The Workmen's Compensation Act
The Workmen's Compensation Act
Introduction
The law of granting compensation to the workmen for fetal or serious injuries at the
workplace was first enacted in India in 1923 under the name Workmen’s Compensation
Act. It is based on the model of English law which was first passed in the year 1897 and
was thereafter amended in the year 1922. This Act was the first step towards social
security in India. It provides for payment of compensation by the employer to his
workman, if the workman sustains a personal injury during the course of his employment
and as a result, suffers from disability to work.
Under the common law, a workman could claim such compensation from his employer
by taking an action under tort, but he had to establish the negligence on the part of his
employer. Unless the workman sustaining employment-injury and consequently suffering
from physical disability could prove that his employer was responsible for the same due
to his negligence, it was not possible for the workman to succeed in his claim. Apart from
the difficulties faced by workmen in establishing the case against the employer, there
were counter-claims made by the employers in the nature of contributory negligence on
the part of workman. In other words, if there was any allegation by the employer about
any negligence on the part of workman leading to the employment-injury, it was very
difficult, almost impossible, for the workman to prove that the negligence of the
employer was the decisive one. As such, recovery of compensation from the employer
was a very remote possibility.
Additionally, many employers were not natural persons, in the sense that they were
registered corporate bodies with several owners and therefore, for this reason also an
action against employer under tort was very difficult.
With this background, the Act gave a great relief to the workmen, particularly those
employed in factories and mines. It provided for the compensation by the employer
regardless of any negligence on the part of the concerned workman. The Factories Act,
1881 required the employers of factories to take adequate measures for safety of the
workers. The Workmen's Compensation Act further increased the importance of these
safety measures by making the payment of compensation compulsory irrespective of
negligence of the concerned workman, except in certain cases.
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It should be noted that the workmen and their dependents, while claiming compensation
under the Act, however, have to give up their common law right to prosecute the
employer for compensation for any injury covered under the Act.
One more important point that should be noted is that this Act is based on the British
model of Workmen's Compensation Act. The law on Workmen's Compensation in
England does not provide for the compulsory insurance to be obtained by the employer in
respect of his liability to pay Workmen's Compensation to his workmen. Such insurance
is optional. The British law of Workmen's Compensation was based on the German law
and it borrowed many concepts and principles from the German law. The German law
provided for the compulsory insurance, but the British law did not incorporate this
principle. Since the Indian law is based on the British model, it also does not provide for
compulsory insurance. However, it is now felt desirable that provisions relating to
compulsory insurance for the employers, as found in the Payment of gratuity Act, be
introduced in this Act also.
The Employees’ State Insurance Act, 1948, which extends similar and perhaps more
comprehensive benefits to the employees, provides that insured person (i.e. employee) or
his dependents shall not be entitled to receive or recover, whether from the employer of
the insured person or from any other person, any compensation or damages under the
Workmen's Compensation Act, 1923 or any other law for the time being in force or
otherwise, in respect of an employment injury sustained by the insured person as an
employee under E. S. I. Act. It is thus clear that any person who is not insured under the
provisions of the E. S. I. Act, 1948 is entitled to get compensation under this Act, if he
fulfils the conditions laid down.
Initially the Act applied to a few employments only. Even in these employments, the
employees drawing wages up to a certain limit only were covered. Gradually the Act was
made applicable to many more employments and the wage limit for the employees was
enhanced from to time.
The present position is that there is no wage limit fixed for the purpose of application of
the Act. In fact, the employees who are not covered under the E.S.I. Act due to their
wages exceeding the wage limit fixed under that Act are covered under the Workmen's
Compensation Act. Similarly, the Act was initially applicable to workers employed
railways, tramways, factories, mines etc. The coverage has been extended from time to
time to give protection and benefits to more and more workers and at present the
employees working in 48 different employments (which are specified in schedule II of
the Act) are workmen within the meaning of the Act and hence are entitled to the benefits
under the Act.
