Introduction

Even in a safe and conducive work atmosphere, accidents can happen. In such cases, the employer
may become liable to pay compensation to the injured, as such keeping that in mind and taking into
consideration the various situational scenarios that can take place in industries and what that could
mean for labourers who are at a disadvantage as compared to employers, the Employee’s
Compensation Act was enacted.

Employee’s Compensation Act, 1923 is very old enactment for providing social security to workmen
and was one of the earliest measures adopted to benefit labourers. The Act was known as
Workmen’s Compensation Act, but was named as Employee’s Compensation Act w.e.f. 18-1-2010 as
now employees in clerical capacity are also eligible for compensation. The act aims to provide
financial protection to employees and their dependents through compensation in case of any
accidental injury occurs during employment which results in either death or disablement of the
worker. 1

To get an overall understanding of the Act, it is useful to look at the “Statement of Objects and
Reasons” published with the Act when it was first passed in 1923. To quote: “….the growing
complexity of industry in this country with the increasing use of machinery and consequent danger
to the employee, along with the comparative poverty to employee themselves renders it advisable
that they should be protected, as far as possible from hardship arsing out of accidents.

An additional advantage of a legislation of this type is that by increasing the importance for
employers of adequate safety devices, it reduces the number of accidents to employees in a manner
that cannot be achieved by official inspection only. Further, the encouragement given to employers
to provide adequate medical treatment for their employees should mitigate the effects of such
accidents as does occur. The benefits so conferred added to the increased sense of security, which
he will enjoy, should render industrial life more attractive and thus increase the availability of supply
of labour. At the same time a corresponding increase in the efficiency of the average employees may
be expected.”

1
https://www.indiafilings.com/learn/employees-compensation-act/

1
 Employer’s liability to pay

The liability of an employer to pay compensation is limited and is subject to the provisions of the act.
Under sub-section (1) of the Section 3 the liability of the employer to pay compensation is
dependent upon the following conditions : (1)If personal injury is caused to a workman (2) Such
injury must have been caused by an accident (3)Accident must have been arisen out of and in the
course of his employment (4)The injury must have resulted either in death of the employee or in his
total or partial disablement for a period exceeding3 days. The employer shall not be so liable to pay
compensation in the following case - (a) If the injury did not result in the total or partial disablement
of the workman for a period exceeding three days; (b) in respect of any injury not resulting in death
or permanent total disablement the employer can plead –  That the workman having been at the
time thereof under the influence of drink or drugs; or  That the workmen wilfully disobeyed to an
order expressly given or to a rule expressly framed for the purpose of securing the safety of
workmen; or  That the workmen wilfully removed or disregarded any safety guard or other device
he knew to have been provided for the purpose of securing the safety of workman

Every Employer

1. Employing persons listed in Schedule II to the Act;

2. Carrying on an occupation listed in Schedule III to the Act

Is liable to pay compensation under the Act. 2

Employees Entitled To Compensation: Every employee (including those employed through a

contractor but excluding casual employees), who is engaged for the purposes of employers business
and who suffers an injury in any accident arising out of and in the course of his employment, shall be
entitled for compensation under the Act.

A workman in the railway had a job that entailed repairing clocks at different stations. While on his
way to repair a clock in one of the stations, the workman was stabbed and died eventually. The court
ruled that the death of the workman was as a result of an accident that happened in the line of
employment3

Personal injury

The compensation is payable in cases of personal injury caused to the workman by accident arising
out of and in the course of his employment. The expression “personal injury” has not been defined.
Personal injury under the act means physiological injury. It is a bodily injury or a physical injury to
which would also include abnormal mental conditions. Personal injury includes any harmful change
in the body. It need not involve physical trauma, but may include such injuries as disease, sunstroke,
nervous collapse, hysterical paralysis and neurasthenia. 4 It may be external, or may be internal. In

2
http://aiftponline.org/journal/2016/june-2016/the-employees-compensation-act-1923-old-name-the-
workmens-compensation-act-1923/
3
Bhayabhai v Central Railway, AIR 1955, BOM. 105
4
Larsens’ Workmens Compensation Law, 2009, Vol I, 613

2
the case of chest pain arising during duty due to strenuous work for many hours, such may be
termed as an accidental internal injury.

The word ‘personal injury’ being wider than bodily injury also includes all physical injuries which may
be caused by an accident arising out of and in the course of employment. I also include all mental
strains or mental tension, provided that such mental conditions have arisen by accidents arising out
of and in the course of employment. Similarly, a death from heat stroke has also been held to be
personal injury entitling the dependant to compensation. 5

In India News Chronicle Ltd v Luis Lazarus where a workman was under the duty as an electrician to
go to the heating room and then to a cooling room frequently, where the temperature was kept low.
While on duty the workman went to the cooling room and thereafter fell ill and subsequently died of
pneumonia. The Court held that the ‘injury’ in section 3 of the workmen’s compensation Act does
not mean mere physical injury but may include a strain which causes a chill. What is important is
that the result of the injury must be such as to either kill a workman or partially or totally
incapacitate him from work for a period exceeding three days. Thus if an injury is sustained whether
physical or mental by accident arising out of and in the course of employment, the employee is
entitled to compensation, provided the injury results in either death or partial or total disablement
for a period exceeding three days.

It may be concluded that personal injury means any injury caused to the person of an employee
affecting his efficiency of labour or reducing his earning capacity in any employment in which he was
engaged at the time of accident or in every employment which he was capable of undertaking at
that time. Another essential required for making an employee entitled to compensation is that
personal injury must have been caused by an accident arising out of and in the course of
employment.

