Workmen Compensation

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The Workmen’s Compensation Act, 1923 makes it mandatory for an employer to compensate the worker and/or the worker’s family in case the worker dies, becomes injured, or suffers a disability during the course of his/her employment. If the worker suffers from any physical disability due to the nature of his employment. Then the employer becomes liable to pay for the financial loss suffered by the worker and/or his family. This financial loss might involve medical costs, legal costs, etc. A Workers Compensation policy takes care of this liability of the employer. The policy covers the compensation payable by the employer to the injured worker. Thereby saving the employer from considerable financial burden. 

How does the policy work?

The Workmen Compensation or Employee Compensation policy can be bought by an employer to cover his financial liability towards employees as stated under the Workmen’s Compensation Act. The policy covers ‘workmen’ as defined under the Workmen’s Compensation Act and pays financial compensation if the workmen suffer a physical injury, death, or disability due to or over the duration of their employment.

The coverage amount would depend on the average wage of the workman, the nature of the injury suffered, and the workman’s age. Gives coverage for death, permanent disablement. Whether total or partial in nature, total temporary disablement, and any type of legal cost incurred by the employer.

The policy covers the employer’s legal liability in two tables – 

  • Table A covers the liability faced by the employer when the workmen suffer accidental injuries as specified under the Workmen Compensation Act, 1923 and the Indian Fatal Accidents Act, 1855
  • Table B covers the liability faced by the employer under common law

Besides coverage for physical injuries and legal costs, the policy also allows extensions. That the employer chooses by paying an additional premium. The available extensions include the following :

  • Compensation for the medical bills, hospital bills, surgical bills, transportation of the workman to the hospital, etc. in case of an accident covered under the Workmen’s Compensation policy
  • Diseases that are mentioned under Part C of Schedule III of the Workmen Compensation Act which are usually not covered but which arise during the course of employment

Though the Workers Compensation policy has an extensive scope of coverage, there are some exclusions too. Common exclusions include the following :

Injuries suffered-

  •  Due to war or war-like situations
  •  When the workmen did not follow security measures
  •  Due to alcohol and/or drug abuse
  •  Outside employment
  •  Due to terrorist activities
  •  Which do not result in disablement for more than 3 days
  •  Due to self-inflicted and deliberate causes
  •  By third party workmen, hired by the employer for temporary jobs
  •  Which were mentioned in a contractual agreement with the workman

A Workmen’s Compensation policy is an important requirement for all businesses which are liable to face the financial impact of any physical harm suffered by their employees during the course of employment. The policy provides good coverage against the unlimited liability faced by organizations.