EMPLOYEES’

COMPENSATION ACT, 1923

I July, 1924
Objectives
 To provide for compensation to employees
incapacitated by an injury from ‘accident arising out of
and in the course of employment’.
 It is a guarantee against hazards of employment ;
 This Act is based on the doctrine of noblesse oblige;
Scope and coverage
It extends to the whole of India;
It applies to workmen employed in factories, Mines,
Plantations, Transport Establishments, construction
work, Railways, ships and other hazardous
occupations, and employments specified in scheduled
II of the Act;
IT does not apply to members of the Armed Forced of
the Union and workmen who are covered by the ESI
Act, 1948.
 . Provisions were made for suitable compensation not
only in the case of accidents but also in case workers
are effected by any occupational diseases of the work;
 For quick disposal of cases the powers are vested with
the Commissioners appointed by the appropriate
government;
 The civil courts are barred under the Act and an
appeal from the Commissioners ‘Award’ will lie only in
the High Court.
PRINCIPLES GOVERNING COMPENSATION
 Casual connection between the injury and accident;
 Injury or loss must be caused by accident arise out of
and in the course of his employment;
 The onus lies upon the claimant;

Exceptions:
 Doctrine of added peril;
 Self-inflicted Injury
 If the injury does not result in a partial or total
disablement lasting more than 3 days
EMPLOYEE —[Sec.2(1)(dd]
Employee means a person who is —
(i) a railway servant as defined in clause (34) of Section 2 of the
Railways Act, 1989 (24 of 1989), not permanently appointed in any
administrative district or sub-divisional office of a railway;
(ii)(a) a master, seamen or other members 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;
 iii) employed in any such capacity as is specified in Schedule II;
EMPLOYEE —[Sec.2(1)(dd]
In any case, whether the employment of a particular workman is
of casual nature or otherwise depends upon the nature of
employment and onus in such cases is upon the employer to
prove the conditions necessary for excluding a person from the
category of workmen.
Who is a workman/ employee ?
Narayan v. Southern Railway, (1980) 1 LLJ 395 395 (Ker)--- A
licensed porter working under the railway administration.
Laloo Kashyap v. Chemicals and Fertilizers Factory,
Shahjahanpur and another, (2003)II LLJ66(All), - A claimant
of compensation continuously worked for about 4 year on daily
wages can be said to an employee and entitled for compensation
 Assistant Director of Fisheries v. Mathumeentchyia, AIR
1963 Mad.9----There is no hard and fast rule that work done on
a piece work basis will not bring about the employer-employee
relationship. Even a piece work job can bring employer-
employee relationship.

 Kochu Velu v. Joseph,(1980) II LLJ 220 (ker)– coconut climber

employed periodically can be said to be an employee;
 T.N. Sitharama Reddiar v. A. Ayyaswami Gounder ,AIR 1966
Mad.212– an employee employed in the construction of a well
for the purposes of the employer’s agricultural purposes can be
said to be an employee.
Who is not a workman?
If any person employed other than the purposes of
the employer’s trade or business is not a
workman.
 Thomas v. Babu, (1995) II LLJ 141(Ker)—when a
coconut climber works for more persons at once could
be considered as self-employed.
EMPLOYER -- [Sec2(1)(e)]
It includes—
(a) Any body of persons whether incorporated or not;
(b) Any managing agent of an employer;
(c) Legal representative of a deceased employer;
(d) When the services of an employee are temporarily
lent on hire to another person by the person with
whom the employee has entered into a contract of
service or apprenticeship, means such other person
while the employee is working for him
EMPLOYER -- [Sec2(1)(e)]

 Muncipal Board, Almora v. Jasad Singh and

AnotherAIR 1960 All.468 ---- Employer or his agent is
liable to pay compensation for the ordinary course of
business or trade.
 Zilla sahakari kendra bank Marydit v. Shahjadi
Begum and others,2007 I LLJ 426 Guj--- Where the
services of the employee is let on hire to some person and
he is under the orders and controls of such other person,
the person to whom the services are being actually
rendered shall be in law the employer of the employee.
Difference between contract of service and contract
for service;
 Master and servant relationship;
 Obligation of the employee ;
 Contract between the parties.
Sec.12 of the Act— vicarious liability of the principal employer in case of
contract for service.
Conditions—
 That the person called the principal is carrying on a trade or business
and, in the course of or for the purpose of that trade of business,
engages a contractor to execute the work;
 That work is ordinarily a par of the trade or business of the principal;
 The accident which gives rise to the liability for compensation must
have occurred , in or about the premises on which the principal has
undertaken, or usually undertakes to execute the work or which is in his
control or management;
 The accident must have occurred while the workman was in the course
of employment in executing the work.
Employer’s liability(Sec.3)

