This article discusses Workmen’s Compensation Insurance Policy and covers Why is it Necessary for Employers to Buy Workmen’s Compensation Insurance Policy?How did Workmen’s Compensation Insurance Policy come into existence? What all is covered under the workmen compensation insurance policy? How an employer benefits from Workmen’s Compensation Policy?
Why is it Necessary for Employers to Buy Workmen’s Compensation Insurance Policy?
As an employer, it becomes your responsibility to offer a safe working atmosphere to your employees. Unfortunately, irrespective of how prudent and diligent you are in the workplace, it is difficult to completely rule out the possibility of workplace accidents. As per the report published in a newspaper, an average incidence of 1,400 fatal and 1 lakh non-fatal accidents were reported in non-domestic places by the Ministry of Labour’s.
In case an employee suffering a bodily injury ordeath during employment, the employer becomes legally liable to pay compensation. Workmen compensation policy safeguards the interest of the employers as well as employees. The policy covers statutory liability of the employer for death or bodily injury caused to employees. It gives compensation to workers and their dependants in case of industrial accident or injury, including occupational diseases, arising out of work and in the course of employment resulting in death or disablement. It is also known as the ‘The Employees Compensation (Amendment) Bill’.
As per the Workmen Compensation Act in India, the contractor or main employer is liable to pay compensation to the employees in case of any mishap in the workplace. This policy helps by offering legal liability coverage and defending employers from an expensive lawsuit filed by employees for the wrong done to them because of the negligence in the workplace.
How did Workmen’s Compensation Insurance Policy come into existence?
The Workmen’s compensation insurance policy is a result of the grand bargain between the business owners and the employees. Business owners were tired of being sued and paying a hefty amount to the injured employees for their negligence. Workers wanted compensation for the injuries caused by the accidents in the workplace or by occupational diseases during the course of employment. The policy came into existence in order to address both the parties. As an employee was hired by a company, he got insured under the Workmen Compensation Policy.And through this policy, the employer covered employees for death, permanent total disablement, permanent partial disablement and temporary disablement during the course of employment.
What all is covered under the workmen compensation insurance policy?
Usually, the benefits offered by the policy depend on the type of policy chosen. Here are some of the main events covered under the workmen compensation insurance policy:
- Death
- Permanent total disablement
- Permanent partial disablement
- Temporary disablement
- Legal costs incurred if any
An employer can also extend the policy coverage to include medical treatment.
Who is a worker under this Act?
Under this Act, workman means any person:
- Who is railway servant as per the Railways Act, 1989 (24 of 1989)] not permanently employed in any administrative, district or sub-divisional office of a railway and not working in any such capacity as given under the Schedule II, or
- a master, seaman or other member of the crew of a ship,
- a captain or other member of the crew of an aircraft,
- a person employed as a driver, helper, mechanic, cleaner or in any other position in connection with a motor vehicle,
- a person employed to work abroad by a company in any such capacity as given in the Schedule II and the ship, aircraft or motor vehicle, or company, as the case may be, is registered in India, or
- Employed in any such capacity as given in Schedule II, whether the contract of employment was prepared before or after the passing of this Act and whether such contract is expressed or implied, oral or in writing; but does not include any person working in the capacity of a member of the Armed Forces of the Union and any reference to a workman who has been injured shall, where the workman is dead, include a reference to his dependents or any of them.
How is the compensation decided?
The compensation to be paid by employers is decided on the basis of the extent of injuries suffered by employees; more severe injuries receive higher compensation. Also, there is a guiding principle, the higher the age of the employee, lower the compensation amount.
Basis of calculation of the compensation amount
Wages are the basis for calculating the compensation amount. It means two workers earning different wages will get different compensation amount even if they both have the same injuries. Under the Act, wages are defined as the benefit which can be measured in terms of money other than travel allowance or provident fund or any other benefit received by the employer during the course of employment.
In case a worker is getting monthly wages lesser than the limit as specified under the Minimum Wages Act, 1948, he/she would consider to be drawing the wages as prescribed by the Act, for calculating the compensation amount.
If a worker contracts any occupational disease the compensation will be computed on the basis of the wages drawn at the time of termination from the job and not on the date of contracting the ailment. In case a worker dies, his/her dependent will receive the compensation.
Exclusions attached to the Workmen’s Compensation Act
Some of the events which are not covered by the insurance policy are:
- Any injury or accident directly linked to war invasions and other perils
- Any injury or accident happens under the influence of drugs and drinks
- If there is a disobey of safety mechanisms
- If an injury or accident doesn’t cause fatal or partial disablement for more than three days
It is not a complete list and there are various other events also which are not covered by the insurer.
How an employer benefits from Workmen’s Compensation Policy?
As mentioned above in the article, the manufacturing units or business companies are enforced to offer suitable working environment. But still, it is recommended to go for a workmen’s compensation policy to prevent your business from legal liability. The cost incurred from the workplace injury is massive. By doing this, it is ensured that if there is some accident caused due to any negligence, then it gets covered under this policy. This policy covers the employer’s legal liability to an unlimited extent. The employer does not have to pay any legal expense if the employee sues him over the work injury.
The Workmen’s Compensation Policy benefits both the employees and employers. The employers are getting benefits because they get legal liability coverage against workplace accidents or illnesses. The employees, on the other hand do not have to pursue employers in the court for any kind of damage. So, the employers should make a smart move by buying Workmen’s Compensation Policy.
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