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A BRIEF OVERVIEW ON EMPLOYEES COMPENSATION ACT, 1923

The Workmens Compensation Act is the first piece of legislation towards social security. It deals with compensation for employees who are injured in the course of duty. The scheme of the Workmens Compensation Act is not to compensate the employee in lieu of wages. The general principle is that a employee who suffers an injury in the course of his employment, which results in a disablement, should be entitled to compensation and in the case of a fatal injury his dependants should be compensated. Under the Workmens Compensation Act it is the employer who is responsible to pay compensation (as opposed to the employees State insurance. Establishments to which the Employees State Insurance Act applies to the liability to pay compensation are on the ESI Corporation). The Workmens Compensation Act, 1923 provides for payment of compensation to employee and their dependants in case of injury and accident (including certain occupational disease) arising out of and in the course of employment and resulting in disablement or death. The amount of compensation to be paid depends on the nature of the injury and the average monthly wages and age of employee. The minimum and maximum rates of compensation payable for death (in such cases it is paid to the dependents of employee) and for disability have been fixed and is subject to revision from time to time. The meaning of compensation in this Act is limited to compensation granted under the Act for employment injuries sustained during the course of work. It is also limited to specifically monetary compensation other than a salary, travel allowance, and any other form of remuneration that could be paid under normal circumstances of employment. To get an overall understanding of the Act it is useful to look at the Statement of Objects and Reasons published with the Act when it was first passed in 1923. To quote: the growing complexity of industry in this country with the increasing use of the machinery and consequent danger to employee, along with the comparative poverty to employee themselves renders it advisable that they should be protected, as far as possible from hardship arising out of accidents. An additional advantage of a legislation of this type is that by increasing the importance for employers of adequate safety devises, it reduces the number of accidents to employees in a manner that cannot be achieved by official inspection. Further, the encouragement given to employers to provide adequate medical treatment for their employees should mitigate the effects of such accidents as does occur. The benefits so conferred added to the increased sense of security, which he will enjoy, should render industrial life more attractive and thus increase the available supply of labour. At the same time a corresponding increase in the efficiency of the average employees may be expected. While these were the official objects and reason, Indian reality today, is that the protection offered by the Act does not act as an incentive for employees, most of whom are unaware of it and who simply join work to earn a livelihood. At the time the framing of the bill two criteria were followed in determining whom the Act would apply to:

1. Those industries which were more or less organized 2. Employee whose occupations were hazardous. Nowadays the government (State of Central) may extend the application of this Act to other establishments of an industry that may not be organised. It is obligatory for the employers to pay compensation to their employees for injury caused to a employee by accident, arising out of and in the course of employment, resulting in death or in total/partial disablement under the Workmens Compensation Act. Compensation is also payable for some occupational diseases contracted by employees during the course of their employment. In the year 2010 the Act had been amended to make it gender neutral and will now be called the Employees Compensation Act, 1923.

LATEST AMENDMENT (EFFECTIVE FROM 18.01.2010) Change of name of the Act. WORKMEN COMPENSATION ACT, 1923 now changed as EMPLOYEES COMPENSATION ACT, 1923 The words workman or workmen in the Act have been substituted by the words employee or employees wherever they occur. The Explanation II to clauses (a) & (b) of Sec.4 was omitted and a new sub-section (IB) has been added after Sub-section IA of sec. 4 whereby the maximum wage limit has been revised to Rs. 8000/-p.m. Clerks were not covered for compensation under the Act However post amendment position Clerks are now covered for compensation. (Schedule II) Enhancement in minimum compensation payable from Rs.80,000 to Rs.1,20,000 (in case of death) and from Rs.90,000 to Rs.1,40,000 (in case of permanent disability) and funeral expenses from Rs.2,500 to Rs.5,000. Reimbursement of actual medical expenses incurred during treatment of injury caused during course of employment. [sub-Sec.2A of Sec. 4] Increase in coverage by omission of restrictive clause in Schedule-II and inclusion of additional hazardous activities A new section has been added Section 25A which fixes 3 months time limit for disposal of claims from the date of reference. Empower Central Govt. to specify monthly wages for the purpose of compensation and enhance minimum rates of compensation from time to time.

