Business insurance
How is workmen’s compensation calculated?
Under the Code on Social Security, which now carries the Employees’ Compensation law, compensation for death at work is 50% of the worker’s monthly wages multiplied by a relevant factor based on age. For permanent total disablement it is 60%. Temporary disablement is paid half-monthly at 25% of wages, from day 16, for up to five years.
In short
- Death: 50% of monthly wages × a relevant factor based on age.
- Permanent total disablement: 60% of monthly wages × the relevant factor.
- Temporary disablement: half-monthly at 25% of wages, from day 16, up to five years.
- Old fixed minimums still quoted online have been replaced.
What law decides workmen’s compensation now?
The Code on Social Security, 2020, which now carries Employees’ Compensation. It replaced the old Employees’ Compensation Act. The law sets what an employer must pay when a worker is injured or killed in the course of work, and a workmen’s compensation policy pays it on the employer’s behalf.
The formulas, side by side
| Outcome | How compensation is worked out |
|---|---|
| Death | 50% of monthly wages × the relevant factor |
| Permanent total disablement | 60% of monthly wages × the relevant factor |
| Permanent partial disablement | A share of the permanent total figure, by the loss of earning capacity |
| Temporary disablement | Half-monthly payments at 25% of wages, from day 16, for up to five years |
The relevant factor comes from a schedule in the law and falls as the worker’s age rises, so younger workers’ families receive more.
Are the old minimum amounts still valid?
No. Fixed minimum amounts that are still quoted online have been replaced by an amount the government notifies. Use the current notified figure, not an old one from a website, when estimating compensation.
Why does this matter for an employer?
Because the liability is statutory and can be large. Without a policy, the employer pays from its own funds. With one, the insurer pays the compensation the law requires, so the employer is not exposed on the day of an accident.
Frequently asked questions
How is compensation calculated for death under workmen's compensation?
50% of the worker's monthly wages multiplied by a relevant factor based on age, under the Code on Social Security.
How is compensation calculated for permanent total disablement?
60% of monthly wages multiplied by the relevant factor.
What is the relevant factor in workmen's compensation?
A number from a schedule in the law, linked to the worker's age. It is higher for younger workers.
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A note on this page. Everything here is general information, not legal advice, and nothing is an offer. Statutory formulas are as understood at the review date under the Code on Social Security, 2020, and must be checked against the notified rules before relying on them. For advice about your situation, talk to us.