Workmen Compensation

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What is the difference between the WC policy and ESIC?

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 Workmen Compensation policy and Employee State Insurance. Despite several similarities in terms of benefits, there are differences in applicability and functioning of both policies.

Let’s take a look at the differences between workmen compensation policy and employee state insurance.

Major differences between WC policy and ESIC

Definition

Workmen compensation policy (WC) is an unnamed insurance policy to protect employers against the statutory liabilities towards employees in case of workplace accidents or death. Meanwhile, employees state insurance (ESIC) is an integrated social insurance scheme. It ensures employee welfare protection in case of his/her death and disability due to workplace injury, maternity and medical illness. It also provides medical care to the insured employees and their family. Difference in compensation awarded

Compensation to be paid under workmen compensation policy is formulated as per 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 decide the compensation amount of workers in case they suffer death, disability or an injury due to workplace accidents or occupational illnesses. On the other hand, the multi-dimensional ESIC scheme provides medical care and financial security to employees and their family. The Employees State Insurance Corporation (ESIC) manages the fund as per the rules and regulation of Employee State Insurance Act, 1948.

Difference in Policy beneficiaries

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 labourers, drivers and construction firms can secure WC policy benefits. Workers employed in building construction and maintenance work, civil engineering, mining, farming and any other menial jobs also fall under the purview of the policy. On the other hand, a non-seasonal factory with over 10 employees, having monthly wages of INR 21,000 and below can buy employee state insurance scheme. Usually, ESIC is applicable for restaurants, hotels, newspaper establishments, transport undertakings and cinemas etc.

 Applicability differences

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 workmen compensation policy. Under ESIC, the employer contributes 3.25% and the employee contributes 0.75% out of a total share of 4%.

Difference in factors on which the policy benefits are determined

WC and ESIC benefits depends on monthly wages, number of employees/workers employed and type of workers hired on the job.

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