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EMPLOYEES COMPENSATION ACT,

1923
AN OVERVIEW
(PROJECT REPORT)

SUBMITTED IN PARTIAL FULFILLMENT OF


THE REQUIREMENT AWARD OF THE
DEGREE OF MASTERS OF LAWS
IN
CORPORATE LAW AND GOVERNANCE

UNDER THE GUIDANCE OF


PROFESSOR DR. G. MALLIKARJUN

BY
PARUL PRASAD
1ST YEAR, LL.M.
ROLL NUMBER - 2012-28

DATE OF SUBMISSION
02.04.2013

AT

NALSAR UNIVERSITY OF LAW


HYDERABAD

PREFACE

I am extremely grateful to my professor, Dr. G. Mallikarjun for his support for the
project, from initial guidance in the early stages of conceptual inception, and through
ongoing advice and encouragement to this day. He has been instrumental in
conceptualization of this study.

I would also like to extend my heartfelt regards and gratitude to the Library Staff.

I am also grateful to my friends for their huge support and encouraging words, during this
project.

PARUL PRASAD
CONTENTS
1
A BRIEF OVERVIEW
The Workmens Compensation Act is the first piece of legislation towards social security.
It deals with compensation for employees who are injured in the course of duty. The
scheme of the Workmens Compensation Act is not to compensate the employee in lieu of
wages. The general principle is that a employee who suffers an injury in the course of his
employment, which results in a disablement, should be entitled to compensation and in
the case of a fatal injury his dependants should be compensated. Under the Workmens
Compensation Act it is the employer who is responsible to pay compensation (as opposed
to the employees State insurance. Establishments to which the Employees State
Insurance Act applies to the liability to pay compensation are on the ESI Corporation).

The Workmens Compensation Act, 1923 provides for payment of compensation to


employee and their dependants in case of injury and accident (including certain
occupational disease) arising out of and in the course of employment and resulting in
disablement or death. The amount of compensation to be paid depends on the nature of
the injury and the average monthly wages and age of employee. The minimum and
maximum rates of compensation payable for death (in such cases it is paid to the
dependents of employee) and for disability have been fixed and is subject to revision
from time to time.

The meaning of compensation in this Act is limited to compensation granted under the
Act for employment injuries sustained during the course of work. It is also limited to
specifically monetary compensation other than a salary, travel allowance, and any other
form of remuneration that could be paid under normal circumstances of employment.

To get an overall understanding of the Act it is useful to look at the Statement of Objects
and Reasons published with the Act when it was first passed in 1923. To quote: the
growing complexity of industry in this country with the increasing use of the machinery
and consequent danger to employee, along with the comparative poverty to employee
themselves renders it advisable that they should be protected, as far as possible from
hardship arising out of accidents.

An additional advantage of a legislation of this type is that by increasing the importance


for employers of adequate safety devises, it reduces the number of accidents to
employees in a manner that cannot be achieved by official inspection. Further, the
encouragement given to employers to provide adequate medical treatment for their
employees should mitigate the effects of such accidents as does occur. The benefits so
conferred added to the increased sense of security, which he will enjoy, should render
industrial life more attractive and thus increase the available supply of labour. At the

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same time a corresponding increase in the efficiency of the average employees may be
expected.

While these were the official objects and reason, Indian reality today, is that the
protection offered by the Act does not act as an incentive for employees, most of whom
are unaware of it and who simply join work to earn a livelihood.

At the time the framing of the bill two criteria were followed in determining whom the
Act would apply to:

1. Those industries which were more or less organized


2. Employee whose occupations were hazardous.

Nowadays the government (State of Central) may extend the application of this Act to
other establishments of an industry that may not be organised.

It is obligatory for the employers to pay compensation to their employees for injury
caused to a employee by accident, arising out of and in the course of employment,
resulting in death or in total/partial disablement under the Workmens Compensation Act.
Compensation is also payable for some occupational diseases contracted by employees
during the course of their employment.

In the year 2010 the Act had been amended to make it gender neutral and will now be
called the Employees Compensation Act, 1923.

LATEST AMENDMENT (EFFECTIVE FROM 18.01.2010)

Change of name of the Act. WORKMEN COMPENSATION ACT, 1923 now


changed as EMPLOYEES COMPENSATION ACT, 1923

The words workman or workmen in the Act have been substituted by the words
employee or employees wherever they occur.

The Explanation II to clauses (a) & (b) of Sec.4 was omitted and a new sub-
section (IB) has been added after Sub-section IA of sec. 4 whereby the
maximum wage limit has been revised to Rs. 8000/-p.m.

Clerks were not covered for compensation under the Act However post
amendment position Clerks are now covered for compensation. (Schedule II)

Enhancement in minimum compensation payable from Rs.80,000 to Rs.1,20,000


(in case of death) and from Rs.90,000 to Rs.1,40,000 (in case of permanent
disability) and funeral expenses from Rs.2,500 to Rs.5,000.