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Workmen Compensation Act 1923: An Overview

Introduction

The Workmen Compensation Act 1923 was enacted as social security legislation to reimburse workers or employees in the event of an accident due to and during the course of their employment. It came into force in 1924 and applies to the whole of India. This Act aims at prioritizing workers’ welfare and preserving their dignity and well-being. It was implemented keeping in mind the hazardous nature of some labour occupations such as mining, construction, transportation, Plantations etc. It thus intends to insure workers against any injury or disease occurring due to their work and pressurized employers to ensure a safe working environment and a mentally and physically healthy workforce.

Who are Workmen?

The exhaustive list of persons classified as “Workers” is contained in Schedule II of the Act. According to Section 2 (1)(n), Workmen (or Workers or Employees) broadly constitute:

1. Railway Servants

2. Master, Seaman or other members of the crew of a ship

3. A captain or other member of the crew of an aircraft

4. A person hired as driver, mechanic, cleaner or in any other capacity in connection with a motor vehicle

5. A person recruited for work abroad by a company, and who is employed outside India

Note: Workers do not include members of the Armed Forces of India.

Who is/are (an) Employer(s)?

According to Section 2 (1)(e) of the Workmen Compensation Act 1923, an employer has been defined as comprising a person or group of persons and any managing agent acting as a representative on behalf of an employer (in a trade or business) and, any person who hires the services of employees by entering into a contractual arrangement with the employer.

In the State of Kerala v. KhadeejaBeevi [1], it was held that even a Government servant, working as a “Mahout” in the forest department shall be treated as an employee under the Act even if he is covered by family benefits schemes under the Government.

In New India Assurance Co. Ltd. vs Mohan Kumar Sahoo[2], it was stated that a person engaged even for one day to drive a vehicle belonging to the owner is also an employee under this act. This is because the owner gives directions and exercises definite control over the person.

In Radhamony v. Secretary, Department of Home Affairs[3] also, it was held that an individual working as a driver will fall under the label of an employee irrespective of whether he is a non-governmental or government employee.

Who are dependants?

According to Section 2 (1)(d) of the Workmen Compensation Act 1923, dependants, who are entitled to monetary compensation include:

1. Widow of the departed.

2. Widower

3. A son who is below 18 years of age

4. An unmarried daughter

5. Widowed mother

6. Parents of the departed

7. Paternal Grandparents (If parents of the deceased are not alive)

8. A legitimately adopted son or an unmarried daughter

9. A minor sibling or a widowed sister

10. Widowed daughter-in-law

11. A minor child of a pre-deceased son or daughter (if the minor has no parent alive).

When is an employer liable to compensate? (Section 3)

Generally, an employer is held liable in the following circumstances: –

Accident or injury is caused in the course of the worker’s employment. In Natwarsinh A. Chauhan vs Niranjanbhai K. Shah[4], the court explained the expression- “arising out of and in the course of employment”, adding that there must be a derivative or proximate relation between the employer and the accident.

Occupational disorders and diseases, defined by the World Health Organization as “any disease contracted primarily as a result of an exposure to risk factors arising from work activity”, their main cause being the work environment. Examples- Occupational Asthma, COPD, and Dermatitis. Schedule III of the Act lists all possible and proximate occupational diseases that may occur in the particular nature of employment. An exhaustive list of occupation disorders is given in Schedule III of the Act.

Further, we must consider the situations when the employer isn’t liable:

1. Injury not resulting in partial or total disablement (for more than 3 days).

2. Injury (not resulting in death) caused:

  1. During the influence of drinks or drugs, or
  2. By willful disobedience of express orders and in defiance of safety measures, or
  3. By removal or disregard of safety devices or implements.

In DevidayalRalyaram v. Secretary of State[5], the doctrine of Added Peril was elaborated, according to which if a workman while performing his duty does something which is not required and involves extra danger, he shall not be liable to be compensated in the event of an injury.

3. When a suit for damages has already been instituted before a commissioner in a Civil Court and has been compensated by the employer.

Regarding the Amount of Compensation (Section 4)

Clause

Situation

Compensation

(a) Where death results from the injury

 

An amount equal to 50% of the monthly wages of the deceased workman multiplied by the relevant factor;

or

an amount of Rs. 80,000; whichever is more.

(Rs. 2,500 to the eldest dependant for funeral expenses in case of no dependant.)

(b) Where permanent total disablement results from the injury (A thorough list of such injuries is provided in Part I of Schedule I.) An amount equal to 60% of the monthly wages of the injured workman multiplied by the relevant factor,

Or

An amount of Rs. 90,000; whichever is more.

