INTRODUCTION

The Workmen Compensation Act, 1923[1] (subsequently renamed as the Employee’s Compensation Act by the 2010 Amendment) (Hereinafter referred to as “the Act”) was enacted as one of the labour welfare legislation in India, which seeks to give monetary relief to workmen who sustain injury or disability due to accidents during the course of their employment. It was passed during the British rule and was one of its kind as it acknowledged employer’s liability in case of work-related accidents, and introduced no-fault liability for compensating affected workers.

Yet, even after a century since its enactment, doubts about whether it does justice to injured employees still persist. The underlying motivation for undertaking this research is that, in spite of this Act, which was enacted as protective legislation to provide compensation, payment delays, inadequate coverage, and delayed settlements are rampant across industries in India.

The need for supervision of the government to guarantee the principal application and enforcement of this Act is gaining importance, but its effectiveness is less than clear. Although the Act is meant to offer a method of quick and just compensation, what tends to happen in reality is slow or uncoordinated trauma responses, weak regulation and little protection for those workers who need it most.[2]

In the context of modern industrial relations with evolving work patterns, informal sectors of work, and complicated employer-employee relationships, the Workmen’s Compensation Act presents new challenges to the traditional framework.[3]

This study is intended to critically analyse and assess the extent to which the Act provides actual justice to injured employees, focusing on the insufficiency of the supervision by government authorities currently in place. The research will explore the gap between the legislative intent and the Act’s implementation, investigating whether, through its supervisory role, the appropriate government ensures that an award is not merely a procedural formality but also substantial justice.

This study assumes significance in the light of India’s expanding industrial workforce and growing acceptance of workers’ rights. If the compensatory mechanism itself does not deliver substantive justice, it can be said that the purpose of this law and its larger, progressive underpinnings that seek to secure social security measures for workers in India have been subverted.

ANALYSIS

This Act was intended to secure an immediate and certain compensation to workmen for injuries sustained as a result of employment. However, a hundred years later, close scrutiny indicates that the Act, in substance and application, provides little actual justice to injured workers. The shortfall is not only in terms of the statutory framework, but these gaps stem from a poor level of government surveillance, lack of implementation and systemic inertia to modify the law in line with modern industrial circumstances.

Procedural Complexities and Access to Justice

Quite simple proceedings are contemplated before the Commissioner of Workmen’s Compensation for the purposes of this Act. But in practice, the procedure follows civil litigation with pleading, framing of issues, production of evidence and cross-examination. The onus of proof is onerous for the injured workman or dependents of the deceased. They will have to establish (i) Employer-employee relationship, (ii) accident arising “out of and in the course of employment” under Section 3, (iii) character of disablement, and quantum thereof/ loss of earning capacity.

A lot of that information (wage records, medical history and accident reports), however, is in the employer’s custody. This inequity was identified by Jyotsna Nath Mallik which found it common for workers to be unable to provide required papers, while employers are able to,  with superior resources, contest claims effectively. Taken together, the procedural formality and absence of legal aid place workers at a severe disadvantage.[4]

In Pratap Narain Singh Deo Vs. Srinivas Sabata[5], the Supreme Court had held that the employer’s liability to pay compensation commences from the date of the accident, and no delay can be made on the justification of procedural niceties. However, irrespective of such judicial statements, procedural hindrances forestall relief. Further, even the potential of the government’s supervision has not resulted in streamlined proceedings or favourable claimant presumptions regarding evidence to date.

Delay in Disposal of Claims

The Act is based on the need to grant “prompt and certain” compensation. But actual data proves a long pendency of cases. For example, in West Bengal in 1957, there were more than 2,800 claim cases pending, some dating back to 4 years previously. And, delays continue to be the norm today, with cases taking years to reach resolution, rendering interim and immediate support for injured workers all but futile.[6]

It has been time and again enunciated by the Supreme Court that the Act in question is a welfare legislation and therefore should be construed liberally (See Bharagath Engineering v. R. Ranganayaki[7]). However, the goal is subverted by delays in adjudication. The appropriate government has been endowed with the power under section 30 to direct and frame rules for speedy disposal, but this aspect has been poorly monitored.

Ambiguities in Employer Liability

A third dimension of injustice is the limitation on employer liability under the Act.

