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    The employees' compensation act, 1923

    The Employees' Compensation Act, 1923 which was earlier known as Workmen's Compensation Act, 1923, provides compensation benefits to certain classes of employees by their employer for the injury which is caused to them as a result of accident arising out of employment and in the course of employment. Hence if an employee suffers injury in the course of employment shall be entitled to compensation. This Act basically provides a social security to employees who receive incapacity resulting in loss in the earning capacity


    • Applies to all persons covered under the definition "Employee" under Section 2(1)(dd)
    • A railway servant not in administrative capacity or as per Schedule II
    • Member of the crew of aircraft , ship or employee in motor vehicle>
    • Persons working outside India in capacity under Schedule II
    • Employee in any capacity under Schedule II


    The Act does not apply to:

    • Members of Armed Forces of Union [Section 2(1)(dd)]
    • Factory where ESI Act applies. (Section 10B)


    A widow, minor son and unmarried daughter (legitimate or adopted), widowed mother

    A widow, minor son and unmarried daughter (legitimate or adopted), widowed mother

    Liability for compensation

    For injuries arising out and in the course of employment which includes injury under Part I & II of Schedule I and Occupational diseases under Part A, B, C of Schedule III

    No liability- if accident is due to influence of drinks/drugs or

    Willful disobediance to any order disregard to safety guard for the safety of employee [Section 3(1)(b)]

    Calculation of compensation

    Death-50% of monthly wages x Relevant factor or Rs 1,20,000 whichever is more [Section 4(1)(a)]

    Permanent total disablement-60% of monthly wages x relevant factor or Rs 1,40,000 whichever is more [Section 4(1)(b)]

    Permanent partial disablement- If schedule injury-% of compensation for total disablement as loss of earning of earning capacity [Section 4(1)(c)(i)]

    If non-scheduled injury -% of compensation for total disablement in proportion to loss of earning capacity [Section 4(1)(c)(ii)]

    Loss of earning capacity to be assessed by qualified medical practitioner

    Temporary disablement-25% of monthly wages in half monthly payments [Section 4(1)(d)]


    Not exceeding 50% of compensation is payable in case of default of 1 month in paying compensation with interest [Section 4A(3)]


    For claiming compensation - 2 years from date of accident

    Contract employees

    Principal employer is liable to pay compensation to contract employees employed in connection with his trade/business with right of indemnity from contractor

    Offence & penalty

    Failure to: Fine up to Rs 5,000
    Maintain notice book as per Section 10(3)
    Send statement to Commissioner as per Section 10(1)
    Send report of fatal accident as per Section 10B
    Make returns as per Section 16