The Employee's Compensation Act, 1923 is one of the important social security legislations. Employees’ compensation policy cover the statutory liability of the insured from on-the-job injuries, fatalities and work related illnesses suffered by insured’s employees in the course of employment. Employees or Workmen compensation insurance is essential for every employer having employer-employee relationship.
Right of Employees:
An employee can sue the employer for injury arises out of an accident at workplace. If an employer has workmen compensation/ employee’s compensation insurance then policy would cover the legal defense cost. Policy would also pay the compensation decided by the court and the local authority which generally consists of cost of lost wages, medical expenses arising out of injuries or disabilities, and other related costs.
Limit of Compensation:
The sum insured is determined on the basis of number of employees and total number of claims that may arise during the period of insurance. Compensation payable to any employee or workmen for certain cases is defined in the Workmen Compensation Act, 1923.
Filing a Claim:
In case of an accident at the work site, employer should immediately inform the insurer about the incident and also intimate the local labour authority of the area. Next step is to submit the required documents such as claim form, medical reports, and compensation records to the insurer.
Amount of Compensation:
The amount of compensation payable to a workman depends on the death or nature of injury caused by accident the monthly wages of the workman concerned and the relevant factor. The Relevant Factor is specified in schedule IV of the Act for working out the lump sum amount of compensation. There is no distinction between an adult and a minor worker with respect to the amount of compensation e.g.:
1. For Death:
INR 120000/- or 50% of the monthly wages multiplied by the relevant factor (age based factor as per the schedule IV of Workmen Compensation Act) – whichever is higher.
2. For Permanent Total Disablement:
INR 140000/- or 60% of the monthly wages multiplied by the relevant factor (age based factor as per the schedule IV of Workmen Compensation Act) – whichever is higher.
3. For Permanent Partial Disablement:
Compensation is calculated same as that of the partial total disablement, but on a pro rata basis depending on the percentage of loss on earning capacity.
4. For Temporary Disablement:
Compensation will be paid on half monthly basis which equals to 25% of the monthly wages. Compensation will be paid for 5 years or till the period of disablement- whichever is earlier.
Legal Responsibility:
For any business, it is a legal responsibility to compensate the employees in the event of any fatalities or injuries suffered due to workplace accidents or on contracting occupational illness in the course of employment. But, along with all the necessary safety measure it’s also important to have Employees compensation coverage in place to protect the business from statutory liabilities and costly lawsuits that may arise due to an unfortunate event.
The amount of compensation is not payable to the workman directly. It is generally deposited along with the prescribed statement, with the Commissioner who will then pay it to the workman.
