ABSTRACT:

This paper is titled ‘Jurisprudence of the Employee’s Compensation Act’. The principle has
evolved historically from Germany, which was the first country to introduce such laws in
favour of the workers. After that, the principle has developed and spread across the world.
In the Indian context, a major part of the Employee’s Compensation Act is derived from the
British law. However, the Indian Act is quite rigid and leaves very little scope for disputes.
The paper aims to explore the various theories of responsibility of the employer and to study
the evolution and features of the Indian Employee’s Compensation Act of 1923. The paper
also seeks to delve into the important features of the Indian Act.
THE EMPLOYEE COMPENSATION ACT: ORIGIN:
The genesis of the principles of workman compensation does not lie in the English common
law, but in the preventions of the economists of the Continent. England enacted such an Act
as late as 1906, while continental Europe had legislations before the end of the 19th century.
The purpose of the Employee Compensation Act, 1923 1 is to protect an employee, if he was
either injured or killed in any employment due to the negligence of the employer. The
employee can claim and recover for any such injury from the employer.

In the case of GEC Alsthom India Ltd v. Industrial Tribunal (I), the Allahabad High Court
propounded that the Workmen’s Compensation Act is essentially a welfare legislation, which
intends to give benefits to the workmen who suffer from injuries due to their employment. 2
The act carries a message of social welfare, and consequently does not demand strict proof
from the employees, and imposes an obligation on them to be honest. In the case of Nissan
Springs Pvt Ltd. v. Om Jain, it was held that the duty lay on the court to ensure that no
employee’s interest was hurt because of the court’s hysterical and hyper-technical approach,
and also to ensure that no employee gained undeserved sympathy due to false claims.3

THE INDIAN WORKMAN’S COMPENSATION ACT:

In India, the legislative Assembly enacted this law to compensate workmen for an injury by
accident, including a few diseases. This was the first of its kind in India, and resembles that
of the United States more than it does to the law of Great Britain. It was enacted in February,
1923. The Act is potentially one of the most important Acts to pursue the goals of socio-
economic justice, as also enshrined in Article 38 of the Constitution of India. 4 Under this
Article, the Constitution places the duty of promoting the welfare of the country by protecting
and securing a social order, wherein social, economic and political justice will inform
institutions about national life. The Constitution also states in Article 43, that the state shall
endeavour to secure all workers a decent standard of life, and proper conditions of work.
In the sixty-second Law Commission Report,5 the Commission has stated that the necessity
for revising the Act stem from socio-economic changes in India since 1923, and that this
social legislation therefore ought to be reviewed.

2
1998 (78) FLR 136 (All HC)
3
1995 (III) LLJ (Supp) 234
4
5
Compensation, as a concept has evolved through various stages. During the Twelve Tables of
Roman Law, compensation was exact vengeance, by inflicting the exact same injury to the
culprit as he did to the victim. With slow development of customs, they also imposed limits
on vengeance, and set out the extent beyond which revenge could not be taken. After some
more time, the State evolved into a central authority and changed the means of revenge from
retribution by individuals to inflicting of punishments. Now, the concept of vengeance has
disappeared, and the concept of compensation has taken over.

In The Rule of Law in the Contemporary Welfare State, Fritz Cygi stated:
“Justice at least is done in this way in the shape of equalization, the breach in the idea of
abstract and uniform equality serving to level the sharp points of social differences.
By social legislation in favor of workers, tenants and lodgers, as also of agriculture, the
legislator is doing a work of equalization.”6

HISTORY OF AND AMENDMENTS TO THE WORKMEN’S COMPENSATION ACT IN INDIA:

The proposal for a formal Act for workmen compensation was published in 1921 by the
Government of India. In 1922, a committee of persons representing both, the employer and
the employee met and prepared a broad framework of the Act, which was introduced in the
Legislative Assembly after minor changes and editing. It was passed in 1923, and came into
effect on 1 July, 1924.7 It has been amended five times. However, the main amendment came
after the ratification of an International Labour Convention in 1926.8

Act VIII of 19239 stated that the general principle which was embodied in the Act was to
compensate the employees who had either succumbed or suffered injuries while working
under the employer, and in the course of their employment. The Statement of Objectives also
stated that India was probably alone amongst the nations who had not yet enacted such a
legislation to favour the employees, and that it was now imperative to protect such employees
from any hardships which might arise from accidents at the workplace in the course of their
employment.

6
Fritz Cyfi, The Rule of Law in the Contemporary Welfare State, 1962, Vol 4, Journal of the international
Commission of Jurists, no. 1 page 3, at pages 8 and 9
7

8
9
Act XXXVII of 192510 had limited its amendments to only such sections which were either
defective or were not likely to raise controversial points when changed, but instead perceived
to be improved by such changes.

The Report of the Royal Commission on Labour in India set out a proposal for general
revision of the Act. It stated that despite the fact that the Act followed the British model, and
quite a few provisions were borrowed from the British counterpart, there were some
important differences between the two. The Indian law is extremely rigid, and it has left very
few openings for disputes. The precision of the Act had the vision to put a suitable machinery
in place for resolving disputes which may arise, since it was mainly concerned with large
scale employers. Initially, the Act only provided compensation to the workmen who were
engaged in hazardous occupations, but was later amended to include almost all workers,
except those in small factories, mines, railways and tramways along with some lesser
important branches of employment.

Act XV of 1933 was brought in because he initial act was experimental in nature, and a lot
many modifications and amendments were suggested by various scholars and lawmakers.
Major changes involved a change in the category of workers entitled to such compensation,
changes in the scales of such compensations, and limitations on the liability of the employee.

