LABOUR LAWS II

ASSIGNMENT
ON
THE CONCEPT OF DISABLEMENT UNDER THE WORKMENS
COMPENSATION ACT AND THE COMPENSATION FOR
DIFFERENT KINDS OF DISABLEMENT

Submitted by,
Priyanka Prasad
B.B.A.LL.B. (HONS.)
Roll Number : 23
School of Legal Studies

CUSAT

CONTENTS
1. INTRODUCTION............................................................................................ 3
2. CONCEPT OF DISABLEMENT................................................................... 4

3. WHEN EMPLOYER IS NOT LIABLE TO PAY COMPENSTION.......... 5

4. AMOUNT OF COMPENSATION AND THE PRINCIPLES TO DECIDE

QUANTUM OF COMPENSATION UNDER THE ACT............................. 7
5. CONCLUSION................................................................................................... 14
6. BIBILIOGRAPHY............................................................................................. 15

INTRODUCTION
The Workmens Compensation Act was enacted by the Central Legislature in 1923. It
came into force on 1st July 1924. This Act extends to the whole of India except the State
of Jammu and Kashmir. The passing of the Act in 1923 was the first step towards Social
Security of workmen. The Workmens Compensation Act, 1923 is modelled on the
British pattern. The Act has been amended several times and the latest amendment was
made in the year 2009 by the Workmens Compensation (Amendment) Act, 2009. By
2009 amendment the short title of the Act has been changed to the Employees
Compensation Act, 1923.
The main object of the Act is to make provision for the payment of compensation by
certain classes of employers to their employees for injury by accident. The general
principle of the Act is that compensation should ordinarily be given to employees who
sustained personal injuries by accidents arising out of and in the course of their
employment. Under the Act, injuries by accident are deemed to include contracting of
certain diseases, known as occupational diseases in limited circumstances.
The Act overrides the old doctrines of common employment and assumed risk under
which the employer was not normally liable to pay damages to his employees for injury.
The employer can no longer take the defence that the injury is resulted from the default of
another employee or of the injured employee.
The Employees Compensation Act makes an employer liable to pay compensation at a
fixed rate to his employees who are incapacitated by accidents arising out of and in the
course of their employment. The liability to pay compensation is independent of any
neglect or wrongful act on the part of the employee, master or another employee. In other
words, it is not a liability which arises out of tort. It is a liability which springs out of the
relationship of master and servant. The Act prescribes liability for no fault of the
employer.

CONCEPT OF DISABLEMENT
Section 3 of the Act deals with the employers liability to pay compensation. It
enumerates the circumstances under which an employer is liable to pay compensation.
Under this section the employer is liable to pay compensation in the case of personal
injury and also in the case of contracting of certain diseases known as occupational
diseases.
Section 3(1) of the Act deals with compensation for personal injuries. Sub-sections 2,
2-A, 3 & 4 of section 3 deal with compensation for occupational diseases.
The injury must have resulted either in the death of the workman or to his total or partial
disablement for a period exceeding three days. Disablement may be temporary or
permanent. The test of disablement is the reduction in the earning capacity in relation to
the employment in which the workman was engaged at the time the accident took place
and it resulted in the disablement. In permanent partial disablement, the reduction in the
earning capacity must be in every employment which the workman was capable of
undertaking at the time of the accident. The injuries specified in Part 2 of Schedule 1
shall be deemed to result in permanent partial disablement.
The total disablement may be temporary or permanent. The test to determine is the
incapacity of the workman to perform the work which he was capable of doing at the
time of the accident.1 Part 1 of Schedule I, enumerates injuries that may be treated as
permanent total disablement. In this case, the percentage of loss of earning capacity is
100. In part 2 of schedule I injuries which are deemed to result in permanent partial
1 If a carpenter has to ampute his left hand by employment injury, he cannot work with one hand.
So his disablement is total and not partial. See The New India Assurance Company v. Shyama
Singh, 1992 Lab IC 2158 (Ori); Pratap Narain Singh Deo v. Shrinivas Sabata, AIR 1976 SC 222;
K. Velu v. Joseph, 1984 ACJ 630; Sri Gopal Singh, Regl. Director, E.S.I. v. Gopi, 1995 KLJ 370.