(c) Where permanent partial disablement results from the injury(A thorough list of such injuries is provided in Part II of Schedule I.) Same as % payable in case of permanent total disablement or loss of earning capacity caused by that injury (specified in Part II of Schedule I).

Same as % payable in case of permanent total disablement or in proportion to loss of earning capacity (as assessed by the qualified medical practitioner) permanently caused by the injury (not specified in Schedule I).

(d) Where temporary disablement, whether total or partial, results from the injury A half-monthly payment of the sum equivalent to 25% of monthly wages of the workman, to be paid [in accordance with the provisions of sub-section (2)].

Note: In the event of death or permanent disablement, such a lump sum equivalent of compensation can be worked out as per Schedule IV of the Workmen Compensation Act 1923.

What is the method of calculating monthly wages? (Section 5)

According to clause (a), the monthly wages shall be one-twelfth of the total wages payable for service not less than 12 months in case of a subsequent accident.

According to clause (b), if the worker had served less than a month, he would be paid the average monthly amount paid to a worker involved in the same work before the event of an accident.

According to clause (c), if it is not possible to calculate wages under clause (b), the monthly wages shall be 30 times the total wages earned in respect of the last continuous period of service immediately preceding the accident from the employer who is liable to pay compensation, divided by the number of days comprising such period.

When should the notice and claim be made? (Section 10)

In case of death, the notice must be given as soon as practicable or within 2 years. However, a report of the circumstances of serious injury leading to death must be given within 7 days to the Commissioner.

In the case of disease or disablement, it shall be deemed to be assumed from the day he was continuously absent from work.

The employer must communicate the circumstances of the death within 30 days to the commissioner. If he opines that it’s his liability, he may compensate within 30 days. If he opines that it isn’t his liability, he can justify it through defensive claims. The commissioner will decide whether he is liable to compensate or not and can ask the dependants to pursue their claim.

If the notice is irregular, it still can be entertained if:

1. The death was caused within the premises belonging to the employer

2. Other employers were aware of the time of accident or

The following needs to be mentioned in the notice:

a. Name and address of the person

b. Cause of injury of the person

c. Employer(s) responsible for managing the employee of a particular branch

The notice must be sent by a registered post to the residence or any office or place of business of the person on whom it is to be served, or it can be entered into a notice book. A notice book is mandatory for the employer to maintain so that the injured workers could themselves or through others record their injuries.

Regarding Free Medical Examination (Section 11)

An employee who informs about his injury shall be entitled to free medical examination by a qualified practitioner within 3 days of such information. Such a medical professional is tasked with assessing the loss of earning capacity, which helps in estimating compensation.

If he does not submit himself or obstructs his examination, he shall not be liable to be compensated.

If he leaves his place of work, he shall not be given compensation till he returns and submits.

Regarding Contracting (Section 12)

If there is an existing contract between the principal and Contractor in the course of a business or trade, the principal would be liable to compensate the employee, which is calculated with reference to the employee’s wages under the employer.

The principal gets indemnified by the contractor from whom the workman would have claimed compensation. Other questions arising out of default of agreement, as to rights and amount of such indemnity are dealt with by the Commissioner.

The principle shall not be liable to compensate if the accident occurs somewhere else (that is either on the premises on which the principal has undertaken or usually undertakes, to execute the work or which are otherwise under his supervision).

Regarding Insolvency of Employer (Section 14)

1. If there is a contract between the insurer and the employer or any scheme or arrangement with creditors in respect of a liability to an employee, then in case of insolvency, he can recover such amount to compensate the employee.

2. If the contract is void or voidable due to non-fulfillment of some conditions, the employer may take to prove its validity during the proceedings for ascertaining compensation or during liquidation.

3. In case the compensation is a half-monthly payment, the amount would be paid in a lump sum.

4. If the liability of the employer is greater vis-à-vis the insurer, the employee can prove his claim for the balance amount during the proceedings or during liquidation.

5. Insolvency of the company will not be applied if the company voluntarily relocates or reconstructs or merges with another company.

Special Provisions relating to:

1. Masters of ship and seamen (Section 15)

The Act is applicable with certain alterations, which are as follows:

1. The seamen need not give notice of any accident occurring onboard the ship.

2. The claim for compensation must be made within 1 year (after knowledge of the incident or 18 months if the ship goes missing.

