Workmen Compensation

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Workmen’s Compensation: What you need to know as an Employer 

A worker was killed, and four others were injured during a mishap at a private stainless-steel plant in Jaipur.

Irrespective of the type or size of your business, employees or workers are the real reason for your success. Therefore, providing a safe and a conducive working atmosphere to your employees is indispensable. However, one can’t deny the fact that accidents or injuries can happen at 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 amount.  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 labor 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 the compensation in case of disability.

The WCA policy benefits are awarded in the following cases:

1. Death

In the case of 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 determines 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 expenditure 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 which 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 lay off 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 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 workmen compensation insurance policy, the employer can secure itself from hefty claim amount. Thus, the employer can prevent legal and financial liabilities when an employee suffers injuries.

Read More: Myths Related to Workmen’s Compensation Insurance Policy

Workmen’s Compensation: What you need to know 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.

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