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Know your insurance rights as employees

By Swati Kedia
July 06, 2009 12:29 IST
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What happens if your employee is injured while working under your roof? What if it is proved to be your negligence that caused her/him harm? Will you sweep the entire thing under the rug and pray it never reveals its ugly head again. But what if the employee decides to exercise legal recourse? How much mental agony apart from the financial burden will it create for you? Are you ready to face this? If not then you can fall back on a mundane but necessary insurance policy, which is 'Workmen's Compensation Policy'.

What is 'Workmen's Compensation Insurance Policy'?

The Workmen's Compensation Insurance in its uncomplicated and simplest form is an insurance that provides for the payment of compensation by the employer to his employees if personal injury is caused to them by accidents arising out of and in the course of their employment, in exchange for mandatory relinquishment of the employee's right to sue her/his employer for the tort (legal term meaning a wrongful act that does not include a breach of contract or trust) of negligence.

The Workmen's Compensation Insurance is the primary method by which any employer, whether as a principal or contractor, engaging 'workmen' as defined in the Workmen's Compensation Act or any employer of employees who do not qualify as 'workmen' but share an employee-employer relationship, can demonstrate the ability to satisfy the obligations imposed by the worker's compensation statutes.

It is compensation payable under a scheme set out in the Workmen's Compensation Act of India, monitored by the Ministry of Labour.

When is the compensation payable under this policy?

The Indian Workmen's Compensation Act 1923, The Fatal Accidents Act 1855 (including subsequent amendments of the said Acts) and Common Law provides for compensation payable to employees under following circumstances (as per W.C. Amendment Act 2000):

  • Where employment injury results in death
  • Permanent total disablement
  • Permanent partial disablement
  • Where more than one injury is caused by same accident, it shall be aggregated; but in any case compensation won't exceed the amount payable for permanent total disablement
  • Temporary disablement (compensation will be in accordance with the provisions of the W.C. Act)
  • Actual medical expenses incurred in connection with on-duty injury/fatality
  • Legal costs and expenses incurred with the company's consent

What can employees get under the provisions of the W.C. Act?

  • Weekly payments in place of wages (functioning in this case as a form of disability insurance)
  • Compensation for economic loss (past and future)
  • Reimbursement or payment of medical and like expenses (functioning in this case as a form of health insurance) and
  • Benefits payable to the dependents of workers killed during employment (functioning in this case as a form of life insurance)

What are the exclusions under this policy?

  • Any injury by accident or disease directly attributable to war invasion and like perils
  • Liability towards the contractor's employees
  • Any liability attached due to an agreement, which would not have attached in the absence of that agreement
  • Any sum which the insured would have been entitled to recover from any party but for an agreement between the insured and party

To conclude, I would like to say that, as the world progresses to a faster pace of life, the dangers lurking behind every corner increase exponentially. For every organisation there is always that remote possibility of harm to their workmen and also the liability to be prosecuted for that one miniscule negligence. Workmen' Compensation Insurance is the easiest and cheapest way to keep your organisation tarnish free, while having the unions and their leaders at bay.

The author is a certified financial planner.

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