Employer’s liability for Compensation under the Employee’s Compensation Act 1926: An Analysis


By -  Sarthak Chauhan, Amity University, Noida 


Human resource is the greatest asset for a nation because it is this human resource which utilizes other resources and leads to progress and development of a country. India is blessed with this resource in abundance but large section of people who are employed in various factories are often exploited and abused by their employers. Among many laws, ‘The Workmen’s Compensation Act (currently known as The Employee’s Compensation Act) was legislated in 1923. The Employee’s Compensation Act 1923 was enacted with the aim to set liability on employer for the personal injury to employee from accident arising out of and in course of employment. To make employee responsible for compensation one needs to understand the terms mentioned in the section 03 of the Act. Section 03 is cornerstone of the act and sets the liability of employer. In this paper, section 03 of the act is analyzed with help of various English case laws as well as Indian case laws. The requirements required to be fulfilled for compensating the employee and the circumstances of exception are also discussed in detail. Doctrine of Notional Extension is used for benefitting the employee and Doctrine of Added Peril is used by employer to escape his liability of compensation. In this paper both these doctrines are also examined and explored. The paper examined various terms which are of key importance to decide whether the employee is entitled for compensation or employer is not liable to compensate. 


Arising out, In course of, Employment, Notional Extension, Added Peril


With an over 400 million workforce, India stands just next to China. This workforce is employed in various kinds of jobs such as manufacturing, constructing, transporting etc. Most of the workers are employed in unorganized sector and have poor and uneducated background. These workers are vulnerable and often exploited by the employers. Therefore, the legislative organ has enacted numerous laws to improve the condition of employees, to protect them from the exploitation, to provide social security benefits such as pension, gratuity and other various employer obligations in this respect. Among such statutes is, ‘The Employees Compensation Act 1923’ that aims to provide compensation to the employees from the employer in case of injury or death due to employment accident. The era of Industrialization had brought us the advantages of mass production with the help of machinery but at the same time this environment of close working of man and machine often results in the accidents. Before the enactment of this act, there was no legal obligation on the employer to compensate their employees/ dependents for the injury or death of workman and any payment by employer was considered as ex-gratia. The Employees Compensation Act 1923 came into force on 01 July 1924 in order to bind the employers legally to compensate. The objective of this act is to protect the employees and the objective of the act will become useless if the scope of employment is narrow. Therefore, the court has widened the scope of employment by using the doctrine of Notional Extension. This doctrine is utilized by the courts in cases to check whether such act falls within the scope of employment or such act happened due to the employment.