In India, workers employed in industries are insured against injuries or death due to accidents arising while fulfilling their duties by the employer. This is enforced under Employees’ Compensation Act.

 

According to the act, employers are required to compensate workers who get injured while performing their duties under employment. The Act also offers compensation to workers who get disabled or die due to accidents at work. The wage limit for calculating compensation under the Employees’ Compensation Act has been raised to ₹15,000, which was earlier ₹8,000.

 

 

How Did The Act Come Into Being?

 

As industrialisation spread its roots in India during the late nineteenth and early twentieth centuries, the use of machines in factories increased. This exposed workers to new risks. Coupled with the poor economic condition of employees in the country, many factory inspectors realised that the Fatal Act of 1885 was not sufficient to protect them from economic hardships in the event of an accident at work.

 

Also, workers had to go through an expensive and arduous legal process to seek compensation for injuries sustained during employment. In 1922, a committee was convened consisting of government members, medical experts, life insurance experts, and employer representatives to draw up a set of recommendations for the legislation. After deliberations, the act was passed.

 

 

Why Was the Act Formed?

 

The policy specifies that as an employer has the right to make profits, the welfare of employees due to an injury as a result of the employment is the employer’s responsibility too.

 

The core objective of the Act is to ensure that employees can live a respectable life if they encounter an injury, disability, or death due to an accident related to their employment. While workers can buy a life policy to offer financial support to their families in the event of their untimely death, the Act offers an additional safety net.

 

 

Who is Covered under the Act?

 

 

The Employees Compensation Act 1923 offers a list of industries, including mines, factories, construction establishments, oil fields, docks, ships, fire brigades, and various other industries specified in the Schedule II of the Employee Compensation Act. It also covers employees working in a range of high-risk roles like a mechanic, drivers, aircraft crew, construction workers, miners, electricity department outdoor employees, and many more.

 

 

Is the Act Applicable in All States?

 

The Act is applicable across India except in Jammu and Kashmir.

 

Employer’s Liability Under Employees’ Compensation Act

According to the rules, employers are liable to pay compensation to workers under the following circumstances:

 

• Accidental injuries – If a worker suffers from a personal injury during the course of his employment, then the employer has to pay compensation

 

• Occupational diseases – If a worker contracts a disease due to being exposed to certain conditions while working, then the employer is liable to offer compensation

 

Every compensation claim must meet the following criteria:

 

• The accident must be in the course of the worker’s employment.
• There needs to be a causal connection between employment and the accident. In other words, it needs to be established that the accident happened while the worker was fulfilling his duties as per his terms of employment.
• If an employee dies due to injuries caused by accident arising out of employment, then it is important to establish a direct connection between the cause of death and the nature of his duties. A causal connection will also suffice.

 

 

Exceptions to Employer’s Liability

Employers will not be liable to pay compensation if:

 

• The injury caused to a worker does not result in partial or total disability for more than three days.
• If a worker gets injured but does not succumb to the injuries or suffers from total disability during an accident that can be attributed to:
  
  
  • Working under the influence of drugs or alcohol
  • Intentional disobedience to rules or orders specified for the security of workers
  • Wilful removal of any safety equipment provided for keeping workers safe

 

 

Calculating Compensation Under Act

 

Compensation under this Act is calculated based on the nature of the injury, the worker’s age, and his monthly wages as described below:

 

• Death of the worker
  
  If a worker succumbs to the injuries caused due to an accident while fulfilling his responsibilities as part of his job, then the compensation amount will be higher of:
  
  
  • 50% of his monthly salary multiplied by the appropriate factor; and
  • ₹80,000
    

Schedule IV of the Act provides a list of factors for calculating the lump sum equivalent to the compensation amount in the event of permanent disability or death.

• Permanent Total Disability
  
  If a worker suffers from a permanent total disability due to an accident while fulfilling his responsibilities as part of his job, then the compensation amount will be higher of:

• 60% of his monthly salary multiplied by the appropriate factor; and
• ₹90,000

Schedule IV of the Employees’ Compensation Act provides a list of factors for calculating the lump sum equivalent to the compensation amount in the event of permanent disability or death.

 

 

• Permanent Partial Disability
  

If a worker suffers from a permanent partial disability due to an accident while fulfilling his responsibilities as part of his job, then the Coverage states:

• If the injury falls in the list of injuries specified in Part II of Schedule II, then the compensation amount will be a percentage of the total disability coverage based on the percentage of the loss of earning capacity due to the disability
• If the injury is not specified in Schedule I, then the compensation amount will the percentage of total disability coverage based on the loss of earning capacity as assessed by a qualified medical practitioner

• Temporary Disability

If a worker suffers from a temporary disability due to an accident while fulfilling his responsibilities as part of his job, then the compensation amount will be a half monthly payment of the sum equivalent to twenty-five per cent of the monthly wages of the worker. This is calculated as per the provisions of the Act.



Tata AIA Life Insurance Company offers a range of life insurance policies that can help employees create a financial safety net for their families. With affordable premiums and a range of features, the policy can be chosen as per the specific need of each individual.

 

Conclusion

When a worker gets injured during the course of his job, then the employer is legally liable to compensate based on the provisions in the Employees’ Compensation Act. It is important to remember that if a worker is receiving compensation under the Employees’ State Insurance Act 1048, then he will not be covered under the act.

L&C/Advt/2022/Aug/1866