Important definitions:
Explanation: For the purposes of sub-clause (ii) and items (f) and (g) of sub-clause (iii),
reference to a son, daughter or child include an adopted son, daughter or child
respectively.
Explanation:
The Workmen's Compensation is payable to the workman in the first place if he is alive
after the employment-injury. The question of payment of compensation to the relatives of
the workman arises only in the event of death of the workman. Only those relatives of
the deceased workman who are defined as dependent under the Act are entitled to
the Workmen's Compensation.
The definition of the term dependent divides the relatives of the deceased workman into
three classes. These three classes are mentioned in the definition and serially numbered in
roman figures. An analysis of the definition would show that the distinction has been
made among the relatives on the basis of their dependency on the earnings of the
deceased workman at the time of his death. The relatives mentioned in clause (i) are
considered to be dependents on the earnings of the deceased workman irrespective of
whether they were actually dependent or not. The relatives mentioned in class (ii) must
be wholly dependent on the earnings of the deceased workman in order to be considered
as dependent for claiming compensation. The relatives mentioned in class (iii) can get
compensation only when they can establish that they were wholly or in part dependent on
the earnings of the deceased workman.
In other words, the dependents mentioned in class (i) need not be dependents on the
earnings of the deceased workman at the time of his death but the persons in the second
clause must prove that they were wholly dependent on such earnings. Similarly, the
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persons mentioned in clause (iii) must prove that they were wholly or in part dependent
on the earnings of the deceased workman at the time of his death.
It is necessary to note two points here with respect to the claim for the amount of
compensation. The three classes of Dependents mentioned in the definition do not have
any hierarchical order among them, in the sense that once the condition of dependency is
satisfied by the relatives of second and third class, they stand on the same footing as the
dependents of the first class. Thereafter, all the relatives are treated as Dependents under
the Act and they possess the same right to compensation. (It is for the Commissioner to
distribute the amount of compensation among these Dependents as per his discretion)
Employer includes any body 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.
Explanation:
It can be seen from the definition that any person who gives employment is an employer.
It includes natural persons as well as artificial persons and body corporate, whether
registered under the law or not. The definition also includes the legal representatives of
the deceased employer. Similarly, when the employer lends the services of a workman
out to another person, such other person becomes the employer for the workman during
the period the services are so lent.
Managing agent means any person appointed or acting as the representative of another
person for the purpose of carrying on such other person’s trade or business, but does not
include an individual manager sub ordinate to an employer.
Explanation:
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When a workman meets with an accident and sustains injuries, it results in loss of his
earning capacity. Such incapacity of doing work is his disablement. Such disablement can
be either partial or total. The definition of partial disablement further classifies it as
temporary partial disablement and permanent partial disablement. For example, a foreign
object penetrating in the eye of a workman and temporarily disabling him to work
because of blindness is a case of temporary partial disablement. On the other hand, if the
eyesight of the workman is injured forever, it is permanent partial disablement. If the
earning capacity of the workman is reduced as result of disablement only in the particular
employment in which he was engaged at the time of his accident, it is partial disablement
of temporary nature.
If, on the other hand, the earning capacity of the workman is reduced as a result of
disablement in every employment which he was capable of undertaking at the time of the
accident, it is partial disablement of permanent nature. Therefore, the difference between
the two is that in temporary partial disablement the earning capacity of the workman is
reduced in the particular employment in which he was engaged whereas in permanent
partial disablement the earning capacity of the workman is reduced in every employment
which he was capable of undertaking at the
time of the accident.
It is further provided that every injury specified in the Part II of Schedule I shall be
deemed to result in permanent partial disablement. There are 48 injuries specified in part
II of Schedule I such as loss of thumb, loss of one eye, without complications, the other
being normal etc.
It is important to note here that even if the workman is continued in the employment on
the same terms and conditions after the partial disablement has occurred, the employer
cannot be absolved from liability to pay the Workmen's Compensation. Only because the
employer pays to the workman the same wages even after the accident resulting in
permanent disablement, it cannot be said that there is no loss of earning capacity. If it
were so, the employer could easily avoid payment of compensation by continuing the
employment of the workman. If the workman is constrained to look for another
employment in future, his disability would certainly be a handicap in getting the wages as
per the then existing market rates and at that time he would not be entitled to claim
compensation also at a belated stage.
