Workers employed by businesses that are exposed to high risks can face occupation-related health issues and accidents at work. Concerns with regard to loss of income and healthcare cost are addressed by the Workmen Compensation Act, 1923. The act has also been renamed as Employees Compensation Act, 1923. As per the rules and regulations laid down in the Workmen Compensation Act, workers injured on the job or suffering certain occupational illnesses are entitled to receive compensation from the employer. Compensation to be paid is formulated by the Workmen Compensation Act.
Additional Read: How to Calculate a Settlement in a Workman’s Compensation Injury?
A Workmen Compensation insurance policy as offered by insurance companies is the most effective way for any employer to safeguard themselves against these statutory liabilities. The policy is important for both employer and workers/employees. In India, Workmen Compensation Insurance is mandatory under the Workmen Compensation Act, 1923 for manufacturing companies, mining companies, construction companies, transport undertakings, factories and plantations etc, having more than 20 workers, to protect the rights of employees.
More than being a statutory requirement, the policy is extremely beneficial for both employees and employers. The workmen compensation policy aims to protect the ‘workmen’ as defined in the Workmen Compensation Act, 1923 during the following cases.
- Workplace accidents resulting in death
- Workplace accidents resulting in disability (total or partial)
- Injuries to workmen on duty during the course of employment
- Occupational illnesses listed under the Workmen Compensation Act, 1961
A workmen compensation policy is very important for employers, specifically for the companies having large labour forces, to shield themselves against the liabilities resulting from workmen injuries. Not being compliant with the statutory requirements can be troublesome for the businesses. The compensation to be paid by the employer is stated in the Workmen Compensation Act. Depending on the wages paid, the number of workers employed, their job nature and the degree of risk exposure, employers can avail workmen compensation insurance.
The term ‘workmen’ is clearly defined in Schedule II of the Workmen Compensation Act, 1923. In this Schedule II, the list of persons who are entitled to receive the workmen compensation benefit is clearly stated. If a workmen from the list suffers an injury, then the employer is to compensate them as per the WC Act.
Hence, workmen compensation policy is mandatory and important for businesses to effectively manage the consequences of workplace accidents and occupational illnesses to the workers.