What is workmen compensation?

What is workmen compensation?

For any organisation, employees are the most valuable tangible assets. In today’s competitive and dynamic business environment, human asset is what needed the most in evolution of business. It’s important to safeguard the company’s human asset from any workplace hazards. There are some job profiles that would involve higher risk of an injury and even death. Workmen compensation is the most effective solution for this. As per Workmen Compensation Act, 1923 it’s mandatory for companies to seek workmen compensation insurance cover for employees working under hazardous situations. 

Workmen Compensation Insurance – an Overview

Workmen compensation policy is an insurance programme that helps the company to protect its employees when he/she suffers an injury or dies during the course of employment. Workmen compensation is a no-fault insurance system wherein the payment is made regardless of who is at fault. The compensation under the workmen compensation policy is payable as per the norms of Workmen’s Compensation Act of India, monitored by the Ministry of Labour. Basically, workmen compensation policy covers the statutory liability of the company or firm or any employer for death or physical injuries caused to employees due to workplace accidents while performing job duties. 

Coverage offered under workmen compensation policy

Workmen compensation policy provides coverage mainly in two forms mentioned below.

  • Table A – table A policies offer coverage for company’s statutory liabilities to employees as per the terms of:
  • The Workmen Compensation Act, 1923 and any subsequent amendments to the said act before the policy issuance.
  • The Fatal Accidents Act, 1855 and any subsequent amendments to the said Act before the policy issuance.
  • The Common Law

 

  • Table B – table B policies offer coverage for company’s statutory liabilities to employees as per the terms of:
  • The Fatal Accidents Act, 1855 and any subsequent amendments to the said Act before the policy issuance.
  • The Common Law

Following is the coverage offered under workmen compensation policy

  • Death: Employer’s statutory liabilities to employees when the employee dies in a workplace accident or illness. Compensation is payable as mentioned in the Workmen Compensation Act, 1923. 

Compensation payable will be higher of INR. 1, 20,000 or 50% of monthly wages X relevant factor (based on age) stated in Schedule IV of the Workmen Compensation Act, 1923.

 

  • Permanent total disablement: Policy covers employer’s statutory liabilities to employees when injury caused due to workplace accident or illness results in permanent total disablement. 

Compensation payable will be higher of INR. 1, 40,000 or 60% of monthly wages X relevant factor (based on age) stated in Schedule IV of the Workmen Compensation Act, 1923.

  • Permanent partial disablement: Policy covers employer’s statutory liabilities to employees when injury caused due to workplace accident or illness results in permanent partial disablement.

Compensation payable will be calculated same as that for permanent total disablement but on a pro rata basis depending on the percentage of disability.

 

  • Temporary disablement: policy covers employer’s statutory liabilities to employees when workplace injuries or illnesses result in temporary disablement. 25% of the monthly wages is payable as compensation on half monthly basis.

 

 

  • Medical and legal expenses

 

Apart from these, there are many add-on covers or optional riders are offered under workmen compensation policy. Following are some of the riders offered.

  • Cover for contractor liability
  • Occupational illness, etc

Exclusions in workmen compensation policy

Following are some of the exclusions in workmen compensation policy

  • Workplace accidents causing injuries that are caused by war, either civil war or any act of the enemy resulting to invasion or mutiny or some hostility. Even all sorts of revolution, rebellion or military power is excluded from workmen compensation policy.
  • It also excludes all liabilities of the insured’s contractors and their employees
  • It excludes all liabilities which have been included only because of a particular contract that is not declared at the time of the policy, which under normal circumstances would not have been a liability
  • Any injury or accidents at the workplace that is caused due to negligence under intoxication or alcohol or drug usage.
  • All self-inflicted injuries or caused due to non-compliance or disobeying certain laws and rules.

Who can buy workmen compensation policy?

Any employer who employs ‘workmen’ as defined in the Workmen’s Compensation Act, 1923 can buy workmen compensation policy. Employees who are not defined as per the term ‘workmen’ in the Workmen’s Compensation Act, 1923 can also be covered under Table B workmen compensation policy. Some of the examples of businesses/employer who can seek workmen compensation insurance cover is as below –

  • Nuclear firm or companies 
  • Engineering firms and civil contractors
  • Businesses that employ workers on contract basis
  • Builders and construction companies
  • Farming companies
  • Establishment or companies employing watchmen
  • Indian companies or firms hiring workers abroad for menial jobs
  • Ship owners and shipping companies, etc.

Click here to know whether your business needs workmen compensation insurance policy.

Benefits of workmen compensation policy

Following are some of the main advantages of workmen compensation policy

  • The policy provides legal liability cover to employers to safeguard them against lawsuits from employees relating to death and injuries caused in workplace accidents.
  • The policy provides protection to employees by way of covering job related illnesses like asthma and bronchitis etc.
  • Policy provides comprehensive protection to employees by giving them coverage for income loss along with rehabilitation expenses
  • Additional covers and extensions can save both employees and employer from extra cost.

As workmen compensation policy offers bilinear benefit – to both employer and employee, it has become a crucial part of any business. For most of the businesses, workmen compensation policy is a statutory requirement. Not just as a statutory need, every business needs workmen compensation policy to protect its most valuable asset-human resources. Click here to buy the right workmen compensation insurance policy.

 

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