Employee's Compensation

Employee's compensation is the no-fault scheme by which an employer pays a fixed scale of compensation to a worker injured at work, or to the family of a worker killed, without the worker proving negligence. For a century it ran under one Act. Since most of the Code on Social Security, 2020 was brought into force on 21 November 2025 (S.O. 5319(E)), its subject sits in that Code. The Employment practice page covers the codes as a whole; this page deals with the compensation claim and its forums.

The 1923 Act and the Code

The Employee's Compensation Act, 1923 was passed as the Workmen's Compensation Act and renamed in 2009. The Code repealed it, with eight other Acts among them the Employees' State Insurance Act, 1948 and the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, and its repeal and savings provision treats anything done under a repealed Act as done under the corresponding provision of the Code. The Social Security (Central) Rules, 2026 (G.S.R. 344(E), 8 May 2026) followed on 8 May 2026 and send a compensation claim to a competent authority. The section numbers given below for the compensation process are those of the 1923 Act. Which instrument governs a claim for an accident before 21 November 2025, and a claim already pending on that date, is answered by the repeal and savings provision applied to the facts, and this page does not state a general rule for it.

What is compensated

Under the 1923 Act an employer was liable under section 3 where personal injury was caused to an employee by an accident arising out of and in the course of employment, and for an occupational disease listed in the schedule to the Act. The employer could not generally defend on the ground of the employee's carelessness. Compensation is fixed by a scale (section 4) tied to the employee's monthly wages, subject to a wage ceiling, and to the degree of disablement or, on death, a stated proportion of wages multiplied by a factor that depends on age. The amounts and wage ceiling have been revised by notification from time to time. Interest, and for unjustified delay a penalty, follow late payment under section 4A.

Contractors and principal employers

A principal who engages a contractor is liable under section 12 to pay compensation to the contractor's worker, where the work is part of the principal's trade or business, and may then recover it from the contractor. A contract that purports to take away a worker's right to compensation is void under section 17. For a business that uses contract labour, the exposure turns on whether the contractor's insurance cover matches the liability that falls on the principal.

The claim

Under the 1923 Act a claim was decided by the Commissioner for Employee's Compensation; under the Code it goes before the competent authority appointed by the State Government, and the Social Security (Central) Rules, 2026 now govern the notice, the application and the transfer of proceedings. Under the 1923 Act a claim began with notice of the accident given as soon as practicable, and a claim had to be made within two years of the accident, or of death, though the Commissioner could admit a late claim for sufficient cause (section 10). The Commissioner decided questions of liability and the amount, and the dependants entitled, under section 19; for a death, section 8 required the compensation to be deposited with the Commissioner and not paid directly to the family. The claim was brought before the Commissioner whose area covered the place of the accident or where the worker ordinarily resided.

Appeals

Under the 1923 Act an appeal against an order of the Commissioner lay to the High Court on a substantial question of law, within sixty days, under section 30. An employer's appeal against an award of compensation was not entertained unless the amount had been deposited with the Commissioner. The High Court did not re-examine the facts found by the Commissioner. Under the Code the forum is the competent authority, and the route of appeal from it is set by the Code.

The Employees' State Insurance interface

The Employees' State Insurance scheme provides employment injury benefit, including disablement and dependants' benefits, to employees of covered establishments. Under the 1948 Act, now repealed by the Code, an employee entitled to that benefit could not recover compensation or damages for the same employment injury under the compensation Act or any other law (section 53), and section 61 barred a similar benefit under any other enactment. Disputes about the benefit went to the Employees' Insurance Court, with an appeal to the High Court on a substantial question of law. A claim therefore starts by asking whether the establishment and the worker were covered by the scheme, since coverage decides which of the two systems governs. The Code carries the Employees' State Insurance scheme forward in its own chapter.

What the law does not allow

A waiver in the contract of employment. A term that contracts out of the right to compensation is void under section 17 of the 1923 Act.

A claim in both systems for the same injury. Section 53 of the Employees' State Insurance Act, 1948 bars compensation under the compensation Act where the employee is entitled to the corresponding benefit.

A payment of a death claim direct to the family. Section 8 requires the sum to be deposited with the Commissioner.

What an employer has to decide, when an accident is reported, is which regime applies to the date of the accident, and whether the worker is covered by the insurance scheme or by the compensation scheme, since the answer fixes the forum and the amount.