Part II of Schedule II gives the list of injuries, which are deemed to result in permanent
partial disablement. However, the list is not exhaustive. There can be many other types of
injuries causing permanent partial disablement. Under such circumstances, medical
examination of the workman becomes necessary. Loss of earning capacity has to be
determined by taking into account the destruction of physical capacity supported by the
medical evidence. What has to be assessed is the extent to which the destruction of
physical capacity can be taken to have disabled the workman from performing the work,
which a workman of his class ordinarily performs.
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It is worthwhile to note that a medical expert can only state what the injury is and its
effect on the body of the workman. It is ultimately for the Court to find whether the
disablement is partial or total, by taking into account the nature of injury, the nature of
work, which the workman was capable of performing at the time of accident and its
availability to him. For example, loss of one hand for a worker may be a permanent
partial disablement, of course, having regard to the normal conditions of work. However,
it is certainly a permanent total disablement if the same worker is employed as a driver.
Medical examination in both the cases, however, would disclose the same destruction of
physical capacity.
Provided that permanent total disablement shall be deemed to result from every injury
specified in Part I of Schedule I or from any combination of injuries specified in Part II
thereof where the aggregate percentage of the loss of earning capacity, as specified in the
said Part II against those injuries amounts to one hundred percent or more.
Explanation:
It is important to note that in partial disablement, the reference is to the reduced earning
capacity whereas in total disablement the reference is to the total incompetence of the
workman for all work, which he was capable of performing at the time of accident.
The definition further provides that the injuries specified in Part I of Schedule I shall be
deemed to result in permanent total disablement and that if different permanent partial
disablements together cause a loss of earning capacity of one hundred percent (or more),
it shall be deemed that there is permanent total disablement. Part I of Schedule I specifies
six injuries which are deemed to result in permanent total disablement such as loss of
both hands, loss of hand and a foot, absolute deafness etc.
Whether the permanent disablement is partial or total is a very crucial question in every
case for the simple reason that the amount of compensation would vary substantially
depending on the nature of disablement.
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Qualified Medical Practitioner means any person registered under any Central Act,
Provincial Act or an Act of legislature of a State providing for the maintenance of a
register of medical practitioners, or, in any area where no such last-mentioned Act is in
force, any person declared by the State Government, by notification in the Official
Gazette, to be a qualified medical practitioner for the purposes of this Act.
Seaman means any person forming part of the crew of any ship, but does not include the
master of the ship.
Wages includes any privilege or benefit which is capable of being estimated in money,
other than a traveling allowance or the value of any traveling concession or a contribution
paid by the employer of a workman towards any pension or provident fund or a sum paid
to a workman to cover special expenses entailed on him by the nature of his employment.
Explanation:
The definition does not attempt to restrict the meaning of wages, but rather seeks to
include what ordinarily may not be included in the concept of wages. Any benefit or
privilege given by the employer to his workman, which can be calculated in terms of
money, is wages under this Act, except contributions paid the employer towards any
pension or provident fund, traveling allowance or concession or reimbursement of special
expenses incurred on the workman. Hence, in addition to monetary wages, all other
benefits or privileges given by the employer, which are capable of being estimated in
money, are wages. The value of amenities such as free house accommodation, supply of
light and water etc. are the service benefits which are to be included in wages. Bonus is
no longer regarded as an ex-gratia payment given by the employer and hence is a
privilege enjoyed by the workmen and as such it is also included in the wages.
