Mahindra Prabu, Asst.

Prof (Law)

21-11-2015

Employees Compensation Act, 1923

M. Mahindra Prabu
Asst. Professor (Law)
TNNLS

History
Germany 1884 by Iron Chancellor
Bismarck (Marxist Challenge to stop
revolution of workers)
Great Britain 1897 by Joseph Chamberlain
Intention is Justice & Humanity rather than
neutralizing revolution of working class

US State of Maryland in 1902, New York in

1910 [42 States by 1921]
India 1923

Mahindra Prabu, Asst. Prof (Law)

21-11-2015

Need for WCA

Mercantilism upto middle of 18th Century
Govt regulating trade
Laissez Faire let things alone Complete
economic freedom
In the name of freedom of contract employers
imposed cruelly harsh terms of employment
with no equal bargaining power forcing
employees to work for long hours under
appalling conditions
For death or disablement by industrial injuries
Damages @ common law.

Contd.,
Doctrine of common employment or fellow
servants rule (From UK to US) ( Justified by US
Courts)
It meant that there was always an implied term in a
contract of service that the servant agreed to accept
the risk of injury from the negligence of a fellow
servant and consequently when such negligence was
the cause of the injury, he could not claim damages
from the master

Doctrine of assumed risk

Resulted in enactment of Factories Act and then
WCA

Mahindra Prabu, Asst. Prof (Law)

21-11-2015

Development from compensation to

Insurance System
Public opinion favors more secure basis of
protection
Position in UK:
National Insurance (Industrial Injuries) Act, 1946
Introduced insurance system under which insurance
benefits are payable to victims of industrial accidents
and to sufferers from certain industrial diseases.
All persons employed in Great Britain under a
contract of service or apprenticeship were brought
under the purview of the Act, whatever their
earnings might be.

Contd.,
The solatium receivable by workman was given in
the name of benefit in lieu of compensation and
it was payable (premium) out of a fund to be built
up with equal contributions by the employers and
the employees and a further contribution by state.
Employee can claim both insurance amount and
sue his employer @ law for damages.

Mahindra Prabu, Asst. Prof (Law)

21-11-2015

Position in India
The Indian Fatal Accidents Act, 1855 enables
certain heirs of the deceased persons to sue for
damages when death is caused by an actionable
wrong. This act overrides the dictum that a
personal action dies with the person injured,
personalis motiureum persona.
Influence of ILO, 1919 Treaty of Versailles

emphasized the fact that the failure of any

nation to adopt human conditions is an obstacle
in the way of other nations, which desires to
improve the conditions in their own countries.

Contd.,
1921 Public opinion on the subject (WCA) was
invited.
1922 Committee comprised of Legislative Assembly
members, Employers & workers representatives and
medical & insurance experts were formed and
recommended framing of legislation.
1923 Workmen Compensation Act was passed.
1938 Employers Liability Act An Act to declare that
certain defenses shall not be raised in suits for
damages in respect of injuries sustained by workman.
(Amended in 1951)

Mahindra Prabu, Asst. Prof (Law)

21-11-2015

Object & Reasons

The general principles of workmens compensation
had almost universal acceptance and India is now
nearly alone among civilised countries in being
without legislation embodying those principles.
For a number of years the more generous employers
have been in the habit of giving compensation
voluntarily, but this practice is by no means general.
The growing complexity of industry in this country,
with the increasing use of machinery and consequent
danger to workmen, along with the comparative
poverty of the workmen themselves, renders it
advisable that they should be protected, as far as
possible from hardship arising from accidents.

Contd.,
The general principle is that the compensation
should ordinarily be given to workmen who
sustained personal injuries by accidents arising
out of and in the course of their employment.
Compensation will also be given in certain
limited circumstances for disease.
The actual rates of compensation payable are
fixed and in every case subject to a maxima.
Thus, it is an Act to provide for the payment by
certain classes of employers to their workmen of
compensation for injury by accident

Mahindra Prabu, Asst. Prof (Law)

21-11-2015

Scope & Application

Any class of persons in Schedule II employed in
Hazardous Occupation through a gazette notification
by State govt.
The state govt may direct that the provisions of this
Act shall apply to such classes of persons in respect of
specified injuries only. [ See S.2(3) of ECA, 1923]
In 1984 - The provisions of the Act have been
extended to cover all workers irrespective of the
amount of their wages.
ECA, 1923 is not applicable to workers who are
covered by ESI Act, 1948. [See S.53 of ESI, 1948 &
Bharagath Engg v. R. Ranganayaki & anr., 2000 SCC
(L&S) 786]

To which establishments does the Act apply?