• Principals and Contractors: Where work is contracted out, section 12 obligates the principal to pay remuneration if it was “ordinarily part of the trade or business” of the principal. Courts have read it in more restrictively and in a way that has limited workers’ rights. In Messrs New India Tannis Ltd. v. Aurora Singh Mojbi[8], the liability of principals was restricted under a narrow interpretation by requiring that only such works directly connected with their trade or business could be accepted. Similarly, the Calcutta High Court in S. M. Ghose vs National Sheet & Metal Works Ltd.[9] adopted a narrow approach, and most of the contract labour were left out.
• Hired or Lent Employees: As per Section 2(e), the Employer is not liable, but the Limitation applies to the Person by whom Compensation Due is payable to the person in “direct employment at the time of the accident”. When a worker is lent or hired by another employer, they can end up falling between two stools, and no one taking the responsibility.

These lacunae reveal that the Act’s scope is not comprehensive, and the government has failed to exercise its supervisory powers by having clear rules or amendments to fill such gaps. That is in contrast to the social insurance model adopted by many countries, where such distinctions do not matter, and cover the person.

Inadequate Quantum of Compensation

Another major criticism so far has been that compensation figures are insufficient. Section 4 establishes a compensation structure limited by monthly wage and percentage of loss of earning capacity as prescribed by statute. While the amounts have been amended occasionally, they are usually out of date with inflation and real medical care costs.

In Rekha Devi v. New India Assurance Co. Ltd.[10], the Supreme Court observed that a fair compensation and not an illusory award should be granted to a claimant. But many awards are too small to keep recipients out of poverty. Periodic adjustment of the rate of compensation based on economic realities should be made subject to government oversight, particularly pursuant to Section 30. But such amendments are rare, indicating an apathy on the part of the executive in preventing future mishaps.

Enforcement of Awards

Even if awards are rendered, enforcement poses a challenge. Under Section 31, Commissioners can recover the amounts from revenue authorities as arrears of land revenue. This unwieldy process can lead to interminable delay. Workers, most of them already on the margins, have to wait for the bureaucratic machinery to get going.[11]

Without an independent execution body in the commissioner’s office, the award process is not credible. In Oriental Insurance Co. Ltd. v. Siby George[12], it was reiterated by the Hon’ble Supreme Court that there is no escape from payment of compensation without any delay, and there is a liability to pay interest on the default as per law to serve justice. But if they are not acted on in time, such instructions become meaningless. The government has not established effective monitoring mechanisms for timely recovery, and this indicates a serious enforcement gap.

Limited Review and Appellate Remedies

Section 6 permits review on the ground of temporary disablement only, and Section 30 allows appeal to the High Court on “a substantial question of law.” The workers who are injured or develop new medical issues and suffer aggravation of injury are left without a cure. Real justice does not really exist in the absence of larger review powers.[13]

In North East Karnataka RTC v. Sujatha (2019)[14], the Court observed that the provisions have to be read in the employees’ favour so as to advance the beneficial intent of the Act. However, statutory inflexibility remains, and regulators have not proposed such reforms to broaden oversight.

Competence and Appointment of Commissioners

The adjudicatory powers have been conferred upon the Commissioners appointed by the respective government under the Act. However, in most states, it is given to junior officers who have a heavy workload and no experience with labour law. This does not merely damage the quality of adjudication but also slows down matters as the officers are overloaded.

In Bharat Bank Ltd. Vs Employees[15] itself, the Court has held that tribunals exercising judicial functions must inspire confidence on the part of the litigants. The supervision by the government will guarantee that Commissioners are appointed from the judiciary or those having the required legal background. But in practice, this obligation has not been met, and it has led to a patchwork of justice from state to state.

Government Supervision: A Passive Role

The government’s supervisory role is seriously deficient. Section 32 authorises the appropriate Government to issue rules in order to carry out the objects of the Act. This would also include regulations on medical checks, claims and execution. Notwithstanding this, a number of procedural gaps, including problems around proof of medical evidence, lack of provision for suspensory awards and slow enforcement, have continued to endure over decades.

More importantly, the government has not put in place efficient monitoring to oversee the operation of Commissioners’ courts and dispose of cases within a specified timeframe or impose a penalty on employers for systemic defaults. In Pradyumna Singh Deo v. Jayanti Devi[16], the Orissa High Court pointed out a supervisory default in nonpayment of compensation on account of the absence of administrative guidance.

