Just like a company has a set of responsibilities for an employee, the company has to fulfil some liabilities for its employees too. An organisation is expected to take care of its workers throughout their tenure and even more.
For such reasons, companies provide something called “employee compensation insurance” or “ workmen compensation policy” to their employees in times of crisis.
Read further to know why one actually needs to buy a workmen’s compensation policy online.
What is Workmen Compensation Policy?
Workers’ compensation or employee compensation, often referred to as “workers’ comp,” is a special form of insurance policy designed to provide financial support to employees who sustain illnesses or injuries while performing their job duties.
In this system, wage replacement and medical benefits are provided in exchange for the employee’s relinquishment of the right to sue their employer for negligence. Hence, it is also known as a “compensation bargain”.
Acquiring a WC policy online aims to ensure that workers receive timely compensation while protecting the company from potentially devastating lawsuits resulting from workplace injuries.
What is the Workmen’s Compensation Act 1923?
One of the significant pieces of legislation passed by the Indian Parliament that focuses on protecting workers who face illnesses or injuries while doing their job is the Workmen’s Compensation Act of 1923.
In accordance with this act, employers are required to compensate employees who suffer from diseases, injuries, or disabilities that are directly caused by their work.
Why Employers Should Consider Employee Compensation Insurance
If questions like this- “Why do I need workers comp insurance?” are popping into your mind, here are a few of the reasons:
Brand Image
When you have a workmen compensation policy, your organisation tends to demonstrate a commitment to employee well-being and safety. With this, you can also build trust-worthy relationships with employees, customers, and stakeholders. This positively impacts your brand image, which eventually results in increased loyalty and better business opportunities.
Legal Compliance
There is a statutory obligation under the Employee’s Compensation Act of 1923, for contracts and business agreements to include the workmen compensation insurance. This coverage ensures compliance with legal and contractual obligations, helping to prevent potential disputes and legal issues that may arise from workplace incidents.
Financial Support
One of the primary purposes of workmen compensation insurance is to provide financial assistance to employees who suffer work-related illnesses and injuries. This insurance policy manages substantial medical bills, rehabilitation costs, and even a portion of lost wages during employee recovery.
Sense of Security
There is a mutual strengthening assurance that provides overall workplace stability with an employee compensation insurance. A workmen compensation insurance policy, when acquired through a reputed insurance provider like TATA AIG, offers a real sense of security to the employer knowing that they are fulfilling their legal duties.
For employees, this policy ensures peace of mind regarding financial security and reassurance that they will be supported in times of crisis.
Risk Mitigation
The workmen compensation policy covers any legal costs associated with lawsuits that can be stemmed from work-related injuries and illnesses. Along with this, the employee compensation policy also mitigates financial risks for employers by acting as a safety net in the event of a crisis.
What is Covered under Employees Compensation Insurance?
The Employee’s Compensation Act comes into play when employees suffer the following injuries:
| Scenarios | Compensation |
| Temporary Disablement
(Total or Partial) |
A semi-monthly payment equal to 25% of the employee’s monthly earnings, as stipulated in Section 4(2) of the Employee’s Compensation Act, 1923 |
| Permanent Total Disablement from Injury | An amount equal to 60% of the monthly wages of the injured employee multiplied by the relevant factor, OR an amount of ₹1.4 lakhs, whichever is greater. |
| Permanent Partial Disablement from Injury | – For specified injuries: Percentage of loss of earning capacity as per Part II of Schedule I.
– For unspecified injuries: Proportionate to loss of earning capacity as assessed by a qualified medical professional. |
| Death Resulting from Injury | An amount equal to 50% of the monthly wages of the deceased employee multiplied by the relevant factor, OR an amount of ₹1.2 lakhs, whichever is greater. |
Conclusion
A workmen compensation insurance policy is as important for a company to create a safer and more supportive workplace environment for its employees.
With this, the organisation also benefits by fulfilling its legal compliances creating a reliable brand image, and employee satisfaction which further adds up to the overall organisational success.
