Workers’ Compensation or Employee Compensation refers to the monetary compensation offered to workers or employees of an organization, firm, household or any establishment in lieu of any injuries they might sustain while involved in 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 the worker or employee is :
- On duty and
- Performing the tasks assigned by the employer
Hence it can be considered as the employer’s duty, 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 is not covered.
Workers 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.
Case Study on Worker Compensation
Shameek Choudhry runs a proprietary tours and travels company and operates about 20 taxies with all India permits. 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 while returning from a trip, a driver met with an accident and had to be hospitalized. Shameek, had no recourse to an alternative and paid the healthcare and recovery expenses for the driver out of his pocket. The total expenses incurred were about Rs. 75,000 and Shameek also paid some money to his family so that they could look after their household expenses while the driver was recovering.
The driver rejoined Shameek after about one month, and while he is gratetul to Shameek, Shameek’s pockets are lighter by about Rs. 1 Lakh.
This amount could have been much higher in case the driver had 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 would have had to pay it under a court order.
Death at Workplace from Natural Causes
Ashfaq, a 45 years old driver, was employed with Congo Minerals Ltd. Once, after returning from a trip while driving the company’s official vehicle, he suffered chest pain and was moved to a hospital, where he was pronounced dead within half an hour of arrival.
The cause of death was registered as a heart attack in the post mortem report.
Ashfaq’s family demanded that Congo Minerals should pay compensation under the Workmen Compensation Act, as Ashfaq died while on duty. But the firm 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 compensation out of W. C. Act to the family for their loss, and offered to employ the eldest member of the family.