ILO Convention No. 121[17] (Employment Injury Benefits) at the international level emphasises that it is a state’s responsibility to ensure adequate and early provision of relief. Even as a member of the ILO, India has not aligned its system with such standards. The dependence upon employer liability, in the absence of effective oversight enforcement, renders the Act hopelessly archaic by contemporary social security standards.

Emerging Challenges and Supervisory Inadequacies

The emergence of informal employment, the gig economy and occupational diseases poses new threats that the Act has not confronted definitively. Many categories of workers are excluded from the definition of ‘employee’ under the Act, especially in the unorganised sector. And yet government oversight hasn’t adjusted its infrastructure for these realities, leaving large group of workers with little recourse.[18]

The Supreme Court in Param Pal Singh v. National Insurance Co. Ltd.[19] stressed that social welfare legislations have to be read in a manner to benefit the weaker of the parties, i.e., the employee, in an employment relationship. But without legislative and oversight reforms, the Act is structurally constrained.

SUGGESTIONS

To make sure the Act achieves its aim of giving real justice, major changes are required. The procedure should be as straightforward as possible, with no excessive, stringent red tape for the parties. The evidentiary burden should be placed upon employers with wage records, accident reports, and medical records for a more equitable process. Simultaneously, the use of hospital records and certified medical reports should be statutorily acknowledged rather than demanding overburdensome proofs, which causes cost and delay to workers.[20]

Claims disposal needs to be time-bound, and there has to be a statutory limit on the timelines for disposing of the claims. It should be mandatory for commissioners to report at regular intervals about the backlog and disposal rates, so that a meaningful supervisory overview by the concerned government could be possible. Government supervision should not be passive, but rather the state system must be turned active for accountability and scrutiny throughout the process of adjudication and execution.

There is also a need for greater clarity around employer liability. The Act needs to be amended with Section 12, where the liability of the principal employer in qualification under contract and sub-contract is to be made more stringent so that it doesn’t leave workers high and dry due to a lack of scope for interpretation. We must expand how we define “employee” to encompass part-time, casual and gig workers, because that is what our workforce looks like today.

The quantum of compensation should also be adjusted periodically on an automatic basis. Tying the awards to inflation indexes and adding allowances for medical treatment and rehabilitation would make the compensation more than symbolic. Such reforms will ensure that we avoid repeating archaic awards which are not up to the true cost of injury or disability.[21]

Another issue is the execution of awards. The contemporary use of the revenue recovery mechanism is almost synonymous with endless waiting. Commissioners should be empowered with independent execution powers, including separate recovery cells in their offices, to ensure that workers can actually collect the compensation awarded to them without any artificial barriers.

Furthermore, the Act needs to have more comprehensive review measures. At present, review is restricted under certain circumstances, ie short-term disablement. Statutory provisions should specifically provide for review in the event of an aggravated disability, newly discovered evidence, or clerical error. Appellate jurisdiction must also be expanded to allow questions of fact and cases of manifest injustice.[22]

Finally, the quality of adjudication is a reflection of the competency and integrity of Commissioners. The appointment to the post should be restricted to persons with a legal background and judicial experience, instead of junior officers having various other responsibilities. Specialised training in labour law, welfare legal provisions, and health and social security must be provided to the commissioners. With such reforms and open government oversight, the Act can then move from being a procedural safeguard to a tool of social justice.[23]

CONCLUSION

The Act was enacted as a monumental social law aimed to accord quick and determined monetary benefits to the employees who become disabled or otherwise die during the course of their duty. Its basis in no-fault liability was ahead of its time and is evidence of the understanding that the cost for industrial accidents should not be carried alone or just by the worker, but rather by industry and ultimately all of society.

Yet, this research indicates that the Act has not developed sufficiently to cope with the demands of the modern labour market and that state regulation has failed to deliver its protective objectives. Inflexibility of procedure, failure to observe the burden of proof placed upon workmen in unfair proportion, delay in adjusting cases, non-remunerative rates of compensation and impotency to enforce awards are some factors that help detract from the value of the scheme as it now stands on the statute books. However, reading of statutes in favour of employees, the courts have time and again tried to do justice with the workmen. However, these judicial interventions are only an imperfect substitute for systemic reform by legislative and administrative action.

