Why is workmen compensation important?
Every business is expected to keep the work environment safe for its employees. Employer is legally liable to pay compensation if an employee suffers an injury (leading to disablement) or death due to workplace accidents or illnesses during the scope of employment. The Workmen’s Compensation Act, 1923 clearly states the compensation to be paid to employees for each type of claim. Workmen compensation insurance policy is an effective way to protect employees and save the company from statutory liabilities related to employee claims. Let’s take a detailed look at the importance of workmen compensation insurance and why has it become an integral part of businesses.
What is workmen compensation policy? What does it cover?
Workmen compensation policy is an insurance policy that provides protection to employers against statutory liabilities that may arise from employees who suffers an injury or death in a workplace accident or illness arising out of or during the course of employment. Specifically, the businesses with work nature that exposes workers to life or health hazards are required to be covered.
Workmen’s Compensation Act, 1923 (now known as Employee’s Compensation Act), a social security legislation protects ‘workmen’ and their dependants in case of an injury or death during job-related accidents or illness. As per the act, employer is liable to compensate the employee who suffers workplace accidents or illness arising out of or in the course of employment for the following:
- Death – compensation as stated in the Workmen Compensation Act is payable to the dependants of diseased employee.
- Permanent total disablement – In case where employee is completely disabled and not expected to be returned to work in lifetime, compensation will be paid to the disabled employee for loss of income
- Permanent partial disablement – in case where employee is permanently disabled and the impairment makes worker unable to perform work at full physical capacity even after the recovery. Compensation will be paid to disabled employee for loss of wages/income (on pro-rata basis) and medical expenses.
- Temporary disablement (total or partial) – It is the disability that temporarily makes employee incapable to work. It can be of total or partial nature. Compensation as stated in the Workmen’s Compensation Act will be payable to employee till recovery.
- Legal expenses that are incurred with the prior consent of insurer
Workmen compensation policy pays the compensation as it is stated in the Workmen’s Compensation Act, 1923. Businesses that employs less than 20 employees are governed by Workmen’s Compensation Act, 1923.
Click here to know more on how the employer’s liability is decided under a workmen compensation policy.
Importance of workmen compensation policy
Many businesses consider workmen compensation as just an unnecessary cost to the business. But, the workmen compensation policy is an essential cost to business as it protects business from serious financial burden of compensating the employees and paying for their medical care. Specifically for high-risk businesses, it’s important to have the insurance protection to save themselves from costly claims and also to protect the employees. Here are some of the key benefits offered by workmen compensation policy because of which it is wiser decision to have for businesses.
Workmen compensation policy benefits
- No fault coverage
No matter who is at fault, workmen compensation policy ensures to provide protection to employees and to their dependant when workplace accident or illness results in death or disablement. Even if the employer is not at fault, compensation will be still provided to employees.
- Protection to employees
The policy pays compensation to employees of the insured employer in the event of workplace accidents or illnesses leading to death or disablement. In case of death of an employee occurs in a workplace accident or due to job-related illnesses, dependents will be paid compensation for the loss of regular income. In case accidental injuries or job-related illnesses result in disablement of any type, policy compensates for the lost wage and income along with paying for medical expenses.
- Statutory benefits for employer
It is a legal responsibility of every employer to protect the safety, health and welfare of their employees. In case of any mishaps at workplace or for any occupational illnesses leading to death or injury to worker, employer is held responsible. As per Workmen’s Compensation Act, 1923, employer is required to compensate the employees and their dependents for loss of wage or income, medical expenses and for disability. Workmen compensation policy compensate the employer for statutory liabilities to employees as stated in the Workmen’s Compensation Act, 1923. Without workmen compensation insurance, businesses are held completely responsible for paying of medical expenses and lost wages when employee is injured in workplace accident.
- Extensions or add-on benefits
Along with covering the death, disablements and medical care expenses, many of the workmen compensation policies in India provide extensions to the main coverage at an additional cost. Many features are offered as optional benefits under the workmen compensation policy. For example, coverage for contractual employees can be included in the policy as an extension. Same way, some policies provide extension cover for occupational diseases mentioned in Part ‘C’ of Schedule III of the Workmen Compensation Act, 1923 that are generally excluded from main policy.
Workmen compensation policy provides two-way benefits. It works as an employee benefit package as well as saves the employer from legal complications arising out of statutory liabilities. Hence, workmen compensation policy is one of the basic insurance that is crucially needed for the business. Click here to avail the right workmen compensation policy.