The word ‘accident;’ has not been defined in the statute, however it should be understood in the
popular and ordinary sense as a mishap or untoward event which is not expected or designed. Such
accident is arisen, shall make the employer liable for compensation, even if it be found that there
was negligence on the part of the employee concerned. If the work in which the workman is
engaged is within his employment, the question of negligence, great or small, is irrelevant, if the
workman is doing an act within the scope of his employment, no amount of negligence on his part
can change his action into a non-employment job, so as to exempt the employer from liability to pay
compensation.

In Regional Director, ESI coprporation v Francis De Costa6, Francis de Costa met with an
accident while he was on his way to his place of employment. The accident occurred at a place which
was about 1 km to the north of the factory at 4:15 and the duty shift of Francis de Costa was to
commence only at 4:30 pm. Francis was going to the factory and was hit by a lorry belong to his
employers and sustained fracture in his collar bone. His claim for disablement benefit was allowed
by the ESI Court but was rejected by the High Court and finally the case went to the Supreme Court.
The Supreme Court rejected the appeal since there was no casual connection between the employer
and the accident. Francis de Costa was not entitled to compensation.

Further, the Supreme Court laid down the following guidelines for determining what constitutes
personal injury: -
5
Mrs Santan Fernandez v B. P. (India) Ltd 58. Bomb. LR 149
6
1197 I LLJ 34

3
 i. There must be casual connection between the injury and the accident and the work
done should be performed in the course of employment.
ii. The onus is upon the applicant to show that it was the work and its resulting strain
which contributed or aggravated the injury.
iii. If the evidence brought on record establishes a greater probability which satisfies a
reasonable man that the work contributed to the causing of the personal injury, it would
be enough for the workman to succeed, but the same would also depend upon the facts
of each case

Thin line of difference between ‘injury’ and ‘accident’

The main difference between Accident and Injury is that the Accident is an unforeseen and
unplanned event or circumstance and injury is a physiological wound caused by an external source,
sometimes however accident and injury coincide.

It has to be established that there was some casual connection between the injury of the workman
and his employment. If the workman dies a natural death as a result of a disease which he was
suffering from, or while suffering from a particular disease he dies of that disease as a result of wear
and tear of the employment, the employer may not be held liable. But if the employment is a
contributory cause or has accelerated the death, or if the death was due not only to the disease but
also the disease coupled

Occupational diseases: the Act makes provisions for payment of compensation in two cases, first in
case of personal injury caused to the employee by accident arising in and out of employment and
secondly in cases of occupational diseases. These diseases are called occupational diseases because
they are contracted because of the occupation of the person concerned. Such diseases are peculiar
to the occupation of a person.

As per Section 3(2) certain occupations involve clear risks from specified diseases. If the
workers in these occupations contract particular diseases, it is practically certain that the disease
arose out of the employment. But most industrial diseases are contracted gradually, and in the case
of a workman who has pursued the same occupation under several employers, it is not always
possible to assign responsibility to any particular employer. This is especially the case as regards lead
poisoning and phosphorous poisoning, the two diseases at present entered in Schedule III.

On the other hand, anthrax is a disease which is not contracted gradually. The clause
accordingly provides that where a workman contracts one of the three specified occupational
diseases, it is for the employer to prove that the disease did not result from the employment. Except
in the case of anthrax. The grant of compensation is subject to the condition that six months should
have elapsed since the workman took service with the employer concerned. So, section 3(2), deals
with the payment of compensation in case of an injury resulting from occupational diseases. The list
of the occupational diseases is contained in schedule III of the Act. Schedule III is divided into three
parts, A, B and C. The disease contracted must be an occupational disease peculiar to the
employment specified in schedule III. In respect of every such disease mentioned as occupational
disease in schedule III, a list of number of employments is given.

To support any claim for compensation in case of occupational disease in part A no specified
period of employment is necessary; for disease in part B the employee must be in continuous
employment of the same employer for a period of employment would be such as is specified by the
central Government for each such employment whether in service of one or more employers. The
contracting of any accident arising out of and in the course of employment unless the contrary is

4
proved. Part A of schedule III- The employer shall be liable to pay compensation for an injury
resulting from an occupational disease mentioned in Part a of schedule III, if an employee employed
in any employment specified in part A of schedule III contracts any disease specified therein as an
occupational disease peculiar to that employment. The contracting of the disease shall be deemed
to be an injury by accident would be deemed to have arisen out of and in the course of employment.
Contracting of an occupational disease after discontinuance of service.- If any such disease as is
mentioned in part A of Schedule III develops after an employee has left the employment, no
compensation shall be payable to him.

Part B of schedule III.- In case of contracting of any disease mentioned in part B of schedule III the
employer shall be liable if an employee while in the service of an employer in whose service he has
been employed for a continuous period of not less than six months in any employment specified in
part B of schedule III contracts any disease peculiar to that employment. The contracting of the
disease shall be deemed to be an injury by accident within meaning of this section, and unless
contrary is proved, the accident would be deemed to have arisen out of and in the course of the
employment. Contracting of an occupational disease after discontinuous of service- The employer
shall be liable to pay compensation to an employee where an employee contracts any disease as
aforesaid after he has left his employment in the following conditions: (1) If an employee has served
under any employer in any employment specified in Part B of Schedule III for a continuous period of
six months.(2) If an employee has after cessation of his service contracted any disease specified in
Part B of Schedule III as an occupational disease peculiar to that employment. (3) If it is proved that
such disease arose out of employment. The contracting of the disease shall then be deemed to be an
injury by accident within the meaning of this section.

