The Workmen Compensation Act, 1923 is an enactment that was issued by the tral Government and was
implemented by various State Governments which gives social security to workers. This security is offered by the
law for people who work.
The Act was formed after it was noted that laborers were getting more exposed to danger with the use of
advanced and sophisticated machinery. The common law had it that the employer would only take up the compensation responsibility if it is found that the industrial accident was a result of his negligence. In India, the issue of compensating workmen after fatal and major accidents hit the road in 1884. It was then in
1885 that the factory and mining inspectors realized that the Fatal Accidents Act, 1885, was not enough to attend
to the intended purposes.
The State offered a hearing ear when members of the Legislative Assembly, employers’ representatives, workers
and experts in medicine and insurance formed a committee that gave a report that
led to the enacting of the Workmen’s Compensation Act in 1923.
The passing of the Act put a stop and offered a relief for workers who would have gone through court processes
that are often expensive, an effort to seek compensation whenever they acquired an injury during employment.
Aspects of The Workmen Compensation Act
The Act has its basis on two aspects:
# Theory of least cost.
# The production cost shall have the cost of blood and workmen included.
For an industry to run, an employer uses capital, skills in business and the labor of workers who are paid for the
labor. The management has to put aside finances for the possibility of the expense needed to repair the machines
when they break down. If that care and attention can be given to machines, human beings working in the same
environment need also receive care and attention for the risks they undertake when working in that industry.
Social security offers to ensure compensation is paid to a disabled or injured person only if the accident rose in
the middle of the employment. The compensation paid to a workman by an employer when an accident occurs is a relief and social security measure provided by the Act. A workman is now able to get compensation regardless
of his negligence.
The Act also puts in place the amount that is to be paid according to the intensity of the injury. This makes an
employer aware of the amount of compensation he is liable to pay in case of an accident.
The Act is recognized all over India and applies to all workmen and casual
workers in factories, plantations,
mines, transport establishments, railways, ships, circuses, construction work and any other potentially dangerous
occupations made mention in Schedule II of this Act. The Act is not applicable to people in the Armed Forces.
Objective of The Workmen Compensation Act
The Workmen’s Compensation Act of 1923 was formed majorly to give compensations to workmen in the event
of an accident.
The Act has it that employers should have duties and obligations that include
the welfare of workers after an
injury resulting from employment in the same way they have reserved the right to make profits. The Act aims to see
workmen have a sustainable life after an employment-related accident.
The Royal Commission on Labour made note of the following:
The Act also goes further to ensure the prevention of accidents by giving
workmen a relief from anxiety and renders the industry more friendly and
It has become a necessity for workmen to be protected due to the increasing
complexity of the industry through the increased use of sophisticated machinery
that poses a potential danger to workers and also the possibility of poverty
The Act tried as much as possible to curb the chances of disputes which has led
to events which are arbitrary. However, the general outcome is satisfactory
since the merits are more than the demerits when it comes to the welfare of
Scope of the Act:
The Act is applicable only to those workmen working in industries as specified
in the Act. The Act affords protection to a workman from losses or injury caused
by accident arising out of and in the course of employment subject to certain
exceptions as laid down in the Act.
Employer’s Liability for Compensation:
To make the employer pay compensation, the death or injury suffered by the
workman must be consequence of an ‘accident arising out of and in the course of
his employment’ is dependent upon the following four conditions:
(1) The casual connection between the injury and the accident (i.e., personal
injury is caused to workman while on work);
(2) The injury and accident caused during the course of employment;
(3) The probability tenable to reason that the work contributed to the causing
of personal injury; and
(4) The applicant proves that it was the work and the resulting strain which
contributed to or aggravated the injury.
1. Applicability of the Act:
The Act is applicable throughout India except the State of Jammu & Kashmir. The
Act does not apply to those areas which are covered by the Employees’ State
Insurance Act, 1948.
2. The salient features of the Act are as follows:
I. Extent and Application:
The Act extends to whole of India. It is also applicable to the workman
recruited by companies/establishments registered in India and sent for work
It applies to:
(a) All railway servants not permanently employed in any administrative,
district or sub-divisional office of a railway and not employed in any capacity
as is specified in Schedule II to the Act;
(b) Persons employed in any such capacity as is specified in Schedule II to the
Act. Schedule II includes persons employed in factories, mines, plantations,
mechanically propelled vehicles, construction works and certain other hazardous
occupations. In all, there are 48 employments listed in the Schedule; and
(c) Persons employed in employments added to Schedule II by the State Government
in exercise of the powers conferred on them under section 2(3) of the Act. In
this connection, a statement indicating the additions made so far by different
State Governments is enclosed (Annex-I).
