Page 37 - DMGT306_MERCANTILE_LAWS_II

Mercantile Laws – II

Notes government formulated some proposals for the grant of compensation and circulated them for
opinion. The proposals received general support. As a result, the Workmen’s Compensation Act
was passed in March 1923 and was put into force on July 1, 1924. Subsequently, there were a
number of amendments to the Act. The Act contains 36 sections and four Schedules. The purpose
of this unit is to enable the students to comprehend basic expressions. At the end of this unit you
should be able to understand various concepts regarding the Workmen’s Compensation Act.

2.1 Genesis of the Act

The Workmen’s Compensation Act, 1923 provides for payment of compensation to workmen
and their dependents in case of injury and accident (including certain occupational disease)
arising out of and in the course of employment and resulting in disablement or death. The Act
applies to railway servants and persons employed in any such capacity as is specified in Schedule
II of the Act. The Schedule II includes persons employed in factories, mines, plantations,
mechanically propelled vehicles, construction works and certain other hazardous occupations.
The amount of compensation to be paid depends on the nature of the injury and the average
monthly wages and age of workmen. The minimum and maximum rates of compensation
payable for death (in such cases it is paid to the dependents of workmen) and for disability have
been fixed and is subject to revision from time to time. A Social Security Division has been set
up under the Ministry of Labour and Employment, which deals with framing of social security
policy for the workers and implementation of the various social security schemes. It is also
responsible for enforcing this Act.

Notes The Act is administered by the State Governments through Commissioners for
Workmen’s Compensation.

2.1.1 Object of the Act

The object of the Act is to impose an obligation upon employers to pay compensation to workers
for accidents arising out of and in the course of employment. The scheme of the Act is not to
compensate the workman in lieu of wages, but to pay compensation for the injury sustained to
him. The Workmen’s Compensation Act, aims to:
 Provide workmen and/or their dependents some relief or to consider compensation payable
by an employer to his workmen in case of accidents arising out of and in the course of
employment and causing either death or disablement of workmen as a measure of relief
and social security.

 Provide for payment by certain classes of employers to their workmen compensation for
injury by accident.
 To enable a workmen to get compensation irrespective of his negligence.

 It lays down the various amounts payable in case of an accident, depending upon the type
and extent of injury. The employer now knows the amount of compensation he has to pay
and is saved of many uncertainties to which he was subject before the Act came into force.
2.1.2 Scope and Coverage

The Act extends to the whole of India and applies to any person who is employed, otherwise
than in a clerical capacity, in the railways, factories, mines, plantations, mechanically propelled

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