in the normal performance of the duties of his employment, then the employer will not be liable.

Compensation In Case Of Occupational Diseases:

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.
Occupational diseases have been categorized in Parts A, B and C of Schedule III. The employer is liable to pay compensation:
a. When a workman contracts any disease specified in Part B, while in service for a continuous period of 6 months under one employer. (Period of service under any other employer in the same kind of employment shall not be included),
b. When a workman contracts any disease specified in Part C, while he has been in continuous service for a specified period, whether under one or more employers. (Proportionate compensation is payable by all the employers, if the workman had been in service under more than one employer).
If an employee has after the cessation of that service contracted any disease specified in the said Part B or Part C, as an 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 the Act.

Calculation of Compensation:

The amount of compensation payable by the employer shall be calculated as follows:
(a) In case of death. – 50% of the monthly wages X Relevant Factor or Rs. 50,000, whichever is more and Rs.1000 for funeral expenses.
(b) In case of total permanent disablement Specified under Schedule I – 60% of the monthly wages X Relevant Factor or Rs. 60,000, whichever is more.
(c) In case of partial permanent disablement specified under Schedule I – Such percentage of the compensation payable in case (b) above as is the percentage of the loss in earning capacity (specified in Schedule I)
(d) In case of partial permanent disablement not specified under Schedule I .-Such percentage of the compensation payable in case (b) above, as is proportionate to the loss of earning Capacity (as assessed by a qualified medical practitioner).
(e) In case of temporary disablement (whether total or partial). – A half-monthly installment equal to 25% of the monthly wages, for the period of disablement or 5 years, whichever is shorter.

When compensation to be deposited with commissioner?

The amount of compensation is not payable to the workman directly. It is generally deposited along with the prescribed statement, with the Commissioner who will then pay it to the workman. Any payment made to the workman or his dependents, directly, in the following cases will not be deemed to be a payment of compensation:
i. in case of death of the employee;
ii. in case of lump sum compensation payable to a woman or a minor or a person of unsound mind or whose entitlement to the compensation is in dispute or a person under a legal disability.
Besides, compensation of Rs. 10 or more may be deposited with the Commissioner on behalf of the person entitled thereto.
The receipt of deposit with the Commissioner shall be a sufficient proof of discharge of the employer’s liability.

Amounts Permissible To Be Paid To The Workman/ Dependents Directly:

Following amounts may be paid directly to the workman or his dependents:
a. In case of death of the workman, any advance on account of compensation up to [an amount equal to three months’ wages of such workman] may be paid to any dependent.
b. In case of lump sum compensation payable to an adult male worker not suffering from any legal disability.
In case of half-monthly payments payable to any workman.

Registration of Agreements Of Compensation

1. Where the amount payable as compensation has been settled by agreement a memorandum thereof shall be sent by the employer to the Commissioner, who shall, on being satisfied about its genuineness, record the memorandum in a registered manner.
2. However where it appears to the Commissioner that the agreement ought not to be registered by reason of the inadequacy of the sum or amount, or by reason that the agreement has been obtained by fraud or undue influence or other improper means he may refuse to record the agreement and may make such order including an order as to any sum already paid under the agreement as he thinks just in the circumstances.
3. An agreement for payment of compensation which has been registered shall be enforceable under this act notwithstanding anything contained in the Indian Contract Act, or any other law for the time being in force.

Effect of Failure to Register Agreement:

When a memorandum of any agreement is not sent to the Commissioner for registration, the employer shall be liable to pay the full amount of compensation, which he is liable to pay under the provisions of this Act.

Filing of Claims:

A claim for the compensation shall be made before the Commissioner.
No claim for compensation shall be entertained by the Commissioner unless the notice of accident has been given by the workman in the prescribed manner, except in the following circumstances:
a. in case of death of workman resulting from an accident which occurred on the premises of the employer, or at any place where the workman at the time of the accident was working died on such premises or such place or in the vicinity of such premises or place;
b. in case the employer has knowledge of the accident from any other source, at or about the time of its occurrence;
c. in case the failure to give notice or prefer the claim, was due to sufficient cause.

Limitation:

Workman, to the Commissioner, may file the claim for accident compensation in the prescribed form, within 2 years from the occurrence of the accident or from the date of death. The claim must be preceded by
(i) a notice of accident, and
(ii) the claimant-employee must present himself for medical examination if so required by the employer.

Duties of Employers / Employees:

· To pay compensation for an accident suffered by an employee, in accordance with the Act.
· To submit a statement to the Commissioner (within 30 days of receiving the notice) in the prescribed form, giving the circumstances attending the death of a workman as result of an accident and indicating whether he is liable to deposit any compensation for the same.
· To submit accident report to the Commissioner in the prescribed form within 7 days of the accident, which results in death of a workman or a serious bodily injury to a workman.
· To maintain a notice book in the prescribed from at a place where it is readily accessible to the workman.
· To submit an annual return of accidents specifying the number of injuries for which compensation has been paid during the year, the amount of such compensation and other prescribed particulars.

Duties of Employees:

· To send a notice of the accident in the prescribed form, to the Commissioner and the employer, within such time as soon as it is practicable for him. The notice is precondition for the admission of the claim for compensation.
· To present himself for medical examination, if required by the employer.

Appeal / Bar To Civil Remedy:

An appeal against and order of the Commissioner lies to the High Court, within 60 days of the order. The employer is required to deposit the compensation before filing the appeal.
No right to compensation in respect of any injury shall exist under this act if he has instituted in Civil Court a suit for damages in respect of the injury against the employer or any other person; and no suit for damages shall be maintainable by a workmen in any Court of law in respect of any injury –
a. if he has instituted a claim to compensation respect of the injury before a Commissioner; or
b. if an agreement has come to between the workman and his employer providing for the payment of compensation in respect of the injury in accordance with the provisions of his Act.

Source: Scribd.com

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