disablement are included. In this case the percentage of loss of earning capacity is below
100. If there are several injuries to a workman under Part 2 of Schedule I and the
aggregate of the loss of earning capacity of such injuries come to 100 or more, then it will
be treated as a case of permanent total disablement. Thus, a one armed man if he loses his
other arm in a subsequent accident, the employer will be held liable to pay the
compensation for permanent total disablement. The compensation for permanent total
disablement is much higher than that of the death compensation. The 1976 amendment in
this regard has provided 40 per cent more to permanent total disablement compared to
death.
The difficulties may arise in case of injuries not enumerated in the Schedule to calculate
the amount of compensation. In such cases, the concerned authority is to ascertain the
loss of earning capacity of the injured workmen and on that basis the amount can be
determined with reference to his wages.
WHEN EMPLOYER IS NOT LIABLE TO PAY COMPENSATION- DEFENCES
The employer will not be liable to pay the compensation under the situation mentioned in
the proviso to Section 3(1). These matters mentioned in the proviso operate as defences
available to the employer against the claim for compensation. The employer is not liable
to pay the compensation to the workmen in the following cases:
i.

If the injury did not result in toatal or partial disablement for a period exceeding

ii.

three days; and

In respect of any injury, not resulting in the death, caused by the accident is
directly attributable to;
a) The workman having been at the time of accident under the influence of
drink or drug;
b) The wilful disobedience on the part of the workman to an order expressly
given or to a rule expressly framed for the purpose of securing the safety
of the workman; or
c) The wilful removal or disregard by the workman of any safety guards or
other device which he knows to have been provided for the purpose of
securing the safety of the workman; or

In the above cases, no liability can be imposed upon the employer to pay the
compensation to a workman if he succeeds in establishing that the injury caused was
attributable to anyone of the above factors.
The above exceptions do not apply in the case of an accident resulting in death unless the
employer proves that the fatal accident was one not arising out of and in the course of
employment.

Wilful disobedience
In Aryamuni v. Union of India2, the workman sustained injury to his eye due to a spark.
The companys notice written in the English required the use of goggles for such work.
The goggles were not provided to the workman nor were asked so by the supervisor. The
workman injured did not know the English also. In these circumstances it was held that
the workman is not wilfully disobedient as he did know the English and so could not
know the contents of the notice nor was it explained to him.
Mere negligence of workman is no defence to the employer
A contributory negligence of the workman will not exonerate the employer of his liability
to pay the compensation. Mere negligence is not regarded as wilful disobedience. In
Padam Debi v. Reghunath3, the workman, a motor driver drove the vehicle at a high
speed and dashed with a tree which killed him. It was held that the employer cannot
escape the liability on the ground of rash and negligent driving of the workman. It may be
due to an excessive speed. But dashing against the tree cannot be with any previous
design. An accident means happening without design even though there will be
negligence on the part of the workman who suffers from it. Hence, it was proved to be a
case of accident in the course of employment and the question of negligence whether
great or small is immaterial.
2 (1963) I LLJ 24
3 AIR 1950 Ori 207

Alternative remedy
The workman has option either to claim the compensation under this Act or to claim
damages under the Law of Torts or to make a claim under the Employers Liability Act.
There is a bar for recovering compensation by a workman twice for the same injury under
Section 3(s) of the Act. The workman cannot have the benefits of both and put the
employer in double jeopardy. But the rejection of a claim under the Motor Vehicles Act or
any other laws does not debar the claimant to invoke the benefits by the Employees
Compensation Act4.

AMOUNT OF COMPENSATION AND THE PRINCIPLES TO DECIDE

QUANTUM OF COMPENSATION UNDER THE ACT
Section 4 of the Act deals with the amount of compensation that a workman would be
entitled to get under the Act. The amount of compensation depends upon the gravity of
the injury and the nature of disablement. For the purpose of determination of
compensation, the injuries have been divided into four categories, namely:
i.
ii.
iii.
iv.

Death;
Permanent and total disablement;
Permanent partial disablement; and
Temporary disablement whether total or partial.

1. Death Compensation
if the injury from the accident results in the death of the workman, the compensation is
payable by the employer to the dependants of the workman. In such cases the amount of
compensation is determined by making a reference to Schedule IV.5 In that Schedule, 20
different levels of monthly wages are given in the first column and the amount of
4 The New India Assurance Co. V. Ponnamma Kurien and Others, Lab IC 1995 (Ker) 588.
5 Radhamony and Others v. Secretary, Home Dept., ILR 1995 Ker 280.

