E2-E3

Finance

WORKMEN’S COMPENSATION

ACT1923

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WELCOME

• This is a presentation for the E1– E2 and E2-E3 Core

Module for the Topic: Workmen’s Compensation Act.

• Eligibility: Those who have got the Up gradation to E1-

E2 and from E1 –E2 to E2 to E3.

• This presentation is last updated on 21-3-2011.

• You can also visit the Digital library of BSNL to see this

topic.

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Introduction

• First piece of legislation towards social security legislation.

• Welfare legislation to protect poor workmen from hardship arising from accidents.

• Provisions ought to receive liberal interpretation.

• If any provision is capable of more than one interpretation , which is more favorable to workmen should be adopted.

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Introduction

• Workmen ‘s Compensation Act is applicable in all

organizations where ESI Act is not applicable. It is more

liberal .

• Section 3 provides for employers liability for

compensation in case of personal injury to his ‘workman’

caused by accident arising out of and in the course of his

employment.

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Workmen (Section 2 (1) (n) )

• Workmen:- Any person who is employed otherwise thanfor the purpose of employer’s trade or business in anycapacity as is specified in schedule –II ( A personrecruited for work abroad by a company will also becovered).

• Managers can also be included if agreed.

• Salary no limit.

• So all the except occupier ( without wage limit) areworkmen

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Workmen Section 2 (1) (n)

• To exclude workman from the scope , the following should

be fulfilled;

• 1).Employment is of casual nature and

• 2). He is employed otherwise than for the purpose of

employer’s Trade or business

• If one conditions is absent , cannot be excluded from the

purview.

• Word ‘and’ in section 2(1)(n) must be read conjointly; a

person who falls within the ambit of one of the two is

termed as workman

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To whom payable

• The workman who suffers injury should be entitled to

compensation.

• In case of fatal injury ( Death ) , his dependents should

be compensated.

• The compensation payable not because of a tort or

wrong doing of employer. Liability under the Act has no

connection with any wrong doing on the part of

employer.

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Introduction

3 factors must be established;

1)There must be an injury.

2)It should be caused in an accident.

3)The accident should be arising out of and in the course

of employment.

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Introduction

• Injury sustained is in an incident or in accident.

• Incident which is unforeseen is an accident.

• Accident- Unexpected and unforeseen event or unlookedmischief.

• Injury / death is unexpected or undesigned on his part isaccident.

• As per Section 3 – Accident includes not only collusion,tripping, overflow, obstacle, fall of roofs, etc, but alsoobvious ones, causing injuries

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• Certain occupational diseases shall also be deemed to

be injuries by accident to qualify for compensation.-

Subsection (2) of section 3.

• Section III – list of occupational diseases.

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Arising out of and in the course of

employment

• Three tests to determine;• 1). The employee was in fact employed on duties at the

time of accident

• 2).The accident occurred at the place of performance ofhis duties.

• 3).The immediate act which led to accident is not soremote from the sphere of his duties to be regarded assomething foreign. ( Helper in sawmill –inexperiencedcolleague)

• (Watchman –gone to fetch material on bicycle)

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Notional extension of time and place.

• Depends on circumstances of a given case.

• Causal relationship between accident and employment

must exist.

• Injury sustained during interval or leisure time in or

around the premises of employer can also be

characterized as one arising out of and in the course of

employment.

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Limitations

• Workman not entitled, if accident / injury is directlyattributable being under influence of drink or drugs.

• willful disobedience of an order expressly given or of arule expressly framed for the safety of workman

• Willful removal or disregard of any safety guard or otherdevice provided for the safety of workman

• Not entitled if the total / partial disablement does notexceed ‘3 ‘days.

• Limitations do not apply if the injury results in death of theworkman

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Contracting out

• Any contract or agreement whether made before or after

the commencement of this act, whereby a workman

relinquishes any right of compensation from the

employer for injury / death arising out of and in the

course of the employment , shall be null and void as

purports to remove or reduce the liability of any person

to pay compensation under this Act.

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Amount of compensation

• Section 4 read with schedule IV prescribes the amount

of compensation for death, permanent total / partial

disablement and temporary total / partial disablement

• Act guarantees one time payment in case of death and

permanent total disablement based on monthly wages of

workman

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Amount of compensation

• In case of permanent partial disablement one timepayment is made depending on the percentage of loss ofearning capacity. (as given in the schedule-I)

• For injuries not covered in schedule-I, it will be base onnature of work, nature of injury and other environmentalcircumstances.

• Section 4(I)(d) provides half-monthly payments fortemporary disablement based on monthly wages of theworker

• Half monthly wages can be commuted under section 7and reviewed by commissioner under section 6

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Amount of compensation

• In case of death:

• 50% of monthly wages multiplied by relevant factor(completed years of age on last birthday preceding thecompensation due date) or Rs.80,000 / - whichever ismore( Minimum is Rs.80,000 /- )

• In case of permanent total disablement:

• 60% of monthly wages multiplied by relevant factor orRs.90,000 /- which ever is more.

• Where monthly wages exceed Rs.4,000 /- ,monthlywages deemed to be Rs.4000 /- only.

