Workmen’s Compensation Act was passed in the year 1923 and came into force from 1924. The provisions of this Act were made keeping in mind the hazardous nature of the job of miners, factory workers, transporters, railway servants, etc. This Act was made to ensure the financial and social security of the employees who might get injured due to an accident caused during the course of their employment.
This article deals with the provisions and salient features of the Workmen’s Compensation Act, dealing with the security of the workers as mentioned in Schedule II to the Act. The amount of compensation to be paid by the employer varies in case of different types of diseases and disablement. However, this Act does not extend to all the working class of the country, it only extends to those having jobs of a hazardous nature. The Union Armed Forces and the employees protected under the Employee’s State Insurance Act, 1948 are not covered under this Act.
Every employee desires to have a safe and secure job and expects to get compensation in case any mishap happens during his/her employment. Providing such benefits to the employees and their families would not only give them a sense of security but also increase their motivation towards work. After all, a firm’s goodwill and success depend largely upon the welfare of its employees. Therefore, the protection of its employees has to be a top priority for any firm.
Workmen’s Compensation Act, 1923 was issued by the Central Government and was implemented by various State Governments to ensure social security for workers. It was enacted for the security of the workers whose nature of occupation is hazardous and has a risk to life or grievous injury during the course of employment such as factories, mines, plantations, construction work, railways, cruises, ships, transport establishments and other hazardous occupations and employments specified in Schedule II to the Act. This Act does not extend to the members of the Union’s Armed Forces and all those employees who are protected under the Employees State Insurance Act, 1948. This Act is also applicable to the cooks employed in hotels and restaurants.
The Act was established after it was noticed that with the advancement of technology and usage of more sophisticated and complex machinery, labourers were becoming more prone to danger at the workplace. The common law, however, had the provision that if any industrial accident happens due to the negligence of the employer only then would he be liable to pay the compensation. In India, the problem of workmen’s compensation after fatal and major injuries hit the track in the year 1884. The factory and mining inspectors found in 1885 that the Fatal Accidents Act, 1885, was not adequate to look after the intended purposes.
The foundation of the Workmen’s Compensation Act, which was passed in March 1923 and came into effect on 1st July 1924, emphasises on the fact that the Central and State Government cannot be silent spectators to the misery of the working class employed in factories or enterprises that are susceptible to the various risks to their limbs and lives.
Aims and Objectives of the Act
- The primary aim of this Act is to provide comprehensive coverage to workers for work-related injuries and disabilities. The Act focuses on providing workmen with a sustainable life after suffering any injury at the workplace during the course of employment.
- The second goal is to provide effective protection against loss of income. The cash incentives are meant to recover a large proportion of the lost wages of the disabled workers so that the previous quality of life can be maintained.
- Third objective is to provide the injured staff with sufficient medical treatment and recovery facilities. It requires employers to cover hospital, surgical, and other medical expenses incurred by injured workers and provide rehabilitation facilities to employees with disabilities to help them be returned to productive employment.
- Another aim is to promote employers to reduce work-related mishaps and develop effective safety measures. Organisations with superior accident rates pay comparatively lower workmen’s compensation premiums as experience ranking is used to motivate the employers to minimize work-related accidents and illnesses.
- Workmen’s compensation laws are, above all, designed to reduce litigation. Disabled employees are automatically paid compensation, without having to sue their employers. The goal is to reduce the number of lawsuits pending in court, which will help to minimize or eliminate legal fees charged to lawyers.
Scope of the Act
The Act applies only to those industrially employed workers as specified in Schedule II of the Workmen’s Compensation Act. The Act provides the workers with protection from losses or injury caused by accidents resulting from and during the course of employment subject to certain exceptions as set out in the Act.