Workman means-
1. any person (other than a person whose employment is of a casual nature and who is
employed otherwise than for the purposes of the employer’s trade or business) who is-
a) a railway servant as defined in clause (34) of Section 2 of the Railways Act,
1989, not permanently employed in any administrative, district or sub-divisional
office of a railway and not employed in any such capacity as us specified in
Schedule II, or
b) a master, seaman or other member of the crew of a ship,
c) a captain or other member of the crew of an aircraft,
d) a person recruited as driver, helper, mechanic, cleaner, or in any other capacity in
connection with a motor vehicle,
e) a person recruited to work abroad by a company,
and who is employed outside India in any such capacity as is specified in schedule
II and the ship, aircraft or motor vehicle or company as the case may be, is
registered in India,
f) employed in any such capacity as is specified in Schedule II.
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g) whether the contract of employment was made before or after the passing of this
Act and whether such contract is express or implied, oral or in writing; but does
not include any person working in the capacity of a member of the Armed Forces
of the Union and any reference to a workman who has been injured shall, where
the workman is dead, include a reference to his dependents or any of them.
(2) The exercise and performance of the powers and duties of a local authority or of any
department acting on behalf of the Government shall, for the purposes of this Act, unless
a contrary intention appears, be deemed to be the trade or business of such authority or
department.
(3) The Central Government or the State Government, by notification in the Official
Gazette, after giving not less than three months’ notice of its intention so to do, may, by a
like a notification, add to Schedule II any class of persons employed in any occupation
which it is satisfied is a hazardous occupation and the provisions of this Act shall
thereupon apply, in case of a notification by the Central Government, within the
territories to which the Act extends, or, in the case of the notification by the State
Government, within the State, to such classes of persons.
Provided that in making addition, the Central Government or the State Government, as
the case may be, may direct that the provisions of this Act shall apply to such classes of
persons in respect of specified injuries only. (Section 2 (l) (n).
Explanation:
The persons in the various employments which are included in the definition are
workmen within the meaning of this Act. They are entitled to the benefits and protection
under the Act. Additionally, those who are employed to do the work specified in
Schedule II are also workmen under the Act. At present, Schedule II lists 48 different
types of employment. Thus in order to find out whether a person employed is a workman
within the meaning of the Act, it is always necessary to look into the contents of
Schedule II. The said Schedule is reproduced below.
Schedule II
List of persons who, subject to the provisions of Section 2(1) (n), are the included in
the definition of workman.
The following persons are workmen within the meaning of Section 2 (1) (n) and subject
to the provisions of that section, that is to say any person who is-
i. employed, otherwise in a clerical capacity, or on a railway, in connection with the
operation, repair or maintenance of lift or a vehicle propelled by steam or other
mechanical power or by electricity or in connection with the loading or unloading
of any such vehicle; or
ii. employed, otherwise in a clerical capacity, in any premises wherein or within the
precincts whereof a manufacturing process is as defined in clause (k) of section 2
of the Factories Act, 1948, is being carried on or in any kind of work whatsoever
incidental to or connected with any such manufacturing process or with article
made, whether or not employment in any such work is within such premises or
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iii. employed for the purposes of making, altering, repairing, ornamenting, finishing
or otherwise adapting for use, transport or sale of any article or part of an article
in any premises wherein or within the precincts whereof twenty or more persons
are so employed.
