Worker’s Compensation Insurance 101: Here’s What You Need to Know

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“If you pick the right people, to whom you present the opportunity to grow professionally with growth in compensation, you almost don’t have to manage them.”

In this increasingly competitive global work environment, workers’ rights have increased dramatically. A crucial part of running a smooth business is to keep your workers safe at work. Worker’s compensation insurance covers loss of wages and medical treatment required because of illness or injuries during work.

The coverage is payable under Workmen’s compensation act, 1923, which is monitored by the Ministry of Labour of India. It gives compensation to workers for bodily injuries or death caused due to work injuries or accidents arising out of or during the course of employment.

What does Worker’s Compensation Policy cover?

It covers many essential items, such as:

  • Bodily injuries occurring during the course of employment
  • Physical injuries or illnesses caused due to work conditions
  • Temporary disability or death during the employment course
  • Total or partial permanent disability

Employers are legally obliged to take reasonable steps to ensure safety in work areas, especially areas that are assessed as dangerous. Accidents happen for numerous reasons, including errors in safety protocols. In case of injuries to workers in such accidents, Worker’s Compensation Insurance can cover the liabilities of the employer.

What benefits do injured workers receive?

Injured workers receive all medical treatments necessary for treating the injury. Apart from this, there are other benefits they receive, such as income replacement benefits based on the disability of the person, whether temporary or permanent in cases of both total or partial disability.

Death case scenarios are also covered, where a worker might die during employment. Certain legal costs are also included with the consent of the company.

construction, worker, concrete
Joko_Narimo (CC0), Pixabay

Why is Workmen’s Compensation Insurance required?

The Workmen’s Compensation Act of India has made it compulsory for companies to buy this insurance policy for its workers to provide a sense of security. The policy protects companies from lawsuits resulting from workplace incidents which have caused harm to anyone. The policy also provides income to the injured workers and compensation in cases of death or significant injuries leading to permanent or temporary disability.

What are the exclusions of Worker’s Compensation Insurance policy?

This policy has some exclusions, including:

  • Injuries occurring when working under the influence of alcohol or drugs
  • Non-fatal injuries caused due to accidents
  • Injuries which don’t result in any disability or fatality exceeding a period of 3 days
  • Initial 3 days of disability where the total disability extends to a period less than 28 days
  • Wilful removal of a safety guard or security system
  • Injuries incurred due to wars, riots, nuclear reaction
  • Employees not considered under the Workmen’s Compensation Act of India

These are the typical exclusions of the policy followed by every insurer.

What is Workmen’s Compensation Act of India, 1923?

This act covers the employees of mines, construction sites, factories, and other hazardous work occupations. As per the guidelines, employers have to compensate employees, or their families in cases of death or partial or total permanent disability occurred due to work environment or accidents.

The compensation amount varies according to the age of the worker and the nature of the injury. The act has fixed maximum and minimum limits for the compensation.

In 2016, our Lok Sabha passed Employees Compensation Bill, which provided compensation security to workers or their dependants from ₹ 50,000 to ₹ 1 lac in cases of occupational illnesses and death or disability.

Workmen’s Compensation Insurance policy has become essential for everyone.

It is a boon for both employers and employees. It gives workers various benefits, which keeps their morale positive for work. Similarly, employers can also stay covered against legal liabilities arising due to any accidents involving workers on site.