I.E 20 or more - must compulsorily register
themselves under ESI Act.
ECA applicable to I.E where less than 20 are
employed or any I.E which do not come within
the purview of the ESI Act
If employers fail to register themselves under the
ESI Act, then they will be responsible to pay
compensation under ECA.
However, the Workmens compensation Act will
only apply to those persons considered
workers and those Employers considered
Employers, as defined under the Act

Mahindra Prabu, Asst. Prof (Law)

21-11-2015

Structure of Act

36 Sections
4 Schedules
Schedule 1 --- List of Injuries
Schedule 2 --- List of persons who comes
under the category of Workman
Schedule 3 --- List of Occupational Diseases
Schedule 4 --- Compensation

Who is liable to pay compensation

under this Act?

Mahindra Prabu, Asst. Prof (Law)

21-11-2015

Employer, S. 2(1)(e)
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;

Managing Agent, S.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;

Mahindra Prabu, Asst. Prof (Law)

21-11-2015

Who can claim compensation?

Employee, S.2(1)(dd)
employee means a person, who is
a railway servant as defined in Section 3 of the Indian
Railways Act 1890 (9 of 1890) not permanently employed
in any administrative district or sub-divisional office of a
railway and not employed in any such capacity as is
specified in Schedule II or
(a) a master seaman or other member of the crew of a
ship.
(b) a captain or other member of the crew of an aircraft
(c) a person recruited as driver helper mechanic cleaner
or in any other capacity in connection with a motor
vehicle
(d) 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;

Mahindra Prabu, Asst. Prof (Law)

21-11-2015

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 the contract is expressed 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 any employee who
has been injured shall where the employee is dead
includes a reference to his dependants or any of
them.

On what grounds the employee can

claim compensation?

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Mahindra Prabu, Asst. Prof (Law)

21-11-2015

Dependants, S. 2(d)
Relatives of deceased employee
Divided into 3 classes
1st class dependants have a right to claim
compensation irrespective of the fact whether they are
financially dependant on the deceased or not
2nd class must be wholly dependant on the earning of
the employee at the time of his death.
3rd class may get compensation only when they could
establish that they were wholly or in part dependant
on the earnings of the deceased employee at the time
of his death.

S. 2(1)(d)
Dependent means any of the following relatives of a deceased workman
namely:
i.
a widow a minor legitimate or adopted son an unmarried
legitimate or adopted daughter or a widowed mother; and
ii. if wholly dependant on the earnings of the workman at the time
of his death a son or a daughter who has attained the age of 18
years and who is infirm;
iii. if wholly or in part dependant on the earnings of the workman
at the time of his death (a) a widower
(b) a parent other than a widowed mother
(c) 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

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Mahindra Prabu, Asst. Prof (Law)

21-11-2015

Contd.,
(d) a minor brother or an unmarried sister or a widowed
sister if a minor
(e) a widowed daughter-in-law
(f) a minor child of a pre-deceased son
(g) a minor child of a pre-deceased daughter where no
parent of the child is alive or
(h) a paternal grandparent if no parent of the workman
is alive;
Explanation : For the purpose of sub-clause (ii) and items (f) and (g) of
sub-clause (iii) references to a son daughter or child include an adopted
son daughter or child respectively.

How compensation is calculated?

S. 2(1)(c) & 4; Schedule I & IV
Death results from injury an amount equal
to 50% of monthly wages of the deceased
employed multiplied by relevant factor or
1,20,000 (which ever is more)
Permanent Total Disablement results from the
injury 60% * Relevant Factor or 1,40,000
(which ever is more)

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Mahindra Prabu, Asst. Prof (Law)

21-11-2015

Permanent Partial Disablement result from

injury then Such percentage mentioned in
part II of Schedule I
Assessment by Medical Practitioner
One or more injuries in same accident
Compensation shall be aggregated but not exceed
the amount which would have been payable if
permanent total disablement resulted from
injuries.