Explanation: For the purposes of this clause, persons employed outside the
precincts but in any work incidental to or connected with the work relating to
making, altering, repairing, ornamenting, finishing or otherwise adapting for use,
transport or sale any article or part of an article shall be deemed to be employed
within such premises or precincts; or
v. employed in any mine as defined in clause (j) of section 2 of the Mines Act, 1952
in any mining operation or in any kind of work, other than clerical work
incidental to or connected with any mining operation or with the mineral
obtained, or in any kind of work whatsoever below the ground; or
ix. employed in setting up, maintaining, repairing or taking down any telegraph or
telephone line or post or any overhead electric line or cable or post or standard or
fittings and fixtures for the same; or
xii. employed upon a railway as defined in clause (31) of section 2 and sub-section (1)
of section 197 of the Railways Act, 1989 either directly or through a sub-
contractor, or by a person fulfilling a contract with the railway administration; or
xiii. employed as an inspector, mail guard, sorter, or can peon in the Railway Mail
Service or as a telegraphist or as a postal or railway signaler or employed in any
occupation ordinarily involving outdoor work on the Indian Posts and Telegraphs
Department; or
xiv. employed, otherwise than in a clerical capacity, in connection with operation for
winning natural petroleum or natural gas; or
xvi. employed in the making of any excavation in which on any one day of the
preceding twelve months more than twenty five persons have been employed or
explosives have been used, or whose depth from its highest to its lowest point
exceeds twelve feet; or
xvii. employed in the operation of any ferry boat capable of carrying more than ten
persons; or
xviii. employed, otherwise than in a clerical capacity, on any estate which is maintained
for the purpose of growing cardamom, cinchona, coffee, rubber, tea and on which
on any one day in the preceding twelve months twenty five or more persons have
been so employed; or
gas; or
xx. employed in a light house as defined in clause (d) of section 2 of the Indian Light
House Act, 1927; or
xxiii. employed in the tapping of palm trees or felling or logging of trees, or the
transport of timbre by inland waters, or the control or extinguishing of forest fires;
or
xxiv. employed in the operations for the catching or hunting for elephants or other wild
animals; or
xxvi. employed in the handling or transport of goods in, or within the precincts of –
a) any warehouse or other place in which goods are stores, and in which on any
one day of the preceding twelve months ten or more persons have been so
employed, or
b) any market in which on any one day of the preceding twelve months fifty or
more persons have been so employed;
xxvii. employed in any occupation involving the handling and manipulation of radium
or X-rays apparatus, or contact with radioactive substances; or
xxxv. employed in any employment which requires handling of snakes for the purpose
of extraction of venom or for the purpose of looking after snakes or handling any
other poisonous animals or insects; or
xxxvi. employed in handling animals like horses, mules and bulls; or
xxxvii. employed for the purpose of loading or unloading any mechanically propelled
vehicle or in the handling or transport of goods which have been loaded in such
vehicles; or
xxxviii. employed in cleaning of sewer lines or septic tanks within the limits of local
authority; or
xxxix. employed on surveys and investigation, exploration or gauge or discharge
observation of rivers including drilling operations, hydrological observation and
flood forecasting activities, ground water surveys and explorations; or
xl. employed in cleaning of jungles or reclaiming land or ponds in which on any one
day of the preceding twelve months more than twenty five persons have been
employed; or
xliii. employed in the construction, boring or deepening of an open well or dug well,
bore-well, bore-cum-dug well, filter point and the like; or
Explanation: - In this schedule, “the preceding twelve months” relates in any particular
case to the twelve months ending with the day on which the accident in such case
occurred.
Section 3 of the Act provides for the circumstances under which an employer shall be
liable to pay Workmen's Compensation as per the provisions of the Act. The said section
reads as follows:
1. If personal injury is caused to a workman by accident arising out of and in the
course of employment, his employer shall be liable to pay compensation in
accordance with the provisions of this Chapter:
b. that the disease has arisen out of and in the course of the employment, the
contracting of such disease shall be deemed to be an injury by accident within the
meaning of this section
Provided further that if it is proved that a workman who having served under any
employer in any employment specified in Part B of schedule III or who having served
under one or more employers in any employment specified in Part C of that schedule for
a continuous period specified under this sub-section for that employment and he has after
the cessation of such service contracted any disease specified in the said Part B or said
Part C, as the case may be, as occupational disease peculiar to the employment and that
such disease arose out of the employment, the contracting of the disease shall be deemed
to be an injury by accident within the meaning of this section.
(3) The Central Government or the State Government, by notification in the official
gazette, after giving not less than three months’ notice of its intention so to do, may, by a
like notification, add any discretion of employment to the employment specified in
schedule III, and shall specify in the case of employments so added the diseases which
shall be deemed for the purposes of this section to be occupational diseases peculiar to
those employments respectively and thereupon the provisions of sub-section (2) shall
apply, in the case of a notification by the Central Government, within the territories to
which this Act extends or, in the case of notification by the State Government, within the
State as if such diseases had been declared by this Act to be occupational diseases
peculiar to those employments.