Amending Act VII of 1937 amended Section 35 of the Act, to facilitate the transfer of funds
to the dependants of the employee in another country.
Amending Act IX of 1938 was again, introduced to deal with minor changes and defects
proposed. Further amendments followed in 1959, 1995 and 2009.

10
FEATURES OF THE ACT:
The act is primarily responsible for conferring certain privileges on the industrial and
working classes in India. It was the first legislation which created responsibility on the
employer. The essence of the Act lies in it providing for an effective method of compensation
to an injured workman, as and when an injury is caused in the course of employment.

The Act is not retrospective in nature, i.e. it is deemed to be prospective like all other
legislative enactments. The Act is also to be construed strictly, and is a quasi-penal statute. 11
The interpretation of the Act is liberal and literal, unless there is a reason to not interpret it in
that fashion. The Act is essentially a welfare legislation, which aims at providing the
workmen a better and secure life.

In the case of North Western Iron Co. v. Industrial Com. Ann. Cos.,12 it was stated as follows:
“ the Act is one of general interest, not only to the workman and to the employer, but also to
the State, and it should be so construed that the technical refinements of interpretation will
not be permitted to defeat it. The definition of the dictionaries should be discarded and words
should be construed in the sense in which they are understood in common language, taking
into consideration the text and subject-matter relative to which they are employed.”

HISTORICAL EVOLUTION OF WORKMEN’S COMPENSATION ACROSS THE GLOBE:

Historically, Germany was the first country to enact a workers’ compensation law. France
however, made such a law after almost twenty years of Parliamentary discussions and
debates. In these two countries, the old law of the liability of the employer for accidents, to
the employee was based on the principle of responsibility or on ex delicto, i.e. the liability
that stems from a wrong or transgression. In England, the employer was responsible for both,
his and his employee’s actions. This was, however, subject to the principles of the principles
of common employment, contributory negligence and assumption of risks.

All such laws can also be said to have stemmed from the Roman Law principles governing
the relation of employees and employers. All such relations were governed, not by a labour
contract, but by a law of status.13Later, these countries recognised the liability of the
employer ex delicto, when workmen suffered in inhumane conditions and suffered from
11
Bombay Burmah trading Corporation Ltd. v. Ma E Nun, AIR 1957 Rang 173
12
28 RCL 770
13
injuries due to their jobs. However, the law of Britain was met with a lot of criticisms. Firstly,
the doctrine of assumption of risks went hand in hand with the English rule of liability ex
delicto. This doctrine implies that the workman is assumed to have consented to all the risks
that might rise out of the ordinary course of employment, and this supports and affirms the
theory of responsibility for faults of the employer alone. Secondly, the defence of common
employment is supported by this doctrine. The basis for this doctrine lie in the fact that the
wages are supposed to be fixed in consonance with the risks associated with the employment,
the employee should be free to either accept or reject the employment and that extraordinary
dangers are bound to be paid and compensated by the employer. It is for these assumptions,
that the doctrine is unsound and has no basis.

Further, the theory of liability ex delicto uses a similar cause of proximity to the criterion of
responsibility. This cause is arbitrary, and justice will be done if there was partial liability on
responsibility for a cause which contributed to the occurrence. Therefore, the liability should
be based on the responsibility which the employer holds with regard to the chain of causation.

The theory of liability ex delicto causes a travesty of justice, because of the reasons stated
below:
1. The term ‘fault’ is extremely uncertain and has different meanings attributed to it in
different cases.
2. The idea of whose fault it was is likely to be determined incorrectly, owing to biases
and sympathy, ignorance or prejudice.
3. The cases are, quite often, cannot be determined judicially to put forth a correct and
practical judgement.
4. The delay in deciding these cases indirectly defeats the idea of justice.
5. The facts behind such cases are unascertainable, and cannot be decided by the judicial
process.

THEORIES OF RESPONSIBILITY:
 THEORY OF CONTRACTUAL RESPONSIBILITY:
This theory is based on the premise that there is usually contractual relationship
between an employee and an employer. The said theory starts right from the contract
 of employment, which creates rights in favour of the employer, and obligations upon
the employee. This is a contract of good faith, and includes all expressed and implied
acts and omissions. In other words, it includes both incidental and directly arising
from the contract.

 THEORY OF RESPONSIBILITY FOR THINGS UNDER ONES CARE:

This theory is based on the premise that the employer’s responsibility is based on the
idea of fault. However, the judicial basis for such responsibility is the implied
obligation to bear a risk. The aforementioned obligation may rise either because the
employer may be a master of the enterprise which gave birth to the risk, or because he
directly controls such objects which may cause risk. Therefore, the responsibility lies
on the owner or the employer, to prove that he has nothing to do with the said contract
or tort, and that it has arisen directly from the contract. According to this theory, the
person who should be held responsible for providing compensation to the employee is
not he who owns such goods which have caused the injury, but is the guardian, or the
person under whose control such things were present.

 THEORY OF TRADE RISK:

This theory has developed from the French term, risqué peofessionel. This implies
that every job or work entails some risks, and one is responsible for these risks when
he himself has consented to them freely. Therefore, the employee is supposed to be
held liable for his own acts. In Latin, this is embodied in the maxim, volunti non fit
injuria, which literally means he who volunteers cannot complain of injuries.
However, it is essential that the consent is free and voluntary. In other words, the idea
of fault is substituting the idea of risk.

 THEORY OF RESPONSIBILITY FOR EXISTENCE:

This is a socialist doctrine, and states:

“The theory of trade risk which holds the employer responsible for the risks he has
created, is a theory imagined by jurists in order to bring within the domain of
jurisprudence a novel economic and social conception of the obligations of employers
towards employees.”14

14
Morin, p. 93
This is based on the premise that a wage cannot be a compensation for hours of
laborious work put in by the labourers, and they should be provided with support
apart from such wages.