Employee’s liability for compensation
In order to get compensation from the employer under the Workmen’s Compensation Act, 1923 the following conditions should be fulfilled:
- The worker’s death or injury must result from an ‘accident arising out of and in the course of his employment’. However, the employee cannot hold the employer liable if the injury does not result in the total or partial disablement of the employee for a period exceeding 3 days; if the injury which does not result in death or permanent total disablement is caused due to accident directly attributable to the worker being under the influence of drink or drugs, or willful disobedience to an order expressly given, or a rule expressly framed, to ensure the safety of all the workers, or wilful removal or disregard of any safety guard with the knowledge of it being provided to secure the safety of the employees.[i]
- The employee employed in any employment as specified in Part A, Part B or Part C of Schedule III to the Act contracts any disease specified therein as an occupational disease peculiar to that employment, the contracting of the disease shall be deemed to be an injury by accident unless the proved otherwise, the accident shall be deemed to have arisen out of and in the course of the employment. [ii]
- The disease caused to the employee must be directly attributable to a specific injury by accident arising out of and in the course of his employment, otherwise, no compensation shall be payable by the employer.[iii]
- The employee would not be entitled to confer any right to compensation in respect of any injury for anything contained under the Act if he filed a suit in a Civil Court for damages against the employer or any other person. [iv]
Applicability of the Act
The applicability of the Act extends throughout India.[v] The words ‘except the State of Jammu and Kashmir’ were omitted by Act 51 of 1970. The Act does not apply to those areas which are being covered under the Employees State Insurance Act, 1948.
Salient Features of the Act
I. Extent and Application:
The Workmen’s Compensation Act, 1923 is applicable to the whole of India. It also extends to the workers recruited by organisations/enterprises registered in India and sent abroad for work. It applies to:
- All railway employees not permanently employed in any railway administrative, district, or sub-divisional office and who are not employed in any capacity as stated in Schedule II to the Act;
- Persons employed in any capacity as stated in Schedule II to the Act. Schedule II covers people working in factories, mines, plantations, and mechanically propelled vehicles, building works, and several other hazardous occupations. A total of 48 jobs are listed in the Schedule; and
- Persons working in jobs assigned by the State Government to Schedule U in the exercise of the powers bestowed upon them under Section 2(3) of the Act. A Statement indicating the additions made so far by various state governments is included in this relation (Annex-I).
Under the Act, there is no wage cap for coverage. Consequently, all employees employed in Scheduled employment, including the railway servants mentioned at point a) above, are covered by the Act.
II. Contingencies in which Compensation is Payable:
Compensation is payable in case of temporary or permanent disability or death resulting from any injury caused during the course of the employment. The contracting of any disease as specified in Schedule III to the Act is considered to be an injury caused by accident.
III. Occupational Diseases:
If an employee who is employed under the employment specified in Schedule III to the Act contracts some occupational disease peculiar to that employment, he is entitled to get the compensation under the Act.
The occupational diseases should be contracted in the specified employment while serving an employer. Schedule III divides the occupational diseases into three specified groups, Part-A, Part-B, Part-C in particular.
There is no qualifying period of employment for the diseases mentioned in Part-A. In the case of diseases specified in Part-B, a person should have been employed for a continuous period of no less than six months before contracting the disease in the specified employment.
The qualifying period is specified by the Central Government for the diseases listed in Part-C. The qualifying time for the diseases mentioned in the Part-C of the Schedule is as follows:
- Pneumoconiosis – 7 years
- Pagassosis – 3 years
- Byssinosis – 7 years
- Where the monthly wages of an employee exceed Rs. 2000, his monthly wages for the purpose of a) and b) above shall be considered to be a mere Rs. 2000.
- The minimum amount of compensation for permanent disability and death specified in the Act is Rs. 60,000 and Rs. 50,000 respectively. The estimated payout amount works out to Rs. 274,248.00 for permanent disability, and Rs. 228,540.00 for death.
The Act does not provide for Inspectors to be appointed. Under Section 32 of the Act, however, the State Governments/Union Territory Administrations shall frame rules to implement the purposes of the Act.
Originally the rulemaking power under the Act was vested in the Central Government, and the Workmen’s Compensation Laws, 1924, was formulated in the exercise of these powers. Subsequently, some state governments farmed their own laws under the Act.
In this relation, a declaration is attached showing the names of the States/UTs, which to date have framed the required rules under the Act (Annex-II). The remaining States/UTs are aware of how easily laws are laid down under the Act.