Part C of Schedule III- Where an employee contracts any disease specified in Part C of Schedule III
the employer shall be liable: (1) If an employee was in the service of one or more employers in any
employment specified in Part C of Schedule III for such continuous period as the Central Government
may specify in respect of each such employment; and (2) If he contracts any disease specified
therein as an occupational disease peculiar to that employment. If the above two condition fulfilled,
the contracting of the disease shall be deemed to be an injury by accident within the meaning of
section 3 of the Act and unless contrary is proved the accident shall be deemed to have arisen out of
and in the course of the employment. According to the first proviso to sub-section 2 of section 3 if it
is proved: a. That an employee while in service of one or more employers in any employment
specified in Part C of the Schedule III has contracted a disease specified therein as an occupational
disease peculiar to the employment during a continuous period which is less than the period
specified under sub-section 2 of section 3 for that employment, and b. That the disease has arisen
out of and in the course of employment; the contracting of such disease shall be deemed to be an
injury by accident within the meaning of section 3 of the Act

Contracting of such occupational disease after discontinuous of service.- where an employee

contracts an occupational disease after discontinuous of his service the employer shall be liable to
pay compensation:

1. If it is proved that the employee has served under one or more employers in any employment
specified in Part C of Schedule III for such continuous period as the central Government may specify
in respect of each employment;

2. If he has after cessation of his service contracted any disease specified in Part C of Schedule III as
an occupational disease to that employment; and

5
3. If it is proved that such disease arose out of the employment. The contracting of the disease shall
be deemed to be an injury by accident within the meaning of this section.

The accident must have arisen out of and in the course of his employment:-

The most important essential requirement is that an accident which causes personal injury to the
workman must arise out of and in the course of his employment. It has been very correctly observed
that the phrase “arising out of and in the course of the employment “ is taken from the English Act
originally appearing in the Act of 1897. It has been adopted in the American and Dominion Act. It
also occurs in New Zealand Act, and has the same meaning as that of the English Act. There is hardly
any general principle which can be evolved to explain and define the phrase ‘arising out of
employment ‘, but attempts have been made to explain it by classification, that is, to the nature,
condition, obligations and incidents of the employment. Where in a given case, an accident arises on
the one hand out of the injured person’s employment although he has conducted himself in it
carelessly or improperly, or , on the other hand, arises not out of his employment but out of the fact
that he has outside the scope of it, or has added to it some extraneous peril of his own making or
has temporary suspended it while he pursues some excuses of his own, or has quitted it altogether,
are all questions which, after as they arise, are susceptible of different answers by different minds as
explained by several well-known judges and jurists, and are always question s of nicety. So it is here,
I doubt if any universal test can be found. Analogies, not always so close as they seem to be at first
sight, are often resorted to, but in the last analysis each case is decided on its own facts.” 7

The expression ‘arising out of’ suggests the course of an accident and the expression in the
course of suggests the time as well as the place of employment. Employment is not to be defined in
a narrow manner by reference only to the duties of an employee but the character, conditions,
incidence and special risks involved will have to be taken into consideration. The term ‘course of
employment’ emphasizes the time when accidental injury was caused, and ‘out of employment’
emphasizes that there must be causal connection between the employment and the accidental
injury .The words ‘arising out of the employment’ are wide enough so as to cover a case, where
there may not necessary be a direct connection between the injury caused as a result of an accident
and the employment of the employee. And there may be circumstances attending the employment,
which would go to show that the employee received personal injury as a result of the accident
arising out of his employment. It has been held by the Bombay High Court that if employment is a
contributory cause, or if the employment has accelerated the death or if it could be said that the
death arose out of the employment of the diseased employee.

If the accident had occurred on account of the risk which is an incident of employment, the claim for
compensation must succeed, unless of course, the employee has exposed himself to an added peril
by his own imprudence. In the case of Savitri Devi v. Bharti Filling Station and Another 8, the
appellant’s son worked as driver with the respondent, the owner of the tanker and he died while on
duty. Appellant filed petition for compensation but was denied by the respondent on the ground
that there was no connection between death and work of the deceased. The Commissioner
dismissed the petition filed fir compensation. The High Court held that the commissioner wrongfully
7
Dr.V.G.Goswami, Labour and IndustrialLaws,pg-406, Central Law Agency , Allahabad,8 th Edition
8
2015 III LLJ 662(HP)

6
concluded that there was no connection between work and death of deceased. The very fact that
the deceased was working as a driver and that too of oil tanker, his job was full of stress and strain. It
was not necessary for the petitioner to prove that her son was suffering from heart ailment before
the accident. The Court can take judicial notice that at times the person may die due to first massive
heart attack.

Prof.A.Larson has laid down four lines of interpretation of “arising out of employment” which are as
under:

(a) Peculiar or increased risk doctrine- this is some form or other has in the past been
announced by most courts as the controlling rule. Under this doctrine, injury arises out of the
employment only when it arises out of hazard peculiar to or increased by that employment, and not
common to people generally. The doctrine in practice has produced many exclusions which are
difficult to reconcile with purposes of compensation legislation, most conspicuously in the ‘street
risk’ cases and cases of injury by lightening, freezing, sunstroke and the like.

(b) Actual risk doctrine:-Under this doctrine, more and more courts are saying “we do not care
whether this risk was also common to the public, if in fact it was a risk of this employment”. It is
more defensible rule than the preceding one, since there is no real statutory basis for insisting upon
a peculiar or increased risk, as long as the employment subjected claimant to the actual risk that
injured him. One effect is to permit recoveries in most street risk cases and in a much greater
proportion to act of God cases.

(c) Position Risk Doctrine:-Few Courts have been willing to accept the full implications of the
positional risk. That an injury arises out of the employment if it would not have occurred but for the
fact that the conditions and obligations of the employment placed claimant in the position where he
was injured. However, it is not uncommon for the test to be approved and used in particular
situation. This theory supports compensation, for example, in cases of stray bullets, roving lunatics
and other situations in which the employment’ only connection with the injury is that its obligations
place the employee in the particular place at the particular time he was injured by some neutral
force meaning by “neutral” personal to the claimant nor distinctly associated with the employment.