3. No compensation shall be payable for such injuries for which provision of gratuity, allowance or pension is made under the War Pensions and Detention Allowances Schemes (of 1939, 1941, and 1942) or the Pensions (Navy, Army, Air Force and Mercantile Marine) Act, 1939by the Union Government.

2. Captains and Other Members of the crew of aircraft (Section 15A)

The Act is applicable with certain alterations, which are as follows:

1. The crew need not give notice of any accident occurring onboard the aircraft.

2. The claim for compensation must be made within 1 year (after knowledge of the incident or 18 months if the aircraft goes missing.

3. Workmen abroad of companies and motor vehicles (Section 15 B)

Workmen who are recruited by companies registered in India and working abroad and persons (drivers, mechanics, cleaners, etc.) operating motor vehicles registered under Motor Vehicles Act, 1988 abroad shall fall under these provisions:

The notice and claim will be attended by the local agent (of the vehicle or company) in the country where the accident occurred. Such a claim must be made within 1 year, subject to the Commissioner’s consideration.

Who are Commissioners?

Commissioners are public servants appointed under Section 20 of the Workmen Compensation Act 1923. Under Section 23, he/she is deemed to be a ‘Civil Court’ under the Code of Civil Procedure, having powers to admit evidence and summon witnesses and produce documents. According to Section 19, all queries as to the amount and duration of compensation, liability of the employer, nature and extent of disability are addressed exclusively by the commissioner.

How is a Commissioner appointed?

The State Government issues notification for appointment in the official gazette. To be eligible, a person must be/ have been:

1. A member of a State Judicial Service for a minimum of 5 years, or

2. An Advocate or a Pleader for a minimum of 5 years, or

3. A Gazetted Officer for a minimum of 5 years having experience in Personnel Management, Human Resource Development and Industrial relations.

A commissioner can also appoint one or more persons proficient in a particular field of inquiry to assist him/her in a matter.

Where can proceedings be undertaken by a Commissioner? (Section 21)

The Venue for proceeding may be:

1. The area where the accident took place

2. Wherever the dependants reside

3. At the registered office of the employer

However, if a Commissioner or State Government deems it just, it can transfer a matter completely to any other commissioner, who can conveniently deal with it.

Rules (Section 32)

Section 32 of the Workmen Compensation Act 1923, vests powers in State Government to make rules regarding the following matters: –

1. Prescription of intervals where an application may be made, which is subject to conditions when not attached with a medical certificate.

2. Prescription of intervals where an employee is required to submit himself/ herself for medical examination.

3. Prescription of the procedure to be followed by the Commissioner(s) and the Parties while disposing of the matter.

4. Regulation of transfer of cases from one commissioner to another.

5. Prescription of the manner of investment of money for the benefit of the dependants.

6. Representations of dependants (who are minors or unable to present them) in proceedings.

7. Prescription of the manner of formulation and registration of agreements.

8. Regulation of costs of proceedings

9. Prescription of the number of fees to be paid to the Commissioner relating to proceedings.

10. Maintenance of records and registers of proceedings (by the Commissioners)

11. Prescription of persons responsible for maintaining notice-books.

12. Prescription of the manner of diagnosis and certification, and measurement of incapacity created by occupational diseases.

Rules made under the Act by State Governments are laid before the State Legislatures and on similar lines, those made by Central Government are laid before the Parliament for modifications or altogether annulment after considerations and discussions.

Conclusion

Workers are crucial for the functioning of not only an industry or a business or trade, but they are specialized human resources or assets that keep the nation’s economy in motion. Owing to these contributions, they are respected and protected by law. One such legislation discussed in the article is the Workmen Compensation Act, 1923, which aims at doing good the loss or injury resulting from any accident or negligence of the employer. However, it must be noted that no amount of compensation can be weighed to the worth. It can only give some relief to their dependants or bridge the loss in their earning capacity due to disability.

Above all, it is necessary to ensure that workers are paid sufficient wages to lead a fair life with dignity. The working conditions must also be made healthier and safer. They must not be placed in extremely risky situations to realize tasks that undervalue their lives. Any injury that results due to the negligence of the employer or by accident must be followed by free medical treatment along with compensation in accordance with the Workmen Compensation Act 1923. Moreover, the compensation ascertained must be adequate with due weightage given to changing times.

[1] (1989) IILLJ 438 Ker

[2] 2003 II OLR 388

[3] 1995 ACJ 347

[4] 1991 ACJ 904

[5] 1983 (12) ELT 338 (Bom.)

This article has been written by Tazeen Ahmed, 1st Year B.A. LL.B (Hons) student at Jamia Millia Islamia, New Delhi

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