OBJECT

Provide employees and/or their dependents some relief or to consider compensation payable by an employer to his employee in case of accidents arising out of and in the course of employment and causing either death or disablement of employee as a measure of relief and social security. Provide for payment by certain classes of employers to their employees compensation for injury by accident. To enable an employee to get compensation irrespective of his negligence. It lays down the various amounts payable in case of an accident, depending upon the type and extent of injury. The employer now knows the amount of compensation he has to pay and is saved of many uncertainties to which he was subject before the Act came into force.

FEATURES Act provides for cheaper and quicker mode of disposal of disputes through special proceedings than possible under Civil Laws. Act provides compensation to employees for injury caused by accident and occupational disease arising out of and in the course of employment. The Act is applicable to apprentices also. Procedure for settlement of claim is through Commissioners.

APPLICABILITY The Act extends to the whole of India and applies to certain categories of railway servants and employees employed in any capacity specified in Schedule II of the Act which includes Factories, Mines, and Plantations, Mechanically Propelled Vehicle, Construction Work and certain other hazardous occupations. Every employee including those employed through a contractor who is engaged for the purposes of employers business and who suffers an injury in any accident rising out of and in the course of his employment, shall be entitled for compensation under this Act. The Act does not, however, apply to (i) Persons whose employment is of a casual nature and who are employed for purposes other than the employers trade or business; (ii) Persons serving in Armed Forces and (iii) Employees covered by the Employees State Insurance Act. Under Section 3(3) of the Act, the State Governments are empowered to extend the scope of the Act to any class of persons whose occupations are considered hazardous after giving three months notice in the Official Gazette.

MAIN PROVISIONS AND SCOPE 1. The Act extends to the whole of India and applies to employees employed in any capacity specified in Schedule II of the Act which includes Factories, Mines, Plantations, Mechanically Propelled Vehicles, Construction Work and certain other hazardous occupations and specified categories of Railway Servants. There is no wage limit for coverage of employees under the Act. It does not, however, apply to (i) persons serving in Armed Forces and (ii) employees covered by the Employees State Insurance Act, 1948. 2. The State Governments administer the provisions of this Act through the Commissioners appointed for specified areas. The Commissioners thus appointed are empowered for (i) settlement of disputed claims, (ii) disposal of cases of injuries involving death, and (iii) revision of periodical payments. They are also empowered to impose penalty on employers who fail to pay compensation due to the injured employees within one month. 3. Sub-section (3) of Section 2 of the Act, empowers the State Governments to extend the scope of the Act to any class of persons whose occupations are considered hazardous after giving three months notice, to be published in the Official Gazette. Similarly, under Section 3(3) of the Act, the State Governments are also empowered to add any other disease to the list mentioned in Parts A and B of Schedule-II, and the Central Government, in case of employments specified in Part C of Schedule III of the Act. Besides, the State Governments also make rules for ensuring that the provisions of the Act are complied with. 4. The amount of compensation payable to an employee depends on the nature of injury caused by accident, the monthly wages of the employee, and the age of the employee concerned. In case of death the minimum amount of compensation fixed is Rs.1,20,000 whereas it is Rs.1,40,000 in case of permanent total disablement. The maximum amount of compensation payable is Rs.4.56 lakh in the case of death and Rs.5.48 lakh in the case of permanent total disablement. Under the maximum compensation limit, the monthly wage limit of Rs. 4,000 has been increased to Rs. 8,000. These enhanced rates of compensation have come into force w.e.f. 31.05.2010. 5. Compensation is payable under Sub-section (i) of Section 3 of the Act by the employers in the case of injury, caused by an accident arising out of and in the course of employment, exceeding 3 days. In cases where the disablement prolongs for 28 days or more, compensation is payable from the date of disablement. No compensation is, however, payable if the injury, not resulting in death, is caused by the fault of the employee, arising from factors such as influence of alcoholic drinks and drugs, wilful disobedience of the employee to an order or rule, wilful removal or disregard by the employee of any safety guard or other device, etc. Besides, under Sub-section (2) of Section 3 of the Act, compensation is also payable to such employees who contract occupational diseases in the course of their employment as specified in Schedule-III of the Act.

