How to Calculate a Settlement in a Workman Compensation Injury?

Workman Compensation Injury and Settlement Calculation

Calculating a Settlement in a Workman Compensation Injury relies on the incidence. This is the incident which has led to the compensation.

To calculate a settlement for a Workman Compensation Injury, note the following guidelines:

Under the workmen compensation act, 1923, the maximum Monthly Wage allowed for the calculation of compensation is Rs. 8000.

      Workers from the age of 16 years and above are eligible for the compensation

      A relevant Factor is an age-based multiplier defined in Schedule IV of the Act

Compensation in Case of Death:

      50% of the Monthly Wage x Relevant factor as per the age of the worker

      Funeral costs associated with Rs. 5000 are also payable

      The minimum amount payable is Rs. 120,000

Compensation in case of Permanent Total Disability (PTD)

      60% of the Monthly Wage x Relevant factor as per the age of the worker

      The minimum amount payable in this case is Rs. 140,000

Compensation in case of Permanent Partial Disability (PPD)

A percentage of the compensation payable under PTD. To figure out this percentage, we have to estimate how much the worker’s ability to earn has gone down. Also, if there is any permanent disability or death. 

Compensation in case of Temporary Disability (Total or Partial)

      25% of the Monthly Wage of the Worker payable every half month

      The compensation is payable only if the worker is disabled for more than three consecutive days. 

      The maximum tenure for the compensation is five years

Additional Read: Does Workmen Compensation cover employee negligence?

Relevant Factor Schedule IV of Workmen (now Employee) Compensation Act

Age is the completed years of age, of the workman or employee on the last birthday. The last birthday is the latest birthday of the workman. It immediately precedes the due date of compensation liability.

In conclusion, both employers and employees must understand the process of calculating a settlement in a Workman Compensation injury. We can make sure the injured worker gets fair compensation under Workmen Compensation insurance. This can be done by considering different factors. We also need to meet legal requirements.

Case on Settlement in Workmen Compensation Injury

Ramashankar Prasad was a part-time dump truck driver at R.J Construction Co. Last week, a lot of large water pipes that he was delivering fell on his vehicle, and he died on the spot.

Another worker was uploading the pipes from the truck, and Prasad was sitting beside him. However, while unloading, the pipes shifted and fell off the truck. This caused Prasad to suffer fatal internal head injuries.

Ramashankar supported his family. His passing brings uncertainties about the future for his family of four. His family includes his elderly mother also.

The passing of 28-year-old Ramashankar also had a significant impact on his relatives. Fondly called Rama by his friends, everyone worried about his family’s future.

Luckily, R.J Construction Co. had a workers’ compensation policy. Accordingly, they gave compensation to Ramashankar’s family, as the law requires. The worker courts determined the payment amount in accordance with their previous judgments.

At the time of the accident, Ramashankar was earning only Rs 8,000. So as per the act, he was liable to get 50% of the Monthly Wage x Relevant factor as per the age. This implies that his family received Rs 8,47,160 (4,000 multiplied by 211.79). The insurer promptly paid the entire amount, and the company incurred no burden.

Before buying a workmen compensation insurance policy, understand how to calculate the settlement amount payable. This will avoid any future problems. 

FAQ

1. What is workers’ compensation insurance and why is it important?

Workers’ compensation insurance is a type of insurance that provides benefits to employees who suffer work-related injuries or illnesses. It is important because it helps protect both employees and employers by providing financial support for medical expenses and lost wages in the event of a workplace injury.

2. Who is required to have workers’ compensation insurance?

In most states, employers are required by law to have workers’ compensation insurance to provide coverage for their employees in case of work-related injuries or illnesses. The specific requirements may vary depending on the state and the number of employees a business has. It is important for employers to comply with these regulations to ensure the well-being of their workers and avoid potential legal consequences.

3. How do I choose a workers’ compensation insurance company?

When choosing a workers’ compensation insurance company, consider factors such as the company’s reputation, financial stability, customer service, coverage options, and rates. It’s important to research and compare different insurance companies to find one that meets your specific needs and provides reliable coverage for your employees.

4. Why is WC insurance important for businesses?

WC insurance is important for businesses because it helps protect both employees and employers in the event of a workplace injury or illness. It provides coverage for medical expenses, lost wages, and other related costs, while also helping to prevent lawsuits against the employer for workplace injuries.

5. What information do I need to provide when buying a workers’ compensation insurance policy online?

When purchasing a workers’ compensation insurance policy online, you will typically need to provide information such as your business details, number of employees, type of work they do, payroll information, and any previous claims history. Be prepared to provide accurate and up-to-date information to ensure you get the right coverage for your business.

About The Author

Rahul Kumar 

MBA Finance

With a wealth of experience in the insurance industry, Rahul is a seasoned writer specializing in articles related to workmen compensation policies (WC policies) for SecureNow. With 12 years of experience in the field, he has acquired in-depth knowledge and expertise in workmen compensation insurance, understanding its complexities and nuances. Their insightful articles provide valuable insights into the importance of WC policies for businesses and employees alike, offering practical advice and guidance on navigating the intricacies of insurance coverage. Trust him to deliver informative and engaging content, backed by years of experience and a passion for educating readers about insurance-related topics.