Personal injury
Personal
injury
caused
Disability—permanent and temporary
to a
employe
e by Physical, bodily and
accident
Prerequisites under Sec.3(1)..
 Personal injury;
 Accident;
 Arising out of and in the course of employment;
 The injury caused by the accident must have resulted
in the workman’s death or total or partial (permanent
or temporary )disablement
Exceptions to employer‘s liability for compensation

 Injury does not lead to the disablement of the

workman for a duration that goes for more than 3 days;
 Injury which did not lead to death that was triggered
by an accident is as result of –
(a) the influence of drugs or alcohol at the time of
accident;
(b) Intentional defiance of a rule that was made to
ensure the safety of all workmen;
(c) Wilful removal or disregard by the employee of any
safety guard or other device
Sec.3(2) – employer’s liability in case of occupational
disease;
Sec.3(2-A)—where there are more than one
employers, the Commissioner is authorized to fix up
the extent of responsibility of different employers;
Sec.3(3)-The Central or State Government after giving
a notification in the Gazette, add any description of
employment in Schedule III;
Sec.3(4)—Employer's liability to pay compensation;
Sec.3(5) – Civil Court has no Jurisdiction
Judicial interpretation
Judicial decisions on the words, ‘Personal injury’, ‘accident’,
‘occupational disease’, ‘arising out of the employment’ and
‘arising in the course of employment’.
(a) personal injury---
 Indian News Chronicle v. Mrs.Lazarus, AIR 1961 Punj 102;
Injury caused by an accident is not confined to physical injury.
It does not mean only physical or bodily injury. It includes even
a nervous shock, a mental injury or strain which causes a chill.
It is a term wider than bodily injury.
 Savithri Devi v. Bharti Filling Station and Another, 2015 III LLJ
662 (HP)-- In certain circumstances, working conditions also
have great impact on employees health;
What is Employer’s Liability in case of
Psychological ailments?
. Yates v. South Kirby Collieries Ltd, (1910) 2 K.B.538
 When a man in the course of his employment sustains a nervous shock
producing physiological injury, not a mere emotional impulse, he
meets with an accident arising out of and in the course of his
employment."
 Pathfinder Co. v. Industrial Commission, 62 Ill. 2d 556 (1976)
 "Against the rather old-fashioned clinging to some shred of the
`physical' in these cases, must be balanced the fact that, once this shred
has been found, awards issue that require recognition of some of the
most sophisticated theories of the interaction of mind and body of
some of the most complex neurotic conditions, including
`compensation neuroses.' As to the category of mental stimulus causing
nervous injury, with no `physical' involvement, could be enforceable
(b) Accident: Accident means an untoward mishap
which is not expected or designed by the workman.
Trustees port of Bombay v. Yamunabai. AIR 1952
Bom.382 --- “ If a particular accident would not have
happened to an employee had he not been employed
to work in the particular place and condition, it would
be accident arising out of the employment.”
(d) Employment: Employment as used in the phrase
"arising out of and in the course of employment” has
to be understood in the context of the language,
employed therein.
Ompal Singh and another v Madhu Transport
Company and another, 31st July 2018
 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. --- Clover Clayton &
Co. v. Hughes [1910] UKHL 885, 47 SLR 885 ;
 Coram --- Lord Chancellor (Loreburn), Lords Macnaghten, Atkinson,
Collins, and Shaw .
 Ratio: A workman suffered from a severe aneurism of the heart, from
which he might at any time have died even in bed. While he was at his
work engaged in manual labour the aneurism burst and he died. The County
Court Judge found that ‘the death was caused by a strain arising out of the
ordinary work of the deceased operating upon a condition of body which
was such as to render the strain fatal.’ He therefore awarded compensation.
 Held ( diss. Lords Atkinson and Shaw) that there was evidence to support
the finding, and that the injury had arisen out of and in the course of the
employment.
In a case of this nature to prove that accident has
taken place, factors which would have to be
established, inter alia, are:
1. stress and strain arising during the course of
employment
2. nature of employment
3. injury aggravated due to stress and strain"
Exceptions
Doctrine of Added Peril – Nemo exproprio dolo
consequitur actionem – No one maintains an action
arising out of his own wrong.
Wilful disobedience of orders or safety devices, etc –
Arya Muni v. UOI, (1965) 1 LLJ 24 – Employer has an
obligation to issue proper notice and must take care
regarding the safety devices of the employees.
Saurashtra Salt Manufacturing Company V Bai Valu
Raja And Others, AIR 1958 SC 881
M.Mackenzie v. I.M.Issak, AIR 1970 SC 1906;
Doctrine of Notional Extension
Eundo, Morando, Et Redeundo - Going, remaining,
and returning.
According to this theory, a workman may be regarded
as in the course has of his employment, even though
he has not reached or left the premises of his
employer.
Saurashtra Salt Manufacturing Company v Bai Valu Raja and
Others, Supreme Court of India, 28 April 1958, C.A. No. 368 of 1956,

