Workmen Compensation

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Are there any value-added services in workmen compensation?

Employee welfare is crucial for every business to ensure its smooth run and growth. Protecting the employee’s health and welfare benefits both employer and employees. It’s a legal responsibility of every employer to protect employees’ health and safety. The primary and effective way to comply with legal obligations is to avail workmen compensation policy.

What is workmen compensation policy? What does it cover?

Workmen compensation policy is an insurance policy that secures employer from legal liabilities in case employees suffer injuries or die in a workplace accident or an illness arising due to or during the course of employment. Click here to know more on how employer’s liability is decided.

Who benefits from WC policy?

Workers if injured at work can claim compensation. The worker courts decides the compensation. The WC insurance benefits the employer because the insurance pays for any award as decided by the courts. Also, workmen compensation is a no fault insurance system. The insurer will simply pay the amounts as prescribed by the courts without getting into any details of why the accident was caused. The policy usually comes in two forms –

  • Table A – Indemnifies the employer against legal liability to all employees under the Workmen Compensation Act, 1923,Fatal Accidents Act, 1855 and Common Law
  • Table B – Indemnifies the employer against legal liabilities to employees as under the Fatal Accidents Act, 1855 and Common Law. Moreover, these policies do not cover employees that are excluded from the definition of ‘workmen’ in the Workmen Compensation Act, 1923.

Coverage offered under the workmen compensation policy

  • Death: In case of death of an employee arising due to or during the course of employment, dependants of diseased employee will be compensated under the workmen compensation policy for the income loss.

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

  • Permanent total disablement: In case of complete disablement of an employee at the workplace arising out of or during the course of employment, the workmen compensation policy offers protection to employees.  Compensation is also provided for their replacement.

Compensation payable as per the terms of the Workmen’s Compensation Act, 1923, is higher of INR. 1,40,000 or 60% of monthly wages X relevant factor (based on age). These stated compensations are subject to change.

  • Permanent partial disablement: In case of an injury suffered by employee due to workplace accident or illness disables the employee to perform job at full capacity, the policy compensates for loss of income.

The extent of impairment determines the compensation. Calculation of compensation payable is similar to that of permanent total disablement. However, benefits paid on pro-rata basis depend on the extent of disability.

  • Temporary disablement (total or partial): In case, an injury caused to an employee due to a workplace accident or illness makes the employee temporarily disabled to perform a job, then the policy pays for loss of income and for the cost of retraining after recovery.

As per the terms of the Workmen’s Compensation Act, 1923, 25% of the monthly wages is payable as compensation on half monthly basis.

Value-added services in workmen compensation

Policy Extensions

However, workmen compensation policy also offers extensions to avail the additional coverage. Add-ons come at an extra premium cost.

  • Medical expenses cover: Medical expenses incurred on hospitalisation or for surgical treatments of an injured employee
  • Cover for legal cost: Legal expenses incurred by employer relating to workmen compensation claims
  • Contractual employees: Employees working under contractor and sub-contractor are usually excluded from the main workmen compensation policy. Contractual employees cover extends protection for employees who work under contractor.
  • Occupational diseases: Illnesses as listed under part ‘C’ of Schedule III of the Workmen Compensation Act, 1923 such as pneumoconiosis, bagassosis, silico tuberculosis, bronchopulmonary diseases and extrinsic allergy etc. are excluded under the main workmen compensation policy. Hence, this extension offers coverage for occupational illnesses listed in part ‘C’.

How do WC policy extensions help?

Let’s say a person employed in a coal mining firm contracts coal worker’s pneumoconiosis by inhaling coal dust then compensation will be paid by the workmen compensation policy only if occupational diseases extension is availed.

Thus, value-added features of the workmen’s compensation policy enhance the coverage offered under the standard plan. Depending on the industry type, nature of business, and risk exposure, employers can include these extension or value-added features to the main workmen’s compensation policy to avail extensive coverage.

Having a robust workmen compensation policy is the need of an hour for every employer in this dynamic market environment. Click here to avail the right workmen compensation policy.