Workers’ Compensation or Workmen Compensation refers to the monetary compensation offered to workers or employees of an organization, firm, household or any establishment in lieu of his/her injuries sustained while involved in the employment related activities.

An important factor to note about worker’s compensation is that it is only applicable in the case, where the damage to physical health has been sustained while:

  • On duty &
  • Performing the tasks assigned by the employer

It can also be called as a liability of the employer, to ensure a safe and healthy work environment for the workers.

Any other injury sustained outside the workplace or at the workplace due to the worker ignoring a safety protocol.

Worker’s should also be compensated for the occupational diseases contracted by them due to their work profiles.

To summarize we can say that a worker/employee is eligible for monetary compensation; i.e. Worker’s Compensation in any of the following cases:

  • Injury at employment (due to the work)
  • Disease contracted due to occupation
  • Death or Disability sustained at work

This liability can be insured against, in fact, it should be insured against, if you are employing workers who could be eligible for it.

To know more about the insurance available to cover such liability see What Insurance Products Meet Workers Insurance Requirements?

Case Study on Worker Compensation

Shameek Choudhry runs a proprietary tours and travels company and operates about 20 taxis with all India permit. He has employed about the same number of drivers to drive these taxis and has a small pit-shop with two mechanics who perform minor repairs and maintenance on these taxis.

Since most of the drivers and mechanics are contractual, Shameek has no need for buying health or life covers for these workers.

Once a driver, while returning from a trip meets with an accident and had to be hospitalized. Shameek, having no recourse, paid all the healthcare and recovery expenses for the driver out of his pocket. Total expenses incurred was about Rs. 75,000 and the Shameek also paid some money to his family so that they can look after their household expenses, while the driver recovers.

The worker joined Shameek again after about one month, and while he is now filled with gratitude towards Shameek, Shameek still has pockets which are lighter by about Rs. 1 Lakh.

This amount could’ve been much higher, in case the driver would’ve died, and there is no guarantee that Shameek could’ve borne it being a small-scale proprietor. But, in any case, it was his responsibility, and he might have to pay it under a court order.

To know whether you need an insurance cover for your worker’s compensation liability, see Who Should buy Worker’s Compensation Policy?

Death at Workplace from Natural Causes

Ashfaq, 45 years old driver, was employed with Congo Minerals Ltd. Once, after returning from a trip driving the corporation’s vehicle, he suffered a chest pain and was transported to a hospital, where he was pronounced dead within half an hour of the arrival.

Cause of death was registered as heart attack in the post mortem report.

Ashfaq’s family demanded that Congo Minerals should pay compensation under W.C. Act. As Ashfaq died on duty. But the firm has denied the same citing the reasons of death as unrelated with the job performed by the employee.

Later the high court confirmed the same after going through all the evidence and factors.

The employer however, agreed to pay a compensation out of W. C. Act to the family for their loss, and offered to employ the eldest member of the family.

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