Industrial accidents and diseases are far more frequent and damaging than most
people not directly concerned with industry realise. People are shocked from
time to time by mass disasters but are scarcely aware of the endless toll of
death, suffering and hardship, caused by the day to day accidents in the
industrial sphere, which kill or injure only a few at a time, but many in all.
Theoretically, liability to pay compensation to the injured workman arises for
two reasons. Firstly, the workman has been contributing to the employer's
occupation, business and trade and consequently the employer should compensate
for the loss or injury suffered by the workman, while discharging the work of
the employer. Secondly, the result of a workman's labour goes into the
consumption and comfort of the society, and as such the hazards and risks that
he undertakes in the discharge of his duties is the society's concern. It was in
this background that the Workmen's Compensation Act, 1923 was enacted, for
protecting workmen from hardships arising from industrial accidents. This
article seeks to examine the provisions of the Workmen's Compensation Act, 1923
in order to analyse the efficacy of the system.
The growing complexity of industries in this country, with the increasing use of
machinery and consequent danger to workmen, it was advisable that they should be
protected, as far as possible from hardship arising from accidents. After a
detailed study of the question by the Government of India, Local Governments
were addressed in July 1921, and temporary views of the Government of India were
published for general information. The proposal of legislation had been accepted
by the great majority of Local Governments and of employers and workers
associations and the Government of India believed that public opinion
generally is in support of legislation. In June 1922 a committee was summoned to
consider the question. After considering the numerous replies and opinions
received by the Government of India, the committee was unanimously in support of
legislation, and drew up detailed recommendations. On the recommendations of the
committee the Workmen ‘s Compensation Bill was introduced in the Legislature.
The Workmen ‘s Compensation Bill having been passed by the Legislature received
its assent on the 5th March, 1923. It came into force on 1st July, 1924.
The Workmen‘s Compensation Act, 1923 is one of the earliest labour welfare and
social security legislation passed in India. It recognizes the fact that if a
workman is a victim of an accident or an occupational disease in course of his
employment, he needs to be compensated. The Act does notapply to those workers
who are insured under the Employees State Insurance Act, 1948. Section 53 of the
Employees‘ State Insurance Act provides that an insured person or his dependents
shall not be entitled to receive or recover whether from the employer of the
insured person or from any other person any compensation or damages under the
Workmen‘s Compensation Act, 1923 or any other law for the time being in force or
otherwise in respect of an employment injury sustained by the insured person as
an employee under this Act.
Workers compensation in India may seem to be a headache for all employers and
businessman in India, but it is a boon for employees. It gives employees several
benefits, which helps to keep the employees motivated and loyal towards their
company. This, in turn, leads to better performance.
The Workmen ‘s Compensation Act, 1923, aims to provide workmen and their
dependents some relief in case of accidents, arising out of and in the course of
employment and causing either disablement or death of workmen as a measure of
relief and social security. It also provides for payment by employers to their
workmen and compensation for injury by accident. This Act enables a workman to
get compensation irrespective of his negligence. It lays down varied amounts
payable in case of an accident, depending upon the type and extent of injury.
The employer now knows the amount of compensation he must pay and is saved from
many uncertainties to which he was subject before this Act came into force. The
legislation has given security to the worker and this has increased the
availability of workmen to some extent.
Scope And Coverage
The Act extends to the whole of India and it applies to any person who is
employed otherwise than in a clerical capacity, in railways and other transport
establishments, factories establishments engaged in making, altering, repairing,
adapting, transport or sale of any articles, mines, docks, establishments
engaged in constructions, fire-brigade, plantations, oilfields and other
employments listed in Schedule II of the Act. The Workmen's Compensation
(Amendment) Act, 1995, has extended the scope of the Act to cover workers of
newspaper establishments, drivers, cleaners, etc. working in connection with
motor vehicle, workers employed by Indian companies abroad, persons engaged in
spraying or dusting of insecticides or pesticides in agricultural operations,
mechanized harvesting and thrashing, horticultural operations and doing other
mechanical jobs.Under section 2(3) of the Act, the State Governments are
empowered to extend the scope of the Act to any class of persons whose
occupations are considered hazardous after giving three months' notice in the
Official Gazette. The Act, however does not apply to members serving in the
Armed Forces of the Indian Union, and employees covered under the provisions of
the Employees' State Insurance Act, 1948 as disablement and dependents' benefits
are available under this Act.