The central conclusion of this project is that the supervisory role of the relevant government, foreseen in Section 32 as well as other sections, has become passive and largely dormant. The government has not implemented its powers to simplify the procedures, appoint competent Commissioners, put in place effective monitoring mechanisms and amend the law to include new categories of workers like those working in informal and gig economies. This administrative indifference frustrates the promise of “real justice” to injured employees and transforms the Act into a mere framework of procedural rights rather than substantive relief.

Moreover, by international standards, and especially those established in ILO Convention No. 121, India’s reliance on employer liability at a time when no comprehensive system of state-backed social insurance is available appears outdated. Unless supervisory machinery is rejuvenated and made more effective, the Act will remain a dead letter.

The conclusion that comes out, therefore, is evident, while the Act stands as a milestone in the history of labour welfare, its potential to provide actual justice remains thwarted by legislatively-imposed limitations and, more importantly, by governmental laxity. To bridge this gap, there is a need for not only laws to be amended, but they should be exercised proactively, transparently and in a responsible manner by the concerned government so that compensation is no longer just a procedural entitlement but becomes an effective means of dispensing social justice.

REFERENCES

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[1] Employees’ Compensation Act, No. 8 of 1923 (India).

[2] Mallik, J. N. (1961). WORKMEN’S COMPENSATION ACT AND SOME PROBLEMS OF PROCEDURE. Journal of the Indian Law Institute, 3(2), 131–160.

[3] Kumar, P. (2013). A Structural Analysis of Indian Contract Labor Laws. Indian Journal of Industrial Relations, 49(2), 185–196.

[4] Mallik, J. N. (1961). WORKMEN’S COMPENSATION ACT AND SOME PROBLEMS OF PROCEDURE. Journal of the Indian Law Institute, 3(2), 131–160.

[5] Pratap Narain Singh Deo v. Srinivas Sabata, (1976) 2 SCC 877.

[6] Government of India, Ministry of Labour. (1957). Report of the Committee on the Administration of the Workmen’s Compensation Act, 1923. Government of India Press.

[7] Bharagath Engineering v. R. Ranganayaki, (2003) 2 SCC 138.

[8] Messrs. New India Tannis Ltd. v. Aurora Singh Mojbi, 61 CWN 234 (Cal HC, 1957).

[9] S. M. Ghose v. National Sheet & Metal Works Ltd., 54 CWN 716 (Calcutta High Court, India).

[10] Rekha Devi v. New India Assurance Co. Ltd., (2000) 10 SCC 256.

[11] Conflict of Laws in Workmen’s Compensation. (1920). The Yale Law Journal, 30(1), 71–75.

[12] Oriental Insurance Co. Ltd. v. Siby George, (2012) 12 SCC 540.

[13] Kaul, B. T. (2007). DISCIPLINARY ACTION AND POWERS OF INDUSTRIAL ADJUDICATOR: A CRITIQUE OF JUDICIAL INTERVENTION. Journal of the Indian Law Institute, 49(3), 309–364.

[14] North East Karnataka RTC v. Sujatha, (2019) 11 SCC 514.

[15] Bharat Bank Ltd. v. Employees, 1950 SCR 459.

[16] Pradyumna Singh Deo v. Jayanti Devi, AIR 1976 Ori 1.

[17] International Labour Organization. (1964). Employment Injury Benefits Convention (No. 121). Adopted at the 48th International Labour Conference session, Geneva, 8 July 1964.

[18] Kaul, B. T. (2008). “INDUSTRY,” “INDUSTRIAL DISPUTE,” AND “WORKMAN”: CONCEPTUAL FRAMEWORK AND JUDICIAL ACTIVISM. Journal of the Indian Law Institute, 50(1), 3–50.

[19] Param Pal Singh v. National Insurance Co. Ltd., (2013) 3 SCC 409.

[20] Sodhi, J. S. (2014). Labour Law Reform in India. Indian Journal of Industrial Relations, 50(1), 100–117.

[21] Srivastava, S. C. (1992). JUDICIAL LEGISLATION FOR COMPENSATORY RELIEF TO WORKMEN EXPOSED TO OCCUPATIONAL DISABILITIES. Journal of the Indian Law Institute, 34(2), 305–313.

[22] WORKMEN’S COMPENSATION. (1923). Monthly Labor Review, 16(5), 201–206.

[23] Prasad, D. (1973). PERSPECTIVE FOR REFORM IN THE LAW OF SOCIAL INSURANCE IN INDIA. Journal of the Indian Law Institute, 15(1), 147–153.