The Workmen's Compensation Act 1923

There is no doubt that employees are an organisation's pillars of success. Thus, it falls upon employers to ensure that their workforce receives proper financial compensation in case they meet with an unfortunate accident at the workplace.

Now, to ensure proper enforcement of this facility, several laws like the 1884 Compensation Act and the Fatal Act of 1885 were implemented. However, they were not enough to financially compensate workers in case they met with harm while performing their duties. Thus, the Indian Parliament passed the Workmen’s Compensation Act in 1923. 

Workmen Compensation Act 1923 – Definition and Scope

The Workmen Compensation Act 1923 aims to provide financial compensation to employees in case they meet with an unfortunate accident while performing their duties. 

All employees working full-time, part-time, temporarily or casually are liable to receive financial protection under this law. It comes into effect in case they secure injuries, incapacity, and disfigurement or die while performing their duties. 

Front-line workers in the following industries are liable to protection under this law:

• Non-permanent employees of the Railways who do not fall under the sub-divisional, district or administrative offices. 
• Captains and crew members on an aircraft. 
• Labours employed abroad as per Schedule II of the Workmen Compensation Act 1923. 
• Individuals working in construction sites, mines, docks, factories and specific places as per Schedule II of the above mentioned Act. 
• Drivers, mechanics, helpers and any other person associated with working with vehicles.     

According to this Act, any company or establishment operating in the sector highlighted above and having more than 10 employees are liable to abide by its rules.  

Coverage receivable under the Workmen Compensation Act 1923

The type and extent of financial coverage as well as its applicable terms and conditions fully depend on the insurance company that is affiliated with the employer. Here are some basic things which all insurers cover:

• Bodily or other injuries during an accident while on duty
• Temporary disablement 
• Permanent disablement (complete or partial)
• Death due to an accident at work 
• Injury, disease or death resulting from working conditions
• All legal or any other expenses incurred by an employee in the above circumstances  

Workmen's Compensation Act 1923 - Amount of compensation

According to Section 4 of the Workmen's Compensation Act 1923, the amount of compensation workers are liable to receive is as follows:

• Temporary disabilities

For temporary disabilities, the Workmen's Compensation Act 1923 provides financial compensation of up to 25% of the concerned employee’s monthly wages. 

• Permanent total disabilities

In an unfortunate event when an employee suffers from permanent disablement, that individual has the right to receive 60% of his/her monthly wage or Rs.1,20,000, whichever is higher. 

• Permanent partial disabilities

Injuries that fall under permanent partial disabilities are stated in Part II Schedule I of the Act. The payable corpus is a certain percentage of earnings loss by the employee due to his/her injury. 

• Death 

When an employee dies due to an accident at his/her workplace, their family is liable to receive 50% of the deceased’s monthly wages or Rs.1,20,000, whichever is higher. 

Note – Individuals who are liable to receive compensation under the Employees' State Insurance Scheme of India (ESIC) cannot get financial benefits from the above mentioned Act. 

Updates in the Workmen Compensation Act 1923

Since its inception in 1923, there have been two major changes in the Workmen Compensation Act. They are as follows:

• In 2010, this law’s name was changed to Employee’s Compensation Act.
• On January 3, 2020, the Ministry of Labour and Employment raised the amount on which compensation was calculated as per the Act from Rs. 8,000 to Rs. 15,000.  

Features of the Workmen Compensation Act 1923

Employers are under the obligation to provide financial compensation as per the Workmen Compensation Act 1923 in the following circumstances:

• An accident or injury occurs at the workplace while carrying out a task.
• If the applicant provides proof that the injury or accident that has occurred at the workplace is aggravating his/her medical condition. 
• In case a worker becomes disabled or dies while on duty. 

When is the employer not liable to pay compensation?

As per the Act, employers are not liable to financially compensate their employees under the following circumstances:

• Employee suffers from an injury or accident by disregarding the safety norms.
• Injury resulting in partial or total disablement for less than three days.
• For accidents or injuries under the influence of alcohol or drugs.

Final Word

It is mandatory as per government rules for employers to provide insurance benefits to their workforce under the Workmen Compensation Act 1923. This ensures that even in the case of unfortunate accidents, employees can get financial security, which can help them and their families deal with the situation.    

Frequently Asked Questions

Q1. What to look for while searching for a workmen's compensation insurance policy?

Ans. The extent of coverage is the most important factor to keep in mind while searching for such a policy. Additionally, employers must also consider the sum insured, optional covers, extra benefits and the claim settlement process.  

Q2. What is the claim settlement process for a workmen’s compensation insurance plan?

Ans. To claim a workmen’s compensation insurance policy, employees must inform the site inspector of the accident or fatality. Then, they must provide all relevant documents to the insurance company and wait for the claim to be accepted. Please keep in mind that the claim settlement procedure can vary across providing companies.   

Q3. What are the documents required to file a workmen’s compensation insurance claim?

Ans. The documents that an employee needs to submit while claiming a workmen’s compensation insurance policy are the completed and signed application form, medical bills, and compensation records. Moreover, for mishaps causing disabilities or death, medical certificates confirming the same need to be submitted.  

Q4. Who is liable to receive compensation when an employee dies?

Ans. According to the law, when an employee dies at the workplace, all his/her dependants are liable to receive financial compensation. This benefit is also applicable in case of accidents causing disablement. 

Q5. Should I purchase workmen’s compensation insurance policy online?

Ans. Yes, it is a smart move to search for workmen’s compensation insurance plans online. This is because employers can tally the pros and cons of several providers before making their final choice.