UNIT 6 EMPLOYEE’S COMPENSATION ACT, 1923

Employee’s Compensation Act, 1923 is very old enactment for providing social security to
workmen. The Act was known as Workmen’s Compensation Act, but was named as Employee’s
Compensation Act w.e.f. 18-1-2010 as now employees in clerical capacity are also eligible for
compensation.
A beginning of social security in India was the passing of the Workman’s Compensation Act 1923.
In 1921, the government formulated some proposals for the grant for compensation and circulated
them for opinion. The proposals received general support. As a result, the workman’s
Compensation Act was passed in March 1923 and was put into force on July 1, 1924 as THE
WORKMEN’S COMPENSATION ACT, 1923. It contains 36 sections and 4 schedules.
The Workmen Compensation Act, 1923 is an enactment that was issued by the Central
Government and was implemented by various State Governments which gives social security to
workers. This security is offered by the law for people who work.

The Act was formed after it was noted that laborers were getting more exposed to danger with the
use of advanced and sophisticated machinery. The common law had it that the employer would
only take up the compensation responsibility if it is found that the industrial accident was a result
of his negligence.

Features of the Act:

1. Informing employees of their rights to Compensation:
The amendment inserted a new section, Section 17 A whereby the employers are now under an
obligation to inform the employee, at the time of employment, of his/ her rights to compensation
under this Act, in writing as well as through electronic means. The employer should inform the
same either in English or Hindi or in the official language of the area of employment, as may be
understood by the employee.
According to the amended Section 18 A, penalties have been prescribed even for failure to inform
the employee of his rights to compensation as required under section 17A.
2. Imposition of Fine:
Also, according to Section 18 A the amount of maximum fine which can be imposed has been
increased from INR 5,000 to INR 50,000.
3. Threshold limits for appeals against order of the Commissioner:
According to Section 30 of the Act, an appeal can be preferred to the High Court from the orders
of the Commissioner related to:
a. an order awarding as compensation a lump sum whether by way of redemption of a half-monthly
payment or otherwise or disallowing a claim in full or in part for a lump sum; or
b. an order awarding interest or penalty, an order refusing to allow redemption of a half-monthly
payment; or
c. an order providing for the distribution of compensation among the dependants of a deceased 153
[employee], or
d. disallowing any claim of a person alleging himself to be such dependant; or
e. an order allowing or disallowing any claim for the amount of an indemnity; or
f. an order refusing to register a memorandum of agreement or registering the same or providing
for the registration of the same subject to conditions.
However, the threshold limit for appeals against an order refusing to allow redemption of a half-
monthly payment was INR 300 and has now been increased to INR 10,000 or such higher amount
as the Central Government may specify.
4. Commissioner not to withhold payment during the pendency of an appeal by employer:
Further, according to Section 30 A of the Act, during the pendency of an appeal made by the
employer under Section 30, the Commissioner may upon his own discretion or if directed by the
High Court, withhold payment of any sum in deposit with him. However, this power is no more
available to the Commissioner as the Section has been omitted from the amendment of 2017.
The content of this article is intended to provide a general guide to the subject matter. Specialist
advice should be sought about your specific circumstances.

Objective of the Act:

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.

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.
Definitions:
a) Workman
b) “Employer” includes anybody of persons whether incorporated or not and any managing agent
of an employer and the legal representative of a deceased employer, and, when the services of a
workman are temporarily lent or let on hire to another person by the person with whom the
workman has entered into a contract of service or apprenticeship, means such other person while
the workman is working for him.

c) Disablement means loss of capacity to work or to move. Disablement of workman may result
in loss or reduction of his earning capacity. Disablement may be partial and total disablement.