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Workmen's Compensation Policy

Stay compliant with labor law and provide financial coverage for workplace injuries or illnesses, ensuring a safety net for your employees.

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What Is

Workmen's Compensation Policy?

A workers' compensation insurance policy serves as a financial safeguard for employees who get injured at work. In India, employers are mandated by different acts to protect their workers financially. The Workmen Compensation Act of 1923 mandates employers to pay compensation to their employees who work under hazardous situations. Schedule II of this Act makes workmen's compensation insurance mandatory for employers of plantations, mines, factories, mechanically propelled vehicles, construction works, and other unsafe occupations to protect the occupational rights of their workmen. These provisions of the Act are also extended to those who deal with Liquefied Petroleum Gas (LPG) and other such mechanical devices (for example, chefs in restaurants and hotels).

Features of Workmen's Compensation Policy

Compensation Calculation

This policy considers factors like the employee's age, role, and average monthly wage for compensation calculation.

Fixed Rates

Fixed minimum and maximum compensation rates apply for death and disability cases, subject to periodic reviews.

Dependent Compensation

In the unfortunate event of an employee's death, their dependents become eligible for compensation from the employer.

Employee Protection

The enforcement of the Employee Protection Assurance policy falls under the purview of the 'Social Security Division' of the Ministry of Labour & Employment.

Implementation Assurance

Each state government appoints Compensation Commissioners dedicated to the effective implementation of this insurance policy.

Who Needs

Workmen's Compensation Policy?

Companies with a workforce of more than 20 employees are mandated by law to possess this form of assurance. As per the Employees' State Insurance Act of 1948, employers are obligated to extend insurance benefits to their employees. Claims under this assurance can be categorized into four types, namely accidental death, permanent total disability, permanent partial disability, and temporary total disability.

This policy is primarily designed to offer financial security to workers and their families in case of adverse workplace incidents.

You can raise a claim under WC insurance policy by following these steps:

Start by notifying the factory inspector promptly if an accident occurs on your premises.
Follow this up by formally informing the insurance company in writing about the worker's disability or unfortunate demise.
The insurance company will deploy a professional investigator to confirm the veracity of the claim.
Ensure that you provide any documents requested by the insurance company for further validation of the claim.
If you receive a notice from the workmen's compensation commissioner, promptly forward it to your insurance company.
Meanwhile, submit the claim form along with all necessary documentation to your insurance provider.

Why Get

Workmen's Compensation Policy?

Financial coverage for employees who suffer injuries while on duty, ensuring their wellbeing and financial stability.
Most workmen's compensation policies include coverage for not only permanent staff but also for temporary and contract workers, extending the protective umbrella to all your employees.
Acquiring this insurance helps maintain legal compliance within your organization, ensuring you meet all regulatory requirements.
If an injury leaves a worker incapacitated and unable to perform their duties, this policy assures them a consistent monthly income, allowing them to focus on recovery without financial distress.
In the unfortunate event of a work-related fatality, workmen's compensation insurance steps in to provide death benefits, offering essential support to the bereaved family.
Investing in workmen's compensation insurance can shield your business from hefty fines and penalties, promoting financial security and reputation preservation.

Coverages & Exclusions in

Workmen's Compensation Policy

CoveragesExclusions

Workmen's Compensation Insurance facilitates employers to offset the financial responsibilities related to their employees' work-related injuries or illnesses. Here's an overview of the principal protections provided by a standard workmen's compensation insurance policy in India:

Medical Expenses Coverage:

The policy covers medical costs stemming from work-related injuries or illnesses. This includes charges for hospital stays, doctors' consultations, diagnostic tests, medications, surgeries, and other necessary medical treatments. Immediate medical needs, like ambulance services or emergency care, are typically included. The policy may also extend to rehabilitation costs like physical therapy, vocational training, and necessary aids that assist the employee's recovery and return to work.

Physical Injury Coverage:

The policy includes coverage for physical injuries sustained by employees in the course of their employment. This comprises injuries occurring on the employer's premises, during work-related activities, or while traveling for work. The policy also covers associated medical costs, including hospitalization, doctors' fees, diagnostic tests, medications, surgeries, and rehabilitation services.

Death or Disability Coverage:

The policy provides benefits for death or disability resulting from work-related accidents or occupational diseases. Compensation is extended to the dependents or nominees of a deceased employee. If an employee suffers from permanent or temporary disability due to a work-related incident, the policy provides compensation aligned with the degree of disability. It may also cover rehabilitation costs for disabled employees, including medical treatments, physical therapy, vocational training, and assistive devices.

Occupational Diseases Coverage:

The policy extends coverage for occupational diseases as outlined in the Workmen's Compensation Act, 1923 and its amendments. To claim this coverage, the employee must provide medical evidence verifying that the disease is a direct result of their occupation or workplace environment. Upon confirmation, the policy covers the relevant medical costs, including hospital stays, doctors' fees, diagnostic tests, medications, surgeries, and other necessary treatments.

Workmen's Compensation Examples

Incident 1Incident 2

Claim for dead employee in manufacturing company

ABC Manufacturing is a large industrial company that employs hundreds of workers. To protect their employees and comply with legal requirements, they have a workers' compensation insurance policy in place. Unfortunately, one of their workers died because of a mishap in the production unit. As ABC company has an WC insurance in place, the insurer agrees to indemnify the workers family for the accident.

About Workmen's Compensation Policy

What is the workmen's compensation act in simple words?

What is the difference between workmen's compensation and employee compensation?

What are the salient features of the workmen's compensation act?

How is workmen's compensation calculated in India?

What are the rules of workmen’s compensation?

Who is eligible for workmen's compensation?

Where is workmen’s compensation applicable?

What is the process of WC claims?

What can be the maximum claim in WC policy?

Is workmen's policy compulsory?

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This is an article by YouStory written by Palak Agarwal and published on October, 2022

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