Accident compensation – Legislative safeguard

AccidentIncidents of contracting injuries in the course of employment are more rampant for those engaged in blue-collar jobs, against those in white-collar jobs. They are often face physical hazards assuming the form of employment related injuries (resulting in death or disability) or occupational disease.

Workmen’s Compensation Act, 1923(the Act)1is an important legislation that safeguards workers facing such physical hazards or occupational diseases. The Act lays obligation on the principal employer for compensating the workers (including contract workers) or their dependants (in case of death), where workman suffers injury on account of accident arising out of and in course of employment. Workman who has served an employer for at least six months is eligible for compensation for any specified occupational disease.

The Act applies to any worker employed in factory, mine, plantation, construction work or any other hazardous occupation as listed in Schedule II of the Act &2&3 irrespective of their salary. Nonetheless, no liability arises for an injury attributable to fault of workman, worker under influence of alcohol or drugs, willful neglect or removal of safety rules or safeguard devices, willful disobedience of order given, etc.

The amount of compensation is determined by taking into consideration the nature of injury, average monthly wage of the worker and the relevant factor as laid down in Schedule IV, pertaining to the age of the worker.4 However, the maximum monthly wage for computation of compensation is fixed at Rs. 4,000 at present.

The minimum compensation in case of death is Rs. 800005and maximum is Rs. 4.56 lakh and the same is Rs. 900006and Rs. 5.48 lakh in case of permanent total disability exceeding three days. For the purpose if the disability prolongs beyond 28 days, compensation becomes payable from the date of disablement. The employer is under an obligation to pay the dues of compensation within 30 days from the date it fell due.


- Palak Lotiya (views expressed in the article are that of the author)


1 Workmen’s Compensation (Amendment) Bill, 2009 contained a proposal to substitute the word “employee” in place of “Workmen” to make it gender neutral. The Bill has been passed by both the Houses of the Parliament. It is to take form of an Act after getting the President’s assent.

2The Act does not apply to casual workers, persons serving in Armed Forces, and those who are covered under the Employees’ State Insurance Act, 1948.

3State Government has the power to add any other occupational disease to the Schedule and also extend the scope of the Act to any class of persons whom it believes are engaged in hazardous occupations. This needs to be done after giving three months notice to the concerned employers. It is also empowered to impose penalty on employer who fail to pay the dues of such compensation within a month’s time from the date it fell due.

4Formula for calculating compensation = Monthly wages X age factor x 50/100

5Workmen’s Compensation (Amendment) Bill, 2009 proposes to raise the compensation paid to the workers and their family members in case of death to Rs. 1.2 lakh from current Rs. 80,000.

6Workmen’s Compensation (Amendment) Bill, 2009 proposes to raise the compensation for permanent disability to Rs. 1.4 lakh from present Rs. 90,000.