“As a rule, the employment of a workman does not commence until

he has reached the place of employment and does not continue when
he has left the place of employment, the journey to and from the place
of employment being excluded. It is now well-settled, however, that
this is a subject to the theory of notional extension of the employer’s
premises so as to include an area which the workman passes and
repasses in going to and in leaving the actual place of work. There
may be some reasonable extension in both time and place and a
workman may be regarded as in the course of his employment even
though he had not reached or had left his employer’s premises.
Daya Kishan Joshi and another v Dynemech Systems Private Limited,
2017 Indlaw SC 1040 Supreme Court of India 9 August 2017 Civil Appeal
No. of 2017;
General Manager, B.E.S.T. Undertaking v. Mrs. Agnes,AIR 1964 SC 193 ;
National Iron and Steel Co. Ltd. Vs. Monorama (AIR1953Cal143,)
ISSUES
1. Whether the accident of the deceased occurred during the course of
and out of employment?
2. Whether the deceased falls under the definition of workman under
Employees’ Compensation Act, 1923?
3. If so, whether the claimant is entitled for compensation as per claim
application?
 Determination of Compensation
CASES
(Sec.4)
AMOUNT OF COMPENSATION

In case of injury resulting in Death Amount equal to 50% of the monthly

salaries of the deceased employee
multiplied by the appropriate factor or with
the amount of 1,20,000 or more.

In case of injury resulting in permanent total Amount equal to 60% of the monthly wages
disablement of the injured workmen multiplied by the
relevant factor or an amount of 1,40,000 or
more

In case of an injury occurring in permanent In case of an injury mentioned in part-II of

partial disablement schedule I, such percentage of the
compensation which will be payable in the
case of permanent total disablement as is
defined as being the percentage of the lack
of earning capacity caused by that injury.
 In case of an injury not mentioned in schedule I,
such percentage of the compensation payable for
permanent total disablement as is proportionate
to the lack of earning capacity (as examined by
the medical practitioner) permanently caused by
the injury.

Half-monthly payment which is equal to 25% of

the monthly salaries of the workmen, to be paid
In case of injury resulting in temporary by the provisions of section 4(2).
disablement.
When the claim of Compensation shall be payable under
Section 4(1)(c)(ii) ----- Management of Tamilnadu Cement
Corporation Ltd v. N.Jayapalan, (1994) 1 LLJ 838 Mad;
Management Sree Lalithambika Enterprises, Salem v. S.
Kailasam (1988) 1 LLJ 63 Mad– court has held that
“merely because the employer pays the same salary to the
workmen, it cannot be stated that there is no loss of earning
capacity. If the law were to be so, the employer can easily
evade the provisions of the Act by continuing the
employment on the same terms as were enjoyed by the
workman prior to the accident. Nor again can it be said that if
in future the workman is compelled to seek employment at
reduced wages, he can claim compensation. That would result
in the negation of the beneficial provisions of the Act.”
 Sewa Singh v. Manager Indian Hume Pipe Co (AIR
1964 Pun.512)--
The compensation payable as a result of permanent
total disablement has to be related to a loss of earning
capacity and there being mere loss of four fingers
without there being loss of earning capacity will not
be sufficient to claim for compensation.
Sec.8--- A non-dependant legal heir is not entitled to claim
compensation for the death of the workman---
 Habeebullah Marikar v. Periaswami, (1977)2 LLN 370;
 Imammiya sadrumiya Malek v. M.N.Shaik, (1986) 2LLN 640(Guj)
2. National Insurance Co.Ltd v. Ranjulata Bhuyan, (1996) 1 LLN
658. ----
Where the deceased workman had only one heir, the
compensation amount deposited with the commissioner became
the property of such dependant and if that sole dependant died
prior to the allotment of that compensation, the said amount
devolved on the heirs of the dependant and not on the heirs of
the deceased workman.
COMMISSIONER -- POWERS
Definition of Commissioner under Sec.2(b);
Power to Distribution of Compensation(Sec8);
Power to require from employers statements regarding
fatal accidents(Sec.10-A);
Power to Settle Disputes(Sec.19(1));
Power of Transfer (Sec.21(2));
Power to require further deposit in case of fatal
accident(Sec.22-A);
Power of Civil Court (Sec.23);
Power and duty to record evidence (Sec.25)
Power to order Costs(Sec.26);
Power to submit cases(Sec.27);
Power to withhold certain payments pending decision of
an appeal (Sec.30-A);
Power of recovery(Sec-31);