Workmen’s Compensation Online

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Workmen’s Compensation Online

Cover your statutory liability

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What is workmen’s compensation (WC) policy?

The Workmen's Compensation policy provides payment for legal compensation to Employees or their dependants in case of injury and accident of the employees at workplace (including certain occupational disease) arising out of and in the course of employment and resulting in disablement or death.

Let’s start with an example

An employee who is 25 years of age with monthly salary of Rs 20000/- dies due to personal injury that is caused by an accident arising out of and in the course of employment, his/her employer will be legally liable to pay compensation of Rs 16,26,825/- to the legal heir of the demised employee under the provision of workmen’s compensation act.

Note: The Act restrict the employer’s liability to the maximum of Rs 15000/- per month wages

Death Claim Calculations

  • 50% of Rs 15000 (monthly salary) = Rs 7500
  • Factor for Age 25 = 216.91 (pls refer the table given below)
  • Compensation Payable by Employer= Rs 7500 X 216.91 = Rs 16,26, 825/- & additional Rs 5000/- payable as funeral expenses.

In the absence of WC policy, the employer is liable to pay the claim. Similarly for Permanent Total Disability, Permanent Partial Disability and Temporary Total Disability of any employee arising out of and in the course of employment, the Employer has a legal liability to pay the compensation.

Is workmen compensation policy compulsory?

In India, Workmen Compensation Insurance is mandatory under the Workmen Compensation Act, 1923 for manufacturing companies, mining companies, construction companies, transport undertakings, factories, plantations, etc, having more than 20 workers, to protect the rights of employees.

Who comes under workmen compensation?

Every employee (including those employed through a contractor but excluding casual employees), who is engaged for the purposes of employer's business and who suffers an injury in any accident arising out of and in the course of his employment, shall be entitled for compensation under the Act.

Who is eligible for workmen compensation policy?

Therefore, employers of firms who engage “workmen” as defined by the Workmen Compensation Act, 1923 can buy the WC policy. Thus, organizations that engage the services of labourers, drivers, and construction workers can buy and claim WC benefits.

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

The policy covers statutory liability of an Employer caused to employees due to accidents arising out of and in the course of employment for

  • Death
  • Permanent total disablement
  • Permanent partial disablement
  • Temporary disablement
  • Policy can also be extended to include medical expenditure for necessary treatment

Amount payable under workmen’s compensation policy?

Death

50% of the Monthly Wage x Relevant factor* as per the age of the worker. Funeral expenses of Rs. 5000 is also payable. The minimum amount payable is Rs. 120,000

Permanent Total Disability (PTD)

50% of the Monthly Wage x Relevant factor* as per the age of the worker. The minimum amount payable in this case is Rs. 120,000

Permanent Partial Disability (PPD)

Percentage of the worker’s compensation will be payable under PPD. This percentage needs to be estimated based on the “extent of the reduction in earning capacity” of the worker.

Temporary Disability (Total or Partial)

25% of the Monthly Wage of the Worker payable every half month. The compensation is payable if the worker is disabled for more than three consecutive days. The maximum tenure for the compensation is five years

What are the exclusions under the policy?

The Insured's liability to contractors’ employees (unless specifically declared and covered) Any liability of the Insured which attaches by virtue of an agreement but which would not have attached in the absence of such agreement.

An injury that doesn't' result in partial or total disablement for a period of more than 3 days.

NOTE: Please refer policy wordings for detailed coverage, exclusions and conditions.

Relevant factor claims

Age Factor Age Factor Age Factor Age Factor
16 228.54 29 209.92 42 178.49 55 135.56
17 227.49 30 207.98 43 175.54 56 131.95
18 226.38 31 205.95 44 172.52 57 128.33
19 225.22 32 203.85 45 169.44 58 124.7
20 224 33 201.66 46 166.29 59 121.05
21 222.71 34 199.4 47 163.07 60 117.41
22 221.37 35 197.06 48 159.8 61 113.77
23 219.95 36 194.64 49 156.47 62 110.14
24 218.47 37 192.14 50 153.09 63 106.52
25 216.91 38 189.56 51 149.67 64 102.93
26 215.28 39 186.9 52 146.2 65 99.37
27 213.57 40 184.17 53 142.68
28 211.79 41 181.37 54 139.13

Claims procedure under workmen compensation act

  • 1.Your insurance company must be informed about the accident (disability or the death) of an employee.
  • 2.The factory inspector or supervisor must be informed, if the accident takes place in a manufacturing unit or factory.
  • 3.Any supporting documents or other relevant information as mentioned below should be provided to the insurer.
  • 4.Reach out to the workmen compensation commission and deposit the compensation claim that the employee is entitled to.
  • 5.The commission would provide you with a receipt of the claim, the same must be passed on to the insurer.
  • 6.WC commissioner might send a notice to the employee or the employer, the same must be handed over to the insurance company.
  • 7.Insurance companies usually have investigators to look over the claims, you might need to cooperate with the investigator.