IMPORTANT DEFINATIONS 1) Commissioner [Section 2 (1) (b)]: Commissioner means a Commissioner for Employees Compensation appointed under Section 20. 2) Compensation [Section 2(1) (c)]: Compensation means compensation as provided for by this Act. 3) Dependent [Section 2(1) (d)]: Dependent means any of the following relatives of a deceased employee, namely: a) A widow, a minor, legitimate or adopted son, an unmarried legitimate or adopted daughter or a widowed mother; and b) If wholly dependent on the earnings of the employee at the time of his death a son or a daughter who has attained the age of 18 years and who is infirm; c) If wholly or in part dependant on the earnings of the employee at the time of his death: i. A widower, ii. A parent other than a widowed mother, iii. A minor, illegitimate son, an unmarried illegitimate daughter, or a daughter legitimate or illegitimate or adopted if married and a minor or if widowed and minor, iv. A minor brother or an unmarried sister or a widowed sister if a minor, v. A widowed daughter-in-law, vi. A minor child of a pre-deceased son, vii. A minor child of a pre-deceased daughter where no parent of the child is alive, or viii. A paternal grandparent if no parent of the employee is alive. 4) Employer [Section 2(1) (e)]: Employer includes any body or 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 an employee are temporarily lent or let on hire to another person by the person with whom the employee has entered into a contract of service or apprenticeship means such other person while the employee is working for him; 5) Managing Agent [Section 2(1) (f)]: Managing agent means any person appointed or acting as the representative of another person for the purpose of carrying on such other persons trade or business but does not include an individual manager subordinate to an employer; 6) Minor [Section 2(1) (ff)]: Minor means a person who has not attained the age of 18 years; 7) Disablement: Disablement means loss of capacity to work or to move. Disablement of a employee may result in loss or reduction of his earning capacity. In the latter case, he is not able to earn as much as he used to earn before his disablement. Disablement may be partial, or total. Further Partial disablement may be permanent, or temporary.

Partial Disablement [Section 2 (1) (g)]: This means any disablement as reduces the earning capacity of a employee as a result of some accident. Partial disablement may be temporary or permanent. a. Temporary partial disablement means any disablement as reduces the earning capacity of a employee in any employment in which he was engaged at the time of accident which resulted in such disablement. b. Permanent partial disablement is one which reduces the earning capacity of a employee in every employment which he was capable of undertaking at the time of injury. Total Disablement [Section 2 (1) (L)]: It means such disablement, whether of a temporary or permanent nature, as incapacitates an employee for all work which he was capable of performing at the time of the accident resulting in such disablement. It refers to that condition where a employee becomes unfit for every type of work and is not able to get job anywhere due to that disablement. Total disablement is 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 Part II against those injuries, amounts to 100 per cent or more. Where an employee becomes unfit for a particular class of job but is fit for another class which is offered to him by the employer, the employee is entitled to claim compensation only on the basis of partial disablement and not total disablement. 8) Qualified Medical Practitioner [Section (2) (i)]: Qualified medical practitioner means any person registered under any Central Act, Provincial Act or an Act of the 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 purpose of this Act; 9) Wages [Section 2(1) (m)]: Wages includes any privilege or benefit which is capable of being estimated in money other than a travelling allowance or the value of any travelling concession or a contribution paid by the employer of a employee towards any pension or provident fund or a sum paid to an employee to cover any special expenses entailed on him by the nature of his employment. 10) Employee [Section 2(1) (n)]: Employee means any person who is a. a railway servant not permanently employed in any administrative, district or sub-divisional office of a railway and or not employed in any such capacity as specified in Schedule II, or b. (i) a master, seamen or other member of the crew or a ship, (ii) a captain or other member of the crew of an aircraft, (iii) a person recruited as driver, helper, mechanic, cleaner or in any other capacity in connection with a motor vehicle. (iv) a person recruited for 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; or

c. Employed in any such capacity as is specified in Schedule II whether the contract of employment was made before or after the passing of this Act and whether such contract is expressed or implied, oral or in writing; but does not include any person working in the capacity of the member of the Armed forces of the Union; and any reference to any employee who has been injured shall, where the employee is dead, include a reference to his dependants or any of them;

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