Write a short note on Amount of Compensation under Workmen’s Compensation Act 1923.

Amount of Compensation under Workmen’s Compensation Act, 1923 [Section 4(1)] : Subject to the provisions of this Act, the amount of compensation shall be as follows :

Where death results from the injury : An amount equal to 50% of the monthly wages of the deceased workman multiplied by the relevant factor or Rs. 1,20,000, whichever is higher. The formula for calculating the amount of compensation in case of death resulting from an injury is: 50 x Monthly wages x Relevant factor or Rs. 1,20,000 whichever is higher.

Where permanent total disablement results from the injury: An amount equal to 60% of monthly wages multiplied by relevant factor or Rs. 1,40,000, whichever is higher. Meaning of ‘relevant factor’ in relation to a workmanSchedule IV lays down the relevant factor related to the age of the workman at the time of death, injury or accident by which wages are multiplied to arrive at compensation.

Where permanent partial disablement results from the injury:

  • In the case of an injury specified in Part II of Schedule I, such percentage of the compensation which would have been payable in the case of permanent total disablement as is specified therein as being the percentage of the loss of earning capacity caused by that injury, and
  • In the case of an injury not specified in Schedule I, such percentage of the compensation payable in the case of permanent total disablement as is proportionate to the loss of earning capacity permanently caused by injury,

Where temporary disablement whether total or partial results from the injury Half monthly payment of the sum equivalent to 25% of
monthly wages of the workman is to be paid in accordance with . the following provisions:

  • Half monthly payment shall be payable on 16th day from the date of disablement where such .disablement lasts for.a period of 28 days or more OR
  • Payable on 16th day, after the expiry of a waiting period of 3 days from the date of disablement where such disablement lasts for a period of less than 28 days and thereafter half monthly during the disablement or during a period of 5 Years, whichever is shorter.

The Act provides that compensation under Section 4 shall be paid as soon as it falls due. Compensation becomes due on the date of death of the workman and not when commissioner decides it.

Where the employer is in default in paying the compensation due under this Act within one month of the date, the Commissioner shall direct the employer

  • To pay simple interest @ 12%p.a. or such higher rate as specified by the Central Government.
  • To pay further sum not exceeding 50% of such amount (dues + interest) as penalty.

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