Employee’s Compensation Act, 1923
Decoding the Employees’ Compensation Act, 1923
A Visual Guide for Law Students
The Core Principle: No-Fault Liability
The Act establishes a system where an employee does not need to prove the employer’s negligence to receive compensation for a workplace injury. The focus is on providing swift financial relief as a form of social security.
Who is Covered? (Section 2 Definitions)
Employee
Includes persons in occupations listed in Schedule II of the Act, covering a wide range of roles from factory workers to drivers. The definition is crucial for determining the Act’s applicability.
Dependant
In case of an employee’s death, the Act specifies who is entitled to compensation. This includes the widow, minor children, and other relatives financially dependent on the deceased’s earnings.
The Golden Rule: Employer’s Liability (Section 3)
For an employer to be liable, the injury must satisfy a two-part test. It must be a personal injury caused by an accident that arises both “out of” and “in the course of” employment. This causal link is the foundation of any claim.
“In the Course of” Employment
Relates to the time and place of employment. Did the accident happen during work hours and at the workplace?
“Arising Out of” Employment
Relates to a causal connection. Was the accident a result of a risk associated with the job’s nature?
Liability Established
If both conditions are met, the employer is liable to pay compensation.
Exceptions to Liability
However, an employer is NOT liable if the injury (not resulting in death or permanent total disablement) is directly attributable to the employee’s actions.
Intoxication
The employee was under the influence of drugs or alcohol at the time of the accident.
Willful Disobedience
The employee deliberately disobeyed an express order or rule designed for their safety.
Removal of Safety Guard
The employee willfully removed or disregarded a safety device they knew was provided.
Calculating Compensation (Section 4)
The Act provides specific formulas to calculate compensation, ensuring consistency. The amount depends on the injury’s severity, the employee’s monthly wages, and an age-related factor from Schedule IV. This chart shows the wage percentage basis for major categories.
The Principal’s Responsibility (Section 12)
Employers cannot evade liability by using contractors for their business operations. Section 12 holds the principal employer liable for injuries to a contractor’s employees, though they can seek indemnity from the contractor.
Engages contractor for their trade/business
Executes the work
Injured while working
The Legal Process: From Accident to Appeal
The Act lays out a clear and time-bound process for making claims and resolving disputes, designed to be quicker than traditional civil litigation.
Accident Occurs
An injury arises out of and in the course of employment.
Notice to Employer (Sec 10)
The employee must give notice of the accident as soon as practicable.
Claim is Filed (Sec 10)
A claim must be preferred before the Commissioner within 2 years of the accident or death.
Adjudication by Commissioner (Sec 20)
A quasi-judicial authority hears the case, examines evidence, and passes an order for compensation.
Appeal to High Court (Sec 30)
An appeal can be filed in the High Court, but only if it involves a “substantial question of law”.
