WORKMEN’S COMPENSATION ACT 1923

The Workmen’s Compensation Act 1923 was introduced in India in 1923 as first social security of workmen and to protect the interests of the workmen. This Act is based on the theory that:

“The cost of Product should bear the blood of the workmen.”

SCOPE AND APPLICATION OF WORKMEN’S COMPENSATION ACT 1923 ACT

The Workmen Compensation Act 1923 came into force on first day of July 1924. This Act extends to the whole of India including the state of Jammu and Kashmir.

It covers the workmen employed in factories, mines, plantations, transport, construction works, railways, ships, circuses and other hazardous occupations and employments.

OBJECTS OF WORKMEN’S COMPENSATION ACT 1923

The following are the objects of the Workmen’s Compensation Act 1923:

  • To lower down the number of accidents
  • To mitigate the effects of the accidents by providing the suitable medical treatment.
  • To provide the quicker and cheaper mechanism of grievance handling related to the compensation issues.
  • To make the industry more attractive and comfortable to workmen for working.

CIRCUMSTANCES IN WHICH EMPLOYER LIABLE TO PAY COMPENSATION

Section of the Workmen’s Compensation Act 1923 provides the employer’s liability to pay compensation to an employee. An employer is liable to pay compensation to an employee:

  • For personal injury caused to him by accident.
  • For any occupational disease contracted by him.

Conditions to be satisfied:

According to Section 3 (1) of the Act, the conditions must exist before an employer can be held liable to pay compensation to an employees:

  • Some personal injury must have been caused to the employee.
  • Such an injury must have been caused by an accident.
  • The accident must have arisen out of and in the course of employment.
  • The injury must have resulted either in the death of the employee or in his total or partial disablement.

1.PERSONAL INJURY

It refers to harm or damage caused to the health of a workman by an accident, disease or otherwise. A personal injury does not include only physical or bodily injury, but also includes the psychological injury. It is not necessary that injury must be external in nature. Any harm or damage inside the body is also an injury.

If a workman is doing a job which requires a lot of effort or energy and receives injury to his heart by such working, he is entitled to compensation as it is a personal injury.

CASE: INDIAN NEWS CHRONICLE LTD. MRS. LAZARUS

A workman, in the course of his duties, had frequently to go into a heating room and from there into a cooling room. One night he went into the cooling room, he got pneumonia because of which he died. Held, the death was due to personal injury.

2.ACCIDENT

Accident means unintended or unforeseen happening which causes hurt or loss.

In other words, an event is deemed to be an accident, if it is unexpected or undersigned, although it may be due to negligence on the part of the concerned workman.

Accident includes the mishappenings like:

  • Collissions
  • Fall from roof
  • Internal accidents like heart failure
  • Sunstroke etc.

EXAMPLE: If in the course of performing his duties, the eyes of a workman are expressed to the glare of the furnace, and on every occasion they are stuck by ultra-violet rays and absorb the same. This leads to impairment of his vision in small degrees and ultimately leads to his blindness. Held that the series of small accidents together constitute an accident causing injury to the person or a workman.

There are mainly three cases:

Accident arising out of and in the course of employment: A workmen is given compensation for personal injury only if it arises out of and in the course of employment. The term ‘arising out of and in the course of the employment’ has not been defined by the Workmen Compensation Act, 1923. The accidents held to be out of and in course of employment are:

  • Transit facility provided by the employer for going to and the place of the work.
  • The time during which the workman is upon the employer, even though he may not be actually working at that time.
  • The period of rest during the period of employment.
  • If workman reaches the place of the employment before time to equip himself for the work.

Accident arising out of employment: ‘Arising out of employment’ means the work which the employee is employed to do. This expression means that the personal injury must have resulted from the nature of his employment i.e. from the duties he has to discharge.

  • In order to prove than an accident ‘arise out of employment’ following conditions must be satisfied:
  • The accident must have resulted from some risk incidental to the duties of the service.
  • At the time of accident, the worker must have been engaged in the business of the employer and must not be doing something for his own benefit.

In the course of Employment:  The expression ‘In the course of employment’ refers to the time period during which the employment continues. It is the time which a workman spends in carrying out his duties according to the terms of his contract of service. It also includes the duties attached to the employment.

In other words, it includes not only the period when he is doing the work actually allotted to him but also the time when he is at a place.

3.OCCUPATIONAL DISEASE

Any disease which is inherent to the nature of employment and the workers employed there earn the risk of contracting such disease is known as occupational disease.

EXAMPLE

  1. A person engaged in an employment involving exposure to dust containing silica is liable to contract silicosis.
  2. Telegraph operators are liable to contract a disease named Telegraphist’s Cramp.

An employer is liable to pay compensation to a workman when he contracts a disease as included in Part A, B and C of Schedule III as under:

PART A: An employer is liable to pay compensation to a workman when he contracts disease. It contains the occupational diseases like:

  • Parasitic diseases
  • Diseases caused by work in compressed air.
  • Diseases caused by lead or its toxic compounds.
  • Poisoning by nitrous fumes.
  • Poisoning by organ phosphorous compounds.

PART B: An employer is liable to pay compensation for any disease included in this part of the schedule provided a workman is in continuous service for a period of 6 months. It includes the diseases such as:

  • Diseases caused by phosphorous or its toxic compounds.
  • Disease caused by mercury or its toxic compounds.
  • Disease caused by benzene or its toxic compounds.
  • Diseases caused by radioactive substances.
  • Disease caused by chromium and its toxic compounds.
  • Disease caused by arsenic or its toxic compounds.