(d) Proximate cause:-The three preceding line of interpretation are the one s which figure
prominently in modern compensation law. However, the proximate cause test cannot be ignored
entirely here, since it appears in some of the older cases and since the test, and the philosophy on
which it rest, still occasionally crop up in opinions and tests. The proximate cause test would demand
that harms be foreseeable as the hazard of this risk of employment and that the chain of causation
be not broken by an independent intervening cause, such as an act of God.

Notional Extension of Employer’s Premises

A considerable difficulty is felt to determine whether an employee acted within the course of
employment while meeting with an accident to entitle him to compensation. An employee is
considered to be acting in the course of his employment when he is engaged in doing something he
was employed to do or when he is doing in the discharge of duty of his employer directly or
indirectly imposed on him by his contract or services. The expression applies to employment as such,
its conditions, its obligations and its incidents and if as a reason of any of these, an employee is
brought within the zone of special danger and so injured and killed, the Act applies to such a case.
An employee who suffers from an accident during the transit on work undertaken on behalf of his

7
employer but out of his ordinary place of work is also covered by the words ‘arising in the course of
employment’. In the case of National Iron and Steel Co.v . Manorama 9, a boy was employed in a tea
shop located outside the factory gate. As a part of his duty he was required to take the tea from the
shop to the persons working in the factory. One day when the boy was coming out of the factory
after serving tea, he passed through a violent mob of factory workers who were leaving the factory.
The mob attacked the police who fired upon the mob in self defence. The boy was injured by a bullet
and died in the hospital. The mother of the boy claimed compensation. It was held that the accident
arose in the course of employment and death occurred because of the risk to which he was exposed
by the nature of his employment.

In the leading case Trustees of the Port of Bombay v. Yamunabai 10 , the facts were that a bomb
placed in the premises of a workshop exploded and caused injury to an employee. It was held that
the employee was not responsible for placing the bomb and the injury due to its explosion were
caused at the time and place at which he was employed. Therefore, injury was the result of an
accident arising out of his employment.

In the light of the decided cases by the courts from time to time relating to the doctrine of notional
extension of the employers premises for the purposes of making him liable to pay compensation
under the provisions of the Act, the trends which emerge are as follows:-

(a) The time taken for going on the place of work and returning therefore to home come within
the purview of accident “arising out of and in the course of employment”

(b) The transport facilities provided to the worker for reporting on duty must not only be in the
nature of concession or privilege or in the nature of option to avail of or not to avail of, and further
where the means of transport provided by the employer is not only the most convenient means but
also the only means to reach the place of work, it would be deemed to be treated as implied
obligation on the employer to provide the transport and reciprocal obligation on the employee to
avail of it. But such cases are to be decided on merit after taking due note of the fact situation in
each case.

(c) In the case of accident taking place on a public road, the employer can made liable if the
contract of employment of the worker required him to be there. The distance from the place of
employment in such cases is immaterial and lastly,

(d) The employee concerned had met with an accident outside the premises of the
establishment while on duty and within the terms and conditions of employment whether expressly
or impliedly laid down in the contract of service would be entitled for compensation.

Burden of proof- In Halsbury’s Laws of England, it is stated that the burden of proof both that the
accident arose out of in the course of employment rests in the first place upon the employee or his
dependants. Where, however, the employee is engaged in his employer’s work up to the time of his
death, and the last act known about him are consistent with the continuance of that work, the
burden is on those who allege a cession of work, and similarly, if it is alleged that the employee has
been guilty of a peril, the onus of providing it is upon the employer. 11

9
AIR 1953 Cal.143
10
4 F.J.R.190.
11
S.K. Puri, Labour and Industrial Law, pg-289-294, Allahabad Law Agency Faridabad (Haryana), 10 Edition

8
The workmen’s compensation act aims to provide relief and financial protection to employees and
their dependants in case of accidents arising out of and in the case of employment which results
either in death or disablement of the worker.

A. INJURY RESULTINF EITHER IN DEATH OF THE EMPLOYEE OR IN HIS TOTAL OR PARTIAL

DISABLEMENT FOR A PERIOD EXCEEDING THREE DAYS

The compensation to be paid by the employer for injuries caused depends on extent of the
disablement suffered by the worker. More severe disablements naturally receive higher
compensation. They have been categorised as:

i. Death

ii. Disablement –

a. Permanent total disablement

b. Permanent partial disablement

c. Temporary disablement which includes

• Temporary total disablement

• Temporary partial disablement

TOTAL DISABLEMENT – Disablement, in ordinary language, means loss of capacity to work or move.
Such incapacity may be partial or total and accordingly there are two types of disablement, partial
and total. In the Act both types of disablement are further subdivided into two classes, temporary
and permanent.

According to Section 2(1)(g), total disablement means such disablement, whether of a temporary or
permanent nature, as incapacitates a workman for all work which he was capable of performing at
the time of the accident resulting in such disablement, provided that permanent total disablement
shall be deemed to result from the permanent total loss of the sight of both eyes or from any
combination of injuries specified in Schedule I, where the aggregate percentage of the loss of
earning capacity as specified in that schedule against those injuries, amounts to one hundred per
cent. If a Carpenter‘s left hand above elbow is amputated as a result of a personal injury suffered in
the course of his employment, it is total disablement because a carpenter cannot work with one
hand. 12

PARTIAL DISABLEMENT – By Section 2 (g) Temporary Partial Disablement means such disablement as
reduces the earning capacity of a workman in any employment in which he was engaged at the time
of the accident, and Permanent Partial Disablement means such disablement as reduces his earning
capacity in every employment he was capable of undertaking at that time.

