The Workmen's Compensation Act was enacted in 1923 and came into force on 01.07.1924. A 2009 amendment replaced 'workman' with 'employee', so it is now the Employees' Compensation Act. Its object is social security: compensation to an employee injured in an accident or by an occupational disease, or to the dependants if the employee dies.
When Compensation Is Payable
- The accident must arise 'out of' the employment (a causal link) and 'in the course of' the employment (while under the employer's control).
- For injury, the disablement must last at least 3 days.
- Occupational diseases listed in Schedule III are also covered.
- On Railways the Act covers railway servants as defined in the Railways Act, 1989, other than those permanently employed in administrative, district or sub-divisional offices; after 2009 there is no pay limit for coverage.
When It Can Be Refused (injury cases only)
- The employee was under the influence of drink or drugs.
- Wilful disobedience of an order or rule made for the employee's safety.
- Wilful removal or disregard of a safety guard or device.
- These defences do not apply when the employee dies.
Amount of Compensation
| Result of the accident | Compensation |
|---|---|
| Death | 50% of monthly wages × relevant factor, or Rs 1,20,000, whichever is more |
| Permanent total disablement | 60% of monthly wages × relevant factor, or Rs 1,40,000, whichever is more |
| Permanent partial disablement | In proportion to the loss of earning capacity (Schedule I or as assessed by a doctor) |
| Temporary disablement | Half-monthly payment of 25% of monthly wages, for the period of disablement or 5 years, whichever is shorter |
- The 'relevant factor' comes from Schedule IV and depends on the employee's age on the last birthday; it falls as age rises (for example 224.00 at age 20 and 153.09 at age 50).
- Monthly wages above a ceiling notified by the Central Government are taken as the ceiling for calculation. The ceiling was Rs 8,000 from 2010 and was raised to Rs 15,000 by the notification of January 2020.
- Half-monthly payments for temporary disablement start on the 16th day: from the date of disablement if it lasts 28 days or more, otherwise after a 3-day waiting period.
- If the employer delays payment beyond one month, the Commissioner can order 12% simple interest a year and, if the delay is unjustified, a penalty of up to 50% of the amount.
- Compensation for death, or a lump sum for a woman or a person under legal disability, must be deposited with the Commissioner, not paid directly.
| Schedule | Contents |
|---|---|
| I | Injuries and the % loss of earning capacity (e.g. loss of both hands = 100%) |
| II | Classes of employees covered |
| III | Occupational diseases |
| IV | Relevant factors by age for working out compensation |
Labour Codes
The four Labour Codes came into force on 21 November 2025. The Code on Social Security, 2020 now consolidates this Act. Departmental papers still ask about the Act by name, so learn the provisions above, but check current orders for any changed figures.