V. Settlement of Claims under the Act:
Compensation claims fall broadly into three groups, namely (i) uncontested cases of disablement; (ii) disputed cases of disablement, and (iii) fatal cases. The procedures for settling the three types of cases are as described below:
- Uncontested Cases:
- The employer is expected to pay for the medical examinations of the worker after he has given notice of the accident. The medical examination fee must be free of charge for the worker. These tests would show the nature of the disablement.
- If the disability is of a temporary nature, the employer shall pay compensation in the form of half monthly payments, directly to the workers.
- If the disability is of permanent nature the compensation amount, in such case, would be paid in a lump sum if he is a male over the age of 18 years. In the case of women and children, the employer must deposit, for disbursement, the amount of compensation with the Commissioner.
- Where an employee has agreed to accept and has taken a smaller sum than that decided by the Act, his right to bring a proceeding for the balance shall be protected.
- The agreement with the employee for lump sum payment, if any, must be registered with the Commissioner employer.
- Disputed Cases:
- In case the employer refuses to pay compensation or fails to pay the full sum owed, the employee in such a case has to write an application to the Commissioner for Workman’s Compensation appointed by the State Government/Union Territory.
The application must be in the Form ‘F* as prescribed in the Workman’s Compensation Rules. An illiterate person may have the application prepared under the guidance of the Commissioner.
- A compensation claim shall be preferred before the Commissioner within 2 years from the occurrence of the accident or within 2 years from the date of death in the case of death. The incident is considered to have happened, in the case of contracting a disease, on the first day on which the workman was continually absent as a result of the impairment caused by the disease.
- Fatal Cases:
- The employer has to deposit the amount of the compensation due to the Commissioner for Workmen’s Compensation. The Act explicitly provided that no payment rendered directly by the employer shall be considered a payment of compensation.
- The Commissioner shall distribute to the dependants the lump sum of the compensation in the proportion as he may desire.
- If the employer refuses to pay the compensation, the employee or dependent shall appeal to the Commissioner in the Form ‘G’ as prescribed by the Workmen’s Compensation Rules for the matter of an order to pay the compensation.
VI. Extension of the provisions of the Workmen’s Compensation Act to Hazardous Employment in Agriculture:
The Workmen’s Compensation Act of 1923 also refers to workers who are working by tractors or other contrivances powered by steam or other mechanical power or electricity etc. in agriculture. In March 1976, the State Governments of Andhra Pradesh, etc. were advised to consider, in compliance with the provisions of subsection (3) of Section 2 of the Act, the addition of the following employments to Schedule-II:
- Employed in the clearing of jungles or in the reclaiming of land or wetlands in which more than twenty-five persons were working on any one day of the proceeding;
- Employed in land cultivation or in the rearing and maintaining of live stocks or forest operations or fisheries in which more than twenty-five persons were working on any one day of the proceeding;
- Employed, otherwise than in cleric, I capacity, in installation, maintenance, repair of pumping equipment used to raise water from wells, rivers, ponds, lakes, streams and so on;
- Employed in the construction, boring or deepening of an open well / dug well, other than in clerical capacity, by means of mechanical techniques;
- Employed in the construction, operating, repair or maintenance of a bore well, bore-cum-dug well, fitter point, etc., other than in clerical capacity;
- Employed in agricultural operations/plantations for the spraying and dusting of insecticides or pesticides;
- Employed in repair work and maintenance of bulldozers, power tillers, tractors, and other such carriers.
The Workman Compensation Act, 1923 was established to provide insurance to employees who acquired/acquire injuries caused by accidents at the workplace. It ensures the protection of their rights and dignity as labourers. Employers are also obliged to pay compensation to workers who have suffered accidents that have resulted in disability or even death during jobs.
The Act is essentially designed for the workers to be able to get compensation from the employers when they incur damages for the injuries sustained during an incident. The fundamental law of Vicarious Liability applies in the Act. The employer is a master and the employee is a servant. The employee only seeks insurance when the accident happens in the course of employment and at work.
It is for providing the worker’s social security against any injury or disease that resulted from an accident at the workplace. It is administered by respective State Governments and Union Territory Administrations. These authorities are required to appoint Commissioners for Workmen’s Compensation for the smooth functioning of the Act and to provide everyone with a compensation for the losses suffered by them.