Workmen Compensation

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An employer in a workmen compensation insurance policy is:

  1. A group of individuals. These may or may not be incorporated,
  2. Any managing agent of an employer. Managing Agent implies an individual appointed to represent another person for carrying out that other person’s trade or business. This does not include a subordinate to an employer or an individual manager. This simply means a person who is acting on behalf of another person so that the other person’s orders/directives to the worker are being expressed,
  3. A legal representative of an already dead employer,
  4. In many cases, a workman’s services are contracted, lent, or let on hire to a third party., This third party is the employer of that workman for as long as he stays under their contractual employment. He is being paid a salary/wage as compensation for his services.

Who can be employers?

Simply put, an employer can be an individual or a legal entity with control over a worker or a servant. An employer directs the worker as per a contractual employment agreement or implied agreement between both parties. The employer also disburses salaries or wages as compensation to the workmen/servant.

Read More: What is covered under Workmen Compensation Insurance Policy?

Employers can be anyone ranging from someone giving the services of a babysitter to governmental bodies. Even companies with hundreds of employees are employers. Governmental bodies are the largest employers. However, it is the small and medium businesses in the private sectors that have most of the workforce in employment.

Case: 1

 After working for a decade in the corporate sector, Rajan Saran started his own manufacturing unit in 2013. Rajan’s hard work and diligence resulted in the company making an impressive client base within four years of its inception. The company founded with only one person has now 120 employees.

Rajan implemented all the safety measures in his manufacturing unit. As an employer, it is necessary for him to buy a workmen compensation insurance policy as well.

Accidents happen even at safe locations, and therefore, it is necessary to have a policy to cover the expenses of injured employees. Without a policy, Rajan will have to pay compensation and deal with medical expenses on his own.

To avoid a heavy financial burden, it is essential for Rajan to purchase a worker’s compensation insurance policy. WC policy will also offer legal liability coverage. If Rajan’s employees meet with an accident during working hours, the worker compensation insurer will pay compensation and medical expenses to the worker.

It will save Rajan from bearing the financial brunt that may arise in the case of the accident or injury of his employee.

Case: 2

The last year was tough for AKJ Electronics as it lost its founder Mr. Vijayprakash. He died at the age of 75 due to a heart attack.

Lt. Vijayprakash had two sons— the elder son, Homiand Jeet. Homi was helping Vijayprakashin the business and  Jeet was studying in college. After the death of Vijayprakash, Homi became the full-time owner of AKJ Electronics as per the will of Vijayprakash.

Homi had followed global safety norms at the workplace. He also built a separate department to train employees on safety practices.

Read More: What Is the Purpose of Workmen’s Compensation?

As Homi was the new CEO, he also bought workmen compensation insurance policy. This policy will help him cover his legal liability which could arise due to the injury of his employee during working hours.

A few days ago, one worker suffered major hand injuries when his gloves caught between the machine. Five other workers present at the time of the accident rushed the injured worker to the hospital. In this case, as Homi was the employer and had a workmen compensation insurance policy, he informed the insurance company immediately. The insurance provider agreed to offer legal liability coverage to the injured employee.

In this case, the worker’s compensation insurance company paid Rs 2 lakh to the injured worker as compensation. Moreover, it also paid for the medical expenses.

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