Workmen Compensation

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What Is the Purpose of Workmen’s Compensation?

The primary objective of the Workmen Compensation Act, 1923, is to provide financial relief to employees’ families in case of their death or injury at the workplace. The act also provides cover for employees that get an occupational disease while in employment.

Reasons For enactment of the Workmen’s Compensation Act

  • The Act safeguards the interest of employers and employees. Furthermore, reasons for the enactment of the Act can be as follows: A large number of the young workforce of the country is employed in factories, manufacturing units and various menial jobs. The Act promotes the welfare of labourers.
  • Providing a safe and healthy work environment is the responsibility of the employers of this workforce.
  • Workers suffering injury or death due to the occupational hazards are liable to get compensation. Dependents or the worker him/herself is not in a position to fight the employer for compensation
  • The employer and worker may not reach a reasonable amount when it comes to compensation in such cases.

Thus, the Act provided a resolution for compensation in cases of accidents in the workplace.

Case on Purpose of Workmen’s Compensation

After successfully establishing its name in Singapore, R.J. Mills is planning to set up a factory in India. Reports of R.J. Mills looking for a site for setting up its mills have been doing the rounds for quite some time. Finally, the company selected Mumbai as its next mill site. R.J. Mills plans to leverage its strong supply chain market, built over two decades to get a foothold in the rapidly growing Indian market. However, the company is wary of rising incidents of labour unrest in India. The increasing discontent among workers over issues like wages, working conditions, etc worries the management.

As it will be the first factory of R.J. Mills in India, the company doesn’t want to take any risk. Therefore, it is mulling over every measure to curtail the workers’ unrest. The company has hired a third-party agency for research on the rising level of workers dissatisfaction. The initial report results have showed that the working conditions are one of the prime reasons for unrest.The final report is yet to be submitted to the agency.

Steps taken by the Employer

  1. Budgetary allowance for safe employee working conditions -To deal with the issue, the company has allocated a special budget towards the employee working conditions and safety issues. Also, the company has decided to impart training to its employees on the safe working practices.
  2. Buying WC policy-Additionally, R.J. Mills will buy a workers compensation insurance, for accidents that fall under the workmen’s compensation act. The policy will cover the legal liability of the employer that may arise due to death or disability of any worker.

Though the safety measures will help to protect workers; you can’t completely rule out the possibility of accidents at the workplace. If while working, any employee dies or meets with an accident, the policy will pay the compensation to the worker or his/her family, and thus, this insurance policy offers legal liability coverage to R.J. Mills.