How the Employer’s Liability is Decided Under a Workman’s Compensation Policy?

In 2016, a worker lost his life, while several others got injured when a fire broke out in a plastic factory in Delhi’s Narela.

Even in a safe and conducive work atmosphere, accidents can happen. In such a case, the employer’s liability arises to pay the compensation to the injured. The compensation amount in some cases can run into lakhs.

Key Takeaways

• The Primary Shield: A WC policy is the most effective way for an employer to fulfill the heavy financial obligations imposed by Indian workers’ compensation statutes.

• The “Three-Day” Rule: Employers are generally not liable for very minor injuries. If the injury does not result in total or partial disability for more than three days, a compensation claim cannot be maintained.

• Conduct Matters: Liability is waived if the accident was caused by the worker’s intoxication or their deliberate disregard of established safety rules (e.g., refusing to use provided safety guards).

• Schedule III Protections: Liability extends beyond accidents to include Occupational Diseases. If a worker contracts a disease specified in Part B or C of Schedule III due to their specific job, they are entitled to compensation.

• Post-Job Claims: A worker can still claim liability compensation even after leaving the job, provided they can prove the ailment is an occupational disease directly caused by their previous employment.

• The Legal Election: A worker must choose a path. If they file a suit in Civil Court for damages, they forfeit their right to claim compensation under the Workmen’s Compensation Act, and vice versa.

Why workmen’s compensation policy is a must-have for employers?

Workmen compensation insurance is the primary method by which an employer can satisfy their obligations towards employees. This policy helps employers award the compensation and fulfil their obligations imposed as per the workers’ compensation statutes. At the time of workplace injury, the insurance company pays compensation in accordance with the Workmen’s Compensation Act of India, monitored by the Ministry of Labour.

Cases where the employer’s liability for compensation does not arise

In the case of workmen’s compensation insurance policy, the employer’s liability for compensation does not arise in the following situations-

• In case of an injury that doesn’t involve the total or partial disability of the workmen for more than three days.
• Any injury which doesn’t result in an accident or permanent total disability.
• Also, in cases when an accident happens while the workman is under the influence of drugs or alcohol.
• Even in cases where employees willfully disregard the safety rules as framed for the purpose of the safety of workmen the employee liability compensation is not payable.

Check Now: Myths Related to Workmen Compensation Insurance Policy

Cases where the employer’s liability for compensation arises

• When a workman engaged under the services of one or more employers in the employment specified part C of Schedule III has suffered from an ailment. Moreover, the ailment should be specified as an occupational disease. It means that the disease should arise out of and in the course of employment.
• When a worker has worked for any employer in any employment as specified in Part B of Schedule III. Also, when a worker has served one or more employers in the employment as mentioned in Part C of that Schedule. The worker should serve for a continuous period as mentioned in this sub-section for that employment.

Furthermore, if the worker contracts an ailment after leaving the job, he can seek liability compensation. However, the employee is liable to receive compensation only when it is an occupational ailment mainly arising out of the employment.

Important considerations related to employee liability compensation

1. The Central or the State Government gives notification in the official gazette to add diseases peculiar to certain employments only.
2. Further, no compensation will be given if the accident arises out of and in the course of the employment. Also, there will be no right to compensation if the worker has filed a suit in a civil court. In cases where workers file lawsuits for damages and injury against the employer or any other person, they cannot claim compensation.

A worker does not need to maintain a suit for damages in any court in respect of the injury –

(a) If the worker has instituted a claim for compensation in respect of the injury before the commissioner or,

(b) When a worker institutes the claim for compensation in accordance with the provisions of the Workmen Compensation Act, 1923.

Summary Table: The Dynamics of Employer Liability

How can SecureNow help you in understanding and covering your liabilities?

It is imperative to have a workers’ compensation insurance policy to shield yourself from legal liability that may arise in the case of injury or accident of a worker. SecureNow can help you find the right policy.

Read More: 10 Questions of Workmen Compensation Insurance Answered

The insurance company- SecureNow has established itself as a leading corporate insurance advisor in the market. It lets you compare online insurance quotes from different insurers to help you find the apt workmen insurance policy for yourself.

Further, advisors will assist you even after you buy the workmen compensation insurance policy. Experts of SecureNow will help you at the time of claim settlement as well and the experts will handle all your queries pertaining to insurance.

Frequently Asked Questions (FAQs)

1. What happens if a worker is injured but was not wearing the provided safety helmet?

A) If the employer can prove that the worker willfully disregarded a safety rule or device (like a helmet or safety goggles) specifically provided for their protection, the employer’s liability for compensation generally does not arise for non-fatal injuries.

2. Can an employee sue me in court and claim insurance compensation?

A) No. Under the law, a worker cannot maintain two separate legal actions for the same injury. If they choose to file a suit for damages in a Civil Court, they lose the right to claim compensation through the Workmen’s Compensation Commissioner.

3. Am I liable for a disease a worker discovers six months after they quit?

A) Yes, potentially. If the disease is an Occupational Ailment (as specified in the Act) and it can be proven that it arose “out of and in the course of” their time at your company, you remain liable for compensation even after the employment has ended.

4. Why is there no compensation for injuries lasting only two days?

A) The Act is designed to protect workers from significant financial hardship. Minor injuries that heal within three days are considered “waiting period” events and do not trigger the statutory compensation requirements for lost wages or disability.

5. How are new diseases added to the “Occupational Ailments” list?

A) The Central or State Government has the authority to add new diseases to the official list. This is done by issuing a notification in the Official Gazette, specifically targeting diseases that are peculiar to certain modern types of employment.

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.