What is Workmen Compensation [Explained in Details]
Updated on Mar 20, 2023 | 7 min read | 7.3k views
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Updated on Mar 20, 2023 | 7 min read | 7.3k views
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Employees have valued assets in any organisation. Safeguarding their welfare helps organisations to achieve success and realise the smooth functioning of most of their operations. Taking care of the employees and their dependents in the event of a fatal accident at the workplace is one of the best practices to ensure their welfare.
A workplace injury can result in critical long-term physical and monetary losses, which is what the worker’s compensation or the Workmen’s compensation covers.
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Let’s dive in to understand more!
The Workmen’s Compensation Act, 1923 (also referred to as the Compensation Act or WCA in some states) is a federal law that orders employers to compensate their workmen or employees for a work-related accident, injury, illness, or fatality. This act resulted in the creation of a distinctive type of insurance for frontline employees.
According to this act, employers should provide compensation to their workers who encountered injuries that resulted in disablement or demise during employment. It guarantees that workers are sufficiently compensated during such cases in the line of duty.
The Workmen’s Compensation Insurance Policy is created to ensure that employers are liable to compensate the workers/employees in the situation of an injury at the workplace. The act guarantees that the workers’ rights are maintained even after they meet some disability or demise due to an accident during their work.
The Workmen Compensation policy is significant for businesses, too, since it protects them against the threat of a high compensation amount as well as additional lawsuits. Specifically, this holds true for companies in which employees are prone to severe health and life hazards.
The compensation amount depends on various factors like the employee’s age, the type of injury, and average monthly salary. But, the maximum and minimum compensation is fixed for cases associated with death or permanent disability. If an employee is killed on the job, the employer should compensate his/her dependents.
Two key objectives of this act are:
A workmen’s compensation policy benefits both employers and employees. Here are the reasons justifying why all employers should get a workmen’s compensation insurance policy.
The (Workmen’s Compensation Fund) WCF was established by abiding by the Workmen’s Compensation Act. The workmen compensation fund aims to substitute the employer’s liability and to provide swift and unbiased protection against disease, injury, death, or disability resulting from employment.
The employer is responsible for contributing exclusively to the workmen compensation fund WCF per year, just like the insurance premium. The employees are entitled to get compensation benefits that cover monthly indemnity, medical services, funeral grants, and rehabilitation in the event of employment-related causes.
The following types of frontline workers are covered under the Workmen Compensation policy:
The steps involved in filing the workmen’s compensation claims are mentioned below:
As per Section 3 of the Workmen’s Compensation Act, an employer is responsible for compensating for damages to its workers under the below conditions:
The following guidelines should be followed for calculating workmen’s compensation injury.
The process of calculating workmen’s compensation must be done as per the provisions set under Section 4 of the Workmen’s Compensation Act.
Note: As per the new rule stated by the government, the wage considered for calculation under this act is INR 15,000/-. The relevant factor is provided in Section IV of the Act.
The maximum term for the compensation is five years.
25% of the worker’s monthly salary is to be paid every half month.
The compensation is paid only if the worker is disabled for over three successive days.
The employer who employs “workmen”, as stated in the Workmen’s Compensation Act, 1923, can purchase this Workmen’s Compensation Policy. The employees who aren’t defined as “workmen: in the Workmen’s Compensation Act can be compensated under “Table B Workmen Compensation Policy”.
The following list shows examples of employers who can buy Workmen Compensation Insurance Cover:
The Workmen’s Compensation Act, 1923 is a step forward toward ensuring employees’ welfare at the workplace. Since the states write the rules, several exemptions and exceptions may exist. The best way to comprehend an in-depth understanding of this act is to apply to a legal program, and upGrad enables you to do so!
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