Workmen Compensation Act - A Quick Overview

Workmen Compensation Act: A Brief

The Workmens Compensation Act, 1923 provides for payment of compensation to
workmen and their dependants in case of injury and accident (including certain
occupational disease) arising out of and in the course of employment and resulting in
disablement or death. The amount of compensation to be paid depends on the nature
of the injury and the average monthly wages and age of workmen. The minimum and
maximum rates of compensation payable for death (in such cases it is paid to the
dependents of workmen) and for disability have been fixed and is subject to revision
from time to time.
Applicability of the Law?
The Act extends to the whole of India. The act applies to factories, mines, docks,
construction establishments, plantations, oilfields and other establishments which are
explicitly mentioned in Schedule II and III of the act. Moreover it excludes
establishments covered by the ESI Act.
Every employee including those employed through a contractor except casual
employees, who is engaged for the purposes of employers business and who suffers
an injury in any accident rising out of and in the course of his employment, shall be
entitled for compensation under this Act.
Definition of the Workmen under the Act:
Workman means any person other than a person whose employment is of a casual
nature and who is employed otherwise than for the purposes of the employers trade
or business.
A Casual workman is one who is engaged on work which is of a casual nature or
which is of a non-recurring or intermittent nature.
Scope of Cover:
The Workmens Compensation Insurance Business in India is controlled by the
Workmens Compensation Insurance Tariff (W.C.Tariff). The Tariff provides for two
types of Insurance as follows:
Table A: This policy provides indemnity to the Insured if any employee in the
Insureds immediate service shall sustain bodily injury by accident or contracts
disease arising out of and in the course of his employment by the Insured in the
Business and if the Insured shall be liable to pay compensation for such injury either
under.

Table B: This Policy provides indemnity to the Insured against their legal liability
under the Fatal Accidents Act, 1855, and at Common Law. (This Policy is not issued to
cover employees who fall within the definition of workmen under the Workmens
Compensation Act, 1923, as amended).
Calculation of the Sum Assured:
This insurance policy stands subject to the provisions of the Workmens Compensation
Act. The sum insured is based on the annual wages of the workmen during the
insurance period. So the compensation is adjusted at the end of the policy period or
submission of the statement of actual wages paid during the insurance period. The
policy can also cover the medical expenses of the employers workmen up to the limit
specified under the policy.

Employers Liability Arises:

if personal injury is caused to a workman by accident arising out of and in

the course of his employment;

If a workman employed in any employment contracts any disease, specified

in the Act as an occupational disease peculiar to that employment.
Employers Liability Does not Arise:

Any injury that does not result in a fatality or disability for 3 days
subsequent to the accident.

The first 3 days of a temporary disability if the total temporary disability

period does not exceed 28 days.

Any non-fatal injury caused by an accident that is directly attributed to.

Influence of drinks or drugs.

Willful disobedience of an order that would have secured the workmans

safety.

Willful removal or disregard of any safety device.

War or nuclear group of perils.

Liability towards employees of the contractors of the insured (unless

specifically declared).

Any employee who is not a Workman as per the Workmens Compensation

act.
Liability assumed under an agreement.

Occupational diseases unless cover is extended on payment of extra

premium.

Any change in statute provisions after the policy has commenced.

When the Compensation is to be paid :

Compensation shall be paid as soon as it falls due.

In cases 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 the workman to make any further claim.

Penalty Applicable for Non Payment of Claim :

If the employer defaults in paying the compensation due under this Act
within one month from the date it fell due and has a material justification for
the same than in addition to the amount of the arrears, he will have to pay a
simple interest thereon at the rate of twelve per cent per annum or at a higher
rate but not exceeding the maximum of the lending rates of any scheduled
bank.

If the employer defaults in paying the compensation due under this Act
within one month from the date it fell due and does not have a material
justification for the delay than he can be directed to pay, in addition to the
amount of the arrears and interest a further penalty of a lumpsum amount not
exceeding fifty per cent of the total Arrears payable.