What is the difference between the WC policy and ESIC?

Definitions & Purpose 

1. Workmen’s Compensation (WC) Policy: A non‑contributory, no‑fault liability insurance—purchased by employers—to cover workplace injuries, death, or occupational diseases as per the Workmen’s Compensation Act, 1923. 
2. Employee State Insurance (ESIC): A contributory social security scheme under the ESIC Act, 1948, offering integrated benefits like medical care, sickness allowance, maternity, disablement, and death/dependency payouts. 

Key Takeaways

• • Statutory Compliance: If a company has more than 10 employees (or 20 in some regions) earning below ₹21,000, ESIC is mandatory. However, many companies still buy a WC policy for employees earning above the ESIC threshold or to cover risks during business travel abroad.

  • The “Medical” Difference: ESIC provides a massive network of hospitals for daily sickness and family care. A WC policy only pays for medical costs specifically resulting from a workplace accident.

  • Payout Method: WC usually results in a lump-sum settlement through a Commissioner’s order. ESIC provides periodic payments (similar to a monthly pension or allowance) for as long as the disability lasts.

  • Insurable Interest: WC protects the Employer’s bank account from being drained by a massive legal claim. ESIC protects the Employee’s overall lifestyle, including maternity and unemployment (Rajiv Gandhi Shramik Kalyan Yojana).

  • Workplace vs. General Life: WC is strictly about “out of and in the course of employment.” ESIC covers you even if you get sick or injured on a weekend trip, provided you are an active member.

Coverage Differences 

1. WC Policy: Addresses compensation for injuries, disabilities, or death solely from work-connected incidents, including medical treatment, wage loss, and rehabilitation. 
2. ESIC: Provides broader coverage—covering not only workplace injuries but also general medical, maternity, sickness, unemployment, and dependent benefits. 

Employee & Wage Eligibility 

1. WC: No minimum number of employees or wage limit applies—employers can choose to cover any worker. 
2. ESIC: Mandatory for workplaces with ≥10 employees (≥20 in some states); only applicable to Indian workers earning up to ₹21,000/month (₹25,000 for persons with disabilities) . 

Payment Mechanism 

1. WC Policy: Employer pays full premium; compensation is typically paid in a lump sum via courts/commissioners. 
2. ESIC: Funded jointly—employer contributes ~3.25%, employee ~0.75% of wages; benefits are periodic, managed by ESIC. 

Applicability 

1. WC: Can cover both Indian and foreign employees, including those working abroad. 
2. ESIC: Strictly covers Indian workers employed within India.

Workers in India have access to various health insurance and social security schemes to safeguard their interests during contingencies. Two of the security benefits offered to workers in India are the Workmen Compensation policy and Employee State Insurance. Despite several similarities in terms of benefits, there are differences in the application and functioning of both policies. Let’s explore the main differences between Workmen Compensation policy and Employees State Insurance Scheme (WC policy and ESIC).

Major differences between WC policy and ESIC

Definition

Workmen compensation (WC) policy protects employers against the statutory liabilities towards employees in case of workplace accidents or death. Meanwhile, employees state insurance corporation (ESIC) is an integrated social insurance scheme.

It protects workers if they die or get disabled at work, gives maternity benefits, and covers medical illnesses. It also provides medical care to the insured employees and offers dependants benefit.

The difference in compensation awarded under ESIC and WC

The formulation of compensation under the workmen compensation policy follows the rules set under the Workmen Compensation Act, 1923. It clearly entitles ‘workmen’ (as defined under the Act) to receive compensation from the employer.

The Workers court decides the compensation amount for insured persons in case of workplace injuries. Workers receive compensation in case of death, disability, or injury because of workplace accidents or professional illnesses.

On the other hand, the multi-dimensional ESIC scheme provides medical care and financial security or cash benefit to employees and their families. ESIC manages the fund as per the rules and regulations of the Government Employee State Insurance Act, 1948.

The difference in policy grantees under ESIC and WC

Workmen compensation policy can be purchased by any employer or firm who employs ‘workmen’ as defined in the Workmen Compensation Act, 1923.

For example, firms that employ laborers, drivers, and construction firms can secure WC policy benefits. Workers employed in maintenance work, civil engineering, and other manual jobs also fall under the purview of the policy.

Conversely, a non-seasonal factory with more than 10 employees. Where monthly earnings are INR 21,000 or less, can opt for the Employee State Insurance (ESI) scheme.

Usually, ESIC is applicable for restaurants, hotels, newspaper establishments, transport undertakings cinemas, etc.

Difference in Application of WC Policy and ESIC Policy

Workmen compensation is applicable to Indian companies employing workers in India as well as in foreign countries. On the other hand, employees’ state insurance is applicable to only Indian workers.

 Cost difference

The employer solely bears the cost of the workmen’s compensation policy. Under ESIC, employers contribute 3.25%, and employees contribute 0.75%, making a combined total of 4%.

Summary: WC Policy vs. ESIC Scheme

Factors determine the policy benefits.

WC and ESIC benefits vary based on monthly wages, number of employees/workers, and worker type.

FAQ  

Q1: Can an employee benefit from both WC and ESIC simultaneously?
A1: No—an employee can only claim benefits from one scheme. If eligible for ESIC by wage and employer size, they cannot also claim under WC for the same incident . 

Q2: Who funds each scheme?
A2: WC is entirely employer-funded. ESIC is joint-funded with ~3.25% from employer and ~0.75% from employee contributions . 

Q3: Are there wage or employee thresholds for coverage?
A3: WC has no thresholds. ESIC requires at least 10 employees (≥20 in some states) and covers workers earning ₹21k/month (₹25k for disabled. 

Q4: What types of benefits differ between WC and ESIC?
A4: 

• WC offers lump‑sum compensation for workplace injuries, disabilities, death, plus medical care and rehabilitation. 

• ESIC offers broader, periodic benefits covering general medical care, maternity, sickness, injury, dependency, unemployment aid . 

Q5: How are claims processed?
A5: 

• WC claims are filed by the employer to the Workmen’s Compensation Commissioner or court. 

• ESIC benefits are directly dispensed by ESIC—medical via ESI card in empanelled hospitals; financial via periodic payments. Status can be tracked using the UMANG app.

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.