Employees Compensation Act, 1923

This article is written by Madhuri Pilania, a first-year student pursuing BBA.LLB from Symbiosis Law School, Noida. This article deals with the Employees Compensation Act, 1923.

Table of Contents


Every employee needs a secured job and wants to get compensation for the expenses he has incurred. This is a requirement that needs to be fulfilled by the company whether it is small scale or large scale. After all, a company’s success depends on its employees. Therefore, the protection of employees’ and their safety is a top priority of a company. This article is all about how much compensation is given, under what conditions, who is entitled to claim compensation and a lot more.

Main features of the Act 

The “Employees Compensation Act, 1923” is an Act to provide payment in the form of compensation by the employers to the employees for any injuries they have suffered during an accident. Earlier this Act was known as the Workmen Compensation Act, 1923. When the employer is not liable to pay compensation-

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  1. If the injury does not end in the entire or partial disablement of the employee for a period exceeding three days.
  2. If the injury, not leading in death or permanent total disablement, is caused by an accident which is directly attributable to: 
  • The employee having at the time of the accident is under the influence of drink or drugs; 
  • The willful disobedience of the employee to an order if the rule is expressly given or expressly framed, for the purpose of securing the safety of employees; or
  • The willful removal or disregard by the employee of any safety guard or other device which has been provided for the purpose of securing the safety of employees.

Principles Governing Compensation

Who will be receiving the compensation on behalf of the deceased?

  • A widow or a minor who is a legitimate son or unmarried daughter or a widowed mother is entitled to compensation;
  • If the family of the deceased is wholly dependant on the earnings of the employee at the time of his death or a son or daughter who has attained the age of eighteen years;
  • A widower;
  • A parent other than a widowed mother; 
  • A minor illegitimate son, an unmarried illegitimate daughter or a daughter legitimate or illegitimate or adopted if married and a minor or if widowed and a minor; 
  • A minor brother or an unmarried sister or a widowed sister if a minor; 
  • A widowed daughter-in-law;
  • A minor child of a predeceased son;
  • A minor child of a predeceased daughter where no parent of the child is alive, or; 
  • A paternal grandparent if no parent of the employee is alive.

Nature of Liability

Imagine what will happen if an employee who is working putting in great benefits gets to know that he/she will not be getting any benefits. After all, people tend to do something to get something in return. When the principle of vicarious liability is applied, the employer is liable to pay compensation irrespective of his/her negligence. Employer anticipates it as damages payable to the employees but it is actually a relief for them. An Employer becomes liable when employees have sustained injuries by any accident or unavoidable situations during the course of employment. The question arises: Will an employee who is a part-time worker would still be entitled to the benefits of the Act? Yes, the employer will still get the benefits of the Act.

Who may get the compensation? To what extent the employers are liable?

To be eligible for the Employees’ Compensation Act’s benefits there are some requirements which need to be fulfilled:

  1. You must be an employee of the Company or Organisation.
  2. You must have been injured at the workplace or the job was as such that you have been injured.

Doctrine of added peril

When an employee performs something which is not required in his duty, and which involves extra danger, the employer cannot be held liable to pay compensation for the injuries caused. In the case of Devidayal Ralyaram v/s Secretary of State. It was ruled that the doctrine of added peril was used as defense and the employer was not liable for the compensation.

Adjudication of Compensation

The adjudication is done by the commissioner in calculation of the amount of compensation. The quantum of compensation is calculated from the date of the accident.

Self-inflicted Injury

If a worker inflicts an injury to himself or herself it is a self-inflicted injury. The injury may be intentional or accidental but the employer is not liable for such injuries. There are some types of jobs that have a high risk for self-inflicted injuries which include-

  • Law enforcement
  • Medical employees
  • Farmers
  • Teachers
  • Salespeople

Contributory negligence

Employees owe a duty to their employers to carry out their work with reasonable care so as to avoid accidents and injury. Employers are vicariously liable for the negligence of their employees but are entitled to claim a contribution or indemnity from their negligent employee in appropriate circumstances. So if there is negligence on the part of both employee and the employer then the employer will be liable to pay compensation to the extent of his own negligence, not of the employee. Hence, the compensation amount may reduce as the employer will not be liable for the negligence of the employee.

Employees’ Compensation

Section 3: Employer’s liability for Compensation

Employer’s liability in case of occupational diseases

There are certain occupations which expose employees to particular diseases that are inherent-

  • Infra-red radiations;
  • Skin diseases due to chemical or leather processing units;
  • Hearing impairment caused by noise;
  • Lung cancer caused by asbestos dust and Diseases due to effect of extreme climatic conditions.

