What is the Workmen’s Compensation Act of 1923?

What does the Workmen’s Compensation Act of 1923 cover?

The Workmen’s Compensation Act of 1923, also known by its short title, Workmen’s Compensation Act 1923, as well as the Employees Compensation Act, provides financial protection to workers who suffer from illness, injuries, or accidents while performing their job, including:

• Bodily injuries
• Temporary disablement
• Permanent partial disablement
• Permanent total disablement

The Act also offers compensation in the case of death resulting from a workplace accident.

The Act establishes workmen’s compensation rules that apply to most of India’s workers. Schedule I determines the compensation amounts workers are entitled to, while Schedule II describes the types of work and workers covered under the Act.

One of the Indian Parliament’s main purposes of this Act was to protect workers and their families from financial hardship in the event of injury, incapacity, or death, but since it was enacted, it’s had other positive effects as well, including a decline in reports of fatal accidents in workplaces across India.

What are employers liable for under the Workmen’s Compensation Act of 1923?

Under the Act, the employer’s liability for compensation is clearly outlined—employers must compensate workers who suffer from personal injury or contract an occupational disease while carrying out their duties. If the injury leads to disability or incapacity, whether temporary or permanent, employers are required to provide financial compensation. Employers are also liable for compensating workers in the case of death, ensuring that the worker’s family receives support.

Employers’ main obligations include:

• Strict liability: The Act holds employers to strict or “no-fault” liability, which means that regardless of whether they were at fault for the accident or injury or it just happened because they were careless, if it’s work-related, they still have to pay.
• Financial responsibilities: The Act also outlines what employers are responsible for covering, which includes medical costs, lost wages, and, in some cases, disability benefits or survivor benefits for surviving family in the event of a worker’s death.
• Prompt consideration: The Act requires payment of compensation in a timely manner. It outlines how employers must calculate and disburse payments, so delays don’t get in the way.
• Recordkeeping: Employers are required to keep accurate records of workplace accidents, illnesses, and injuries under the law.
• Compliance with safety regulations: Employers must follow workplace safety requirements set forth in the Act. If an accident or injury occurs because of a failure to take safety precautions, employers may face additional responsibilities under the law.
• Legal recourse: The Act gives workers legal avenues to pursue in the event of a dispute over compensation.

What are employers not liable for under the Workmen’s Compensation Act of 1923?

The liability of the employer does not extend to such cases where the injury is self-inflicted or caused by the employee’s intentional disregard for safety protocols. If the injury results from the worker being under the influence of drugs or alcohol at the time of the accident, the employer’s liability can be waived. Additionally, if such person were involved in activities outside of their work duties or violated company safety rules, the employer is not required to provide compensation.

What benefits can workers receive under the Workmen’s Compensation Act of 1923?

While the type and extent of coverage workers receive depends on the insurance company affiliated with their employer, under the Workmen’s Compensation Act, all workers are entitled to certain coverage and benefits. For mandatory coverage, the Act sets the amount of compensation, which is calculated based on their monthly wages and their reduced earning capacity due to injury or illness.

The amounts employees are entitled to receive are:

• Death: Dependents receive 50% of the deceased worker’s monthly wages multiplied by the relevant factor from Schedule IV of the Act, or 1.2 million rupees, whichever is higher.
• Permanent total disablement: 60% of the worker’s monthly wages multiplied by the relevant factor from Schedule IV of the Act, or 1.4 million rupees, whichever is higher.
• Permanent partial disablement: Depends on the extent of the disability, calculated using this formula: Percentage of loss of earning capacity from Schedule I multiplied by 60% of the worker’s monthly wages multiplied by the relevant factor from Schedule IV of the Act.
• Temporary disablement (total or partial): 25% of the worker’s monthly wages every fortnight for as long as the disablement lasts.

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What updates have been made to the Workmen’s Compensation Act of 1923?

The Workmen’s Compensation Act of 1923 has undergone various amendments over the years to update it and keep worker protections in line with modern needs. There have been two major amendments since the Act was enacted in 1923:

• In 2010, the law’s name was changed to Employee’s Compensation Act.
• In 2020, the Ministry of Labour and Employment changed the way compensation is calculated to increase the amounts workers receive when they’re injured or become ill due to work.

Who is eligible for coverage under the Workmen’s Compensation Act of 1923?

All employees working full-time, part-time, or temporarily are eligible for coverage and financial protection under the Workmen’s Compensation Act, with a few exceptions:

• The Act does not apply to areas covered by the Employees’ State Insurance Act of 1948, since those workers would be entitled to benefits from the Employees’ State Insurance Scheme of India (ESIC).
• The Act is enforced across India except in Jammu and Kashmir.

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Frequently asked questions about the Workmen’s Compensation Act of 1923

Are Indian employers required to have workmen compensation insurance?

Generally, Indian employers are required to have an insurance policy that covers their liability under the Workmen’s Compensation Act of 1923. This helps ensure that workers are compensated for injuries, illnesses, or fatalities that occur in the workplace. Employers are liable to compensate their workers even if they do not have insurance, but obtaining an insurance policy protects the employer from financial risk.

How is a workmen’s compensation claim made?

To make a workmen’s compensation claim, the injured worker or their family must provide a medical certificate detailing the nature of the injury or illness. In some cases, a medical examination is required to assess the severity of the injury and determine the appropriate compensation. The claim is submitted to the employer, who then forwards it to the insurance company or directly pays the compensation.

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