The Workmen’s Compensation Act 1923, aims to protect Indian workers in case they encounter an injury due to an accident in the workplace. It provides a formula to estimate the compensation amount payable to the workers in case of injury or death due to the task they perform. At the same time, workmen compensation serves to protect the interests of even the employers, by laying down strict laws which define the events affecting the liability of the company. It helps protect the business from arbitrary lawsuits and absurd claims of compensation by an injured employee.
When is a worker entitled to compensation?
The Workmen Compensation Act,1923 gives compensation to the employees or their dependents in case there is disability or death due to the nature of work done by them during employment. This also includes any occupational disease or industrial accident that the employee may encounter during the tenure of the employment and arising out of the course of employment which leads to disability or death.
Specifically, a worker is entitled to compensation in case of
- Permanent Total Disablement
- Permanent Partial Disablement
- Temporary disablement – both total and partial
- It has contracted an occupational disease
When is a worker not entitled to compensation as per the Workmen Compensation Act 1923?
The following cases are not covered under the Worker’s Compensation Act.:
- In case the injury or accident has occurred due to certain perils or wars
- In case the employee has chosen to ignore or refused to follow the laid down safety guidelines and mechanisms
- In case the accident or injury was caused when the employee was under the influence of alcohol or drugs
- If the accident and the resulting injury does not result in a partial or total disablement lasting more than 3 days
How is the worker’s compensation amount decided?
The benefit depends upon the monthly wages earned by the worker, the nature of the injury and a relevant factor defined in the Act. These factors are used to calculate a lump-sum amount for workmen compensation. The compensation also depends on the age of the injured employee. Lower the age, higher the benefit and vice versa.
Types of Compensations and the Respective Amounts
The Workmen Compensation Act mandates the employer to pay a compensation amount equal to 50% of monthly wages (maximum monthly wage ceiling of Rs. 8000) of the deceased employee multiplied by the relevant factor, or a sum of Rs. 140,000, whichever is higher.
Permanent Total Disablement
In case the workman has contracted permanent total disablement due to the injury, the compensation amount applicable will be 60% of the monthly wages multiplied by the relevant factor or a sum of Rs. 120,000, whichever is higher.
Permanent Partial Disablement
In this case, the amount of compensation will be calculated pro-rata based on the loss of earning capacity of the workman due to the injury. Some of these are defined in the Workmen Compensation Act 1923, and other specific cases depend upon assessment by qualified medical practitioners.
Whether the temporary disablement is total or partial, the employer is liable to pay half-monthly payment equivalent to 25% of monthly wages, payable on the sixteenth day from the date of disablement. In case the disablement continues for 28 days or more, the workers compensation will be payable from the date of disablement, otherwise after a waiting period of three days from the date of disablement.
Penalty For Default And Delay
Compensation must be paid as soon as it is due. If the employer does not agree to the total amount that is being claimed by the employee or the dependent(s), the former must pay provisional compensation equivalent to the extent of liability that is agreeable to him.
In case the employer is not able to make the payment within this time, there is a delayed payment penalty of 6% per annum for a sum not more than 50% of the total amount.
Insurance For Workmen Compensation Liability
The liability stands with the employer and accidents are unpredictable. Therefore, it is recommended that you buy workmen compensation insurance to take care of it. It saves a lot of unnecessary legal and other hassles in case of injury to the employee and insurers allow you to opt for higher compensation than allowed in the act as per your need. You can use this feature to create a valuable differentiation from your competitors to attract talented contract workers.
Workmen compensation insurance policy benefits the organisation by increasing the motivation levels of the workers towards their employers. It boosts performance as well, knowing that their company covers them in the case of loss of their earning ability. Additionally, additional safety measures on your part will certainly help you to reduce the cost of workmen compensation insurance.
See Infographic on 10 Questions on Workmen Compensation Answered
How to Buy Workmen Compensation Insurance?
Buying workmen compensation policy is possible with just a few clicks. You can visit the online portal of SecureNow, fill in your details, the number of workers, supervisors to be covered under the plan, compare multiple plans offered by different insurers and buy online. Once the payment is successful, you will receive the cover letter of your policy instantly. SecureNow also assists you in managing the policy further, like adding and removing employee names from the cover and file the claim to the insurer.
Keep Reading: Workmen Compensation – What you need to know as an employer
Also Read: What is covered under Workmen Compensation Insurance