Overview of the Workmen’s Compensation Act, 1923
The Workmen's Compensation Act, 1923 (renamed the Employee's Compensation Act, 1923 by the 2010 amendment) is one of the earliest pieces of social security legislation in India. It provides for the payment of compensation to workers or their dependants in cases of employment-related injuries, occupational diseases, and death arising out of and in the course of employment.
The Act operates on the principle of “no-fault liability”—the employer is liable to pay compensation regardless of whether the injury was caused by the employer's negligence or not. The only exceptions are injuries caused by the worker being under the influence of intoxicants or wilful disobedience of safety rules.
The Act applies to workers not covered by the ESI scheme. It covers railway servants, workers in factories, mines, plantations, construction, and other hazardous occupations as specified in Schedule II of the Act. Employers in covered industries must understand their obligations to avoid significant financial liability.
Coverage & Applicability
Covered Workers
- • Workers in factories, mines, plantations, construction
- • Railway servants (not covered by ESI)
- • Workers in motor vehicle operations
- • Seafarers, dock workers, stevedores
- • Workers in hazardous occupations listed in Schedule II
- • Domestic servants in some states
Important Exclusions
- • Workers covered under ESI Act
- • Members of the Armed Forces
- • Workers whose injuries are caused by intoxication
- • Injuries from wilful disobedience of safety rules
- • Injuries from wilful removal of safety devices
Compensation Calculation
The Act prescribes formulas for calculating compensation based on the nature of the injury and the worker's age and wages:
| Type of Injury | Compensation Formula | Minimum Amount |
|---|---|---|
| Death | 50% × monthly wages × relevant factor (based on age) | ₹1,20,000 |
| Permanent Total Disablement | 60% × monthly wages × relevant factor (based on age) | ₹1,40,000 |
| Permanent Partial Disablement | Percentage of permanent total disablement compensation proportionate to loss of earning capacity | Proportionate |
| Temporary Disablement | 25% of monthly wages (half-monthly payments during disablement period) | As per formula |
Maximum monthly wage for calculation: ₹15,000/month. The “relevant factor” is based on the worker’s age at the time of injury and ranges from approximately 228.54 (age 16) down to 99.37 (age 65).
Occupational Diseases
The Act recognizes occupational diseases as equivalent to employment injuries. Diseases are listed in three parts of Schedule III:
Part A
Diseases linked to specific employments (e.g., lead poisoning in lead manufacturing). Deemed to arise from employment unless proven otherwise.
Part B
Diseases linked to specific employments but requiring minimum period of continuous service (e.g., silicosis requiring work in mines).
Part C
Diseases linked to any employment (e.g., occupational cancer, musculoskeletal disorders). Requires proof that the disease was contracted due to employment.
Employer Obligations
- • Pay compensation within 1 month of it becoming due (interest at 12% on delayed payment)
- • Report fatal accidents and serious injuries to the Commissioner within 7 days
- • Display the abstract of the Act at the workplace
- • Maintain records of accidents and compensation paid
- • Deposit compensation with the Commissioner if the worker is deceased
- • Penalty for default: up to ₹10,000 and/or imprisonment up to 3 months
- • Recommended: Maintain Workmen’s Compensation Insurance policy to cover liability