compensation payable in respect of that wage level is given in the second column. The
minimum compensation payable to the dependant of a worker, in case of death is raised
to Rs. 50000/6 and the maximum is fixed at Rs. 2.74 Lac by the 1998 amendment. The
amount is payable in lump sum in such cases.
2. Permanent total disablement compensation
In case of injuries not resulting in death, the amount of compensation depends upon the
nature of the disablement7. When there is 100 per cent loss in the earning capacity of the
injured workman, it is a case of permanent total disablement. Schedule I, Part I of the Act
enumerates six injuries with 100 per cent loss of earning capacity. Apart from this if the
aggregate of the loss of earning capacity due to two or more injuries specified in Part II of
Schedule I, comes to 100 per cent or more, then also it becomes a case of permanent total
disablement. In such cases the amount of compensation payable will be proportionate to
the loss of the earning capacity of the workman concerned based on the wages group he
falls under Schedule IV of the Act. The minimum compensation is enhanced to Rs.
60000/ by the 1995 amendment.8
3. Permanent Partial disablement compensation
When the loss of earning capacity is below 100 per cent, it partakes the nature of
permanent partial disablement. Part II of Schedule I of the Act enumerates certain injuries
as cases of permanent partial disablement showing in their corresponding column the
percentage of loss of earning capacity. If the injury is one in question which is listed in
Part II of Schedule I, the loss of earning capacity can be easily seen from the
corresponding column. In such cases, depending upon the wage structure of the
concerned employee, he is entitled to a compensation proportionate to the loss of earning

6 The minimum death compensation is raised to Rs. 1.2 Lakhs by an amendment in 2009.
7 If it was medically found that the loss of earning capacity is less than originally claimed, then
the claimant should refund the balance amount. See Amarnath Singh v. Continental
Constructions, (2001) 10 SCC 760.
8 The 2009 amendment has raised it to 1.4 lakhs. This amendment has also raised the funeral aid
from Rs. 2500/- to Rs. 5000/-.

capacity payable in the case of permanent total disablement compensation as stated in

schedule IV of the Act.
Compensation on unscheduled injuries
In the case of injuries specified in the Schedule, there is no difficulty in calculating the
compensation. But regarding unscheduled injuries, compensation is determined on the
basis of the loss of earning capacity of the workman caused by the injury. In
Commissioner, Calcutta Port v. Prayag ram,9 the Calcutta High Court clarified the
principles to ascertain the amount of compensation with respect to unspecified injuries. In
this case, the injury was one not specified in the first Schedule of the Act. The
compensation commissioner on the basis of evidence of the doctor assessed the earning
capacity of the injured workman. The High Court struck down this, holding that the entire
proceedings were conducted in total disregard of the law. the Act is not concerned with
the physical injury as such nor with a mere effect of that injury on the physical system of
the workman, but it is concerned only with the effect of such injury on the earning
capacity of the affected workman.
Under Section 4 (1) (c) (2), if the injury is not specified in Schedule I, the amount of
compensation shall be such percentage of the compensation payable in the case of
permanent total disablement as is proportionate to the loss of earning capacity
permanently caused by the injury. The loss of earning capacity is a question of fact. In
this case, the most important issues, namely the reduction of earning capacity was not
considered. There was no evidence for the loss of earning capacity except that of the
doctor. The doctor might well estimate the loss of physical capacity to work, but the loss
of earning capacity must be estimated by some other person. The loss of earning capacity
is to be determined by taking into account the loss of physical capacity. The loss of
physical capacity has disabled the affected workman from performing the duties which a
workman of his class ordinarily performed from earning the remuneration paid for such
duties. It depends on other independent evidence which was not let in this case. The loss
of earning capacity is not necessarily co-extensive with the loss of physical capacity. In
this case, the loss of earning capacity was not separately dealt with and it was treated as a
necessary appendage of the injury or disability.
9 AIR 1976 Calcutta 7.

