Workmen Compensation

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The Workmen compensation insurance policy is a product designed to ensure the employer against their liability towards the workers in case of an injury at the workplace.

Workmen Compensation Act:

Workmen Compensation Act is to provide organizations and workers with a medium to decide the extent of compensation owed by the employer if a worker sustains an injury at the workplace and is unable to attend to his duties and earn wages for an extended time.

On one hand, the act ensured that the workers get compensation for their loss of wages and health. It limits the employer’s financial responsibility to a calculable amount on the other.

The Workmen compensation insurance policy covers these liabilities of the employer as prescribed by the Workmen Compensation Act. Therefore, any workmen compensation policy should cover the following:

  • Death
  • Permanent total disablement
  • Permanent partial disablement
  • Temporary disablement
  • Medical care from the injury or illness
  • Replacement income costs
  • Costs for retraining
  • Legal costs incurred if any
  • Benefits to survivors of workers killed on the job

Besides the above Workers’ compensation insurance does not only limit accidents. It also covers problems and illnesses that might develop over an extended period of time due to the same injurious activity.

A Case of Workmen Compensation Policy

Matter India is a manufacturing firm in Ludhiana, specializing in the production of automobile spare parts. Since the firm started in 2001 it has grown steadily and this year even increased its work capacity as well as employee strength from 50 to 80 workers in the production unit.

Last year a worker aged 26 years was hurt during the manufacturing process. Considering this incident, the firm is extra careful this year regarding safety measures for workers in the factory and has left no stone unturned. Unfortunately, the worker injured his left hand to the extent that he wasn’t able to work for a year. Being the sole earner, his family was emotionally and financially disturbed and filed a case against the firm.

Eventually, Max India ended up paying approximately Rs. 510,000 to the worker and his family for medical care, income lost due to temporary disablement, etc. The firm also incurred legal expenses to the extent of Rs. 150,000 due to the lawsuit.


In this case, if Max India had taken Workmen Insurance, they would have saved this money and the legal battle which battered their name as an employer. Not only would the policy have compensated the worker financially for the loss of work, but the policy would have also covered the legal expenses arising due to the lawsuit.

Max India along with adding 30 new employees to the Unit has finally taken workmen compensation insurance cover this year. Due to the legal liability covered by Workmen Insurance Act, Max India is now covered against workplace accidents or illnesses occurring to workers. Now while the company continues to grow steadily, unpredictable expenses would take care of financially like the one above. Thus, helping the firm to continue on its path of success with lesser roadblocks or difficulties.