(4) Save as provided by sub-sections (2), (2-A) and (3), no compensation shall be payable
to a workman in respect of any disease unless the disease is directly attributable to a
specific injury by accident arising out of and in the course of his employment.
(5) Nothing herein contained shall be deemed to confer any right to compensation on a
workman in respect of any injury if he has instituted in a Civil; Court a suit for damages
in respect of the injury against the employer or any other person; and no suit for damages
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b. if an agreement has been arrived at between the workman and his employer
providing for the payment of compensation in respect of the injury in accordance
with the provisions of this Act.
Explanation:
Section 3 lays down the conditions under which an employer is liable to pay Workmen's
Compensation. A plain reading of the section would show that an employer is liable to
pay compensation his workman if he meets with an accident while on duty and so also
when the workman contracts any occupational disease which is peculiar to the nature of
employment in which he was engaged. In other words, there are two conditions under
which an employer is liable to pay compensation; first in case of personal injury caused
by an accident arising out of and in the course of employment and the second in the case
of occupational disease contracted by the workman, which is peculiar to the nature of his
employment.
Sub-section (1) of Section 3 provides for the employer’s liability to pay compensation in
case of personal injury caused to a workman by an accident. The analysis of the section
tells us that the employer is so liable only when the following conditions are fulfilled.
(2) The personal injury must have been caused by an accident out of and in the course of
employment.
The term ‘accident’ has also not been defined under the Act. However, it is now settled
position of law that accident means some unexpected, sudden mishap or an untoward
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Furthermore, such accident must arise out of and in the course of employment. What is
an accident arising out of and in the course of employment has always been the issue of
great debate and discussion among the judicial and jurisprudential authorities. It is not
possible to frame a regulation or lay down a rule which could be applied to determine
whether any accident is such accident or not. It depends on the merits of each case. From
the various judicial pronouncements, it can be gathered that an accident arising out of and
in the course of employment is an accident, which has a close relation or nexus with the
employment. It need not be due to the risks, which are inherent to the nature of
employment. For example, if a worker working on a metal sheet-cutting machine gets his
fingers cut accidentally during the operation of the machine, it is obviously an accident
out of and in the course of employment. This is so not because the risk of cutting fingers
is involved in working on the cutting machine. If the same worker is going from one
department to another to fetch tools for his working and if he slips on the floor, falls
down and receives a head-injury, it is yet an accident arising out of and in the course of
employment. The cutting of the fingers and the fall on the floor of the workman are both
mishaps which are connected with and incidental to his employment. Both the
occurrences have a nexus with his employment. The expression ‘out of employment’
refers to the very broad area of service of the workman, whereas the expression ‘in the
course of employment’ refers to something happening while performing the duties or
discharging the functions, which are part of his employment.
It shall be thus seen that accidents arising out of and in the course of employment have a
very wide coverage. In fact, the Courts in India including the Supreme Court, have
attached a very extensive and liberal meaning to the same and the expression has been
often interpreted for the benefit of the workmen meeting with accidents. This liberal
interpretation was popularly known as the doctrine of notional extension. It extended
the area of work premises to cover the accidents to workmen while on their way to the
place of work and back to the residence after the duty hours. Thus a workman traveling
home from the place of work after his duty hours is still employed with reference to any
accident on the way, making the employer liable to pay compensation. This extension
was sought to be justified on the ground that what is relevant is whether the workman
meeting with an accident was there at the place of accident as a member of general public
or by virtue of his employment. If the presence of the workman at the place where the
accident takes place is occasioned by his employment, howsoever remotely, it is an
accident arising out of and in the course of employment. Hence, a workman at a bus-stop
waiting for a bus to take him to the work-place is run over by any vehicle, it will be an
accident arising out of and in the course of employment, because at the time of accident
the workman was at the bus stop owing to his employment, and not as a member of
general public.
