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Liability Of An Employer To Pay Compensation: The Employees Compensation Act, 1923

One of the earlier laws to benefit labourers was the Employees Compensation Act. It was enacted in 1923 and came into effect on July 1st, 1924. The Act's purpose was to establish rules for the distribution of benefits to injured employees by a certain set of companies.

With some restrictions on the length of the employee's disability and his or her own negligence, the employees were entitled to compensation from the employer in the event of personal harm brought on by an accident arising out of and during the course of employment. It is a protection against workplace risks to which an employee is subjected as a result of his employment. Any employee deemed disabled by an accident occurring during the course of employment is entitled to compensation from the employer at a rate set forth in this Act.

The "Employees Compensation Act, 1923" is an act designed to compensate employers for any injuries their workers may have sustained in an accident. The Workmen Compensation Act, 1923, was the previous name for this legislation. One of the key social security laws is the Employees Compensation Act of 1923, which aims to protect workers' finances and those of their dependents by compensating them in the event of an accident at work that leaves a worker either dead or permanently disabled.

This Act has significant effects on advancing measures to prevent accidents, granting employees greater freedom from anxiety, and making the industry more appealing in addition to compensation being one of its benefits[1]. Only when the conditions outlined in Section 3 are met and the procedure provided in Section 10 has been followed when submitting a claim for compensation is compensation awarded. Any compensation claim must be submitted within two years of the accident's occurrence or, in the event of death, within two years of the date of death. Not all employees are covered by this Act. It applies to workers in specific industries.

It offers protection to an employee against loss or harm brought on by an accident that occurs as a result of and while working, it is not required that the accident be the result of an employer's negligence.


There are various conditions that must be met in order to qualify for Employees' Compensation Act benefits:
  • You have to work for the business or organization.
  • You must have sustained an injury on the job or as a result of the nature of your job.

Employees Compensation:

In the following situations, an employer is obligated to compensate the employee:
  1. Personal injury by accident: If a worker sustains a personal injury due to an accident that occurred while he was working, the employer is liable for compensating him.
  2. Occupational diseases: People who work in various professions are at risk for contracting illnesses that are specific to those professions.

Doctrine of added peril

The employer is not responsible for covering the costs of injuries when an employee performs a task that is outside the scope of his or her job and poses additional risks.

Adjudication of Compensation

The commissioner decides in determining the compensation amount. The amount of compensation is determined using the accident's date as the base date. Once the compensation has been decided, it cannot be changed because a permanent disability keeps getting worse.

Self-inflicted Injury

A self-inflicted injury is one that a worker inflicts on themselves. Whether the injury was caused on purpose or by accident, the employer is not held responsible.

Contributory negligence

Employees have an obligation to exercise reasonable care while doing their duties in order to prevent mishaps and injuries. If both the employee and the employer were negligent, the employer would be responsible for paying damages to the amount of his own fault rather than that of the employee. As a result, since the employer won't be held accountable for the employee's negligence, the amount of compensation may decrease.
Employers Liability for Compensation:
  • Section 3 of the Employees Compensation Act of 1923 establishes the employer's obligation to provide compensation for an employee. According to this clause, there are five requirements that must be fulfilled before an employer is obligated to give an employee compensation. They are as follows:
    1. If a personal injury has been sustained by an employee: If an employee suffers personal harm (whether physical or psychological) due to an accident while performing employment duties for an entity, the employer is responsible for making compensation. Under the Act, personal injury is not defined. An injury to someone's personal property is not considered a personal injury. This Act defines personal injury to encompass occupational illnesses as well.
    2. If such a personal injury has been inflicted as a result of an accident: An employee must provide proof that their personal injuries came about as a result of an accident while doing essential tasks if they want to obtain compensation from their employer. Additionally, the Act does not define the term "accident." In everyday language, an accident can be defined as a sudden occurrence that causes harm to someone. It is impossible to forecast an accident in such a way that anyone could protect themselves against harm or injury of any kind. An employee cannot foresee any accident that led to his injury, either. As a result, an employer has a duty to provide an employee with compensation in the event of such an accident.
    3. If such an accident has arisen out of and in the course of employment: Proving that the injury occurred either during or outside of the scope of employment is the primary prerequisite for receiving compensation from an employer. In this case, it is the employee's responsibility alone—not the employer's—to prove that the harm resulted from or occurred in the course of employment.
      • Arising out of employment: When something is said to "arise out of employment," it refers to occurrences when there is a connection between the working conditions and the injury that results from them. In other words, the injury and the work that the deceased was performing must be related. Only that work must have caused the accident. Additionally, you should convince the court that if the injured party hadn't been performing that work, he wouldn't suffer any harm. The employee will be given the opportunity to request compensation from the employer if both requirements are met, according to the court.
      • In the course of employment: The employee must prove that the labour was performed at the same time and location as the employment in order for the employer to be held responsible for paying compensation. In other words, the employee must demonstrate that the task was completed both at the employer's location and within the employee's regular working hours. Additionally, the employee must demonstrate that he performed his tasks in the employer's best interests.
    4. If such an injury resulted in permanent or partial disablement of an employee for a period exceeding three days: The employer is responsible for providing compensation to such an employee if an accident-related injury results in his permanent or partial disability for a length of time longer than three days. Under the Act, a permanent or partial disability has been defined. A partial disability may be both temporary and ongoing. When a disability is permanent, it lowers the employee's ability to earn in any job that he was actively engaged in at the time of the accident. When a disability is temporary, it lowers the employee's ability to earn in any job that he was potentially capable of when the accident occurred.
    5. If such an accident resulted in the death of an employee: The final prerequisite for the employee's heirs to be eligible for compensation is to show that the accident caused the employee's death. The employee's heirs are entitled to compensation if it can be demonstrated in court that the death was brought on by an accident that happened during or as a result of employment.
  • Under the following circumstances, an employer is exempt from responsibility for providing workers' compensation:
    1. In the event of any injury which does not render the workers completely or partially disabled for a length of time beyond three days.
    2. In the event that any damage sustained in an accident that is directly due to one of the following, but does not result in death or total permanent disability:
      • the worker intentionally disobeying an order expressly provided, or to a regulation formulated to ensure the safety of workers,
      • the worker present at the time thereof while under the influence of alcohol or drugs,
      • the intentional removal or disrespect by a worker of any safety guard or other equipment that was provided to ensure workers' safety.

