An Overview of Workmen’s Compensation Act, 1923: Workmen Compensation Policy Benefits


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The Workmen’s Compensation Act, 1923 is a social security legislation. This law was made by the government to make employers liable to compensate employees on certain grounds. Let’s discuss them in this post. 

The Workmen’s Compensation Act, 1923 is a law that was passed to ensure that an employer is liable to compensate an employee (or their dependents in case of demise of the employee) if he/she is a victim of workplace accident, injury, or any occupational illness. If such an illness or injury results in partial or total disablement or death of the employee, the employer is liable to pay the compensation.

The Workmen’s Compensation Act came into being looking at the increasing number of workers getting exposed to the risk of using advanced and sophisticated machinery at factories and industries. The law was enacted because it was realized that the compensation act of 1884 was not sufficient to compensate workers.

The passing of the Employee Compensation Act provided huge relief to workers who had to earlier go through the expensive process of going through court to claim compensation.

Scope of Workmen’s Compensation Act

The Workmen’s Compensation Act of 1923 covers workers who are employed in industries mentioned under the act.  The act ensures protection of workmen from any kind of accidental loss or injury caused due to employment.

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Objective of Workmen’s Compensation Act

The Workmen’s Compensation Act was formed primarily to offer compensation to the workmen in case of an accident. As per the act, the employer is responsible to consider worker’s welfare in the event of an injury that is caused due to the job of the worker. Hence the act aims at making sure that the worker could lead a sustainable life despite encountering injury at work related to his/her employment.

Employer’s Liability Regarding Compensation

There are certain conditions under which if the accident has taken place, the act would ensure that the employer pays compensation to the worker (or family) in case of injury or demise of the worker. Let’s take a look at the conditions provided under workmen compensation act 1923:

  • If there is a connection between the injury with the accident
  • The accident and the injury caused is during the course of the employment
  • The applicant is able to prove that the accident took place while performing employment duty and has resulted in aggravating the injury
  • Also, in case a personal injury gets aggravated due to employment.

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Where in India does the Workmen’s Compensation Act is Applicable?

The Workmen’s Compensation Act is applicable across all Indian states excluding the state of Jammu and Kashmir. Also, this act may not apply in states which are covered under the Employee State Insurance Act, 1948.

Changes Applied to Workmen’s Compensation Rules in 2020

In recent times, the government has made some changes in the rules for employee compensation calculation under the Workmen’s Compensation Act, 1923. The changes are likely to serve the benefits of the workers better.

As per the update, the wage amount considered earlier at INR 8, 000 has been increased to INR 15,000 as per the Labour and Employment Ministry, Government of India. The name of the act has also been changed since 2010 and the Workmen’s Compensation Act is now known as Employee’s Compensation Act.  The act also covers employees who suffer from partial or total disablement due work-related accidental injury.

Conditions under which Employers are not Liable to Pay Compensation

As per the Workmen’s Compensation Act, employers are expected to compensate employees in case of any personal injury that takes place due to an employment related accident. However, under this act, the employer is not liable to compensate in the below mentioned cases:

  • If the injury that took place doesn’t result in total or partial disablement of the worker for three days and beyond
  • If the injury doesn’t cause total or partial disability or demise of the worker and was caused under the influence of alcohol or drugs
  • If the accident takes place due to wilful disobedience of the concerned employer’s rules or due to wilful removal of safety guard

Calculation of Compensation: Workmen’s Compensation Calculation

The compensation under this act is calculated as per the provisions of workmen compensation act 1923 mentioned under section four of the act.

In case of permanent total disability, the worker is paid an amount that is equal to 60% of the monthly wage of the injured worker or INR 1,20,000 (whichever amount is higher)

In case of death of the worker due to employment related accident, the worker’s family is paid an amount that is equal to 50% of the monthly salary of the deceased or INR 1, 20,000 (whichever amount is higher).

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To Sum Up

The Workmen’s Compensation Act 1923 was introduced to compensate workers who have encountered accidental injuries while performing job related duties. With this act, the rights of the workers are maintained in case they face any disability. The act obliges employers to compensate workers who encounter injuries and families of workers whose demise is caused due to accidents caused due to employment.

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FAQs: Workmen’s Compensation Act

What is the main feature of the Workmen compensation Act?

The act makes an employer liable to pay compensation to an employee who has sustained injuries leading to the disability or demise of the worker during the tenure of employment.

Who is eligible for the Workmen compensation Act?

Workers working in factories, construction sites, mines, plantations, oilfields, docks and other establishments listed in Schedule II of the Employee's Compensation Act are eligible to benefit from the Employees compensation Act, 1923. 

Why is workman's compensation required?

Injuries or demise of an employee can bring upon huge liability for a company. With the help of the employee’s compensation act 1923, an employer can get these liabilities covered and provide comprehensive protection to his/her employees against the risks of work-related injuries, or death.

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Mar 09, 2023
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PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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