Example- Miners are at a risk of developing a disease called silicosis. Sometimes miners also develop lung diseases due to exposure to dust. The people who work in agricultural lands, develop diseases through spraying of pesticides. These pesticides are toxic in nature and are health hazards to many farmers.

There are thousands of workplaces where occupation itself is dangerous in nature.

Provided that the employer shall not be liable:

(a) if any injury does not result in the total or partial disablement of the employee for a period exceeding three days; 

(b) if any injury does not result in death or permanent total disablement caused by an accident which is directly attributable to- 

  • if the employee is under the influence of drink or drugs at that time, 
  • the willful disobedience of the employee to an order expressly given, or to a rule expressly framed, for the purpose of securing the safety of employees, 
  • the wilful removal by the employee of any safety guard or other devices which he knew to have been provided for the purpose of securing the safety of employees.

Part A of Schedule III

If an employee contracts any disease that is mentioned in occupational diseases or the employee is employed for a continuous period of six months (this does not include the service period) and not less than that, the employer shall not be liable to pay the compensation as the disease will be deemed to be injury and it shall be considered as out of course of employment.

Part B of Schedule III

  1. Diseases caused by phosphorus or the toxic substance present, all include exposure to risk concerned.
  2. Diseases caused by mercury or toxic substances found exposure to the risk concerned.
  3. Diseases caused by benzene or the toxic substances found which pose risk to the concerned.
  4. Diseases caused by nitro and amino toxic substances of benzene involve risk to the concerned.

These diseases are considered occupational diseases, and they are deemed to be out of the course of employment and therefore the employer will not be liable to pay the compensation.

Part C of Schedule III

If an employee contracts a disease that is mentioned as an occupational disease which is specific to that employment, during a continuous period that is less than the period mentioned under this part of Schedule 3 is known as occupational diseases. It will be deemed that the disease has arisen out of and in the course of the employment, the contracting of such disease will be deemed to be an injury by accident within the meaning of this Section: 

Pneumoconiosis is a disease caused by sclerogenic mineral dust (silicosis, anthracosilicosis, asbestosis) and silico-tuberculosis if silicosis is an essential factor in causing the resultant incapacity or death, such diseases are considered as occupational diseases.

For instance, an office of KLM Consultant was located in a new place. The new place had large areas, and a new wallpaper was also placed, the area painted, and a new carpet was also laid. Employees worked in cubicles. However, within a month of shifting, one of the employees, Rahul Sharma complained of skin allergy. At the new workplace, there were no windows in the cubicle where Rahul had shifted. A photocopy machine was near to his cubicle. Since his shifting, he started complaining of unpleasant odors, a feeling of excessive tiredness and irritation in eyes, nose, and throat.

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Also, some paint boxes were kept at the office which was still not removed even after his complaining. He also complained about the increasing noise and distraction there. The rashes which started a week ago with itching and redness now turned more grievous and had spread from the initial location of the hand to surfaces of the wrists. Due to his allergic condition, Rahul had to visit a doctor who advised him to avoid going out. As Rahul had to incur expenses on visiting the doctor and medicines, he approached his employer for compensation. 

The company had bought a workplace compensation insurance policy from the insurance company. The Company KLM Consultant considered it as an occupational disease and approached the employee’s compensation insurance company to recover its legal liability and hence pay the compensation to Rahul.

After checking all the documents submitted by Rahul, the insurer considered it as an occupational disease and agreed to settle the claim. The insurer covered medical expenses incurred by Rahul on his treatment. 

Section 3(3)

The Central Government or the State Government gives a notification in the Official Gazette which species the diseases which will be deemed to be occupational diseases under the provisions of sub-section(2) and in the case of notification by the state government, these diseases are declared by the Act.

Section 3(4)

No compensation will be payable to an employee unless the disease is directly attributable to a specific injury that arises out of or in the course of employment.


Underemployment, an employee is one who works under the employer and has to work as per the terms of the company or the employer. 

Personal injury

A personal injury can be compensated only in some circumstances. Injury sustained by the employee must be a physical injury. Example- If a person is discriminated on the basis of:

  • Age
  • Sex
  • Sexual Orientation
  • Transsexual person
  • If a person is having a disability
  • Religion and belief
  • Colour, Nationality 
  • Pregnancy and Maternity leave
  • Marriage or Civil Partnership

In the case of Richmond Adult Community College v McDougall (2008), M has suffered injuries mentally, psychological disorders as he was offered a job as a database assistant in a college. But when it learned about the medical history and the psychological disability M was suffering from, the college withdrew the offer. M brought a disability discrimination claim from the college. The tribunal accepted that m was suffering from mental impairment but she was not disabled within the meaning of Section 1 of the Disability Discrimination Act, 1995.