However, the provisions of the Act should not be interpreted narrowly so as to
debar the workmen from compensation. The intention of the legislature is to make
the employer an insurer of the workmen responsible against the loss caused by
the injuries or death, which ought to have happened, while the workman was
engaged in his work. While interpreting the law liberally, the Tribunal/Court
is also bound to see that the benevolent purpose of law is not misplaced and
that in genuine cases a workman or his representatives are entitled to get
adequate compensation as prescribed by law.
Employer's Liability Under The Workmen's Compensation Act, 1923
Section 3 of the Employees Compensation Act,1923 provides for the circumstances
where an employer is liable to pay compensation in cases of death or personal
injury suffered by the workman. For an employer to be liable, the following
conditions should be fulfilled-
a. The workman must have sustained personal injury
b. The personal injury must have been caused by an accident;
c. The accident may have arisen out of and in the course of
d. The personal injury caused to the workman must have resulted either in
the total or partial disablement of the workman for a period exceeding three
days or it must have resulted in the death of the workman.
However, an employer is not liable in following cases:
· Injury which does not result in total or partial disablement of workman
for a period exceeding 3 days.
· Injury caused by an accident directly attributable to workman under
influence of drinks or drugs, wilful disobedience of express orders for safety,
willful removal of safety guard or device. [Even if such case, if the workman
dies or suffers permanent total disablement, the employer will be liable].
[A] Meaning of The Term Employment
It is significant to note that the Section uses the word 'employment' and not
'work' and that the term 'employment' has a much wider meaning than the term
'work'.  Employment extends to all things, which the workman is entitled by
his contract of employment expressly, or implicitly to do. The language is
of wide amplitude to cover not only the nature of employment but also its
character, conditions, obligations, incidents and special risks.Therefore, a
man's employment is not confined to the actual task he is employed to
perform, or to his place of work, nor does it necessarily end with the
'tools down signal'. It also includes matters incidental to the task. Times
at which meals are taken, periods of rest, may all be included. Therefore, the
use of the word 'employment' implies that the intention of the Legislature was
that the provision should be given a broad and benevolent interpretation, rather
than a narrow and strict interpretation.
[B] Doctrine of Notional Extension of The Sphere of Employment
Not all accidents occur in the premises of the employer or during working hours
of the workman. Accidents can also take place on a public road, when the
workman's work requires him to be there,or outside the working hours of the
workman. Keeping this in mind, Courts have extended the scope and sphere of
employment by the application of the doctrine of 'notional extension'., both in
time and space, and a workman may be regarded as being in the sphere of his
employment even though he has not reached or has left the premises of his
employer, before or after his working hours.
The doctrine can be applied to every case where it is in the incidence of
employment, which brings a workman in the zone of special danger in order to
fulfill the terms of his employment.In the case of Lancashire and Yorkshire
Rly v. Highly ,Lord Summer laid down the test to assess the phrase: “Was it
part of the injured person's employment to hazard, to suffer, or to do that
which caused the injury. If yes, then the accident comes within the sphere of
his employment, if no, it did not.” It is therefore clear that the criterion for
an accident to come within the theory of notional extension, is that the place
of accident must be one at which the workman would not be present except by
virtue of his employment. Therefore, in cases, where a workman while going to,
or while leaving his work, suffers an accident on the way, the fundamental point
that has to be determined is, whether the workman was at the place of accident
by virtue of his status as workman or by virtue of his status as a member of the
[C] Meaning of The Phrase 'Arising Out of And In The Course of Employment’
An employer shall be liable to pay compensation under the Act, only if the
workman can prove that the accident arose not only 'in the course of his
employment but also out of his employment'. The expression 'arising out of,
suggests the cause of the accident and its connection with the employment and
the expression "in the course of points to the time, place and circumstances
under which the accident occurred,i.e., the injury must have been caused
during the currency of employment.Thus the phrase demands that the injury be
shown to have arisen within the 'time' and 'space' of the employment, and in the
course of an activity whose purpose is related to the employment.The
doctrine of notional extension of employment also emphasizes till what extent
the accident will be considered to be arising in the course of employment.
