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Employees’ Compensation Act, 1923 during Lockdown – An Analysis

Tarun Kumar, Student, School of Law, Ansal University




Social Security lays the foundation of the majority of not only Indian labour legislations but for the world. It can be stated that the concept of Social Security gave rise to the enactments of labour welfare legislations around the world. “Social Security is a program of protection provided by society, said Walter A. Friedlander (1891-1984), against the contingencies of modern of modern life such as sickness, unemployment, old-age, industrial accidents, against which an individual cannot be expected to protect himself and his family by his ability and foresightedness.” 1 Employees Compensation Act, 1923 is one of the earliest measures adopted in the direction of social security by British India with the name Workmen’s Compensation Act, 1923 and the legislative intent behind this enactment was to make provisions concerning the payment of compensation by a certain class of employers to the employees for injuries incurred out of accident during employment.


The history of Workmen’s Compensation can be traced as early as from 2000 B.C. 2 wherein the Greek, Arab, Roman & Chinese laws 3 which provided different sets of compensation schemes such as monetary compensation equivalent to the injury incurred by workers’ body parts. The modern developments towards social security legislation were pushed forward dramatically in the year 1875 in Prussia under the leadership of Otto Von Bismarck 4 5 and later on, In the year 1897, the British government successfully enacted Workers’ Compensation Act, after one failure in 1880 and four years of legislative struggle. 6 Furthermore, the struggle of United States of America came into the picture in 1893 which lead to enactments for workers’ compensation in the year 1906 & 1908 which were a failure because of opposition from many state & implementation obstacles. The first comprehensive workers’ compensation law was finalised in the year 1911 which was later adopted by all the states in 1948.


The Employees’ Compensation Act, 1923 has been proven key legislation in support of the protection and security of the Employees’. The ambit of the Act has been extended time to time keeping in mind the growing complexities and use of heavy equipment & machinery in the industries. Throughout the time, the Act has stood still like years old building which challenges all the natural disasters to make it fall, some scholars as Prof. B.P. Adarkar have denied the implementation of the Act, stating its outdatedness in terms of scope, operation and administration, though some, as Royal Commission on Labour have paid tribute to the smooth operation of the act and recommended extension of benefits under the Act.


Considering the present scenario where the economies of the world are pushing with might to skydive from 10,000ft., industries facing difficulties to maintain their expenditure, the governments are trying hard to protect the human resources of their countries and no one knows till when this episode end. The COVID-19 pandemic has drastically impacted the developed, underdeveloped and developing countries of the world and especially the countries with a higher density of population due to the very nature of the disease. In India, there are more than 90,000 active COVID-19 cases and the concentration of the cases is in the cities having more population density. Amidst lockdown, the most exposed industries in this pandemic remain the healthcare and media industry whereby the lack of proper equipment and gears increases the risk. Furthermore, there have been instances wherein the employees working in these industries are being assaulted by people. This triggers the duty of the employer as provided under the Employees’ Compensation Act, 1923. It becomes the responsibility of the employer to compensate the employees in the cases where such instances become the reason behind the total or partial disablement of the employee.


The most recent amendment in the Act which enhances its operation and expanded its ambit was made vide notification S.O.71 (E) dated January 03, 2020 which changed the wage limit considered for calculation of compensation under the Act from Rs. 8,000/- per month to Rs. 15,000/- per month. The impact of the Act was so deep when the wage limit for calculation was Rs. 8,000/- per month and now when the bar has been raised, we can only assume the increase in number of lives that this Act will aid to. Furthermore, for better clarification on how the compensation is calculated, the following provision has been laid down under the Act:


Section 4 of the Act: Amount of Compensation:

a. For accidents resulting in death: amount equal to fifty percent of monthly wages of the deceased, multiplied by the relevant factors; or an amount of Rs. 1,20,000/-, whichever is higher.

b. For accidents resulting in permanent total disablement: amount equal to sixty percent of monthly wages of the deceased, multiplied by the relevant factors; or an amount of Rs. 1,20,000/-, whichever is higher.


The Act being a crucial enactment for the implementation of social security in India plays a significant role in these circumstances of disruption in society, economy and health. Since we are looking forward to working normally in this coronavirus contagious world which is already been done in the countries like New Zealand & United States of America, it is time to consider the amendment of the Schedule III of the Act with an addition of this disease, which will be a step towards strengthening the social security of the nation in these dire times.


The COVID-19 incurs harm to the respiratory system of the human body which may ultimately result in shortness of breath, chest pain and even loss of speech and movement. Observing the severity of the disease and analysing it with the definition of total disablement provided under the Act i.e. ‘total disablement’ means such disablement, whether of a temporary or permanent nature, as incapacitates an employee for all work which he was capable of performing at the time of the accident resulting in such disablement, it must be advocated that this disease, if suffered by an employee because of an accident during employment, shall result in an occupational disease as provided under Schedule III of the Act. The Employees’ Compensation Act, 1923 emphasises and objectifies a singular sentence

– “To provide for the payment, by the employers to their employees, of compensation for

injury by accident”, because of which it has stood with such strength among us, protecting

the interest of the employees, that no societal advancement has reduced its impact.

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