Case Law- G.S.R.T.C. v. Ashok Kumar Keshavlal Parekh


The Act provides that compensation is provided to employees and their dependants only if the injuries from the accident includes occupational diseases. The accident must occur in the course of employment the Act also applies to railway servants and persons employed in any such capacity as specified in Schedule 2 of the Employees Compensation Act. The people employed in factories, mines, plantations, vehicles, construction works, and certain other hazardous occupations come under Schedule 2.

A fatal accident is one where there is death or a high risk of loss of life of the employee. In the case of a fatal accident, the employee might die or suffer severe disablements and injuries. On the other hand, non-fatal accidents are those accidents that do not have a high probability of death. In the case of non-fatal accidents, the employee or the workman might suffer disabilities or any type of personal injury.

Both fatal and non-fatal accidents are covered by the Employees Compensation Policy, provided such accidents result in the mentioned contingencies in the act. Fatal accidents are taken as those which result in death, or permanent total disablement, permanent partial disablement or fatal injuries. If any of these contingencies occur, the employees’ compensation policy would pay the claim faced by the company. In the case of non-fatal accidents though, the covered contingencies might not occur. The employee or worker might not face any type of disablement or injury from such accidents. If the employee or workman suffers from a type of disablement and the disablement does not last for more than 3 days, the claim would not be paid. As a result, in several employees’ compensation policies, non-fatal accidents are usually not covered unless they cause a disablement which lasts for more than 3 days. 

In Lister v Romford Ice and Cold Storage Company Limited, House of Lords upheld the decision of the Court of Appeal that an employee owed a duty in contract to his employer to take reasonable care in the use of a vehicle at work. In the event that the employer was liable to pay damages arising from the employee’s negligence, the employer could bring a claim to recover that loss from his employee.

Arising out of and in the course of employment

Three factors determine whether the act is arising out of or in the course of employment:

  • When the injury occurred, the employee must have been engaged in the business of the employer. Also, he must not be doing something for his personal benefit. The accident must occur where the employer was performing his duties.
  • The injuries occurred because of the risk incidental to the duties of the work or services or if the nature or condition of employment is inherent.

Reference Case law: N.A. Chauhan v. N.K. Shah

Notional extension of Employer’s Premises

When there is a causal connection between the accident and the place where the employee is working, compensation is payable for the disability or death of the person according to the Employees Compensation Act. This is the Doctrine of Notional Extension of the workplace. The theory of this doctrine was executed in some cases:

Moondra & Co. V/s Mst. Bhawani

There was a truck driver who was told by his employer to drive a petrol tanker. The driver found a leak in the tank and sought permission from the employer to look for the source of the leakage. While searching he lit a matchstick and the tank caught fire. The driver received burn injuries and died. It was held by the court that the family members of the deceased would be entitled to compensation since the accident took place at the workplace and in the course of employment.

Willful disobedience of orders or safety devices, etc. 

If the employee disobeys the order expressly given or denies to obey any rules. The rules are made for the safety of the workmen but if they disobey the accident might happen. 

The accident can take place if the employee willfully disregards the safety guards or any other device.If the employee knew that he has been provided safety for the purpose of securing employees and still disregards it is said to be done wilfully.

Compensation under Agreement 

A compensation agreement ensures that an individual will get paid for the services he or she has provided to a company as an employee. A compensation agreement ensures that an individual will get paid for the services he or she provides to a company as an employee.

The question of compensation and negligence of employee

The question of compensation and negligence of employees is explained above in contributory negligence. When there is negligence on the part of the employer and employee, the employer is liable to pay compensation only to the extent of his negligence. He will not be liable to pay the full amount of compensation. So in the case of negligence of the employee, he will get only a part of compensation.

Alternative Remedy under Section 3(5)

Any right to compensation cannot be conferred by an employee in respect of injuries,if he has instituted a suit for damages in a civil court, in respect of any injury against any employer. No suit for damages shall be maintainable by an employee in any court of law.