There is no wage limit for coverage under the Act. All the employees employed in
Scheduled employment including the railway servants men tioned at (a) above, are
therefore, covered under the Act.
II. Contingencies in which Compensation is Payable:
Compensation is payable in case of temporary/permanent disablement or death as a
result of an employment injury. The contracting of any disease listed in
Schedule III to the Act is deemed to be an injury by accident.
III. Occupational Diseases:
If a workman employed in the employment specified in Schedule III of the Act
contracts any occupational disease peculiar to that employment he becomes
eligible for payment of compensation under the Act.
The occupational diseases should be contracted while in the service of an
employer in the specified employment. The Schedule III divides the occupational
diseases in three parts, namely Part-A, Part-B and Part-C.
For diseases specified in Part-A, there is no qualifying period of employment.
In case of diseases specified in Part-B, a person should have been employed in
the specified employment for a continuous period of not less than six months
before the disease is contracted.
For the diseases specified in Part-C, the qualifying period is specified by the
Central Government. The qualifying period speci fied for the diseases figuring
in Part-C of the Schedule is as given below:
(a) Pneumoconioses 7 years
(b) Pagassosis 3 years
(c) Byssionesis 7 years
No qualifying period is required to be specified.
(1) Where the monthly wages of a workman exceed two thou sand rupees, his
monthly wages for the purposes of (a) and (b) above shall be deemed to be two
thousand rupees only.
(2) The minimum rates of compensation for permanent disablement and death
specified in the Act is rupees Sixty thousand and fifty thousand respectively.
The maximum amount of compensation works out to about Rs. 2,74,248.00 for
permanent disablement and Rs. 2,28,540.00 for death.
The Act does not provide for appointment of Inspectors. However, under Section
32 of the Act, the State Governments/Union Territory Admin istrations have to
frame rules to carry out the purposes of the Act.
The rule making power under the Act was originally vested in the Central Govern
ment and in exercise of these powers, the Workmen’s Compensation Rules, 1924
were framed. Some of the State Governments have subsequently farmed their own
rules under the Act.
In this connection, a statement showing the names of the States/UTs, which have
so far framed necessary rules under the Act, is attached (Annex-II). The
remaining States/UTs are being reminded to expedite the framing of rules under
VI. Settlement of Claims under the Act:
The claims for compensation broadly fall in three categories, namely (i)
uncontested cases of disablement; (ii) disputed cases of disablement and (iii)
fatal cases. The procedures for settlement of the three types of cases are as
(i) Uncontested Cases:
(a) After a workman has given notice of the accident, the employer is expected
to arrange for medical examination of the workman. It must be free of charge.
The medical Examination will indicate the nature of the disablement.
(b) If the disablement is of temporary nature the employer will pay compensation
as half monthly payments, direct to the workmen.
(c) If the disablement is of permanent nature compensation will be paid in lump
sum by the employer to the workman if he is a male over 18 years of age. In the
case of woman and minors, the employer will deposit the amount of compensation
with the Com missioner, for disbursement.
(d) Where a workman has agreed to accept and has taken a smaller sum than the
amount fixed by the Act his right to bring proceed ings for the balance are
(e) Any agreement with the workman for a lump sum payment must be registered
with the Commissioner by the employer.
(a) If the employer refuses to pay compensation or does not pay the full amount
due, the workman has to make an application to the Commissioner for Workman’s
Compensation appointed by the State Government or Union Territory.
The application has to be made in Form ‘F* prescribed under the Workman’s
Compensation Rules. An illiterate person can have the application prepared under
the direction of the Commissioner.
(b) A claim for compensation must be preferred before the Commis sioner within 2
years of the occurrence of the accident or in the case of death within 2 years
of the date of death.
In the case of contracting of a disease the accident is deemed to have occurred
on the first of the day during which the workman was continuously absent in
consequence of the disablement caused by the disease.
(iii) Fatal Cases:
(a) The amount of compensation due has to be deposited by the employer with the
Commissioner for Workmen’s Compensation. The Act specifically provided that no
payment made directly by the employer shall be deemed to be a payment of
(b) The Commissioner shall distribute the lump sum amount of com pensation to
the dependants in such proportion as he may decide.