While a medical experts findings can establish the injuries suffered by the workman and
of his physical disability, but such finding cannot prove his loss of earning capacity. All
the same the medical evidence may provide the basic materials for assessing the loss of
earning capacity of the workman and such loss depends on its own facts. 10in the case of
permanent partial disablement due to the injuries not specified in the Schedule, the
amount of compensation is to be ascertained by taking into account the loss of the
workmans earning capacity and not loss of his physical capacity.11 A medical opinion is
not a decisive factor on the question of earning of the workman. 12 In Sharath Chatterjee
Co. V. Mohammed Khalid13, the Compensation commissioner held that the workman has
sustained loss of earning capacity to the extent of 6 per cent consequent to the injuries to
his legs and feet on account of the fall of rolls of carpet on him while on duty. The
employers contention that there was no permanent partial disablement and so no loss of
earning capacity and that it was purely a case of temporary disablement for which the
workman was duly paid was rejected by the Commissioner. Affirming this, the High
Court held that in case of such unspecified injury resulting in permanent partial
disablement; it is not normally possible for a workman to establish his loss of earning
capacity by his prospects or the offers to him in the open labour market, since he may be
in his old age or other employment. In such circumstances, the Commissioner is required
in the discharge of his judicial functions to assess the earning capacity of the workman in
the light of the medical report as also on the basis of his own estimate of the workmans
disability of employment in the open labour market and similar other relevant factors at
such percentage of the amount payable for permanent total disablement as may be
deemed fair and reasonable in the facts of such case. In the case in hand, since the
10 Manager, Achoor Estate v. Nabeera, ILR 1994 Ker 200; Port of Calcutta v. A. K. Ghosh,
(1972) 76 Cal WN 639; Bengal Mills Co. V. Shahed Miah, (1977) 81 Cal WN 681; Sharath
Chatterjee Co. V. Mohammed Khalid, 1979 Lab IC 401 (Cal); Bengal Coal Co. V. B. Gope, 1983
II LLJ 86 (Cal).
11 Devis and Co. V. Kesto Routh, AIR 1968 Cal 129; Calcutta Electric Supply Corporation v.
Habul Chandradas, AIR 1969 Cal. 278.
12 Agent, East India Railway v. Maurice Cecial Ryen, AIR 1937 Cal 526; Kalidas v. S. K.
Mondal, AIR 1957 Cal 660.
13 1979 Lab IC 401 (Cal).

Commissioner had attached the correct procedure and method, the Court justified his
assessment at six per cent of the loss of earning capacity for the unspecified injury.
Hence, the appeal was dismissed.
Continuance of the workman in service by grace of the employer is not decisive in
computing compensation.
The theme of the Employees Compensation Act is to provide security to the workman
who received physical incapacity resulting in the loss in the earning capacity. The
protection so afforded to the workman is independent of the acts of grace or mercy which
the employer might show to him. In a welfare state like ours, the protection afforded to
the disabled workman cannot be allowed to arise on the mercies and grace shown by the
employer. If the employer does so, it is commendable. A workman has still a stake for his
employment which is guaranteed to him under the Employees Compensation Act.
Therefore, the loss in the earning capacity has to be calculated in terms of the permanent
partial disability to which the workman has to be subject to. In computing the loss in the
earning capacity, the court may take into consideration the medical evidence or such
other evidence on the basis of which the court can come into a conclusion. 14 In Executive
Engineer, Udaipur v. Narayin Lal15, the jeep driver sustained serious injuries by an
accident in the course of his employment and so claimed the compensation under the Act.
The claim was resisted, inter alia, that the claimant has not suffered any loss due to the
accident and that he has resumed the duties after having obtained the medical certificate
of fitness for resuming the duty. Further, the claimant was given leave on full pay during
the period of his treatment and that after resuming the duty, he is doing the same job
which he used to do before the accident and that he is being paid his full salary and
therefore it was argued that the claimant was not incapacitated in his earning capacity.
These contentions were rejected by the Commissioner who gave an award for
compensation which was affirmed by the High Court on the reasoning that the protection
afforded to the workman cannot be allowed to arise on the mercies and grace shown by
the employer and that the loss in the earning capacity is to be calculated in terms of the
14 Executive Engineer, Udaipur V. Narayin Lal, 1977 Lab 1827 Raj.
15 Ibid.

permanent partial disability to which the insured workman has been subject to. 16 Where
the workman employed in the chaff cutting unit was injured while working at the chaff
cutting machine losing his hand which resulted in the diminution of his earning capacity
by sixty per cent, the Commissioner awarded the compensation as a case of permanent
partial disablement and it was held that the compensation awarded is in accordance with
law17.
Deductions
If the injured workman dies, then the compensation payable to his dependants is the lump
sum calculated under Schedule IV after deducting the amount already paid to the
workman before his death as compensation.
4. Compensation in the case of temporary disablement
For temporary disablement whether total or partial, the compensation is payable in the
form of recurring half monthly payments. The first such payment becomes due on the 16 th
day after the expiry of the waiting period of three days where such disablement lasts for a
period of less than 28 days. Thereafter payments are made in half monthly instalments
during the period the disablement lasts or during a period of five years whichever is
shorter. The payment of half- monthly payment payable to a workman is shown in
column 4 of the Schedule IV which varies according to the particular wage group to
which the workman concerned belongs. If the workman has received any amount by way
of compensation except the allowance towards medical treatment during the period of
disablement prior to the receipt of the first half-monthly payment, such amount shall be
deducted from half-monthly payment.
Payment of compensation
Section 4-A requires that the compensation under Section 4 shall be paid as soon as it
falls due. However, if the employer disputes his liability of payment of compensation,
16 For this the Court relied on the following decision in Ram Naresh v. Lodhana Colliery Co.,
1975 Lab IC 1656 Cal.
17 Ram Swaroop v. Ram Swaroop Harija, 1979 Lab IC NOC 95 (All); Bai Mani v. Exe.
Engineer, Baroda, (1986) I LLJ 426 (guj).