PART C: A workmen is entitled to compensation if he has been in service of one or more employers for such continuous period as the Central Government may specify. It includes the diseases such as:

  • Allergy caused by inhalation of organic dusts.
  • Acute pulmonary oedema of high altitude.
  • Bronchopulmonary disease caused by hard metals.

CIRCUMSTANCES IN WHICH EMPLOYER IS NOT LIABLE:

An employer is not liable to pay compensation to a workman for personal injury caused to him by an accident arising out of and in the course of employment in the following circumstances:

  1. If the injury does not result in the total or partial disablement of a workmen for a period exceeding 3 days.
  2. If the injury mot resulting in such death caused by an accident which is directly attributable to:
    • The workman was under the influence of drink or drugs at the time of accident.
    • The workman willfully disobeyed the orders.
    • The workman willfully removed the safety guards or other devices.

CALCULATION OF AMOUNT OF COMPENSATION PAYABLE TO WORKMAN UNDER WORKMEN’S COMPENSATION ACT 1923

According to Section 4 of the Workmen Compensation Act 1923; the amount of compensation depends upon the:

  • The nature of injury caused by an accident.
  • The monthly wages of the workman concerned.
  • The relevant factor for working out lumpsum equivalent of compensation amount as specified in Schedule IV  

CASES IN WHICH COMPENSATION IS GIVEN

The following are the cases in which compensation is given:

METHODS FOR CALCULATING COMPENSATION

The following are the methods for calculating the compensation:

1.COMPENSATION FOR DEATHS: UNDER SECTION 4(1)(a):

Where the death results from an injury, the amount of compensation shall be equal to 50% of the monthly wages of the deceased workman multiplied by the relevant factor or Rs. 50,000 whichever is more.  

If the monthly wages of a workman exceeds Rs. 2,000, his wages shall be deemed to be Rs. 2,000 only.

EXAMPLE: A workman drawing a monthly wage of Rs. 1,000 met with an accident while working on a machine and dies on November 15, 1996. He was born on 14 September 1975. The amount of compensation shall be determined as under:

Number of completed years of age on November 15, 1996= 21 years

Relevant factor for age 21= 222.71

Amount of Compensation= 50*Monthly wages* Relevant Factor/ 100

= 50*1,000*222.71/100

=1,11,355.

Since the 1,11,355 is more  than Rs. 50,000 so the dependant of the deceased workman shall get Rs. 1,11,355.

2.COMPENSATION FOR PERMANENT TOTAL DISABLEMENT: UNDER SECTION 4(1)(b):

Where the permanent total disablement results from an injury the amount of compensation payable shall be equal to 60% of the monthly wages of the injured workman multiplied by the relevant factor or Rs. 60,000 whichever is more.

EXAMPLE: A workman drawing a monthly wage of Rs. 1,000 met with an accident while working on a machine and dies on November 15, 1996. He was born on 14 September 1975. The amount of compensation shall be determined as under:

Number of completed years of age on November 15, 1996= 21 years

Relevant factor for age 21= 222.71

Amount of Compensation= 60*Monthly wages* Relevant Factor/ 100

= 60*1,000*222.71/100

=1,33,626.

Since 1,33,626 is  more than Rs. 60,000, so the injured workmen is entitled to Rs. 1,33,626.

3.COMPENSATION FOR PERMANENT PARTIAL DISABLEMENT: UNDER SECTION 4(1)(c):

The injuries deemed to result in permanent partial disablement have been entitled in part II of the Schedule I of the Act along with the percentage of loss of earning capacity as a result of each injury.

According to Section 4(1)(c) of the Act, where the injury results in permanent partial disablement, the amount of compensation shall be determined as follows:

When an injury is specified in Part II of Schedule I:

The amount of compensation for a scheduled injury will be equal to the proportionate loss of earning capacity permanently of the compensation in case of permanent total disablement.

EXAMPLE: The proportionate loss of earning capacity in 40%, the amount of compensation will be calculated as follows:

Amount of Compensation= 40% * Compensation payable in case of total disablement.

If a workman whose monthly wage is Rs. 1,000 loses one hand as a result of injury caused to him on 14th November, 1995. He had completed 25 years of age on 15th July, 1995. The amount of compensation will be calculated as:

According to Schedule I, the injury has caused 60% loss of earning capacity.

Amount of compensation= 60% * compensation payable in case of total disablement.

=60%* (60*monthly wages* relevant factor/100)

={60/100}*{(60*1,000*261.91)/100}

=94,287.6

When an injury is not specified in Part II of Schedule I:

In this case, the amount of compensation shall be equal to the proportion of the loss of earning capacity permanently of the compensation in case of permanent total disablement.

4.COMPENSATION FOR TEMPORARY DISABLEMENT: UNDER SECTION (4)(1)(d):

In case of temporary disablement, whether total or partial, results from injury, the amount of compensation shall be equivalent to 25% of the monthly wages which will be paid every half-monthly.

EXAMPLE: If a workman is earning Rs. 1,000 a month before the temporary disablement of 25% of Rs.1,000 i.e. Rs.250 every half month till disablement lasts. But if the workmen is earning Rs. 600 a month after the accident, his half monthly payment shall not exceed 255 of Rs. 400 (1000-600) i.e. Rs. 100.

QUESTIONS COVERED

1. What are the circumstances in which an employer is liable to pay compensation under the Workmen compensation Act, 1923? Also explain the circumstances under which the employer is not liable?

2. How is the amount of the compensation payable to an injured workmen calculated under the Workmen’s Compensation Act, 1923?

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