(c) If the employer does not deposit the compensation the dependant or
dependants have to make an application to the Commissioner in Form ‘G’
prescribed under the Workmen’s Compensation Rules for the issue of an order to
VII. Extension of the provisions of the Workmen’s Compensation Act to Hazardous
Employments in Agriculture:
The Workmen’s Compensation Act, 1923 already applies to workers employed in
farming by tractors or other contrivances driven by steam or other mechanical
power or electricity etc.
The State Governments of Andhra Pradesh etc. were
advised in March, 1976 to consider addition of the following employments to
Schedule-II to the Act in accordance with the provision of sub-Section (3) of
Section 2 of the Act:
(i) Employed in clearing of jungles or reclaiming land or ponds in which on any
one day of the proceeding twelve months more than twenty-five persons have been
(ii) Employed in cultivation of land or rearing and maintenance of live stock or
forest operations or fishing in which on any one day of the proceeding twelve
months more than twenty-five persons have been employed ;
(iii) Employed, otherwise than in cleric. I capacity, in installation, main
tenance, repair of pumping equipment used for lifting of water from wells,
tube-wells, ponds, lakes, stream etc.;
(iv) Employed, otherwise than in clerical capacity, in the construction, boring
or deepening of an open well/dug well through mechanical contrivances;
(v) Employed, otherwise than in clerical capacity in the construction, working,
repair or maintenance of a bore well, bore-cum-dug well, fitter point etc.;
(vi) Employed in spraying and dusting of insecticides or persticides in
agricultural operation/or plantations;
(vii) Employed in working or repair of maintenance of bulldozers, tractors,
power tillers etc.
As per available information, the State Governments of Andhra Pradesh, Arunachal
Pradesh, Assam, Bihar, Haryana, Karnataka, Kerala, Maharashtra, Meghalaya,
Orissa, Punjab, Tamil Nadu and Tripura and U.T.
Administrations of Chandigarh, Dadra and Nagar Haveli and Pondicherry have
already made the proposed additions with effect from 15.9.95.
The Central Govern ment has included all the above mentioned employments in
Schedule II of the Act by amending the Schedule. The matter is not, therefore,
being pursued further with the remaining States/UTs.
VIII. Last Amendment of the Act in 1995
(a) The provisions of the Workmen’s Compensation Act, 1923, were reviewed by the
Law Commission of India (1974) and (1989). The Commission had made a number of
recommendations for amend ment of the Act.
Based on their recommendations and suggestions received from the
Ministries/State Governments. The Act has been amended for carrying out certain
The amendments made by the Workmen’s Compensation (Amendment) Act, 1995 provides
inter-alia for enhancement in the rate of compensation from 40% to 50% and from
50% to 60% of the monthly wage in the case of death and permanent total
(b) The minimum rate of compensation for permanent total disable ment and death
have been fixed at Rs. 60,000/- and Rs. 50,000/- respectively, as against the
previous rates of Rs. 24,000/- and Rs. 20,000/- respectively;
(c) The monthly wage ceiling specified in Explanation II under Sec tion 4(1) for
working out the maximum amount of compensation has been enhanced from Rs. 1000/-
to Rs. 2000/-. The rate of compensation is linked to the age of the workman at
the time of his disablement or death.
The workers getting disabled/dying at an early age are, therefore entitled to
compensation at a comparatively higher rate.
(d) A provision for payment of Rs. 1000/- towards funeral expenses has been made
in addition to compensation;
(e) The Act has been made applicable to workmen recruited by Companies
registered and based in India and sent for work abroad;
(f) Sixteen new employments have been added to Schedule-II. In addition to State
Governments, the Central Government has also been empowered to add hazardous
employment in Schedule-II.
(g) Three new occupational diseases added to Schedule-Ill. Power to add
occupational diseases in Schedule-Ill conferred also on the Central Govt.
(h) The claimant of compensation may have the claim/petition filed/ transferred
also before the Commissioner for the area in which the workman ordinarily
Except this all other provisions of the Workmen’s Compensation (Amendment) Act,
1995 have been brought into force with effect from 15.9.1995.
Statement showing the names of States which have framed the Rules under the
Workmen’s Compensation Act, 1923.
2. Uttar Pradesh
3. Tamil Nadu
5. Andhra Pradesh
9. Himachal Pradesh
11. Dadra & Nagar Haveli
12. Daman and Diu
13. Lakshadweep Andaman & Nicobar Karnataka
The Workman Compensation Act, 1923 was formed to provide compensations for workers who acquired/acquire
injuries caused by accidents in the course of employment. It ensure that their
rights and value as labourers is maintained. Therefore employers are obligated
to pay compensations to workers who got injuries that led to disablement or even
death in the course of employment.
Written by:- Navnit Kumari