In a case of Partial Disablement it is necessary that (a) there should be. an accident, (b) as a result of
the accident the workman should suffer injury, (c) which should result in permanent disablement
and (d) as a result whereof his earning capacity must have decreased permanently. In the proportion
in which his earning capacity has been decreased permanently he is entitled to compensation. The
medical evidence showing loss of physical capacity is a relevant factor but it is certainly not the
decisive factor as to the loss of earning capacity. It is the loss of earning capacity that has to be
determined. The type of disablement suffered is to be determined from the facts of the case. But it

12
Pratap Narain Singh Deo v. Shrinivas AIR 1976 S.C. 222.

9
is provided that every injury specified in Part II of Schedule I to the Act shall be deemed to result in
permanent partial disablement. The schedule also mentions the percentage loss of earning capacity
which is to be presumed in each such case. 13

Section 4 provides for compensation for:

1) Death

2) Permanent total disablement

3) Permanent partial disablement and

4) Temporary disablement – total or partial.

1) Compensation for Death: Where death results from an injury, the amount of compensation shall
be equal to 50 percent of the monthly wages of the deceased workman multiplied by the relevant
factor, or Rs. 85,000 whichever is more.

2) Compensation for Permanent Total Disablement: Where permanent total disablement results
from an injury, the amount of compensation payable shall be equal to 60 percent of the monthly
wages of the injured workman multiplied by the relevant factor, or Rs. 90,000, whichever is more.

3) Compensation for Permanent Partial Disablement:

i) In the case of an injury specified in Part II of Schedule I, such percentage of the compensation
which would have been payable in the case of permanent total disablement as is specified therein as
being the percentage of the loss of earning capacity caused by the injury; and in other words, the
percentage of compensation payable is proportionate to the loss of earning capacity permanently
caused by the Scheduled injury. Thus, if the loss of earning capacity caused by an injury specified in
Part II of Schedule I is 30 percent, the amount of compensation shall be 30 percent of compensation
payable in case of permanent total disablement.

ii) In the case of an injury not specified in Schedule I such percentage of the compensation payable
in the case of permanent total disablement as is proportionate to the loss of earning capacity (as
assessed by the qualified medical practitioner) permanently caused by the injury.

4) Compensation for Temporary Disablement: A half monthly payment of the sum whether total or
partial results equivalent to 25% of monthly wages of the from the injury workman to be paid in the
manner prescribed.

5) Compensation to be Paid when due and Penalty for Default: Section 4A provides for the payment
of compensation and the penalty for default. It provides that compensation shall be paid as soon as
it falls due. Section 4 mandates employer to pay compensation amount as soon as it falls due to
victim or his or her legal heirs. However, where the employer does not accept the liability for
compensation to the extent claimed, he shall be bound to make provisional payment based on the
extent of liability which he accepts, and such payment shall be deposited with the Commissioner or
made to the workman, as the case may be, without prejudice to the right of workman to make any
further claim.

Wages are the basis for amount of compensation paid. Two workers earning different salaries
therefore will get different amounts of compensation even though the injury they suffered might be
identical. Compensation under this Act is calculated on the basis of the monthly wage received by

13
https://shodhganga.inflibnet.ac.in/bitstream/10603/28179/12/12_chapter%204.pdf.

10
the worker. According to this Act it is the amount of wages which would be payable for a month’
service – i.e. irrespective of whether the worker is paid on a daily, weekly or piece rate basis.

Further responsibilities of the employer under Employees Compensation Act, 1928

a) Employer shall send a written report to the Commissioner within 7 days of occurrence of any fatal
accident failing which the employer may be held liable for fine amounting to Rs. 5000/-

Death during the course of employment - If the deceased employee met with his death while he was
going to his place of work and the death has arisen during the course of employment, then the
employer is liable for compensation.

Entitlement to claim compensation - Where death was accelerated on account of stress and strain
of the working condition, it is not necessary that there should be a direct connection between the
cause of death and the nature of duties. Even if a casual connection between the two can be shown
then the dependants of the deceased would be entitled to claim compensation from the employer.
Injury sustained by a workman must be a physical injury on account of accident.

Liability under Fatal Accidents Act, 1855

As per Section 1A of the Act, whenever the death of a person shall be caused by wrongful
act, neglect or default, and the act, neglect or default is such as would (if death had not ensued)
have entitled the party injured to maintain an action and recover damages in respect thereof, the
party who would have been liable if death had not ensued, shall be liable to an action or suit for
damages, notwithstanding the death of the person injured and although the death shall have been
caused under such circumstances as amount in law to felony or other crime.

Under the Act a suit for damages can be instituted by wife, husband, parent and child, if any, of the
deceased person. Under the Act compensation awarded for loss of dependency is worked out by
applying the principle of multiplier is a part of damages “proportioned to the loss resulting from the
death” 14

Liability under Common law

If bodily harm or death of an employee is caused by another employee during the course of
his employment, employer can be held vicariously liable, under the respondeat superior doctrine, for
negligent acts or omissions by their employees in the course of employment. For an act to be
considered within the course of employment it must either be authorised or be so connected with
an authorised act that it can be considered a mode, though an improper mode, of performing it. A
tort can be instituted against the employer by the legal heirs of the deceased for seeking adequate
damages on the ground of loss of livelihood. 15

If the injury does not result in the partial or total disablement of the workers for a period
exceeding three days the employer is not liable to pay compensation to workers.

According to the provisions of this Act, the amount of compensation depends upon the nature of the
injury, average monthly wages and age of the workers and the same are tabulated below:

14
https://www.india-briefing.com/news/workplace-injury-compensation-india-11077.html/.
15
http://asklabourproblem.info/the-liability-of-an-employer-in-case-on-an-industrial-accident/.

