Workers Compensation Act 1923 – What is it?
According to the Employee's Compensation Act, 1923 and Indian Fatal Accidents Act, 1855, all companies in India must ensure that adequate compensation is provided to the workers in case they get injured on the job. The act is particularly applicable to small office set-ups and small manufacturing operations. It ensures that workers are compensated adequately for injuries sustained during their duty.
This act aims to cover two primary objectives:
- It helps employees/workers and their dependents to get adequately compensated in case of an accident that causes a worker's death or disability.
- It mandates employers to compensate their workers if they encounter any illnesses or diseases due to their job.
The compensation to be paid to the worker depends on various factors. It includes the employee's age, average monthly wage or salary, and, the nature of the injury. In cases related to permanent disability or death, the minimum and maximum compensation is usually set beforehand. The employer is liable to pay the compensation to the worker's dependents if the worker is killed on the job.
The Social Security Division under The Ministry of Labour and Employment in India enforces the Workers Compensation Act 1923.
Workers Compensation Benefits
Workers compensation is beneficial for both the workers as well as the company. Providing adequate financial coverage to employees in case of workplace hazards is mandatory for business houses in India. The three main benefits are as follows:
- It helps meet statutory requirements.
- Companies can be under huge liability if an employee is killed or sustains injuries during the job. Workers compensation can thus help protect the organizations.
- The employees and their dependents are financially protected in case of any illness or disability caused. This helps them in taking off the financial burden from their shoulders.
Workman’s Comp Insurance for Small Businesses
The Workmen Compensation Act 1923 led to the formation of Workers Compensation Insurance specially designed for frontline workers. Small businesses need this insurance to adhere to the law. It helps employees get protection against medical and legal expenses in case of workplace injuries.
Various other insurance products cater to different needs of a small business. It includes general liability insurance and employers liability insurance, amongst others. General liability and workers comp insurance are two different types of insurance options.
General liability insurance usually covers third-party claims. In contrast, workers compensation insurance helps protect employees from work-related injuries or illnesses.
A Worker's Compensation insurance policy is essential for businesses to safeguard their finances against high compensation. Having a robust employee benefits policy, including Worker's Compensation Insurance, can help the employer comply with Indian laws and have a competitive advantage in retaining and attracting talent at the workplace.