The expression 'arising out of employment' means that during the course of the
employment injury has resulted from some risk incidental to the duties of the
service which, unless engaged in the duty owing to the master, it was reasonable
to believe the workman would not otherwise have suffered.  In Mackinon
Mckenzie v. Ibrahim Mohd. Issak
, the Supreme Court explained the words to
mean: "During the course of employment, injury has resulted from some risk
incidental to the duties of the service which unless engaged in the duty owing
to the master, it is reasonable to believe that the workman would not have
suffered." Therefore, in order to come within the scope of this provision, there
must be a causal connection between the accident and the employment in order
that the Court can say that the accident arose out of the employment of the
deceased. Therefore, it is evident that in order to give true effect to this
enactment, the Courts have taken a beneficial and lenient approach towards the
determination of the scope of the phrase "arising out of and in the course of
employment" and have expanded the scope of this phrase beyond its literal
meaning. However, despite such a lenient and benevolent approach of the Courts,
various shortcomings still remain, and in order to increase the efficiency of
the compensation mechanism, it is important that certain changes are introduced
in the system.
Section 3(2) of the Act recognizes that the workman employed in certain
types of industries of occupation risk exposure to certain occupational disease
peculiar to that employment. Employer is liable if a workman develops any
specified occupational disease, while he is in service of employer for at least
Employer’s fault is immaterial
The compensation is payable even when there was no fault on the employer’s part.
In New India Assurance Co. Ltd. v. Pennamna Kuriern
, the Court held that the
claim of workmen for compensation under Motor Vehicle Act was rejected due to
negligence of employee, but compensation was awarded under Workmen ‘s
Compensation Act on the principle of no fault.
Compensation payable even if workman was negligent
Compensation is payable even if it is found that the employee did not take
proper preventive measure. An employee is not entitled to get compensation under
the following circumstances:
· if he was drunk or had taken drugs
· if he wilfully disobeyed orders in respect of safety
· if he wilfully removed safety guards of machines. However, compensation
cannot be denied claiming workman was negligent or careless.
Number of workmen employed is not a criterion
In definition of workman in schedule II, in most of the cases, number of workmen
employed is not the criteria. In almost all cases, employer will be liable even
if just one workman is employed. The Act applies to a workshop even if it
employs less than 20 workmen and is not a factory‘under the Factories Act, 1948.
Defences Available To The Employer
Prior to the enactment of this Act, the employer was liable to pay compensation
only if he was guilty of negligence. Even in case of proved negligence, the
employer could dispose of his liability by making use of any of the defences
1. The Doctrine of Assumed Risks: If the employee knew the nature of the risks
he was undertaking when working in a factory, the employer had no liability for
injuries. The court assumed that in such a case the workman had willingly
accepted the risks incidental to his work. The doctrine evolved from the rule
Volenti Non Fit Injuria
, which means that one, who has volunteered to take a
risk of injury, is not entitled to damages if injury actually occurs.
2. The Doctrine of Common Employment: Under this rule, if a number of persons
work together for a common purpose and one of them is injured by some act or
omission of another, the employer is not liable to pay compensation for the
3. The Doctrine of Contributory Negligence: Under this rule, a person is not
entitled to damages for injury if he was himself guilty of negligence and such
negligence resulted to the injury.