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This interpretation, though obviously far-fetched and illogical was not seriously objected
to by the employers in India in organised sector, because most of the employers in this
sector had obtained insurance against their liability under the Act. In unorganised sector,
due to the ignorance of workmen no claims under the Act were vigorously made and the
employers hardly bothered to comply with the provisions of the Act. As a result, since
large number of employers were unaffected by this unwarranted liberal interpretation, the
theory of notional extension became the rule. However, in 1996, a Government agency
like E.S.I. Corporation took up the issue to the Supreme Court. In the case of ESI
Regional Director v/s Francis D’ Costa (1996), the Supreme Court finally restricted the
notional extension of the work premises and ruled that unless the workman was within
the premises of the establishment, his employment cannot be deemed to have begun.
Therefore, accident occurring on the way to the work-place or back after duly hours were
specifically held to be not the accidents arising out of and in the course of employment.
The only exception made was the accident to the vehicle provided by the employer for
his workmen to travel to and fro the work place.
(3) The personal injury must result in either total or partial disablement of the workman
for a period exceeding three days or death.
In order to give rise to a claim by workman for compensation under the Act, it is
necessary that he must be either partially or totally disabled to do work at least for a
period of three days. Section 3 (a) expressly provides that there is no liability on the part
of the employer in respect of any injury, which does not result in the total or partial
disablement of the workman for a period exceeding three days. Death of the workman is
total disability of the workman for ever and hence obviously can give rise to a rightful
claim.
There are circumstances where, even after the above conditions are satisfied, the
employer shall not be liable to pay any Workmen's Compensation to his workman under
the Act. In other words, even if a workman has met with an accident arising out of and in
the course of employment causing personal injury to him and which has resulted in
partial or total disablement lasting for three days or more, he shall not have any claim
against his employer for Workmen's Compensation, under certain circumstances. These
situations are mentioned in sub-clause (i), (ii) and (iii) of clause (b) of section 3 itself.
The reading of said section, which is reproduced before, would show that the employer
shall not liable to pay compensation under this Act, if the accident is caused by any of the
following reasons: -
ii. If the workman willfully disobeys an order or rule which is expressly framed for
the purpose of securing his safety; or
iii. If the workman willfully removes or disregards any safety guard or device, which
he knows to have, been provided by the employer for the purpose of securing his
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safety.
Under the above circumstances, the employer shall not be liable to pay any compensation
to the workman, provided the accident does not result in death of the workman.
Similarly, the employer shall also not be liable to pay any compensation if the workman
does not present himself for medical examination when required, or if he fails to take
proper medical treatment, which aggravates the injury or disease.
The employer shall be liable to pay the compensation, if the accident results in the death
of the workman even if the cause of the accident is workman being under the influence of
alcohol or his wilful removal of safety device or wilful disobedience of any safety
instruction.
We have already noted that employer’s liability to pay compensation arises in two events.
The first is when any workman sustains personal injury due to accident arising out of and
in the course of employment disabling him, permanently or partially, for a period
exceeding three days.
The second is when any workman contracts any occupational disease which is peculiar to
the employment. Occupational disease is a disease which is contracted by a person
because of his occupation. For example, persons who have to work in extremely hot or
extremely cold weather are often subjected to the diseases caused by such weather or the
lung functioning of a workman can be affected due to working with cotton. Schedule III
of the Act contains the list of such occupational diseases. This schedule has three parts;
Part A, Part B and Part C.
Part A:
If a workman contracts any disease specified in Part A of Schedule III, the contracting of
such disease is deemed to be an injury by accident and unless proved otherwise, such
accident shall be deemed to have arisen out of and in the course of employment.
Therefore, if a workman contracts any disease, which is peculiar to his employment, and
when such disease is specified in the schedule, the employer is liable to pay Workmen's
Compensation to the workman as if the contracting of such disease is an accident causing
personal injury and that such accident is out of and in the course of employment.
Part B:
disease peculiar to that employment, the contracting of such disease shall also be
similarly treated as an accident arising out of and in the course of employment.