then he is bound to make a provisional payment to the extent of admitted liability. Such
payment shall be deposited with the Commissioner or made to the workman, as the case
may be, within one month from the date the amount fell due. Non- compliance with this
application may entail in the imposition of penalty upon the employer to the extent of
fifty per cent of the amount of compensation with six per cent interest. 18 The provisional
receipt of the admitted amount from the employer will not be operating as estoppels to
claim the full amount of compensation.
Method of calculating wages
The amount of compensation for permanent total or permanent partial disablement or
half-monthly payments for temporary disablement depends upon the wage group to
which the concerned worker belongs. Hence, the calculation of wages is quite relevant.
Under Section 5, the expression monthly wages denotes the amount of wages payable
for a months service and this may be based on wages payable for a month or other period
or even at piece rates. The monthly wages are calculated as follows:
i.

Where the workman who was in the service of the employer during a continuous
period of not less than 12 months immediately preceding the accident, his
monthly wages shall be 1/12th the total wages which have fallen due for payment

ii.

for him by the employer in such 12 months period.

If the workman was in continuous service of one employer for less than one
month, then his monthly wages will be the average monthly amount during the 12
months immediately preceding the accident earned by a workman employed on
the same work with the same employer. In case there was no such workman with
the same employer, then the monthly wages earned by a workman employed on
similar work in the same locality will be the monthly wages of the concerned

iii.

workman;
In other cases including those where it is not possible to calculate monthly wages
due to want of information, the monthly wages shall be 30 times the total wages
earned in respect of the last continuous period of service immediately preceding
the accident divided by the number of days comprising such period.

18 The liability to pay the interest arises under Section 4-A as soon as the injury is caused to the
workman. See M.M. Verma v. Mohan Lal, 1983 II LLJ 332.

Commissioners power to review amount of compensation

Section 6 empowers the Commissioner on the application of either the employer or the
workman review the amount of half-monthly payment. Such application for review must
be accompanied by a certificate of a qualified medical practitioner certifying that a
change in the condition of the workman has taken place and therefore the amount of halfmonthly payment has to be increased, decreased, terminated or continued, as the case
may be, depending upon the changed conditions. The Commissioner may order
accordingly including the conversion of half-monthly payment into lump sum payment
taking into consideration the circumstances in each case.
Commutation of half monthly wages
Under Section 7, the Commissioner by his order or by agreement on behalf of the parties
may commute half-monthly payment to lump sum.

CONCLUSION
It is the function of an ideal welfare State to give to every citizen the opportunity of
earning his living and freedom from fear of economic ruin which can involve physical
and even moral ruin. The Constitution of India affirms this opportunity to the people, in
the form of social and economic justice, which needs to be secured by peaceful, social
and legislative steps.
In order to provide socio-economic justice to the working people various legislative steps
have been taken in our country like other countries of the world. The enactment of the
Employees compensation Act, 1923 was the first step towards social security in India
which provides compensation to the employees, followed by the Employees state
Insurance Act, 1948 which provides insurance benefits to the workers.
The concept of disablement has been defined in both the Acts in order to get
compensation under WC Act and to get disablement benefit under ESI Act. The meaning
and content of the concept of disablement under both the Acts is one and the same. The
only thing that can be noticed is that under WC Act the disablement is classified as partial
and total whereas under the ESI Act the concept is classified as permanent and temporary.
In the case of Workmens Compensation Act the employee gets a lump sum amount of
compensation in case of disablement.

BIBILIOGRAPHY
1. Labour & Industrial Laws by Prof. K.M. Pillai.
2. http:// ncw.nic.in/acts/The WORKMENCOMPENSATIONACT1923. pdf