LABOUR LAWS

TYBBA – HR
 THE EMPLOYEES’ COMPENSATION ACT, 1923

Introduction: -
 In any industrial society the problem of labor
management relations becomes so important that
some sort of social insurance becomes necessary
to provide adequate protection from losses caused
to the laborers by accident.
 With a view to improve the condition of the
employees come social insurance legislations
have been enacted.
 The Employees’ compensation Act, is one of the
earliest measures adopted to benefit the
labourers. It was passed in 1923 and enforced on
1st July,1924.
 Cont…
The object of the Act was to make provision for
the payment of compensation by certain class
of employers to their employees for injury by
accident.
The reasons that compelled the initiation of the
bill were attributed to the growing complexity
of industry with the increasing use of
machinery and consequent danger to
employees along with the comparative poverty
of employees themselves that rendered it
advisable that they should be protected as far
as possible from hardships arising from
accidents.
 Cont…
Originally the Act was applicable to
employees of certain specified industries,
employed otherwise than in clerical capacity;
and receiving monthly wages not exceeding
Rs. 300.
With the progress of time and change in the
standards of living in the society the Act has
on many occasions been modified so as to
benefit greater number of employees and to
provide for payment of greater amount of
compensation to them.
The Employees' Compensation Act was
framed with a view to provide for
compensation to employees incapacitated by
 Cont,..
The main object of the Act was to make
provision for payment of compensation to an
employee only, (i.e, the concerned employee
himself in case of his surviving the injury in
question and to his dependants in the case of
his death) in view of section 2 (1) (n) of the
Act.'
But compensation is not the only benefit
flowing from this Act; it has important effects
in furthering work on the prevention of
accidents, in giving employees greater
freedom from anxiety and in rendering
industry more attractive.
This Act extends to the whole of India except
Features of the Employees Compensation Act, 1923

The Employees' Compensation Act is modelled

on the British pattern. Under the Act payment
of compensation has been made obligatory on
all employers whose employees are entitled to
claim benefit under the Act.
The employee or his dependants may claim
compensation if the injury has been caused by
accident arising out of and in the course of
employment and in case of injury not resulting
in death if such accident cannot be recognized
to the employee having been at the time of
accident under the influence of drink or drugs
or if it is not caused due to willful
disobedience of rule or orders or disregard of
 Cont…
The various classes of employees have been
specified in the definition of "Employee" in
section 2 (l)(dd) and in Schedule II. Persons
employed in administrative or clerical
capacity and earning more than Rs. 1,600/-
per month (except railway servants) were
excluded from the benefit of the Act. But now
the condition of average monthly wage limit
of Rs. 1,600/- has been abolished.
 The amount of compensation payable depends in
case of death on the average monthly wages of
the deceased employee and in the case of an
injured employee both on the average monthly
wages and the nature of disablement.
 Cont…
 The term "wages" for the purposes of this Act includes
over-time pay, and the value of any concessions or
benefit in the form of food, clothing, free quarters, etc.
Whenever the compensation payable to any employee
has to be worked out, first of all his monthly wages are
determined and then the amount of compensation is
decided, where in the method for determining the
amount of compensation for death, and permanent
disablement is given.
 In order to protect the interest of dependants in case of
fatal accidents the following provisions are made—
(i) All cases of fatal accident are to be brought to the
notice of the Commissioner;
(ii) If the employer admits his liability the amount of
compensation payable is to be deposited with the
Commissioner;
 Cont…
If the employer admits his liability and at the
same time there are grounds for believing
compensation to be payable, the dependants
get the information necessary to enable them
to judge if they should make a claim or not.
 A sub-contractor may indemnify his contractor if
he has had to pay compensation either to a
principal or to an employee.
 The Commissioner may deduct a sum of Rs. 50/-
from the amount of compensation and pay the
same to the person who has incurred funeral
expenses of the deceased employee.
 The Act is administered by the Commissioner for
Employees' Compensation appointed by the State
Government.