Liability of Insurance Company

If any claim is due to the insurance company, the company cannot escape liability arising out of claim simply because notice was not issued to the company. For instance, if a notice is issued to the owner of the vehicle it is sufficient to get insurance from the company. In the case of Ram Karan v. Vijayanand the petition was filed by Ram Karan under section 482 of the code of criminal procedure because he had been illegally deprived of the benefits of the premature release. It was a violation of Articles 14, 19 and 21 of the Constitution of India. It was held that he was entitled to be released as per the rules.

Liability of Insurance Company or owner of vehicle 

The question is whether the insurance coverage is available to the insured employer-owners? The owner of motor vehicles, in relation to their liabilities under the Employment Compensation Act on account of motor accident injuries caused to their employees would include additional statutory liability foisted on the insured employers under Section 40 of the Compensation Act.

Section 4: Amount of compensation

Where death results from the injury-

In case the employee dies, an amount equal to fifty percent of the monthly wages multiplied by a factor as per given in the Schedule 4 of the act or rupees eighty thousand is given whichever is more.

Where permanent total disablement results from the injury-

In case the employee has total disablement the amount given is sixty percent or rupees ninety thousand whichever is more. 

Where permanent partial disablement results from injury-

In the case of permanent partial disablement, the compensation provided is equal to disability as sixty percent or rupees ninety thousand.

Liability of Insurer

The liability of the insurer is determined on the basis of the wages of the employee. The amount of wages is covered under the insurance policy. The company will be liable to indemnify only that portion of the amount which is under wages.

Causal connection between disease and occupation

The amount of compensation is paid when the insurer certifies that the injury is the result of an occupational disease.

Application of law of pleadings

An application for pleadings can be filed by the employee under the amount of compensation when he/she thinks that the amount that is decided is not appropriate with respect to the injury incurred.

Section 4-A: Compensation to be paid when due and penalty for default

  • When the employer does not accept liability for compensation to the extent claimed, he shall be bound to make a payment may be provisional and such payment shall be deposited to the employee or the commissioner. 
  • The commissioner can direct the employer to pay interest in addition to the amount at the rate of twelve percent per annum. The rate of interest can also increase which may be specified by the Central Government.

Section 5: Method of calculating Wages

The basis for the calculation of compensation is the monthly wage system. It means the amount of wages deemed to be payable for a month. A case dealing with the method of calculating wages was Zubeda Bano v. Maharashtra Road Transport Corporation, 1990.

Batta does not amount to wages for computing compensation. It is paid to workman per day to cover special expenses incurred by him due to the nature of his work. Another case was New ‘India Assurance Co. Ltd., Hyderabad v. Kotam Appa Rao, 1995.

When the employer has been giving service to the employer during a continuous period of not less than twelve months preceding the accident, and when the employer is liable to pay compensation, the employee will be liable one-twelfth of the total wages. The employer is required to pay the compensation which is due for payment to employees in the last twelve months of that period.

Section 6: Review

  1. Any half monthly payment can be reviewed by the commissioner under this act if there is an agreement between the parties or if there is an order given by the commissioner. A certificate of a qualified medical practitioner will be accompanied that there is a change in the condition of the employee subject to the rules and regulations under the Act.
  2. Any half monthly payment may be reviewed, can be continued, increased, decreased or ended under the act or if the accident is found which resulted in permanent disablement. Such an employee may get less amount because he had already received by way of half monthly payments.

Section 7: Communication of Payments

Commutation of half- monthly payments- Any right to receive half- monthly payment agreement between the parties is commutation of payments. If the parties do not agree and the payment continues for not less than six months then on the application of either party, the Commissioner will redeem the payment of a lump sum amount which was agreed by the parties.

Section 8: Distribution of Compensation

Rights of heirs of dependents

  1. Compensation will not be provided to the employee whose injury has resulted in death and lump sum payment will also be not provided who is under a legal disability. The compensation may be deposited to the commissioner and a direct payment will not be allowed by the employer to the employee.
  2. In the case of a deceased employee, an employer can make payment to any dependant advances. The compensation will amount to equal to three months’ wages of the employee and the amount shall not exceed the compensation payable to the dependant. If the amount exceeds, it may be deducted by the commissioner from the compensation and repaid to the employer.
  3. An amount not less than ten rupees which is payable may be deposited with the commissioner on behalf of that person.
  4. The receipt of the commissioner will be sufficient discharge of the amount if any compensation is deposited with him.
  5. When any compensation is deposited with the commissioner and he is payable to any person, he may if the person to whom the compensation is to be payable is not a woman or a person with a legal disability then he may pay the money to the person who is entitled to get the compensation.
  6. When any lump sum amount is deposited with the commissioner and he is payable to a woman or a person who is legally disabled, such amount can be invested for the benefit of any other woman or a person with a disability. The commissioner may direct the amount in such cases.