11
 Cases 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 85,000 or more.

In case of injury resulting in permanent Amount equal to 60% of the monthly wages
total disablement of the injured workmen multiplied by the
relevant factor or an amount of 90,000 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

In case of injury resulting in temporary Half-monthly payment which is equal to

disablement. 25% of the monthly salaries of the
workmen, to be paid by the provisions of
section 4(2)

Half-Monthly Payment - Half-Monthly payment will be reviewed by Commissioner on the application

by the Employer or employee. A certificate of qualified medical practitioner needs to accompany the
application that there has been changed in the condition of the employee. On review, Half-Monthly
payment may be extended, decreased, continued or ended or converted into lump-sum under
Employees Compensation Act, 1923.

Registration of Agreements - The amount payable as compensation can be settled in the manner of
agreement; the employer should send a memorandum to the Commissioner. The commissioner will
verify and record the memorandum in a registered manner if satisfied.

12
In case if the agreement has been obtained by fraud or undue influence or another improper
manner in such cases, the commissioner will refuse to record the agreement.

Procedure to Claim the Compensation

The processes for filing claims are as follows:

• The applicant has to give notice of accident to the employer or by entering in the notice
book within an appropriate period.

• Every notice submitted should be with the name and address of the person injured and also
by including the cause of the injury and the date on which the accident occurred.

• Then submit the claim application to the commissioner within two years from the date of
the accident.

• In the event of an occupational disease, the accident is deemed to have occurred on the first
day of illness.

• In case of any defect if any in the notice or not giving notice or delayed application will not
reject the claim for compensation. 16

Due and Penalty for Non-Payment - The employer becomes responsible for paying the compensation
immediately when the personal injury occurs to the employee by accident during the work.

The amount of compensation paid will be calculated from the date of the accident happened.

If the amount is not paid within a month from the date of the accident, the Commissioner will ask
the employer to pay simple interest at the rate of 12% per annum or as prevailing in any scheduled
bank along with the compensation amount.

Moreover, if there is no justification for the delay, the Commissioner will demand an apology from
the employer after giving a reasonable opportunity of being heard, direct the employer to pay a
further sum not exceeding 50% of the compensation, through penalty. The amount of penalty and
also interest should be paid to the workman or his dependent in the following cases:

The half-monthly instalments of compensation (payable in case of temporary disablement) should

be paid within the time specified. The half-monthly instalments can be converted into a lump sum
payment, by an agreement between the employer and the employee or by applying to the
Commissioner. 17

WHEN EMPLOYER IS NOT LIABLE TO COMPENSATE

A.THE EMPLOYER SHALL NOT BE ABLE TO PAY COMPENSATION IF THE INJURY DID NOT
RESULT IN THE TOTAL OR PARTIAL DISABLEMENT OF THE EMPLOYEE FOR A PERIOD EXCEEDING
THREE DAYS

The employer is not liable to pay compensation in the following cases:-

16
https://securenow.in/blog/amount-compensation-workers-entitled-under-workmen-compensation-act/.
17
https://www.indiafilings.com/learn/employees-compensation-act/#targetText=Employer's%20Liabilities
%20for%20Compensation,arising%20out%20during%20his%20employment.

13
I. If the injury does not result in the total or partial disablement of the workman for a period
exceeding three days.

II. If the injury, not resulting in death or permanent total disablement, is caused by an accident
which is directly attributable to:-

• the workman having been at the time of the accident under the influence of drink or drugs;

• the willful disobedience of the workman to an order expressly given, or to a rule expressly
framed, for the purpose of securing the safety of workmen;

• the willful removal or disregard by the workman of any safety guard or other device which
has been provided for the purpose of securing safety of workmen. 18

B. In Respect Of Injury Not Resulting In Death Or Permanent Total Disablement The

Employer Can Plead:

That the employee was at the time of accident under the influence of drinks or drugs

C. That the employer willfully disobeyed an order expressly frame for the purpose of
securing safety of employees.

Section 3 of the Workmen Compensation Act 1923 has given the proviso in sub section 1 which
expressly provided that the employer shall not be liable to pay compensation in regards the above
provisions.

It would be the duty of the workman to show that the injury for which he claims compensation has
resulted in the total or partial disablement for a period exceeding three days. The total and partial
disablement had already been explained. On the other hand, it is a valid defence available to an
employer to plead that the personal injury which had admittedly been caused to the workman by
accident arising out of and in course of his employment has not resulted in the total or partial
disablement of the workman for a period not exceeding three days. If it could be proved, the
employer is not liable for compensation under section 3(1) of the Act. The basis of such exemption
from the liability is that it is very difficult to avoid minor accidents where the workmen are doing
their work with the help of complicated machinery. If the accident is serious the employer is liable
and if it is not the serious one he is not liable. The test is test is that if the personal injury has
resulted in the total or partial disablement of a workman for a period exceeding three days, the
accident would be a serious one and the workman can claim compensation under the provisions of
the Act. This is an exemption where an employer may disown his liability for compensation.

The employer can take defences contained in proviso (b) to section 3(1) of the Act only in cases
where the personal injury has not resulted in death of the workman. But he can take these defences
in cases where the personal injury caused to a workman by accident arising out of and in the course
of his employment has resulted in total r partial disablement of the workman concerned for a period
not exceeding three days. In such cases the employer can plead that the accident which caused
personal injury to a workman is directly attributed to:

i. The workman having been at the time of accident under the influence of drinks and drugs,
or
18
https://blog.ipleaders.in/employers-liabilities-labor-laws-india/#targetText=Employers%20are%20not
%20liable%20to,The%20injury%20is%20self%2Dinflicted.

14
ii. The willful disobedience of the workman to an order expressly given, or to a rule expressly
framed, for the purpose of securing the safety of workman.