Primary Documents for Claims

  • 1.Claim Form filled up and signed
  • 2.Any investigation report that the insurer requires
  • 3.A declaration form to be signed and filled up
  • 4.Any supporting documents as requested by the insurer
  • 5.Bills pertaining to the claims

Additional Documents Required

Disability claims (Temporary)

  • 1.All medical bills related to the treatment and hospitalisation
  • 2.A medical certificate that mentions the cause of the disability and the anticipated duration of recovery

Disability Claims (Permanent)

  • 3.Agreement papers between the injured worker and their employer as per the rules laid out by the Workmen Compensation Act
  • 4.A medical certificate citing the disability and that it is permanent

Death Claim

  • 1.A copy of the death certificate of the worker
  • 2.A copy of the post-mortem report of the worker in question
  • 3.Statement of witnesses if any available
  • 4.Workmen Compensation Act’s Form A duly filled and signed by the insured or employer in this case
  • 5.A copy of the First Investigation Report or FIR

What laws/Acts govern compensation for workplace injuries by employers?

Employee’s State Insurance Act, 1948

Compensation for EMPLOYEES in India varies depending on the size of the company. If the business employees more than 10 OR 20 (depending on the state you are operating in) employees, the Employees’ State Insurance Act, 1948 applies. Under this act, employees and the company pay toward an insurance benefit in case of injury. When a workplace injury occurs, the injured employee is able to avail of both medical and financial support. The employees earning upto Rs 21000 per month (gross salary) are covered under this ESI Act. Show More


Employees’/Workmen’s Compensation Act, 1928

The Act deals with compensation for workers who are injured in the course of duty. The scheme of the Act is not to compensate the employee in lieu of wages. The general principle is that an employee who suffers an injury in the course of his employment, which results in a disablement, should be entitled to compensation and in the case of a fatal injury his dependants should be compensated. Under the Employee’s Compensation Act, it is the employer who is responsible to pay compensation (as opposed to the employees State insurance. Establishments to which the Employees’ State Insurance Act applies, the liability to pay compensation is on the ESI corporation). Show More

The compensation to be paid by the employer for injuries caused depend on extent of the disablement suffered by the worker; more severe disablements naturally receive higher compensation.

Liability under Fatal Accidents Act, 1855

As per Section 1A of the Act, whenever the death of a person shall be caused by wrongful act, neglect or default, and the act, neglect or default is such as would (if death had not ensued) have entitled the party injured to maintain an action and recover damages in respect thereof, the party who would have been liable if death had not ensued, shall be liable to an action or suit for damages, notwithstanding the death of the person injured and although the death shall have been caused under such circumstances as amount in law to felony or other crime. Show More

Under the Act a suit for damages can be instituted by wife, husband, parent and child, if any, of the deceased person. Under the Act compensation awarded for loss of dependency is worked out by applying the principle of multiplier is a part of damages “proportioned to the loss resulting from the death”.

Liability under Common law

If bodily harm or death of an employee is caused by another employee during the course of his employment, employer can be held vicariously liable, under the respondeat superior doctrine, for negligent acts or omissions by their employees in the course of employment. For an act to be considered within the course of employment it must either be authorised or be so connected with an authorised act that it can be considered a mode, though an improper mode, of performing it. A tort can be instituted against the employer by the legal heirs of the deceased for seeking adequate damages on the ground of loss of livelihood. Show More

Premium calculations for workmen’s compensation policy?

Factors for Arriving at Premium
Period of Insurance Valid for Contract work
Classification Employees Each Job is described in WC Act and different classification has different premium rate under WC policy
Total Salary/Wages Under each classification of Job, the total Salary/Wages to be calculated upto Rs 15000/- for each employee and the final premium is arrived at after adding premium for all classification
If Medical Extension is opted Medical Extension can be at actual expenses incurred or can be limited to an amount per person. The premium rate will differ based on the amount of medical extension provided

Difference between employees' state insurance act & workmen’s compensation act

Social Security Acts for Employees Employees' State Insurance Act, 1948 (ESI Act) Workmen’s Compensation Act, 1928
What does Act Say? The Act deals with compensation for workers (any work) who are injured in the course of duty. All employees of any organisation earning upto Rs.21000 /-salary per month. Irrespective of nature of work should be covered under this scheme Every employee (including those employed through a contractor but excluding casual employees), who is engaged for the purposes of employer’s business and who suffers an injury in any accident arising out of and in the course of his employment, shall be entitled for compensation under the Act. The act provides category of employees who can be classified as workmen.
Eligibility Organizations/ factory. The organization employs more than 10 employees (more than 20 in some States). Monthly wage for the employees is not more than Rs. 21,000 (w.e.f. 1st Jan 2017). Applicable to Indian workforce only. Currently not applicable to Manipur, Sikkim, Arunachal Pradesh, and Mizoram.

Any organisation employing persons in menial jobs (other than clerical capacity). Any number of such workers employed.

Also, applicable to workers employed in foreign countries by Indian employers Applies across India.

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