Key provisions
The Employee Compensation Act 1923 outlines several provisions to protect workers’ rights. Some of the key features include:
- Employer liability: Employers must provide compensation (to the employee or their family) if a worker gets injured or dies while performing their duties.
- Compensation for injuries: Compensation covers partial or permanent disability, injuries requiring long-term medical care and even fatalities.
- Work-related illnesses: If a worker contracts an occupational disease due to workplace exposure, they are entitled to compensation.
- Timely compensation: Employers must pay compensation without unnecessary delays or they risk facing penalties.
- Exemptions: Certain cases exempt employers from paying compensation, such as injuries caused by employee negligence or when the injury occurs outside work.
- Medical expenses: Medical costs associated with occupational injuries, such as hospital bills, operations and aftercare, must be paid for by the employer.
- Legal Framework: The act clearly defines legal proceedings for claim settlements, ensuring that workers receive their rightful compensation without unnecessary delays.
These provisions make the Workmen Compensation Act a crucial protection tool for workers across industries.
Workers Compensation Act 1923: Compensation amount
The amount of compensation under the Workmen Compensation Act 1923 depends on several factors, including the nature of the injury, the worker’s salary, and their age. Here’s how compensation is typically calculated:
1. In case of death
If an employee passes away due to a workplace accident, the employer must compensate the worker’s dependents. The compensation is as follows:
- 50% of the worker’s monthly wage multiplied by a factor based on age OR a minimum amount of ₹1,20,000 (whichever is higher).
- According to the employer's policy, funeral costs are also paid, usually up to ₹5,000 or more.
2. Permanent total disability
If a worker suffers a permanent disability that prevents them from working, the compensation is:
- 60% of the worker’s monthly wage multiplied by a factor based on their age OR a minimum of ₹1,40,000 (whichever is higher).
- Additional financial assistance is provided if the worker requires lifelong medical support.
3. Permanent partial disability
For partial but permanent disability, compensation is calculated based on the percentage of disability as per the injury schedule in the Act.
4. Temporary disability (Total or partial)
If a worker suffers a temporary injury, they receive:
- A half monthly payment that’s equal to 25% of their monthly wage.
Scope and applicability
The Employee Compensation Act 1923 applies to a wide range of industries and workers. Some important aspects include:
Who is covered?
- Workers employed in hazardous industries such as construction, mining, factories and transportation.
- Workers in government and private sectors where physical labour is involved.
- Employees working in extreme environments, including offshore oil rigs and chemical plants.
Who is not covered?
- Employees covered under the Employees’ State Insurance (ESI) Act.
- Casual workers or independent contractors who do not have an employment contract.
Updates and amendments
The Workmen Compensation Act has undergone several changes to improve worker safety and employer obligations. Key amendments include:
- Amendment in 2009: The act was renamed the Employee Compensation Act 1923 to make it more inclusive of all employees, not just workmen.
- Increase in compensation limits: The minimum compensation for death and disability was increased to provide better financial support.
- Mandatory insurance: Some sectors now require employers to have a Workmen Compensation policy to cover compensation costs.
- Legal penalties for non-compliance: Employers failing to compensate workers can face legal action and penalties.
- Extension to more industries: The act has expanded its reach to include more professions, such as gig economy workers, food delivery personnel, and e-commerce warehouse staff.
- Faster settlement process: New amendments ensure quicker compensation claims processing to reduce delays.
These amendments have made the act more relevant in modern workplaces, ensuring better employee protection.
When is employer not eligible to pay compensation?
While the Workmen Compensation Act 1923 mandates compensation for workplace injuries, there are certain cases where the employer is not liable to pay:
- Injuries due to worker’s negligence: If an employee gets injured due to their own reckless actions, such as working under the influence of alcohol, compensation may not be granted.
- Self-inflicted injuries: If a worker intentionally harms themselves, they are not eligible for compensation.
- Injuries outside work premises: The employer is not responsible if an injury happens outside the workplace and is unrelated to job duties.
- Injuries due to non-work activities: If a worker engages in activities unrelated to their job and gets injured, the employer is not liable.
- Violation of safety rules: If an employee ignores safety protocols and suffers an injury, the employer is not obligated to pay compensation.
These exceptions ensure that employers are protected from unnecessary financial burdens due to misconduct.
Conclusion
The Workmen Compensation Act 1923 is a crucial law that protects the financial well-being of employees who suffer workplace injuries. Over the years, the act has evolved to provide better compensation and include more workers under its scope. Employers must abide with this rule to ensure fair treatment of employees and avoid legal penalties.
For businesses, a workers’ compensation policy is a smart move to cover compensation claims. Workers should also be aware of their rights under the Employee Compensation Act 1923 to ensure they receive the support they deserve.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It is advised to verify the currency and relevance of the data and information before taking any major steps. Please read the sales brochure / policy wordings carefully for detailed information about on risk factors, terms, conditions and exclusions. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.