The proviso (b) to section 3(1) of the Act covers cases where a workman performs his duty after
having taken drink or drugs and due to intoxication he is not in sound condition to work. The
workman in such condition may cause accident under influence 0of drinks or drugs. In order to claim
exemption the employer must show that the workman who sustained injury by accident was at the
time of accident under influence of drinks or drugs. The employer may succeed in his defence only if
he can establish that the accident causing injury to the workman was directly attribute to the
workman having been at the time of accident under the influence of drinks or drugs.

There are certain rules expressly framed or order expressly given to be followed by the workmen
while doing their work or performing their respective duties. The rules and orders are made with a
view to secure safety of the workmen. Proviso (b) (ii) to section 3(1) of the Act provides that if there
is willful disobedience to such orders or rules expressly made the employer shall not be liable for
compensation if he can successfully established that the accident causing personal injury to the
workman is directly attributable to the willful disobedience of such rules and orders.

It has been observed in Bhurangya Coal Co. V. Sahebjan Mian19, that proviso (b) (ii) to Section 3(1)
applies to only those cases of injuries which do not result in death. Where, therefore, the injury has
resulted in death, the question as to the disobedience of any rule or order is not material at all so
long as it can be reasonably held that the accident arose out of and in the course of an employment.
In order to bring a case under proviso (b)(ii) to section 3(1) of the Act, a number of conditions have
to be fulfilled:-

First-that there was a rule or order which the workman disobeyed not merely that there was a
notice on the spot;

Secondly-that the rule or order was in force at the time of accident;

Thirdly-that the substantial purpose of the rule or order was that of securing the safety of workman
as such;

Fourthly-that the order or rule was couched in words which on their face fairly and clearly indicated
that purpose;

Fifthly-that it terms were brought to the notice of the particular workman who was the individual
injured in a case;

Sixthly-that the order or rule was disobeyed by the individual;

Seventhly-that the disobedience of the rule or order by that workman was willful and deliberate and
not only the result of mere negligence or due to a mistaken mode of doing a particular task or due a
wrong decision in an emergency;

Eighthly-that the accident was directly attributable to the aforesaid disobedience.

In order to secure safety of the workmen certain safety guards or other devices are place and
maintained in the workshops where the workmen are engaged in performances of their duties. The
employer is not liable to pay compensation if he is able to established that devices which he knew to
have been provided for the purpose of securing the safety of workmen.

19
AIR 1956 pat 299

15
A man does a thing willfully when he does it intentionally because he expects some benefit to
himself, either some convenience or easy way of doing of work and so forth. More negligence of the
worker cannot be regarded as willful disobedience by the workman to an order expressly given.
Contributory negligence on the parts of the employee does not exonerate the employer from
liability to compensate the employee if the accident could not have been avoided by the exercise of
ordinary care and diligence. Thus, in order to disown the liability for compensation the employer has
to establish that the workman has willfully removed or disregarded a particular safety guard or
device provided for the purpose of securing the safety of workmen and the fact that such safety
guards or devices were provided for the purpose of safety of workmen was known to him. It may be
again pointed out that such defence is available to the employee where the personal injury caused
by an accident arising out of and in the course of his employment has resulted into death of the
workman the question whether he willfully removed or disregarded the safety devices becomes
irrelevant. Even if it is established that the workman willfully removed or disregarded the safety
devices which he knew to have been placed for the safety of workmen the employer is not
exempted from his liability for compensation. 20

C. The wilful removal or disregard by the employee of any safety guards or other device which he
knew to have been provided for the purpose of securing the safety of the employee :

In the above case, no liability can be imposed upon the employer to pay compensation to an
employee provided he succeeds in establishing conclusively to the satisfaction of the court that the
injury caused to an employee was attributable to anyone of the above factor.

The period of three days prescribed in the compensation laws is known as the waiting period and
it has varied from time to time. The original Act prescribed seven days as the waiting period but by
the Amending Act of 1959, the period has been reduced to three days.

The employer is not liable to pay compensation when the accident is caused due to the employee
being under the influence of drink or drug. To take advantage of this exemption, the employer has to
prove that the accident was due solely to the employee’s drunken condition or under the influence
of drug and not to any risk of employment.

In order to escape liability under Section 3 of the Act, the employer has to show that there was
wilful disobedience of the rules and disregard to use safety devices on the part of the employee. A
man does a thing wilfully when he does it intentionally because he expects some benefit to himself,
either some convenience or an easy way of doing a piece of work and so forth. The word wilful
imports that the misconduct was deliberate, not merely thoughtless act on the spur of the moment.
The employee would not lose his right of compensation only by reason of the fact that he had acted
thoughtlessly or foolishly. The plea of wilful disobedience by the employee to any order expressly
given is not available in case of the death of the employee but is available only in cases of injury not
resulting in death. When the death of an employee was caused by an accident arising out of and in
the course of employment, it is no defence that there was wilful disobedience of any order expressly
given or the rules framed for the purpose of securing the safety of the employee.

In the case of Arya Muni v. Union of India21, facts were that an employee met with an accident
while working in a factory. The employee lost his right eye due to an injury caused by a spark rushing
20
Dr. V. G. GOSWAMI, Labour and Industrial Laws, eighth edition reprint 2008 Central Law Agency, p
400,416,417,418.
21
1964 LLJ 24 635

16
into his eye. A notice in English directing all the workers to use goggles while at work was put up on
the notice board. The employee filed a claim for compensation. Resisting the claim the employer
contended that the employee himself was negligent in so far as he disobeyed the instructions for not
using the goggles. Neither did he ever ask for goggles nor was supplied by the supervisor. Supervisor
admitted that the goggles were in the stock but were not asked for by the employee. The employee
stated in his evidence that he had asked for goggles but the same was not given to him. It was
argued on behalf of the employer that since the appellant had stated that he knew about the
goggles, it should be presumed that he knew about the instructions that had been issued to him.

