Irrespective of the type or size of your business, employees or workers are the real reason for your success. Therefore, providing a safe and conducive working atmosphere to your employees is indispensable. However, one can’t deny the fact that accidents or injuries can happen in a safe workplace also.
An employer has to provide compensation and other benefits when a worker gets injured during working hours. In certain cases, the injured worker or his/her family may also file legal claims. A workmen’s compensation insurance policy protects your business from costly legal suits and hefty compensation amounts. Employers’ liability insurance is another name for it.
Read More: Things Small Businesses Should Know About Workmen Compensation Insurance Policy
This insurance policy becomes more important for companies with large labour forces or workers like business processing outsourcing, information technology, industrial units, etc. Monitored by the Ministry of Labour, the compensation amount paid to workers in India varies from one company to another.
When does an employer need to compensate the injured employee?
An employer is required to provide coverage to employees if he/she gets injured while performing duties at work under the Workmen’s Compensation Act (WCA). Along with this, the act also makes it important to pay compensation in case of disability.
The WC policy benefits are awarded in the following cases:
1. Death
In the case of the death of the worker, the immediate dependent of a worker becomes entitled to get compensation. Compensation payable is 50% of monthly wages X relevant factor (age-based) as stated in Schedule IV of the Workmen Compensation Act, 1923.
2. Permanent Total Disability
If due to an on-job injury, the worker can no longer perform duties, the employer has to compensate the injured worker accordingly. Compensation payable is 60% of the monthly wage multiplied by the relevant factor based on potential income.
3. Permanent Partial Disability
When an employee has sustained an injury, which makes it difficult for him/her to perform their role in the same capacity for the rest of their career, the employee becomes permanently partially disabled. The nature of the injury and the employee’s loss of earning potential determine the compensation amount.
4. Temporary Disability
The employee also compensates employees rendered disabled for a temporary period due to workplace accident injuries.
Benefits offered to workers under workmen’s compensation insurance policy
A worker’s compensation system offers:
- Replacement income in case employees are off from work
- Payment for medical expenditures like surgeries, doctor’s visits, etc.
- Vocational rehabilitation benefits like providing job placement assistance, job training, etc.
Exclusions under a worker’s compensation cover?
Some of the events excluded by the Workmen Compensation Insurance Policy are as follows:
- Self-inflicted injuries
- Injuries caused due to intoxication
- Injury, an employee, suffers after the job
- Injuries that may happen due to a fight started by the employee
- Injuries caused after termination or layoff of the worker
How can an employer cover its liability under WC Act?
The WC Act makes it mandatory for an employer to pay compensation in case of workplace injuries. Hence, it is necessary for a company to buy a workplace insurance cover to get legal liability coverage against unforeseen events like accidents or disability.
A workmen’s compensation insurance policy offers the following types of coverages –
Table A: Indemnity against legal liability arising due to accidents of employees as per the Workmen’s Compensation Act, 1923 and the Fatal Accident Act 1855.
Table B: It covers indemnity against legal liability under the Fatal Accident Act 1855.
The cost of workplace injury is massive, and by purchasing a workmen’s compensation insurance policy, the employer can secure itself from the hefty claim amounts. Thus, the employer can prevent legal and financial liabilities when an employee suffers injuries.
Read More: Myths Related to Workmen’s Compensation Insurance Policy
What do you need to know about Workmen’s Compensation as an Employer?
Buying a Workmen’s Compensation Policy is beneficial for both employees and employers. Employees can get their lost wages and cover their medical bills with the help of this policy. Employers too can get legal liability coverage as they don’t need to pay the compensation from their pocket at the time of the accident.
Overall, it is a win-win situation for both the employee and employer.
To ensure the safety and protection of each employee/worker you should start considering purchasing a relevant protection plan according to your organisation. Securenow is a tech-focused insurance broker platform where you can compare online insurance quotes and make the right choice for your employees’ well-being.
About The Author
Rahul Kumar
MBA Finance
With a wealth of experience in the insurance industry, Rahul is a seasoned writer specializing in articles related to workmen compensation policies (WC policies) for SecureNow. With 12 years of experience in the field, he has acquired in-depth knowledge and expertise in workmen compensation insurance, understanding its complexities and nuances. Their insightful articles provide valuable insights into the importance of WC policies for businesses and employees alike, offering practical advice and guidance on navigating the intricacies of insurance coverage. Trust him to deliver informative and engaging content, backed by years of experience and a passion for educating readers about insurance-related topics.