Temporary Disablement (Whether total or partial)

Half monthly payment of the sum equivalent to 25%
of monthly wages
Payable on 16th day
Duration 28 days to 5 years (after expiry of waiting
period of 3 days), whichever period is shorter
Any lump sum compensation by employer to employee
can be deducted in half monthly payment
Employee shall be reimbursed the actual medical
expenditure incurred by him for treatment of injuries
caused during the course of employment
Any payment towards medical expenses shall not be
deemed to be a compensation.

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Mahindra Prabu, Asst. Prof (Law)

21-11-2015

Partial Disablement, S. 2(1)(g)

Partial Disablement means where the disablement is
of a temporary nature such disablement as reduces
the earning capacity of a workman in any
employment in which he was engaged at the time of
the accident resulting in the disablement and where
the disablement is of a permanent nature such
disablement as reduces his earning capacity in every
employment which he was capable of undertaking at
that time.
Provided that every injury specified in Part II of
Schedule shall be deemed to result in permanent
partial disablement;

Contd.,
Disablement incapacity of doing work
i.e. Accident Occurs, employee sustain injury, results
into loss of earning capacity of that workman.

Temporary Partial Disablement Earning

capacity of the workman is reduced by the
disablement
merely
in
the
particular
employment in which he was engaged @ the
time of accident
Permanent Partial Disablement - Earning
capacity of the workman is reduced by the
disablement in every employment which he was
capable to undertake @ the time of accident

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Mahindra Prabu, Asst. Prof (Law)

21-11-2015

Total Disablement, S. 2(1)(l)

Total Disablement means such disablement whether
of a temporary or permanent nature as incapacitates a
workman for all work which he was capable of
performing at the time of the accident resulting in
such disablement :
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 amount to one
hundred per cent or more;

Contd.,
Employee become incompetent for all work
Loss of 100% earning capacity or more
Temporary Total Disablement Earning
capacity lost for a temporary period
Permanent Total Disablement Earning
Capacity lost for all time or forever.

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Mahindra Prabu, Asst. Prof (Law)

21-11-2015

V. Jayaraj v. T. P Transport Corp Ltd,

(1989) II LLJ 38 (Mad)
Conductor lost hearing capacity in a
accident
M.C: R.E 100%; L.E 73.5%
Commissioner fixed: 20% - Appeal to HC
Employee continues old post, old wages
disentitle to claim compensation?
Held, Permanent Partial Disability: 60%

Wages, S. 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 a employee to
cover any special expenses entailed on him by
the nature of his employment

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Mahindra Prabu, Asst. Prof (Law)

21-11-2015

Godawari Sugar Mills Ltd v.

Shakuntala, AIR 1948 Bom. 158
Wages Include any privilege or benefit capable of
being estimated in money
It Includes

D.A
Amenities of Free Quarters & Water
Bonus (Meenakshi Mills Ltd Case, AIR 1958 SC 153)
Overtime Allowance (Bharat Heavy Plate and Vessels Ltd v.
Commissioner, (1983) I LLJ 477 (Alld)

It doesnt includes
Travelling allowance or concession
Contribution by employer towards any pension or PF
Sum paid to any special expenses of employee in the
nature of employment

Employers Liability

Personal Injury

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Mahindra Prabu, Asst. Prof (Law)

21-11-2015

S. 3(1)
3. Employer's liability for compensation
(1) If a personal injury is caused to a employee by accident arising out
of and in the course of his employment, his employer shall be liable to
pay compensation in accordance with the provisions of this Chapter:
Provided that the employer shall not be so liable
(a) in respect of any injury which does not result in the total or
partial disablement of the employee for a period exceeding three
days;
(b) in respect of any injury not resulting in death or permanent
total disablement caused by an accident which is directly
attributable to the employee having been at the time thereof under the
influence of drink or drugs or
the wilful disobedience of the employee to an order expressly
given or to a rule expressly framed for the purpose of securing
the safety of employees or
the wilful removal or disregard by the employee of any safety
guard or other device he knew to have been provided for the
purpose of securing the safety of employees.