Section 9: Compensation not to be assigned, attached or charged

Compensation not to be assigned, attached or charged, save as provided by this Act, no lump sum or half- monthly payment payable under this Act shall in any way be capable of being assigned or charged or be liable to attachment or pass to any person other than the workman by operation of law, nor shall any claim be set off against the same.

Section 10: Notice and claims of the accident

A claim for compensation cannot be entertained by a commissioner unless the notice of the accident is given in a certain manner.

Condonation of delay 

It means that if the employee has delayed in claiming for the compensation it is said to be condoned. 

Section 10A: Power to acquire statements from employers regarding fatal accidents 

When a commissioner receives information about the death of an employee, because of an accident that is arising out of or in the course of employment, he can send a registered post or a notice to the employer of the employee, to submit a notice within thirty days of service. The statement or notice shall be in a prescribed form mentioning the circumstances under which the death took place. Also stating that whether the employer is liable or not to deposit compensation on the death of the employee.

Section 10B: Reports of fatal accidents and serious bodily injuries 

A notice is required to be given to any authority when any law is in force for the time being, if any accident occurs on the premises of the employer which results in the death of employee or serious bodily injury the person on behalf of employer is required to give a notice within seven days of the death. This person shall send a report to the commissioner giving details of the death or serious bodily injury. It will be done only when it is provided by the state government that instead of sending the report to the commissioner it is sent to another authority to whom a notice can be given. “Serious bodily injury” means injury to a limb or permanent loss of sight or hearing or fracture of limbs or the insured person is absent from work for more than twenty days.

Section 11: Medical Examination

When an employee brings to the notice that he has met with an accident, before the expiry of three days he will be examined free of charge by a qualified medical practitioner.

If the employee refuses to submit himself or herself for examination or in any way obstructs the same, his right to compensation shall be suspended.

If the employer voluntarily leaves without having been examined in the place where he is employed, his right to compensation shall be suspended until he returns and offers himself for examination.

The incorporation of words “assessment of loss of earning capacity by the qualified medical practitioner” in Section 4(1)(c)(ii) has some purpose and it is not a case of ambiguity.

If there’s no provision that the Commissioner to see the compensation and he ignores the medical practitioner’s report, there is no question of avoiding it by Commissioner.

unless he desires a second report from the Medical Board; New Asian nation Assurance Co. Ltd. v. Sreedharan, 1995.

Section 12: Contracting

Trade or business of the principal

When a person(principal) is in the course of some business or trade, with any other person(contractor) for the execution of any work, the principal will be liable to pay the amount to the employee who has been employed in the business. The principal is liable because compensation has to be claimed from the principal and the amount of wages will be calculated by the employer.

When the principal will be liable to pay he will be indemnified by the contractor or any other person from whom the employee can claim compensation. The agreement between the principal and the contractor about the right amount and indemnity will be settled by the commissioner.

On, in or about the premises

If the accident occurred at a different place that is either on the premises of the workplace or any other place, the employee will not be able to recover compensation from the employer. Other than this no other constraint is there and employees can recover compensation from the contractor instead of principal. 

Section 13: Remedies of employer against a stranger

When an employee recovers compensation as he suffered any injury and creates a legal liability of some other person other than the person by whom the compensation was paid, the other person will be entitled to be indemnified by the person who is liable to pay damages.

Section 14: Insolvency of employer

  1. When an employer enters into a contract with any insurer in respect of any liability to an employee, and if the employer becomes insolvent or makes a composition or scheme or arrangement with his creditors in this event the company is insolvent. The employee can recover the amount of compensation if the company is winding up and it is the case of insolvency.
  2. If in any case in the case of insolvency,the contract of the employer with the insurer is void or voidable due to any reason such as non compliance on the part of the employer, if the contract is not void or voidable the insurer may be entitled to prove in the proceeding or at the time of liquidation for the amount to be paid to the employee.
  3. In case the liability of the insurer to the employee is less than the liability of the employer to the employee, the employee may prove for the balance amount of the compensation in the insolvency proceedings or at the time of liquidation.
  4. When the compensation is a half monthly payment, the amount due for the said purpose will be taken in a lump sum amount. The amount payable will be half monthly payment, if it be could be redeemable it will be proof.
  5. The insolvency of the employer shall not be applied where a company has wound up voluntarily merely for purposes of reconstruction of the company or amalgamation with another company.

