The Employees Compensation Act 1923

The Employees Compensation Act 1923 is a social security law in India that provides for compensation to employees who suffer from work-related injuries or illnesses. The Act applies to all employees in India, except for those employed in the armed forces.

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The Employees Compensation Act 1923

Under the Act, employers are required to provide compensation to their employees in case of injury or death caused by accidents arising out of and in the course of employment. The compensation is provided in the form of a lump sum payment, which is based on the nature and severity of the injury or illness, as well as the employee’s wages.

The Act also provides for the establishment of Employees’ Compensation Commissioners, who are responsible for adjudicating claims for compensation and determining the amount of compensation to be paid. The Commissioners have the power to order the employer to pay compensation and can also impose penalties on employers who fail to comply with the provisions of the Act.

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The Act also requires employers to maintain certain records related to work-related injuries and illnesses, such as accident registers and medical examination reports. Employers who fail to comply with these record-keeping requirements can face penalties.

The Employees’ Compensation Act, 1923 is an important piece of legislation in India, as it provides much-needed protection to workers who may be injured or disabled while on the job. The Act also helps to promote a culture of safety in the workplace, as employers are incentivized to take measures to prevent workplace accidents and injuries.

Objective of The Employees Compensation Act 1923

To provide relief to workmen and/or their dependents if workmen dead or disabled due to accidents arising out of and in the course of employment.

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Applicability of The Employees Compensation Act 1923

  • Extends to whole of India
  • Applies to all employees working in Railways, manufacturing process, factories, manufacturing or handling of explosives, mines, construction, maintenance, repair or demolition establishments.
  • It is also applicable to oilfields and Newspaper establishment.

Liability of Employer

  • The Employer shall be liable for compensation under the act in case of injury/accident arising out of and in the course of employment and resulting in Total Disablement, partial Disablement, Death or permanent disablement.
  • The employer shall not be liable if an injury does not result in the total or partial disablement of the workmen for a period exceeding three days.
  • Employer shall also not be liable if injury caused by an accident is directly attributable to —
    • Workmen having been at the time there of under the influence of drugs.
    • Willful disobedience of the workmen to an order expressly given, or to a rule expressly framed, for the purpose of securing the safety of workmen.
    • Willful removal or disregard by the workmen of any safeguard or other device which he knew to have been provided for the purpose f securing the safety of workmen.

Amount of Compensation

The principal employer shall provide the essential amenities like

  • Where death results from the injury: an amount equal to fifty percent of the monthly wages of the deceased multiplied by the relevant factor or an amount of (one Lakh and 20 thousand rupees), whichever is more.
  • Where permanent total disablement results from the injury: an amount equal to 60% of the monthly wages of the injured multiplied by relevant factors or an amount of (one Lakh and 20 thousand rupees), whichever is more.
  • Amount of compensation while injuries are mentioned in schedule 1 of this act.
    • Part 1: List of injuries deemed to result in permanent total disablement.
    • Part 2: List of injuries deemed to result in permanent partial disablement.

Types of Disablement

  1. Permanent Total Disablement – Complete loss of earning capacity.
  2. Permanent Partial disablement – Efficiency reduced for all times in every employment.
  3. Temporary Disablement – Reduces the earning capacity of a workman in the employment in which he was engaged at the time of the accident.

Compensation Conditions

  • The compensation will only be applicable if injury of employee takes place while working.
  • Workers employed in certain types of occupations are exposed to the risk of contracting certain diseases.
  • Occupational diseases have been categorised in part A, B & C of Schedule III of this act.

Distribution of Compensation

  • In case of death of the employee and in case of lump-sum compensation payable to a woman or a minor under a legal disability.
  • To be deposited with commissioner who will then pay it to the workman.


Any advance payment up to an amount equal to three month’s wages may paid to the victims’ family which can be later adjusted.


Workman, to the commissioner, may file the claim for accident compensation in the prescribed form within 2 years from the occurrence of the accident or from the date of death.

Any contract or agreement which makes the workman give up or reduce his right to compensation from the employer is null and void in so far as t aims at reducing or removing the liability of the employer to pay compensation under the act.

Reference to Commissioners

Any question arises in any proceedings under this act as to the liability of any person to pay compensation or as to the amount shall be settled by the commissioner.


An appeal shall lie to the High Court from the following orders of a commissioner within 60 days of the order of the commissioner.

Important Updates

  • Before 2010, This act was known as “Workmen’s Compensation Act.
  • As per 2020 update, ₹15,000 will be considered as wage for calculating compensation under the act.
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