Ingredients
The employee must have sustained personal
injury
The personal injury must have been caused by
an accident
The accident must have arisen out of and in the
course of his employment
The personal injury caused to the employee must
have resulted either, in the total or partial
disablement of the workman for a period
exceeding three days or it must have resulted in
the death of the workman

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Mahindra Prabu, Asst. Prof (Law)

21-11-2015

Personal Injury
Not defined in Act
In general, it is a bodily injury or physical injury,
includes abnormal mental conditions
It may include a mental strain or mental tension or
mental illness or psychological diseases.
Personal Injury physical or mental
Electrician heating room to cooling room frequently
Pneumonia Death Injury Strain which causes
chill (Indian News Chronicle Ltd v. Luis Lazarus, AIR
1951 Punj. 102)
What is important is that the result of injury must be
such as to either kill a workman or partially or totally
incapacitate him from work for a period exceeding 3
days.

Accident
It means some unexpected event happening without
design i.e. an unlooked for mishap or untoward
incident.
Act intends to convey is what might be expressed as an
accidental injury.
It includes not only collisions, tripping over floor
obstacles, falls of roofs but less obvious ones causing
injury e.g. strain which causes rupture, exposure to a
drought causing chill, exertion in stokehold causing
apoplexy and shock causing neurasthenia.
But the common factor in all these cases is some
concrete happening at a definite point of time and
incapacity resulting from that.

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Mahindra Prabu, Asst. Prof (Law)

21-11-2015

Sungarbai v. General Manager, Ordnance

Factory, Jabalpur [1976 M.P.L.J. 356]
Shri G.P. Singh J.
(A) Accident means an untoward mishap which is
not expected or designed by the workman. Injury
means Physiological injury.
(B) Accident and injury are distinct in cases where
accident is an event happening externally to a man;
e.g. when a workman falls from a ladder and suffers
injury. But accident may be an event happening
internally to a man and in such cases accident and
injury coincide. Such cases are illustrated by
bursting of an aneurysm, failure of heart and the like
while the workman is doing his normal work.

(C) Physiological injury suffered by a workman due

mainly to the progress of a disease unconnected with
employment, may amount to an injury arising out of
and in the course of employment if the work which
the workmen was doing at the time of the occurrence
of the injury contributed to its occurrence.
(D) The connection between the injury and
employment may be furnished by ordinary strain of
ordinary work if the strain did in fact contribute to or
accelerate or hasten the injury.
(E) The burden to prove the connection of
employment with the injury is on the applicant, but he
is entitled to succeed if on a balance of probabilities a
reasonable man might hold that the more probable a
conclusion is that there was a connection.

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Mahindra Prabu, Asst. Prof (Law)

21-11-2015

Accident arising out of and in the

course of his employment
An accident is said to arise out of the employment
when there exists a casual connection between the
conditions under which the work is required to be
performed and the resulting injury.
The phrase in the course of employment is held to
designate an accident occurring within the period of
employment at a place where the employee may
reasonably be while fulfilling his duties or engaged in
something incidental to it.
According to S.3(1) the injury must not only arise in
the course of but also out of the employment. Proof
of one without the other will not bring a case within
the Act. What has to be considered is the employment
as such its nature, its conditions, its obligations and
its incidents.

Arising out of employment

Prof. A. Larson
Peculiar or Increased Risk Doctrine
Injury arises out of employment only when it
arises out of a hazard peculiar to or increased by
that employment and not common to people
generally.
Actual Risk Doctrine
We dont care whether this risk was also common
to public, if in fact it was a risk of this
employment.

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Mahindra Prabu, Asst. Prof (Law)

21-11-2015

Contd.,
Positional Risk Doctrine
An injury arises out of the employment if it
would not have occurred but for the fact that the
conditions and obligations of the employment
placed claimant in the position where he was
injured.
Proximate Cause
Demands that harms be foreseeable as the hazard
of this kind of employment and that the chain of
causation be not broken by any independent
intervening cause, such as an act of God.