The three aforesaid defences and the rule of no negligence no liability made it
almost impossible for an employee to obtain relief in cases of accident. The
Workmen's Compensation Act of 1923 completely changed the law. According to the
Workmen Compensation Act, 1923 the employer is liable to pay compensation
irrespective of negligence. The Act considers compensation as relief to the
workman and not as damages payable by the employer for a wrongful act or tort.
Hence contributory negligence by the employee does not debar him from relief.
For the same reason, it is not possible for the employer to plead to the defence
of common employment or assumed risks for avoiding liability. Thus, the Act
makes it possible for the workman to get compensation for injuries, unhindered
by the legal obstacles set up by the law of Torts.
Compensation Payable Under The Act
Section 4 of the Act prescribes the amount of compensation payable under the
provisions of the Act. Amount of compensation payable to a workman depends on:
1) The nature of the injury caused by accident.
2) The monthly wages of the workman concerned, and
3) The relevant factor for working out lump-sum equivalent of compensation
amount as specified in Schedule IV (as substituted by Amendment Act of 1984).
There is no distinction between an adult and a minor worker with respect to the
amount of compensation.
Section 4, provides for compensation for:
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:
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.
Delayed payment or deposit of compensation entails interest as well as penalty
Delayed payment or deposit of compensation entails interest @ 6 % p.a. as well
as penalty not exceeding 50% of the amount.
Payment of compensation either to the workman or to deposit it with the
Section 4A (2) states that, in the first place, the employer has to accept the
extent of his liability for payment of compensation and on that basis he has to
make payment either to the workman or to deposit with the Commissioner. The
requirement of this sub-section is payment to the workman and not to any other
person including his heirs and legal representatives. It takes within its sweep
the case where the workman has not breathed his last on account of the accident
met with by him in the course of his employment.
Sub-section (3) of section 4A is a beneficial provision
It is evident that sub-section (3) of section 4A is beneficial provision made
for the benefit of the employee, having regard to the scheme of the Act, the
provision for payment of interest and of penalty have been enacted with a view
to deter the employer from taking pleas and avoiding payment of the compensation
which becomes payable.
Sub-section (3) of section 4A is not applicable for fixing rate of interest in a
claim under the Motor Vehicles Act
Section 4A (3) of the Workmen’s Compensation Act is not applicable in the matter
of fixing rate of interest in a claim under the Motor Vehicles Act.
Two Ways of Claiming Compensation
An injured workman may file a civil suit for damages against the employer.
Section 3(5), however, provides that if such a suit is filed, compensation
cannot be claimed under the Act and if compensation has been claimed under the
Act, or if an agreement has been entered into between the employer and the
workman for the payment of compensation, no suit can be filed in the civil
court. Thus, the workman must choose between two reliefs:
(i) civil suit for damages and
(ii) claim for compensation under the Act.
He cannot have both. In a civil suit for damages, it is open for the employer
to plead all the defences provided by the law of Torts. Therefore, a civil suit
is a unsafe procedure for a workman and is rarely resorted to.
Liability of Principal Employer
Principal Employer is liable to pay the amount of compensation for the injury
suffered by workman employed through contractor, if the accident arises because
of accident arising out of and during the course of employment.
Payment of Compensation Only Through Commissioner
A Commissioner for Workmen’s Compensation is appointed by the Government. The
compensation must be paid only through the Commissioner in case of death or
total disablement. Any payment to workman under the Act must be made only
through Commissioner. Direct payment to workman or his dependents is not
recognized at all as compensation. However, in case of death, if employer
has paid some compensation to dependent, that will be refunded to the employer.
Expenditure made by employer for medical treatment of workman is not regarded
for purposes of the compensation.
Every employee, including those employed through contractor, but excluding
casual employees who is engaged for purpose of employer ‘s business is eligible
for compensation. The Act does not protect employees employed in clerical
capacity. However, workmen in manufacturing processes, mines, ships,
construction, tractor or mechanical appliances in agriculture, circus etc. and
also drivers, watchmen etc. are covered. The compensation is payable if accident
arises out of and during the cause of employment, and such accident causes
either death or disablement.