Liability of an Employer in Case of Occupational Disease:
A, B, and C of Schedule 3, which is annexed to the Act, list a few occupational disorders that are specific to their area of work. The employer is required to provide remuneration to the employee in cases where Schedule 3 applies. When a dispute over the employer's responsibility against the employee comes up in court, the occupational diseases included in the schedule imply that they will be treated as accidental injuries.

Part A of Schedule 3:
It states that the employee is entitled to compensation from the employer if he acquires an occupational sickness while working in the capacity described in Part A.

Part B of Schedule 3
It states that an employee is entitled to compensation if he acquires an occupational disease that resulted from his employment while performing the duties listed in Part B for a period of time that is at least six months. (One employer only)

Part C of Schedule 3
It states that if an employee contracts an occupational disease that results from or occurs while they are working for more than one employer for a period of time that may be specified by the Central Government, they may be entitled to financial compensation from those employers.
  • Part A of Schedule 3:
    • An employee is not entitled to compensation from the employer if, after terminating employment, he gets any of the diseases listed in Part A.
  • Part B of Schedule 3: To be eligible for compensation after leaving employment, an employee must meet the following requirements:
    1. The employee must have worked for the employer for at least six months;
    2. The employee must contract one of the diseases listed in Part B after leaving employment; and
    3. The disease must have its origins in employment.
  • Part C of Schedule 3: To be eligible for compensation after leaving his job, the following requirements must be satisfied:
    1. The employee has worked for one or more employers for a period of time that may be determined by the central government;
    2. The employee gets one of the diseases listed in Part C after leaving employment; and
    3. The illness resulted from the employment.

Due and Penalty for Non-Payment:
  • When an employee suffers a personal injury due to an accident at work, the employer is immediately liable for paying the compensation.
  • The compensation amount will be determined starting on the day the accident occurred.
The Commissioner will ask that the employer pay simple interest at the rate of 12% per year or as it is currently being charged by any scheduled bank together with the compensation amount if the sum is not paid within a month of the accident.

Additionally, the Commissioner will demand an apology from the employer after providing the employer with a sufficient opportunity to be heard and will order the employer to pay an additional amount not to exceed 50% of the compensation as a penalty if there is no justification for the delay. In the following circumstances, the worker or a dependent should receive payment of the fine and interest:

The half-monthly compensation installments (payable in the event of temporary disability) must be made within the time frame given. By way of an agreement between the employer and the employee or by making an application to the Commissioner, the semi-monthly instalments may be changed into a lump sum payment.

Case Laws:
A boy was employed by a tea shop located outside the factory premises in the case of National Iron and Steel Company Limited vs. Manorama[2]. His responsibility was to serve tea to every employee stationed in the factory. The child passed a rowdy group of workers as he was leaving the building.

In an effort to defend themselves from the workers' assault, the cops opened fire on the crowd, hitting the youngster in the process and killing him instantly. The court determined that the deceased should be entitled to compensation since he was doing work-related responsibilities for his employer while on the job and while on the premises during working hours.

The employee's death was brought on by a natural lightning strike in the case of the State of Rajasthan vs. Ram Prasad and others[3]. The court ruled that the employee is entitled to compensation because he met the two requirements that the deceased was struck by lightning while working for the employer and would not have died if the deceased had not been at work when the lightning struck.

In the case of Savitri Devi v. Bharti Filling Station and another[4], the appellant's son was employed by the respondent, the owner of the tanker, as a driver, and he passed away while performing his job. The High Court ruled that the commissioner erroneously came to the incorrect conclusion that the deceased's death had nothing to do with their line of employment.

The deceased driver's job was stressful and demanding just by virtue of the fact that he was driving an oil tanker. The petitioner did not have to provide evidence that her son had a cardiac condition prior to the accident. The Court may take judicial note of the fact that a person may occasionally pass away from a first-ever catastrophic heart attack.

The Act was primarily created for the benefit of the workers so that they might receive reimbursement from the employers for any costs associated with an accident-related injury. The act is subject to the fundamental principle of vicarious liability. Employees are servants to their employers, who are their masters. Only when an injury occurs during the course of employment and at work can the employee receive compensation.

  • a) S.N. Misra, Labour & Industrial Laws, (28th ed., 2019), Central Law Publications, Allahabad.
Online Websites:
  1. accessed on 8th October 2023.
  2. accessed on 8th October 2023.
  3. accessed on 8th October 2023.
  4. accessed on 8th October 2023.
  1. Report of the Royal Commission on Labour in India. P.298
  2. AIR 1953 Cal.143.
  3. (2001) I LLJ 177 (SC)
  4. 2015 III LLJ 662 (HP)

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