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%.
Factors determine the policy benefits.
WC and ESIC benefits vary based on monthly wages, number of employees/workers, and worker type.
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.