Section 14-A: Compensation to be first charge on assets transferred by Employer

When an employer transfers his assets or property before any amount is due to him in respect of any compensation, and the liability accrued is now before the date in law it is the first charge on that part of the assets or property so transferred as it consists of immovable property.

Section 15: Special provisions relating to Masters and Seamen

When the person injured in the aircraft is the master of the ship and he is the employer, but the accident happened and commenced on the ship, it is not necessary for the seaman to give any notice of the accident for compensation for the injuries suffered.

In such cases the death of the seaman or the master, the claim for compensation may be made within one year without the notice after the news of death is received by the claimant. Also if the ship is deemed to have been lost, within eighteen months of the date on which the ship was or is deemed to have been lost.

Section 15-A: Special provisions relating to captains and other members of the crew of aircrafts

If the captain of the aircraft is serving and he is the employer but an accident occurs, any crew member or the captain it is not necessary for any crew member to give notice of the accident.

In such cases the death of the seaman or the master, the claim for compensation may be made within one year without the notice after the news of death is received by the claimant.Also if the ship is deemed to have been lost, within eighteen months of the date on which the ship was or is deemed to have been lost.

When an injured captain or any other crew member of the aircraft or the ship is discharged from any depositions or testimony of a witness is taken by a judge or magistrate the central government or any state government may enforce any proceedings on the basis that the evidence is admissible:

  • if the deposition or testimony of witness is authenticated by the signature of the Judge, Magistrate, or consular officer before it is made.
  • if the person who is accused or he/she is the defendant is having the opportunity by himself or his agent to cross-examine the witness.
  • if the deposition or the testimony of the witness is or was made in the course of a criminal proceeding and the proceeding was made in the presence of the person who is accused. 

Section 15-B: Special provisions relating to employees abroad of companies and motor vehicles

The special provision related to employees abroad and motor vehicles will be applied to the persons or employees who are recruited by the companies registered in India and under the Motor Vehicles Act, 1998.

  • The notice of the accident and the compensation claimed may be served on the agent of the company. Or the notice may be served on the local agent or the owner of the motor vehicle in the country of the accident.
  • In case the employee dies, the provisions made in this section 15-B shall apply. The claim for compensation may be made within one year after the news of the death of the claimant has been received. 
  • Therefore, in case of any compensation claimed, the commissioner shall entertain the claim. Although as provided in the section is not much preferred in due time.

Section 16: Returns as to Compensation

The state government can direct any person who is employing an employee at a specified class, specified time and authority that is specified in the notification of official gazette. The state government may also direct to specify the number of injuries in respect of compensation and the amount that has been paid by the employer during the previous year as compensation.

Section 17: Contracting out

If an employee has made a contract or agreement before or after the commencement of the act, and if he voluntary ceases the right to compensation from the employer it shall be considered null and void. The employee cannot seek compensation for any personal injury arising out of or in the course of employment and the liability will be reduced of any person who is entitled to pay compensation under this Act.

Section 18-A: Penalties

Penalties Arise when whoever-

  • Fails in maintaining a book that is required to maintain under sub Section 3 of Section 10.
  • The person fails to make a report that is needed to send under section 10B.
  • Fails to inform the employee of his rights to claim compensation needed under Section 17A. He or she will be punished with fine which is not less than fifty thousand rupees that can be extended to one lakh rupees.
  • No prosecution can take place under this section.


Section 19: Reference to Commissioner

The question arises about the liability of any person under the act, who will pay the compensation. A question arises about the person who is injured or not or how much amount is to be given or the duration of the compensation. Also about the extent of the disability the person who is suffering and will get compensation. All such issues are to be resolved by the commissioner. 

Jurisdiction of Civil Court

The Jurisdiction of the civil court does not have the authority to settle, decide or deal with questions that are not required to be dealt with under the act if it dealt by the commissioner.

Section 20: Appointment of Commissioner

Commissioner means a commissioner for employee compensation appointed under Section 20. The state government or the central government may appoint any person to be commissioner for workmen’s or employees’ compensation act in some specified areas. Every commissioner is identified as a public servant in the Indian Penal Code.

  1. If the state government appoints more than one commissioner for any area, a specific order may regulate the business.
  2. Any commissioner may choose a person or more persons who possess knowledge and assist him in holding the inquiry.

