As a business owner, it should be one of your priorities to increase the volume of your earnings in a fair and ethical manner. You are required to protect all your assets and proceedings by adhering to Government compliances as well as by ascertaining the welfare of your employees. Providing your employees with workmen compensation insurance policy is an integral part of that deal. In order to optimize production to meet the rising demand, the manufacturing sectors rely upon the use of heavy duty equipment’s. The workmen who use such equipment’s are up against certain degree of occupational hazard or risk. At the same time the comparative poverty of the workmen themselves, requires them to be protected as far as possible from any suffering caused during the course of work.
To place the onus of responsibility on the employers regarding the welfare of workmen of certain industry types namely the manufacturing sector, the Government of India drafted the Workmen’s compensation Act in 1921 which has undergone several amendments since. Under the purview of the act, the workmen’s compensation policy is a legal liability that requires employers to extend coverage to their employees in face of any injury, accident or death caused out of or during the course of employment. The premium rate of the policy is largely determined by the salary and occupation of the workmen.
Difference between Arising out of Employment & Arising in the Course of Employment
There is a technical different between fatality and accident arisen out of employment and arisen in the course of the employment. The former is a situation wherein, the disease or injury that the workman is asking compensation for is caused due to the risk involved with the nature of work or employment. Whereas, when a workman seeks compensation for an incident that arises during the course of employment it essentially means that injury, accident or death is caused to the workmen while he or she was on duty.
While ensuring the protection and welfare of the employee or workmen is the major component of the policy, its incorporation also provides a protective layer to the employer against expensive lawsuits and unnerving compensation cut outs.
Therefore, workmen compensation insurance policy should be made an imperative part of your business for the following reasons:
- Extends protection to the important asset of your company- the workmen or employee
Irrespective of how small or big your enterprise is, if your workforce is unhappy the productivity of your business will eventually suffer. The backing of fair compensation policy goes a long way towards achieving employee satisfaction and loyalty which is essential for the growth and development of a business. Secondly, if any of your employees gets injured while performing his or her duty, the policy will facilitate treatment, speedy recovery and return of your employee to work.
- It’s the law of the land
In order to avoid any kind of legal penalty or complication, providing workmen compensation policy to employees is absolutely mandatory in the best interest of your business and its prospects. It is the law of the land and should be abided by all means.
- Protects employer against lawsuit
When an employer offers workmen compensation policy to its employee or workforce, the terms of the cover is already defined. This will ensure that there is no ambiguity in the contract and the asset of the employer remains protected against any kind of lawsuit or compensation pay outs.
Statutory liability of the employer covered under the policy is as under:
Table ‘A’ – Indemnity against legal liability to all employees (whether or not coming within the definition of the term Workmen) under the W.C. Act 1923 and subsequent amendment to the said Act prior to the date of issue of the policy, the Fatal Accidents Act, 1855 and at Common Law
Table ‘B’ – Indemnity against legal liability under the Fatal Accidents Act, 1855 and Common Law. (Table ‘B’ policies may not be issued to cover employees who fall within the definition of “Workmen” under the Workmen’s Compensation Act, 1923 as amended)
To put it in simple words, the workmen compensation insurance policy should provide cover to the employee for the following circumstances:
- Permanent total disablement
- Permanent partial disablement
- Temporary disablement
Some major points of exclusions from the workmen compensation policy, although not restricted to these is as below:
- Any injury caused by accident or disease as a result of war or nuclear disaster
- Disease mentioned in Part C of the Workmen Compensation Act-1923
- Fatal or non-fatal injury caused due to the negligence (effect of alcohol or drug) of the workman
- An accident caused due to willful disregard for safety compliances by the workman
- Injury or accident that doses result in fatality or partial disablement after a period of three days.
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