Social Security and Workers Compensation in India

What is Social Security?

According to the International Labour Organization (ILO), social security is a human right, protection that society provides to individuals against certain social needs and life risks. Effective social security systems provide health protection and income security, thus, contributing to national development and wellbeing.

Social security positively impacts all levels of society. For workers and employees, it provides access to affordable and quality healthcare thereby protecting their income. Social security can help employers and businesses maintain a steady and productive workforce. It thus translates into building social peace, and overall growth of the organization and the country as a whole.

Social Security and Workers Compensation in India

As per The Code on Social Security, 2020 (“SS Code”), social security draft measures to protect employees, including unorganized workers, to ensure they get access to affordable health care, and to provide income security (mostly in cases of old employees) during unemployment, sickness, work-related injury, maternity or death of an employee. 

The SS Code 2020 was passed in September 2020 and forms a part of the labour reforms in India. It merges some of the existing social security laws and attempts to include an unorganized workforce within the realm of social security.

Some of the social security instruments include:

- Gratuity benefit

- Workers Compensation/ Employees Compensation

- Maternity Benefits

- Employee Provident Fund

- Employees Liability

- Employees State Insurance

Workers compensation forms a part of India’s social security system. The Workers Compensation Act 1923 is a compensation act where the employer is required to financially compensate his employees and workers in case of any workplace-related accident leading to an injury or death. 

In such situations, employees and their dependents shall receive financial support. Employers are also entitled to compensation for occupational diseases caused due to working conditions or on the job. Workers compensation is a legal liability of an employer, and it protects employees/ workers from huge financial costs.

Workers Compensation Insurance

Workers Compensation Insurance, more commonly known as employee compensation insurance is a commercial insurance policy. It covers the employer's legal liability towards its employers and provides compensation in case of an accident that injures or results in the death of the employee during employment. It also covers diseases caused or aggravated due to employment conditions. Consider this example, if a worker fractures his leg in the factory while operating machinery, a workmen compensation policy can help the employer pay for the treatment as compensation.

Workers Compensation Insurance is advantageous for both the workers and the employer. Paying adequate compensation to employees in case of workplace hazards is mandatory for business houses in India. It offers the below benefits:

- Protects employees financially in case of illness or disability

- Helps reduce financial loss to the company

- Helps your business abide by the Workmen's Compensation Act, 1923.

- Safeguards your business from lawsuits arising from work-related injuries

- Once the claim is settled, the injured worker cannot seek additional compensation

Conclusion 

In today’s globalizing world, individuals are exposed to higher health and financial risks, social security and workers compensation play an important role in contributing towards building a strong nation with sustainable gains. Having a robust social security benefit like workers compensation insurance can help the employer comply with the appropriate applicable laws, and gain a competitive advantage during the employee hiring and retention process.