Section 21: Venue of proceedings and transfer

The provisions under the act will be subject to the commissioner as well if there is a matter related to rules and regulations. The rules made under the act before the commissioner for the area where-

  • The accident happened that resulted in the injury.
  • If the employee dies and if the dependent claims compensation it will reside.
  • Employer’s office is registered.

No matter should be processed before a commissioner other than the commissioner who has jurisdiction in the area where the accident happened. It shall not happen without giving notice in the manner prescribed.

If the employee is the mater of the ship or seaman or a captain or crew member of the aircraft or employee in a motor vehicle, meets with an accident outside India, then such matter shall be done by the commissioner.

Section 22: Form of Application

No other application for any matter of the commissioner for dependants should be made for compensation. Until and unless some question arises between the parties there is no settlement as per agreement.

Liability of insurer 

The insurance company and the insurer are the same and it provides the insurance policies to the employer. The employer takes the insurance for the employee for the risks associated with their work. So when there is an accident and injury occurs the employer claims the insurance for the employee. In this case, the employer is the insured.

Defective application 

An application to a commissioner can be made and it will be accompanied by a fee as prescribed. If the applicant is illiterate or because of any other reason is not able to furnish information in written form then the application shall be in the direction of the commissioner.

Section 22-A 

The power of commissioner is required to further deposit in the cases which talks about fatal accidents-

When any amount is deposited by an employer as compensation payable in respect of an employee whose injuries resulted in his death, and the commissioner thinks that amount or sum was not sufficient, he may state a notice in writing giving reasons, he may call upon the employer to show why he could not make a further deposit within such time as stated in the notice.

If the employer fails to satisfy the Commissioner, the Commissioner may make an award determining the total amount to be paid, and requires the employer to deposit the deficient amount.

Section 23: Powers and Procedure of Commissioners

He has the power to award compensation more than what is claimed by the employee if the facts warrant the award. A case dealing with the commissioner was Karnataka State Road Transport Corporation v. B.T. Somashekaraiah, 1994.

Section 24: Appearance of Parties

A person may appear or become a witness for the purpose of examination, an application or act is required to be made by a person to a commission. It may be done on behalf of a legal practitioner or an official of the insurance company or registered trade union or an inspector appointed under Section 8 of the Factories Act, 1948, or any other officer which is specified by the state government with the permission of the commissioner or a person who is authorised to do so.

Section 25: Method of Recording Evidence

The commissioner makes a brief written message(memorandum) of the evidence of every witness as the examination process proceeds. The memorandum should be in written form and duly signed by the commissioner. The form so signed by the commissioner must be in his own handwriting and it will be a part of the record.

Section 25A: Time limit for disposal of cases relating to compensation

The Commissioner can dispose of the matter relating to compensation under this Act within a period of three months from the date of reference and intimate the decision in respect thereof within the said period to the employee.

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Section 26: Cost

All costs, incidental to any proceedings before a Commissioner, shall, subject to rules made under this Act, be in the discretion of the Commissioner.

Section 27: Power to submit cases

A commissioner can submit a Question related to law so that the High Court can decide the compliance with the standards or rules if the High Court wants to do so.

Section 28: Registration of agreements

A memorandum should be sent by the employer to the commissioner when a lump sum amount is payable as compensation due by the agreement either half monthly payment or payment being payable to a woman or a person with a legal disability. The memorandum must be genuine and should be registered in the prescribed manner.

However, a memorandum cannot be recorded before seven days after the communication has taken place between the commissioner and the concerned parties.

Section 29: Effect of failure to register agreement

The employer will be liable to pay the full amount of compensation if the registration of the agreement of memorandum is not sent to the commissioner as required under the section. The employer will pay the compensation as he is liable to pay under the provisions of the Act (Section 4). Until the commissioner directs to deduct more than half of the amount to be paid to the employee as compensation.

Section 30: Appeals

An appeal may lie to the High Court by following the orders of the commissioner.

  • A lump sum amount as compensation is awarded as an order, and redemption of half the monthly payment is away.
  • An order may refuse to allow gain of a half monthly compensation.
  • Distribution of compensation by order among the family members of the deceased, or disallowing of any claim of a person.

Substantial Question of Law

If there is difficulty in applying the facts to the law it will not amount to a substantial question of law. Reference case- Asmath Bedi(dead) v. Marimuthu.

The period of limitation under section 30 is sixty days if a person makes an appeal. An appeal lies against the order of commissioner who will compensate only when a substantial question of law. The scope in section 30 of the Act for appealing against the order that is passed by the commissioner is very limited. An appeal shall not lie against any order unless a substantial question of law.

Can courts intervene on question of fact? 

