Code on Social Security, 2020
If a worker is killed or permanently disabled at work, the law fixes what you owe, regardless of fault and regardless of whether you hold a policy. Those provisions now sit in the Code on Social Security, 2020, which absorbed the Employees' Compensation Act 1923 on 21 November 2025. This works out that exposure per worker.
Two figures matter: the worker's monthly wages, capped at fifteen thousand rupees for the purpose of the calculation, and a factor from Schedule IV of the Act that falls as age rises. A twenty-year-old carries a factor of 224.00; a sixty-year-old carries 118.95, because the younger worker has more earning years ahead.
Death compensation is 50% of the capped monthly wage multiplied by that factor, with a statutory floor of one lakh twenty thousand rupees. Permanent total disablement is 60% multiplied by the same factor, with a floor of one lakh forty thousand. Permanent partial disablement pays a percentage of the total disablement figure, taken from the schedule of injuries in Part II.
Temporary disablement is paid differently, as a half-monthly instalment of 25% of monthly wages for as long as the disablement lasts, subject to the waiting period in the Act.
The employer does not have to have been careless. If the injury arose out of and in the course of employment, compensation is payable. Contributory negligence by the worker does not defeat the claim, and no contract or undertaking can reduce the entitlement, because section 17 makes any such agreement void.
The defences are narrow: intoxication, wilful disobedience of an express safety rule or wilful removal of a safety device, and they do not apply at all where the result was death or permanent total disablement.
Payment is due from the date the compensation falls due. Delay attracts interest at twelve per cent, and the Commissioner can add a penalty of up to fifty per cent of the compensation where the delay is without justification.
The statutory figure is the floor of the exposure, not the whole of it. Medical treatment, transport, funeral expenses and the cost of defending the matter before the Commissioner sit on top and are frequently a substantial fraction of the total.
The wage cap also cuts both ways. Capping wages at fifteen thousand limits the statutory award, but it does not prevent a higher-paid employee or their dependants from bringing a claim in tort for a larger sum where negligence can be shown. A well-drafted WC policy addresses both, through the standard cover and a common-law extension.
For contractors, section 12 of the Act makes the principal employer liable for the workers of a contractor engaged on their work. A factory can be liable for an injury to a labourer it never hired, which is why contractor workers belong inside the policy schedule and why certificates of insurance from contractors are worth collecting.
A workmen compensation policy pays the statutory award, the legal costs of contesting or settling, and medical expenses where the extension is taken. It converts an unpredictable liability that arrives at the worst moment into a premium set against your wage roll.
Getting the schedule right matters more than the price. The policy is rated on categories of worker and headcount, and a claim from a category not declared is a claim the insurer can decline. Seasonal labour, contractor workers and workers who move between sites are where declarations most often fall out of date.
For quarry, marble processing and factory operations across Rajasthan, this is not a theoretical exposure. It is the cover most likely to be called on, and the one most likely to be declared invalid on a technicality nobody checked.
The liability is mandatory and cannot be contracted out of. It sits in the Code on Social Security, 2020, which absorbed the Employees' Compensation Act 1923 on 21 November 2025. The insurance policy that covers it is not itself compulsory under the Code, though it is required under many state rules, tender conditions and contracts. Carrying the liability uninsured is legal and rarely wise.
Fifty per cent of the monthly wages, capped at fifteen thousand rupees, multiplied by the relevant age factor from Schedule IV, subject to a minimum of one lakh twenty thousand rupees. The younger the worker, the higher the factor and the larger the award.
Usually yes. Section 12 makes the principal employer liable for compensation to a contractor's workers engaged on work that is part of the principal's trade or business, with a right to be indemnified by the contractor. In practice the claim reaches the principal first.
Compensation is still payable. Liability under the Act is strict and contributory negligence is not a defence. The narrow exceptions for intoxication and wilful breach of safety rules do not apply where the outcome was death or permanent total disablement.
Where an employee is covered under the Employees' State Insurance Act, benefits come through ESIC and the EC Act does not apply to them. Employees outside the ESIC wage ceiling or in areas not notified under the ESI scheme remain within the EC Act, and most factories have both populations.
Related: Workmen compensation insurance · Group personal accident · Gratuity calculator