Workmen’s Compensation Act

Legal Framework of the Workmen's Compensation Act in India

• The Workmen's Compensation Act, 1923, now known as the Employees' Compensation Act, 1923, is a significant piece of legislation in India that provides financial protection to workers and ensures compensation for work-related injuries. It is a crucial piece of legislation that ensures workers who suffer from such injuries or diseases receive adequate compensation and support.
• The Employees' Compensation Act, 1923, is pivotal in ensuring that workers receive timely and adequate compensation for work-related injuries or death, thereby reducing the financial burden on their families.
• Internationally, the standards for workers' compensation are governed by the International Labour Organization (ILO) conventions, which set minimum standards for compensation and care for injured workers. Compliance with these standards ensures that workers globally receive adequate protection.
• Applicability
  • This Act applies to workers involved in occupations such as Railways (except administrative offices), construction, mining, docks and shipyards, factories, and motor transport (e.g., drivers, mechanics, and helpers). Workers who are specified in Schedule II are covered. Casual Workers are excluded unless they are employed for trade or business.
  • This Act provides for compensation to workers, regardless of the time and nature of their employment, including full-time, part-time, temporary, or contractual work.
  • This Act does not apply to members of the Armed Forces.
  • This Act applies to employment-related injuries and diseases, including injuries, disabilities, or deaths, as well as occupational diseases or injuries during notional extension.
  • Employers' Liability is triggered only for accidents arising out of and in the course of employment.
  • This Act has extra–territorial applicability, subject to the condition that the employer is based in India and the working sector is covered in Schedule II.
  • The employer has strict liability to pay compensation regardless of negligence.
• Employer's Liability (Section 3)
  • The employer's liability is triggered by the occurrence of an accident resulting in injury or death, provided the accident arises out of and in the course of employment. Under the Act, employers are liable to compensate workers for injuries sustained during employment unless the injury:
    • Does not result in disablement for more than three days.
    • It is caused by the worker being under the influence of alcohol or drugs.
    • Results from the worker's wilful disobedience of safety rules or removal of safety guards.
• Compensation Calculation (Section 4)
  • Compensation is calculated based on the worker's monthly wage and the nature of the injury. The Act categorizes injuries into
    • Permanent Total Disablement: Compensation is typically 60% of the monthly wages, multiplied by the relevant factor (as outlined in Schedule IV), or an amount of ₹1,40,000, whichever is more.
    • Permanent Partial Disability: Compensation depends on the degree of loss of earning capacity due to the injury. 
    • Temporary Disablement: Workers are entitled to 25% of their monthly wages for the duration of their disablement.
    • Death: Compensation. Compensation is typically 50% of the monthly wages, multiplied by the relevant factor, or an amount of ₹1,20,000, whichever is more.

Claims Procedure

• The Injured Employee or his dependents, in case of his death, have to inform the employer about the accident as soon as possible, preferably in writing, including date and time of the accident, nature of the injury, and circumstances of the occurrence. If the employer refuses to compensate the employee, the remedies available under the Act allow the employee to claim compensation. The injured or the family members of the deceased can approach the Commissioner (refers to the authority to deal with such matters, under Section 20 of the Act). The information is treated as notice. 
• An application can be presented to the Commissioner for Workmen's Compensation, who has jurisdiction. The application should include the name and address of the claimant and the employer, date, time, and place of accident, nature of injury or reason of death, medical reports, wage details, and any dependents in case of death. It should also contain the notice served on the employer demanding compensation. The application should be presented for a prescribed fee, if any. 
• The compensation has to be claimed within 2 years from the date of the accident, or the date of death (in fatal cases), or the date of knowledge of occupational disease. The compensation will be determined by the nature of the injury and the prevailing wage rate in the area. 
• An appeal can also be made in cases where a substantial question of law is involved or the amount in dispute exceeds ₹10,000 (subject to change by notification).

Significant Amendments

• 2000 Amendment: The 2000 amendment was substantial as it increased the compensation amounts. The limit of ₹50,000 was exceeded to ₹80,000 in the event of death, and the limit of ₹60,000 was exceeded to ₹90,000 in the event of disability. Amendments were made in sections 2, 4, and 4A. 
• 2009 Amendment: In 2009, the Act was renamed the Employees' Compensation Act, 1923. This amendment further increased the compensation limits. The limit of ₹80,000 was exceeded to ₹1,20,000 in the event of death, and the limit of ₹90,000 was exceeded to ₹1,40,000 in the event of disability. Section 25A was introduced, which pertains to the time limit for disposing of cases related to compensation by the Commissioner, i.e., 3 months from the date of reference. 
• 2017 Amendment: The 2017 amendment introduced several key changes. Primarily, it mandated employers to inform employees of their rights to compensation under the Act, as specified in Section 17A. Further, not providing such information will attract a penalty under Section 18A(e). 

Penalties for Violating the Employees' Compensation Act 

• Compensation: Employers who fail to pay compensation to injured workers or their dependents within one month from the date it fell due can face fines of up to 12% per annum. The severity of the compensation depends on the extent of the violation and the harm caused to the worker or their family. Furthermore, up to 50% of the arrears amount can be levied as a penalty in certain instances. Section 4A outlines the penalty for default. 
• Records: Section 18 outlines penalties regarding failure to maintain a notice book, failure to report severe injuries or fatal accidents, and failure to provide returns as to compensation. Employers have to inform employees about their rights. Failure to comply with any of these can result in fines ranging from ₹50,000 to ₹1,00,000, as it hinders the authorities' ability to monitor workplace safety and enforce compliance with the law.

How to Report a Violation of the Employees' Compensation Act? 

• Affected workers or their representatives can file a complaint with the Commissioner for Workmen's Compensation under Section 19 of the Act.
• The Commissioners appointed by the State Government deal with the liability of any person to pay compensation, including any questions as to whether a person injured is or is not an employee, as well as the amount, duration, and nature or extent of disablement.
• The complaint should detail the nature of the violation and the harm caused.

How Can Seasoned Advocates Help You?

• Legal Advice: Offer expert advice on workers' rights and entitlements under the Act. Help workers understand the compensation they are eligible for and the process for claiming it.
• Claim Filing: Assist in the preparation and filing of compensation claims. Ensure that all necessary documentation is provided and that the claim is filed within the statutory deadlines.
• Representation: Represent injured workers or their dependents before the Commissioner for Workmen's Compensation and in Courts if necessary. Present the case, argue on behalf of the worker, and ensure that the claim is given due consideration. If a claim is denied or inadequately compensated, handle appeals. Prepare the necessary legal arguments and represent the worker in court to secure a fair outcome.
• Negotiation: In cases where employers are willing to negotiate, help secure fair settlements. Utilize the expertise to negotiate more favorable compensation amounts and ensure that workers' interests are effectively protected.

Conclusion

In summary, the Workmen's Compensation Act, 1923, now known as the Employees' Compensation Act, serves as a milestone in India's Labour Jurisprudence by ensuring statutory liabilities on employers to compensate employees for employment–related injuries, disabilities, or death. The principle of Social Justice is ensured through this legislation by recognizing employment risks and providing monetary relief to the aggrieved workmen or their dependents. The provisions of the Act are mandatory and have an overriding effect. The judiciary has further expanded its scope through doctrines such as notional extension. Hence, this legislation remains a cornerstone in safeguarding the rights and dignity of the labour class within industrial jurisprudence. To know more, contact us.