Workmen Compensation Act, 1923, also known as the Employees' Compensation Act mandates employers to fairly compensate workers who suffer injuries, disabilities, or death due to on-site accidents. This legislation provides a financial safety net for workers and their families while encouraging employers to maintain safer work environments.
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Key Provisions of the Workmen Compensation Act, 1923
The Workmen Compensation Act 1923 mandates insurance coverage for the following situations, subject to the terms and conditions specified by the employer's insurance provider:
Bodily injuries or other damages sustained in an accident while on duty
Temporary disablement
Permanent disablement (total or partial)
Financial support to the dependents in case of an employee's death.
All legal or other expenses incurred by an employee in the circumstances mentioned above
Compensation Amount Under the Workmen Compensation Act 1923
Section 4 of the Workmen Compensation Act 1923 notes the compensation amounts workers are entitled to receive as follows:
Death: The compensation payable to the dependents of the deceased worker is 50% of the monthly wages of the deceased employee multiplied by the relevant factor from Schedule IV of the Act or Rs. 1,20,000, whichever is higher.
Permanent Total Disablement: The compensation is 60% of the monthly wages multiplied by the relevant factor from Schedule IV of the Act or Rs. 1,40,000, whichever is higher.
Permanent Partial Disablement: The compensation amount depends on the extent of the disability, expressed as a percentage of the loss of earnings. It is calculated using the following formula: (Percentage of loss of earning capacity from Schedule I) × (60% of monthly wages) × (Relevant factor from Schedule IV)
Temporary Disablement (Total or Partial): The employee is entitled to a payment of 25% of the monthly wages every fortnight for the period of disablement.
*Note: Those covered under the Employees' State Insurance Scheme of India (ESIC) are not eligible for benefits from this Act. For a more detailed read on exceptions or further legal intricacies, you can refer to the official document available on the Ministry of Labour & Employment’s website.
Scope and Applicability of Workmen Compensation Act 1923
The Act applies to industries specified within its provisions.
It offers protection against injuries, occupational diseases or fatalities resulting from workplace accidents.
The legislation is enforced across India, with the exception of Jammu and Kashmir.
The Act does not apply to areas covered by the Employees' State Insurance Act, 1948.
Updates and Amendments: Employee Compensation Act 1923
Over the years, the WC Act 1923 has undergone several amendments to better reflect the changing socio-economic landscape. Some key updates include:
Wage Ceiling Adjustment (2020): The wage ceiling for calculating compensation was raised from Rs. 8,000 to Rs. 15,000, enhancing the financial protection available to workers.
Renaming of the Act (2010): The WC Act was officially renamed as the Employees' Compensation Act to better align with modern labour practices and terminologies.
History of Workmen Compensation Act
The Workmen Compensation Act was created after it was noticed that workers faced increased risks due to advanced machinery. Initially, the 1884 Compensation Act held employers responsible for compensating workers only for major or fatal road accidents. However, mining and factory inspectors found this law inadequate by 1885.
The government responded when a committee, including Legislative Assembly members, employer representatives, medical experts, workers, and insurance specialists, presented a report. This led to the Compensation Act of 1923. This new act provided relief to workers by simplifying the compensation process, which previously involved expensive court procedures. It ensured workers could seek compensation for injuries sustained during employment.
Power of the State Government Under the WC Act 1923
State Governments have the authority to frame rules to implement the Employees’ Compensation Act effectively. They can:
Decide how and when a worker must undergo medical examinations for compensation cases.
Set the procedures to be followed by Commissioners while handling compensation claims.
Regulate the transfer of cases and funds between Commissioners.
Prescribe how compensation agreements should be submitted and registered.
Control the fees and legal costs related to compensation proceedings.
Require employers to maintain accident records and submit mandatory statements.
Mandate employers to display key information about the Act at the workplace.
Prescribe the process for diagnosing and certifying occupational diseases.
Define the standards for assessing disability and incapacity of injured workers.
Decide how compensation money for dependents of deceased workers is invested and managed.
Appointment of Commissioners Under the Act
The State Government appoints Commissioners for Employees’ Compensation through an official notification.
Each Commissioner is assigned a specific area or region to handle compensation cases.
If more than one Commissioner is appointed in the same area, the State Government decides how work is distributed among them.
A Commissioner may take expert assistance (such as medical or technical experts) to help decide complex cases.
Every Commissioner is treated as a public servant under law and is bound by legal duties.
Role of the Commissioner Under the Workmen Compensation Act
The Commissioner serves as the primary legal authority for resolving compensation disputes under the Act. Let’s understand their role in ensuring fair investigation, decision-making, and timely settlement of claims:
If there is any dispute about who is liable to pay compensation, the matter is decided by the Commissioner.
If there is a disagreement about the amount of compensation, its duration, or the extent of disability, the Commissioner settles it.
If there is a dispute on whether the injured person qualifies as a ‘workman’, the Commissioner gives the final decision.
These matters are decided by the Commissioner only when both parties cannot reach a mutual agreement.
Civil courts do not have the authority (jurisdiction) to decide these compensation-related matters once they fall under the Commissioner’s scope.
When is the Employer Not Eligible to Pay Compensation?
According to the Workmen Compensation Act, an employer has a legal obligation to pay compensation to its employee when he/she encounters some personal injury due to an accident that arises during an employee's employment. However, certain conditions may exempt employers from liability, including:
Negligence: If the injury resulted from the employee's willful disobedience of safety rules or removal of safety devices.
Intoxication: Accidents caused under the influence of alcohol or drugs, unless they lead to permanent disability or death, are not covered.
Minor Injuries: Injuries that do not result in disability beyond three days are generally not compensable.
The Role of Insurance in Workmen Compensation
Employers often rely on insurance policies to manage the financial risks associated with potential compensation claims. A typical Workmen Compensation Insurance Policy covers the legal liability of the employer, including:
Medical Expenses: Costs of medical treatment for the injured employee.
Compensation Payments: Direct compensation to the injured employee or their dependents.
Legal Fees: Coverage for legal expenses incurred during compensation disputes.
Recent Trends: Emphasis on Workplace Safety
In recent years, there has been a growing emphasis on workplace safety as a preventive measure. Companies are increasingly investing in safety training, hazard assessments, and safety gear to reduce the incidence of workplace accidents. This proactive approach not only minimises the risk of accidents but also reduces the potential liability under the Workers Comp Act.
The Employees Compensation Act 1923, plays a critical role in safeguarding the rights of workers by ensuring they receive adequate compensation for injuries or fatalities sustained during employment. As businesses evolve and face new challenges, employers must remain vigilant in complying with the provisions of the Act to protect their workforce and manage risks. Companies looking to navigate the complexities of employee compensation or seeking tailored insurance solutions may connect with an expert at Policybazaar for Business to discuss comprehensive protection for their employees
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Many employers mistakenly believe that Workers' Compensation and...Read more
08 Apr 2024 by Policybazaar3616 Views
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