Part C
Amount of Compensation
Where the injury results in permanent total disablement of the workman, the
amount of compensation would be sixty per cent of the monthly wages of the
workman multiplied by the relevant factor or Rs. 90,000/- whichever is higher.
Relevant Factor is factor, which depends on the age of the workman at the time of the
accident. It is the highest at the lowest age. It goes on reducing as the age advances. For
example, the relevant factor (as given in the schedule IV of the Act) for a workman at his
age of 18 years is 226.38, whereas the relevant factor for a workman at his age of 58
years is 124.70.
The reason for the gradual reduction in the relevant factor corresponding to the increase
in the age of the workman is that the amount of compensation ought to be more when the
disability occurs at the young age. As the age of a workman draws towards his
retirement, the span of work-life is reduced and therefore the amount of compensation is
also correspondingly reduced.
For the purpose of computing the compensation, the wages of the workman are taken to
be maximum Rs. 4000/- per month. In other words, where the monthly wages of a
workman exceed Rs. 4000/- his wages shall be deemed to be Rs. 4000/- only.
Explanation
The next step is to ascertain the percentage of loss of earning capacity of the workman
due to the injury. For example, the loss of earning capacity in the case of loss of one eye
is specified in the Act to be 40%.
Now the compensation payable is 40% of the amount of compensation, which would
have been payable if the injury, had resulted in the permanent total disablement.
Where the injury results in temporary disablement, whether total or partial, the
amount of compensation is the periodical payment of 25% of monthly wages for
every period of fifteen days. In other words, the employer has to pay to the
workman 25% of his monthly wages after every fifteen days during the period of
his disablement. This compensation is called payment of half monthly wages.
Funeral expenses
The Act further lays down that where the injury of the workman results in his death, the
employer shall, in addition to the compensation as explained above, deposit a sum of Rs.
2500/- with the Commissioner appointed under the Act for payment of the same to the
eldest surviving dependent of the workman towards the expenditure of the funeral of such
workman or where the workman did not have a dependent or was not living with his
dependent at the time of his death to such person who actually incurred such expenditure.
Monthly wages means the amount of wages deemed to be payable for a month’s service,
(whether the wages are payable by month or otherwise) and calculated as follows:
Where the workman has been in continuous employment for not less than twelve
months, his monthly wages would mean the total wages of the workman for the
last twelve months divided by twelve.
Where the period of continuous employment of the workman is less than one
month, his monthly wages would be the average of wages for the previous twelve
months earned by another workman employed on the same kind of work with the
same employer or in the same locality,
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In other cases including the ases in which it is not possible to calculate the
monthly wages for want of information, the monthly wages would be the total
wages earned by the workman divided by the number of days worked multiplied
by thirty.
Distribution of Compensation
Section 8 of the Act deals with the distribution of compensation. It states that the
amount of compensation has to be paid through the Commissioner appointed
under the Act. This is in order to ensure that amount is computed correctly and
there is no malpractice.
If the partial disablement, which does not require the workman to remain absent
from work, the period of two years shall be counted from the day when the
workman gives notice of the disablement to the employer.
The Commissioner
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Commissioner is the judicial authority under the Act appointed by the State Government
for adjudication of disputes. As regards the functions and powers of the Commissioner,
the following points may be noted.
If any question arises in any proceedings as to the liability of any person to pay
compensation or the amount or the duration of compensation or any question
relating to nature or extent of disablement, such question shall be settled by the
Commissioner. No Civil court shall have power to deal with such questions.
The Commissioner shall have all the powers of a Civil Court under the Code of
Civil Procedure for the purpose of taking evidence on oath, enforcing attendance
of witnesses and production of documents etc.
He has the power to direct the employer to deposit additional amount with him,
if in his opinion the amount of deposited by the employer is insufficient.
If any question of law in involved, he may submit the question for the decision
of the High Court.
An Appeal can be preferred against the order of the Commissioner only in the
High Court and that too if a substantial question of law in involved.
Contracting Out
Self-assessment questions
1. Explain the term “Accident arising out of and in the course of employment”.