Though the Courts have intended to give the provisions of the Workmen's
Compensation Act a benevolent interpretation, to ensure maximum benefit to the
workman, no perfect test has been formulated till date, to state with surety
when an accident would be considered to be one 'arising out of and in the course
of employment’. Each case has to be decided on the basis of facts particular to
it. The Courts have very rightly characterised this phrase as being deceptively
simple and litigious prolific. However, the recent trend of decisions
indicate that Courts are extending the limit and scope of the phrase, 'arising
out of and in the course of employment' in the general social interest by making
the employer pay compensation to workers for injuries or fatal accidents based
on the philosophy that an employer is in a comparatively better position to bear
the financial burden of the accident than the workmen.
This article sought to evaluate the Workmen's Compensation Act, 1923 and how
effective a mechanism it has been in providing workmen with the much-needed
social security of compensation for industrial accidents. It is therefore
important that some changes be brought about in the system, in order to make it
a more effective social security mechanism.
 P.G. Krishnan, Social Security: Workmen's Compensation,  125.
 The Workmen ‘s Compensation Act, 1923.
 The Employees State Insurance Act, 1948, s 53.
 The Workmen ‘s Compensation Act, 1923, s 2(3).
 Sunita Devi vs Autar Singh And Anr  (101) FLR 214.
 ShriSankarKal, Vs.Sri Sunil Kumar Saha  1 LLJ 629 Gau.
 The Workmen's Compensation Act, 1923, s 3 (Substituted by Act 8 of 1959).
 The Workmen's Compensation Act, 1923, s 3 (Substituted by Act 15 of 1933).
 Works Manager v. Mahabir, AIR (1954) All 132.
 Kamal v. Madras Port Trust, (1966) ACJ 213.
 Union of India v. Mrs Noor Jahan, (1979) 1 LLN 538; St Helens Colliery v.
Hewitson ,  AC 59.
 Brahmun v. Balan, 8 FJR 204; Weaver v. Tredegar Iron & Steel Co. Ltd.,
 3 All ER 157.
 BEST Undertaking v. Mrs Agnes, (1963) 2 LLJ 615 (SC).
 Commissioners for the Port of Calcutta v. Kaniz Fatima, (1960) 2 LLJ 334
 Dudhiben Dharmshi v. New Jehangir Vakil Mills Co Ltd., (1976) ACJ 136.
Lancashire and Yorkshire Rly v. Highly,  AC 352.
 S.N. Misra, Labour & Industrial Laws (19th edn, 2002) 306
 Mackinon Mckenzie v. Ibrahim Mohd. Issak, (1970) 1 LLJ 16 (SC)
 Janaki Ammal v. Divisional Engineer Highways, (1956) 2 LLJ 233 Mad
Director, D.N.K. Project v. D. Buchitalli, (1987) Lab IC 1795
 Supra 17.
Bhaguabai v. General Manager, Central Rly, AIR (1955) Bom 105
 The Workmen ‘s Compensation Act, 1923, s 3(2).
 New India Assurance Co. Ltd. v. Pennamna Kuriern ,(1995) ACJ 760.
 The Workmen's Compensation Act, 1923, s 4.
 The Workmen's Compensation Act, 1923, s 4. (Substituted by the Amendment
Act of 1984)
 jayanti Lal & Co. v. Garesia Rajvirba, (1992) 1 Lab 1C 1225 (Guj).
 The Employees State Insurance Act, 1948 s 4A (2).
 Sumuben v. Patel Industries, (1994) LLR 338 (Guj).
 Divisional Forest Officer v. Baijanti Bai, (1995) I LLJ MP (837).
 Abati Bezbaruah v. Dy. Director General, GSl,  3 SCC 148.
 The Workmen's Compensation Act, 1923, s 3(5).
 Sumuben v. Patel Industries, (1994) LLR 338 (Guj).
Herbert v. Fox & Co.  1 A.C. 405.