Mackinnon Mackenzie & Co., (P) Ltd v. Ibrahim

Mohd. Issak, AIR 1970 SC 906
In the course of employment refers to the duties which
are to be performed by the workman while he is in service
of the employer
Out of employment refers to service of the workman
If by reason of any of those factors, the workman is
brought within the zone of special danger, the injury
would be one which arises out of employment
Casual connection between accident and employment the injury sustained by the workman must be by accident
which must have occurred while the workman is in service
of the employer and must have been supposed to do his
duties at the time when the accident took place and he
must be supposed to be there only due to the performance
of his duties and not otherwise

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Mahindra Prabu, Asst. Prof (Law)

21-11-2015

Mackinnon Mackenzie & Co., (P) Ltd

v. Ritta Farnandes, 1969 ACJ 419 (SC)
SC referred to the relevant passage in the decision of
House of Lords in Clover, Clayton & Co. Ltd v. Hughes,

1910 AC 242

Even if a workman dies from a pre-existing disease, if

the disease is aggravated or accelerated under the
circumstances which can be said to be accidental, his
death results from injury by accident.

Facts:
Driver driving truck - in the course of driving
activity covering about 1152 Kms felt uncomfortable
and safely parked the vehicle on the side of the road
soon where after he breathed his last.

Theory of Notional Extension

Intends to extend the area of employers
premises to cover accidents while a workman is
on the way to his place of work and also while
he is on the way to his home from the place of
employment.
When a workman is on a public road or a public
place or public transport, he is there as any other
member of the public and is not there in the
course of his employment unless the very nature
of his employment makes it necessary for him to
be there.

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Mahindra Prabu, Asst. Prof (Law)

21-11-2015

In order to apply this theory, the employee is to prove

that he was at the place of accident because of the
terms of service either expressly contained therein or
by implication.
If Employee under duty to use the means of
conveyance provided by employer in order to reach
his place of work and to reach the home after
finishing his work under contract of service then he
will be entitled to compensation for injuries due to
accident.
He can also claim benefit of the theory if he can
successfully prove that there was no other route or
means of conveyance except that which he used for
the purpose in which accident has taken place.

Case Laws
St. Helens Colliery Co. Ltd v. Hewitson, 1924
AC 59
General Manager, B.E.S.T Undertaking v. Mrs.
Agnes, AIR 1964 SC 193
TNCS Corporation v. S. Poomalai, (1995) I LLJ
378

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Mahindra Prabu, Asst. Prof (Law)

21-11-2015

Employers Liability in Occupational Diseases

S. 3(2), (2A), (3) & (4); Schedule III
A disease is called occupational disease since it is
contracted because of the occupation of a person i.e.
peculiar to that employment.
It will be deemed to be an injury by accident, if it is
proved
Schedule III divided into 3 parts
Part A
Part B (must be in service for continuous period not less
than 6 months Period shall not include a period of
service under any other employer in the same kind of
employment)
Part C ( Employee in service of one or more employers in
any employment specified herein, for such continuous
period as C.G specified.

Whether
employee
who
contracts
occupational diseases after he has left his
employment can get compensation?
Ans: If he falls under diseases specified under
Part C, fulfils the condition laid out by C.G,
for disease arose out of such employment may
get compensation.

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Mahindra Prabu, Asst. Prof (Law)

21-11-2015

If a workman employed in any employment

specified in Part C of Schedule III contracts any
occupational
disease
peculiar
to
that
employment the contracting whereof is deemed
to be an injury by accident within the meaning
of this section and such employment was under
more than one employer all such employers shall
be liable for the payment of the compensation in
such proportion as the Commissioner may in the
circumstances deem just

Remedy
Alternate Remedy
File a suit in civil court for damages or
A claim to compensation before a
commissioner
Can exercise any one of above and not both.

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Mahindra Prabu, Asst. Prof (Law)

21-11-2015

Notice & Claim

S. 10:
Notice to Employer and then file a claim before
commissioner within 2 yrs from the date of
occurrence
Notice to Employer is necessary but
commissioner can entertain claim without notice
if he satisfies that failure to give notice was due
to sufficient cause.
Appeal Shall lie before HC
Period of Limitation of Appeal: 60 Days

S.12 - Contracting
Principal Employer and Contractor
Contract Employee
Who is liable to pay compensation?

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Mahindra Prabu, Asst. Prof (Law)

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S. 17 Contracting Out
Can employee relinquishes any right of
compensation through an contract with the
employer?
Any agreement between employer and
employee to remove or reduce the liability to
pay compensation is valid?

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