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Things You Should Know About Workmen Compensation Policy in India


Summary

WORKMEN COMPENSATION

Workmen Compensation policy premium calculator takes into account the minimum monthly wages of the employees and the number of employees. In addition to this, the workmen compensation policy premium calculator also takes into consideration the occupation of the employees. Workmen’s compensation policy can be purchased online with ease and better discounts can be obtained. 

What is Workmen’s compensation policy? 

Workmen Compensation insurance is a type of insurance policy that is taken by the employer to provide compensation to the employees in case of injury, disability, or death at the workplace or during the course of employment. Workmen’s compensation policy is also known as labour insurance in India which is the informal terminology used in the insurance market. 

Workmen Compensation act, 1923 is an act which mandates the employers to pay compensation to their employees for workplace related accidents or illnesses. The main objectives of this act is to provide compensation to the employees in case of any illness or disability during their course of employment at the workplace. The employees or their family members would be provided with compensation depending on the nature of the disability or death and the employees would get compensation in case of workplace related illnesses also known as occupational diseases. 

The fatal accidents act also mandates the employer to pay certain compensation to the kin of the employees meeting with fatal accidents at the workplace or during the course of employment. If any employee is injured during the workplace or during the course of employment then it is the responsibility of the employer to take care of the employee by paying a certain amount under the above mentioned acts. It would not be possible for the employer to provide compensation in each and every case to the employees as the resources and capabilities of the employer would be limited. To address this issue the employers can take Workmen’s compensation policy which provides compensation to the injured or disabled employees during the workplace or during the course of employment. 

For example you are a building contractor taking contracts and constructing houses or apartments. You will be employing daily labour who will be working with you till the competition of the project. Since the nature of the job is highly risky, there might be a chance of accidents during the course of employment or at the workplace. If any worker falls from a height and is injured then it would be your responsibility to make good of the worker by providing him compensation of a certain amount. If you had taken a Workmen’s compensation policy this competition would have been paid by the insurance company on behalf of you. Your liability can be shifted to the insurance company upon purchase of Workmen’s compensation policy. 

Who Should Take Workmen Compensation Policy?

The workmen compensation policy can be taken by any employer running a business in India and registered under the companies act. The Workmen’s compensation policy can be taken by the employer to cover employees working in unorganized sectors such as factories, construction sites, mines, plantations etc.

Workmen’s compensation policy benefits can also be taken by any employer involved in any occupation. But it is more beneficial and necessary for employees involved in hazardous activities. The policy can be taken by IT companies to cover their liability but the chance of getting injured at an IT workplace is less when compared to the chance of getting injured in a Chemical factory or Manufacturing company. 

The most suitable policy for IT companies would be group health insurance as well as group personal accident insurance policies which would be more beneficial to the employees working in IT companies. The chance of developing occupational diseases in the IT sector is very low when compared to a hazardous industry such as the cement manufacturing industry. 

In general, the Workmen’s compensation policy can be taken by any employer running a business and employing people on a daily wage or monthly salary. The policy should be taken by Contractors such as Building contractors, and road contractors who employ daily laborers. Since the nature of work is highly risky it is advisable to take a Workmen’s compensation policy for these workers. 

Compensation payable under Workmen’s compensation policy: 

The compensation under the Workmen’s compensation policy would be decided by the workmen commission or the labour court. The workmen compensation law would be enforced by the government of India through labour inspectors from the social security division under the Ministry of Labour. The inspector would receive a claim regarding any illness or accident in the workplace. 

The inspector would then carry out an investigation regarding the nature of the accident and the loss to the employee. The matter is then decided by the labour court based on the pre-fixed formula which is mentioned below:-

  • Death of the worker: 50% of the worker’s monthly wages multiplied by the age factor or other relevant factor or ₹ 1,20,000 whichever is higher.
  • Permanent total disability: 60% of the worker’s monthly wages multiplied by the age factor or other relevant factor or ₹ 1,20,000 whichever is higher.
  • Permanent Partial Disability: Percentage of disability multiplied by age factor or any other relevant factor. 
  • Temporary total disability: 25% of the employees’ monthly wages. 

Difference between Group health insurance and Workmen’s Compensation?

The main difference between the Workmen’s compensation policy and the Group health insurance policy is that the former provides compensation to the employees in case of an injury or death or illness due to occupational diseases. Group health insurance policy on the other hand provides compensation to the members in case of illness, disease or accident. The policy doesn’t pay for the death of the members of the policy whereas the Workmen’s compensation policy pays for it. 

Group health insurance policies are neither mandatory nor the employer’s legally liable to provide health insurance coverage due to illness or diseases but an employer is legally liable in the case of the workmen compensation policy.

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Susheel Agarwal

Namaste. I'm Abhinay Nedunuru, a Fellow of the Insurance Institute of India with a passion to make insurance simple and crisp. I write mostly on insurance and investment. I have a passion for teaching and training in particular to insurance. I'm currently doing my PhD from IIM in Marketing Management.