Yes, the courts can intervene on the question of fact. This was done in the case of Mangala Ben vs Dilip Motwani. It was first held that there is no substantial question of law. In the opinion of the Court, the finding of the Commissioner does not prove that the deceased was in the employment of the owner. The learned Commissioner further held that the claimant did not produce any evidence to prove that the deceased was employed for the purposes Dilip Motwani’s trade or business. He observed that in the absence of such evidence, the deceased cannot be held to be an employee. In the opinion of the court, the Commissioner committed error of law in holding that the burden lay on the claimant to prove that the deceased was employed for the purposes of the respondent’s trade or business. The appellate court has no jurisdiction to entertain an appeal unless the same involves a substantial question of law, Nisan Springs (Pvt) Ltd v. Om Jain, 1990.

When does an appeal lies?

An appeal lies when there is a judgment passed by the court but the employee or his dependants are not satisfied and then they appeal.

Effect of death of claimant 

If the injury of the employee results in his death, the employer shall give compensation in addition to the compensation that is deposited with the commissioner. A sum of five thousand rupees and not less than that will be given to the eldest surviving dependant of the employee. 

Third proviso to Section 30(1)

Provided further that no appeal by an employer under clause (a) shall lie unless the memorandum of appeal is accompanied by a certificate by the Commissioner to the effect that the appellant has deposited with him the amount payable under the order appealed against.

Review, Revision, Remand, and Writ

If an employee is not satisfied with the decision of the court regarding the compensation, he can appeal for review by the court. Review can be made only after the decree is passed by the court or an order is made. If there is an error in the decision by the court appeal can be made for revision which can be done only by the High Court. An employee can writ if he has been wrongly remanded. Remand means In custody of the court.

Appeal not accompanied with certificate by the Commissioner under Proviso (3)

If the appeal is not accompanied by a certificate by the commissioner that is payable and deposited with him then no appeal by the employer under clause (a) shall lie against the law. The period of limitation under the section for the appeal will be sixty days.

Condonation of delay 

If the appeal by the employee is delayed it is known as condonation of delay. An appeal is filed when the employee is not satisfied by the decision of the court and want to appeal again for the decision. So when the employee gets delayed in appealing the suit it will be condoned.

Section 30-A: Withholding of certain payments pending decisions of appeal

The commissioner may withhold the payment of any amount which is deposited with him when an employer appeals under section 30 and it is directed by the High Court.

Section 31: Recovery

The commissioner can recover any amount payable by any person as arrears of land revenue. The commissioner will be deemed to be a public officer if there is an agreement for the payment of the compensation under the meaning of section 5 of the Revenue Act, 1890.


Section 32: Power of the State Government to make rules

The state government has the power to make rules and regulations for the purpose of this act. These rules provide all the matters without prejudice namely:

  • The state government prescribes certain intervals where an application may be made under Section 6 is subject to conditions when not accompanied by a medical certificate by a qualified practitioner.
  • The state government prescribes some intervals where an employee is required to submit himself to undergo certain medical examination of section 11.
  • The state government prescribes a procedure that needs to be followed by the commissioners. It is required when there is disposal of cases under the act and by the parties.
  • The state government regulates the transfer of matters. It also regulates cases from one commissioner to another and also transfer of money in some cases.

Section 34: Publication of rules

The power to make rules in Section 32 will be subject to the conditions of the rules which are made after previous publication. Rules so published in the Official Gazette will have an effect in the Act.

Section 35: Rules to give effect to arrangements with other countries for the transfer of money paid as compensation

The Central Government may make rules for transfer money to any foreign country which is deposited with a commissioner under the act by a notification. A person who resides in a foreign country or is about to reside may be awarded the money deposited under the law relating to employees. The amount related to fatal accidents shall not be transferred without the consent of the employer under the commissioner.

Section 36: Rules made by the Central Government to be laid before Parliament 

Every rule made under the act by the Central government is laid before each house of parliament while it is in session for thirty days. It may be done in one session or in two sessions before the expiry of the session. The houses may make any modifications in the rule or the houses may agree that the rule should not be made.


The Act is basically made for the employees so that when they incur expenses for the injury suffered during an accident, they can get compensation from the employers. The basic rule of Vicarious liability applies in the act. The employer is the master and the employee is the servant. The employee gets compensation only when the injury takes place in the course of employment and in the workplace.


  1. H.L. Kumar, labor and Industrial law 
  2. Indiankanoon.org 
  3. Labour.Gov.in
  4. Bare Act

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