The Employees’ Compensation Act 1923: A Brief Overview

Every worker requires a stable position and wishes to be compensated for expenses incurred. Regardless of the company’s size, this is a requirement that must be satisfied. Ultimately, the viability of a business depends on its employees. Consequently, a company’s top priority is to ensure the welfare of its employees. This article discusses about at the time of injury to the employee how much compensation is awarded, under what conditions, who is eligible to file a claim, and much more. And also briefly describes the Employees Compensation Act 1923, Objective of the Employees Compensation Act 1923.

Quick Look about Employees Compensation Act 1923

The Employee’s Compensation Act 1923 is a law that was passed by the federal government and then put into effect by the different state governments. It gives workers social protection. The law gives people who work this kind of safety.

The Act was made because it was seen that the use of more advanced and complicated machines put workers in more danger. Under common law, the boss was only responsible for paying compensation if it was found that the workplace accident was caused by his negligence.

In 1884, India started talking about how to pay workers who were hurt or killed on the job. The inspectors of factories and mines then understood in 1885 that the Fatal Accidents Act of 1885 was not enough to do what it was meant to do.

When members of the Legislative Assembly, representatives from employers, workers, and experts in medicine and insurance got together to form a group, the State listened. Their report led to the Employees Compensation Act, which was passed in 1923.

With the passing of the Act, workers who got hurt on the job no longer had to go through expensive court processes to try to get paid.

Objective of the Employee Compensation Act, 1923

The main objective of the Act is to provide compensation to employees in the event of an accident at the workplace. Other objectives of the Employee Compensation Act, 1923 are:

• Management have budget for machine repairs. If machines can be cared for, so should humans in the same environment.
• Social security only compensates disabled or injured workers if the injury occurred while work. The Act provides relief and social security through employer-paid worker accident compensation.
• Worker negligence no longer prevents compensation.
• The Act also sets injury severity-based compensation. This informs employers of their accident compensation liability.
• The Act applies to all workers in factories, plantations, mines, transport establishments, trains, ships, circuses, construction, and other potentially risky occupations listed in Schedule II. Soldiers are exempt from the Act.

Scope of the Employee Compensation Act 1923

The Act only applies to workers in the businesses that are listed in the Act. With a few exceptions, the Act protects workers from losing money or getting hurt because of an accident that happened at work or because of their job.

Liability for Compensation on Employer

For the employer to pay compensation, the worker’s death or injury must have been caused by an “accident arising out of and in the course of his employment.” This means that the death or injury must have been caused by one of the following four things:

• There was a direct link between the injury and the accident (i.e., the worker was hurt at work).
• Both the injury and the accident happened at work.
• It is reasonable to think that the work contributed to the injury.
• The applicant proved that the work and the strain it caused contributed to or worsened the injury.

Conditions under which the employer is not required to pay compensation

These are the conditions when employer is not required to pay compensation:

• If the employee gets hurt but isn’t totally or partially unable to work for more than 3 days.
• Any injury that doesn’t cause total and lasting disability or death and was caused by a drunk or drugged accident.
• If a worker gets hurt because he or she broke the rules on purpose and took out a safety guard on purpose, the worker will be fired.

Compensation amount calculation

Below are the Compensation amount calculation criteria:

• An accident that causes permanent total disability A sum equivalent to 60% of the injured employee’s monthly wage multiplied by the relevant factor, or Rs.1,20,000/-, whichever is greater, is awarded.
• When a fatal accident occurs A sum equivalent to 50% of the dead employee’s monthly income multiplied by the relevant factor, or Rs.1,20,000, whichever is greater, is awarded.

Compliance requirements for the Employee Compensation Act 1923

Following are the compliance requirements:

• The applicant must tell the company about the accident or write it down in the notice book within a certain amount of time.
• Each note should include the name and address of the person who was hurt, as well as the reason why they were hurt and the date the accident happened.
• Then, send the claim form to the commissioner within two years of the accident.
• If someone gets sick at work, the accident is considered to have happened on the first day of sickness.
• If there’s a mistake in the letter or if it’s not sent on time, the claim for compensation won’t be turned down.
• Each year, the employer must file an Annual Return that lists the number of accidents and the amount of compensation paid, among other things.
• Employers must keep a notice book, which any injured worker on the property and any person acting in good faith on his behalf must be able to get to at all reasonable times.

Penalty for Non- Compliance

Below is the penalty for Non-Compliance

• If the amount isn’t paid within a month of the accident, the Commissioner will ask the employer to pay simple interest at the rate of 12% per year or at the rate that is in effect at any scheduled bank along with the settlement amount.
• If there is no good reason for the delay, the Commissioner will ask the employer to apologize and, after giving the employer a chance to be heard, will order the employer to pay a fine of up to 50% of the wages.
• In the following situations, the amount of the fine and interest should be paid to the worker or his dependent:
  • In case of temporary disability, the half-monthly instalments of reimbursement should be paid by the due date.
  • The half-monthly payments can be turned into a lump sum payment if the boss and employee agree to do so or if the employee asks the Commissioner to do so.

People that get compensation on behalf of Employee

Below are the people that will get the compensation on the behalf of the employee who died:

• A widow, a minor who is a legal son or daughter who hasn’t married, or a mother who has lost her husband are all eligible for compensation.
• If the family of the dead was totally dependent on the employee’s income at the time of his death or if the employee had a son or daughter who was 18 or older.
• A parent who isn’t a single mom.
• A minor illegitimate son, an illegitimate daughter who is not married, or a legitimate, illegitimate, or adopted daughter who is married and under 18 or who is a minor widow.
• A brother under 18 or a sister under 18 who isn’t married or a sister under 18 who is widow.
• A widowed daughter-in-law.
• A minor child of a predeceased son.
• A minor child of a predeceased daughter where no parent of the child is alive.
• An employee’s male grandparent if none of the employee’s parents are still alive.

Takeaway

The Act was primarily enacted for the benefit of the workers, so that if they incur costs because of an injury sustained in the course of their employment, they will be able to seek compensation from their employers. In this legislation, the general principle of vicarious liability is applicable.

The relationship between the employer and employee is that of master and servant. The only time an employee is eligible for compensation is if the accident occurred while they were performing their job duties at their place of employment.