Upholding the claim of the employee it was held that there was no wilful disobedience of orders
written in English on the part of the employee as there is nothing to indicate that he had sufficient
knowledge of English which could enable him to understand the contents of the aforesaid notice or
that such contents were explained to him. If the employee was working without goggles, it was the
duty of the supervisor to warn him and was only when such an order was flouted by the employee
that the respondent could claim protection under section 3 (1) (b) (ii).

COMPENSATION

The principle on which compensation is to be awarded has to be determined in accordance with

the provisions of Section 4 of the Employee's Compensation Act and cannot be departed from on the
grounds of sentiment. The amount of compensation depends upon the result of injury and the
nature of disablement. For the purposes of payment of payment of compensation the injury has
been divided into four categories, namely :

• Death ;

• Permanent total disablement ;

• Permanent partial disablement ; and

• Temporary disablement whether total or partial.

1. Compensation in case of death :- if the injury from the accident results in the death of an
employee, the compensation is payable by the employer to the dependants of the employee. In such
cases the amount of compensation is determined by making a reference to Schedule IV. In the
Schedule Twenty different levels of monthly wages are given in the first column and in column two
the amount of compensation payable in respect of that wage level is indicated. Under the table
given in the Schedule, the maximum amount payable to the dependant of a worker in case of death
is rupees [1,20,000/-] or an amount to 50% of the monthly wages multiplied by the relevant factor as
laid down in the Schedule whichever is more. The amount is payable in lump sum in such cases.

In the case of New India Assurance v. Sunkamma22, wherein it was held that the liability of the
Insurance Company was limited to the liability arising under Workmen’s Compensation Act has been
overruled by the High Court of Andhra Pradesh accordingly.

22
1996 AIR586

17
2. Compensation in case of permanent total disablement :- in case of injuries not resulting in
death, the amount of compensation depends upon the nature of the disablement, that is, whether
the disablement is total or partial, temporary or permanent. When there is hundred percent loss in
the earning capacity of a worker, it is a case of permanent total disablement. The amount of
compensation payable in the case of permanent total disablement depends upon the wage group to
which the employee concerned belongs and Schedule IV of the Act specifies the amount of
compensation payable for different wage groups.

In such a case the amount of compensation payable to the worker shall be an amount equal to
60% of the monthly wages multiplied by the relevant factor as laid down in the Schedule or an
amount [of one lakh forty thousand rupees] whichever is more.

3. Compensation in case of permanent partial disablement :- in the case of permanent partial

disablement the compensation payable shall be such percentage of the compensation which would
have been payable in the case of permanent total disablement as is specified in the Schedule as
being the percentage of loss of earning capacity caused by the injury. In the case of an injury not
specified in Schedule I, such percentage of the compensation payable in the case of permanent total
disablement as is proportionate to the loss of earning capacity permanently caused by the injury.

In Executive Engineer, P.W.D. (B&R), Udaipur v. Narain Lal 23, a driver of the appellant was
awarded compensation by the Commissioner for Employees Compensation to the tune of rupees
4,800/- for the injuries suffered during the course of employment due to accident resulting in head
injuries and a broken collar bone. The appellant challenged the award on the ground that there was
no permanent partial disablement, there was no loss of earning capacity and the employee
continued in the same service and earned the same emoluments.

3. Compensation in case of temporary disablement whether total or partial :- for temporary

disablement whether it is total or partial, compensation is payable in the form of recurring
half monthly payments. The first such payment becomes due on the sixteenth day after the
expiry of the waiting period of three days where such disablement lasts for a period of less
than 28 days and from the date of disablement where such disablement lasts for 28 days or
more. Thereafter the payments are made in half monthly instalments during the period the
disablement lasts or during a period of 5 years, whichever is shorter. The payment of half-
monthly payment, payable to an employee is shown in column 4 of Schedule IV which varies
according to the particular wage group to which the employee concerned belongs. The half
monthly payment shall in no case exceed the amount, if any, by which half of the amount of
monthly wages of the employee before the accident exceeds half the amount of monthly
wages which he is getting after the accident. If an employee has received any amount by
way of compensation except allowance towards medical treatment during the period of
disablement prior to the receipt of the first half-months payment, such amount will be
deducted from the half-monthly payment.

23
1978 ILLJ 141 RAJ

18
 CONCLUSION

While taking into consideration the socio-economic scenario of india, protecting labourers in cases
where they suffer injury at work places is paramount keeping in mind the fact that they are weaker
in power than that of employers. It is also to be noted that such burden to protect the employers is
also subject to exceptions, such necessary in order to ensure that no exploitation of employers also
takes place

19
 BIBLIOGRAPHY

BOOKS:

(1) Labour and Industrial Laws, Dr.V.G.Goswami, Central Law Agency , Allahabad,8th Edition
(2) Labour and Industrial Laws, P. K. Padhi, PHI Publications, 2 nd edition, 2012
(3) Labour and Industrial Laws, S. K. Puri, Allahabad Law Agency Faridabad (Haryana), 10 th
edition

Internet sources:

1. https://www.indiafilings.com/learn/employees-compensation-act/
2. http://aiftponline.org/journal/2016/june-2016/the-employees-compensation-act-1923-old-
name-the-workmens-compensation-act-1923/
3. https://shodhganga.inflibnet.ac.in/bitstream/10603/28179/12/12_chapter%204.pdf.

20
4. https://www.india-briefing.com/news/workplace-injury-compensation-india-11077.html/.
5. http://asklabourproblem.info/the-liability-of-an-employer-in-case-on-an-industrial-
accident/.
6. https://securenow.in/blog/amount-compensation-workers-entitled-under-workmen-
compensation-act/.
7. https://www.indiafilings.com/learn/employees-compensation-act/#
8. https://blog.ipleaders.in/employers-liabilities-labor-laws-india

21