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Amount of compensation (illustration)

• Age of workman – 35 years

• Monthly wage . Rs.3,900 /-

• Relevant factor as per schedule IV is 197.06

• Compensation payable in case of Death as per Section 4

(a) is

• 50% of 3,900 = 1950

• 1950 x 197.06 = Rs. 3,84,267.00

• (Minimum compensation is Rs. 80,000.00)

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Amount of compensation (illustration)

• Compensation payable in case of Permanent total

disablement ( as per Section 4 (b):

• 60% of 3,900 = 2340

• 2340 x 197.06 = Rs. 4,61,120.40

• (Minimum compensation is Rs. 90,000.00)

• Compensation payable in case of Injury (Loss of thumb

of one hand ) ( as per schedule I part-II serial no.5)

• 30% of 4,61,120.40 = 1,38,336.12.

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Amount of compensation

• In case of permanent partial disablement:

• In case of injury specified in Part-II of schedule I, as perthe percentage of loss of earning capacity.

• In case of injury not specified in schedule I, as per thepercentage of loss of earning capacity as assessed bythe qualified medical practitioner.

• Where more than one injury, amount is aggregated but,should not exceed the compensation of permanent totaldisablement.

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Amount of compensation

• In case of death , in addition to compensation Rs.2500/- is to be paid towards funeral expenditure to the eldestsurviving dependent or to the person who actuallyincurred such expenditure.

• Any payment or allowance paid by the employer towardsmedical treatment shall not be deemed to be paymentby way of compensation.

• Compensation payable is as admissible on the date ofdeath and not as per subsequently amended law.

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Measures to ensure timely payment

• Section 4-A- provides immediate payment of

compensation as soon as it falls due.

• When amount claimed is not acceptable to employer,

provisional payment has to be made based on extent of

liability which he accepts., without prejudice to the

workman's right to make any further claim.

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Penalty for default / delay

• Sub-section(3) of section4-(A) provides payment of

interest and penalty in case of default / delay in payment

of compensation within one month from the due date .

• The Commissioner shall order payment of amount In

addition to Compensation amount simple interest @12%

or higher rate

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Measures to ensure timely payment

• If the employer fails to pay compensation within onemonth from the date of due;

• Commissioner shall direct the employer• To pay arrears amount and simple interest at 12% p.a or

at higher rate ( not exceeding maximum scheduled bankrate) or

• In addition to the arrears and interest further sum notexceeding 50% of such amount ( If he feels there is nojustification for delay)

• Penalty order shall not be passed without givingreasonable opportunity to the employer to show the causefor delay

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Calculation of wages

• Monthly wage; Wage deemed to be payable for a month.

• If workman is in continuous service for the last 12months (preceding the accident), the monthly wageshall be 1/12 of total preceding 12 months wages.

• If he is in service for less than one month, then averagemonthly wage earned by a workman employed on thesame work by same employer or on similar work in thesame locality.

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Disbursement of compensation

• Section -8 prescribes the manner of distribution of

compensation amongst dependents in case of death.

• In case of any legal dispute, the compensation has to be

deposited with the commissioner who is responsible for

apportionment and payment

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Dependent

• i)A widow , minor legitimate / adopted son unmarried

legitimate / adopted daughter or widowed mother

• ii)Son / daughter of 18 years who are infirm if wholly

dependent on the earnings of the workmen.

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Dependent

• iii) If wholly / partially dependent on the earnings of workmen• a) a widower• b) a parent other than widowed mother• c) minor illegitimate son, un married illegitimate daughter if

married and minor or if widowed and a minor• d) a minor brother or an unmarried sister or widowed sister

if a minor• e) Widowed daughter –in- law• f). minor child of pre-deceased son• g) minor child of pre-deceased daughter• h) Paternal grandparent where no parent of workmen is alive

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Disbursement of compensation

• The commissioner may publish / serve notice to thedependents to appear before him to determine thedependents and distribute accordingly.

• If he feels no dependent exist , he shall repay theamount to the employer on application.

• If the person whom compensation is payable is underlegal disability it should be invested /otherwise dealt forthe benefit of the person during his disability.

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• If any compensation paid is found to be obtained by

fraud / impersonation /other improper means, such

amount may be recovered as per section 31.

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Notice and claim

• No claim for compensation shall be entertained unless

notice of the accident is given and claim is preferred

before him with in 2 years from the date of occurrence /

death

• He may entertain if he is satisfied that the failure was

due to sufficient cause.

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Notice and claim

• Notice shall give name , address of injured person and

the cause and date of injury and shall be served on the

employer.

• The notice should be delivered it at / registered post at

office / residence of business in charge.

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Appointment of Commissioners

• State Govt. by notification may appoint commissioner forW.C Act for such area as may be specified.( NormallyDist. Collector)

• Where more than one is appointed, distribution ofbusiness among them will be regulated by special order.

• Commissioner may choose one or more personspossessing special knowledge in relevant matter toassist him.

• Commissioner shall be deemed to be public servantunder Indian Penal Code (45 of 1860)

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Reference to Commissioner

• Any question regarding:

• Whether any person injured is workman or not

• Amount and duration of compensation

• Extent of disablement .

• Shall be settled by the commissioner.

• No civil court shall have jurisdiction to settle and decide

or deal with any question.

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Area

• Commissioners Area will be decided as per;

• Area in which accident took place

• In case of death where the dependent resides.

• Area where the employer has registered office.

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Transfer

• If a commissioner is satisfied that it can be more

conveniently dealt by other commissioner, he can

transfer the case to the other commissioner either for

report or disposal along with all relevant documents.

• The commissioner to whom case is transferred ,

continue the proceedings as if they had originally

commenced before him.

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To whom payable

• Workman-clause (n) of sub-section (I) of section 2.

• Dependant- clause (d) of sub-section (I) of section 2.

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