Workmen Compensation Policy
According to the Workmen's Compensation Act, 1923, and Fatal Accidents Act, 1855, an employer is legally bound to pay compensation to employees for bodily injury, disability or death caused due to accidents during employment and for occupational hazards of a job.
Workers from the age of 16 years and above are eligible for the compensation. Maximum Monthly Wage Allowed for purposes of calculation of compensation under the Act is INR 8000. The component of wages that exceeds 8000 is calculated by insurers at a different rate.
A third-party liability cover doesn't insure your business's liabilities towards the employees, so Workmen’s Compensation insurance cover is necessary. A workmen's compensation policy covers all monetary liabilities an employer is legally required to cover.
The payouts of a workman compensation policy is set by law. Here is how workman compensation pays out:
In Case of Death
- 50% of the Monthly Wage times Relevant factor as per the age of the worker.
- Funeral expenses of INR 5000 is also payable.
- The minimum amount payable is INR 120,000.
In case of Permanent Total Disability (PTD)
- 60% of the Monthly Wage times the Relevant factor as per the age of the worker.
- Minimum amount payable in this case is INR 140,000.
In case of Permanent Partial Disability (PPD)
- A percentage of the compensation payable under PTD. This percentage needs to be estimated based on the “extent of the reduction in earning capacity” of the worker.
In case of 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.
The Schedule IV of Workmen (now Employee) Compensation Act specifies a relevant factor with which to multiply wages. Age in this schedule refers to the age of the workman is the age as on the last completed birthday before the policy was issued. The factors for various age ranges are given below: