Monthly Wages Under Employees' Compensation Act, 1923

The Workmen Compensation Act of 1923 was designed to offer financial aid to employees who have sustained an injury because of an accident at their workplace. Under this law, all employees whether they work full-time, part-time, temporarily or casually, are eligible to receive this financial compensation.

Here are some general things that are covered:

• Physical injuries sustained at the time of work owing to an accident

• Temporary disablement

• Permanent disablement (partial or total)

• Death because of an accident at the workplace

• Injury, illness, or death as a result of unsafe work conditions

• Legal expenses incurred by the employee in the aforementioned scenario

• Since its inception, there have been two primary changes to the Workmen’s Compensation Act:

• The law was renamed to Employee’s Compensation Act in 2010

On the 3rd of January 2020, the Ministry of Labour and Employment increased the amount for compensation from ₹8,000 to ₹15,000 for total or partial temporary disability.

Front-line workers who are employed in the following industries are eligible for protection under the Employee’s Compensation Act:

• Railway workers who are temporarily employed and have not been assigned to sub-divisional, district, or administrative offices

• Crew members and captains on an aircraft

• Workers who have been employed overseas as mentioned under Schedule II of the Employee’s Compensation Act

• Workers who have been engaged in construction, mining, dock work, factory jobs and other specified locations as per Schedule II of the said Act

• Individuals who work with vehicles, including mechanics, drivers, mechanics and assistants

• If a worker sustains an injury by neglecting the safety guidelines that have been outlined at the workplace.

• If the injury has caused partial or total disablement for less than three days.

• If the injury or accident occurred when the employee was intoxicated.

A key component in determining the compensation amount that is payable by the organisation to the employee is monthly income. Under Section 5 of the Employee’s Compensation Act, monthly income is considered an amount that is payable for one month of the employee’s service.

Previously, the amount for monthly compensation was ₹8,000 but when the law was amended in 2020, the amount increased to ₹15,000. This revision aims to ensure fair compensation and offer more adequate financial support to employees who are suffering from workplace-related injuries.

This update in the framework for statutory compensation improves the overall protection provided to employees.

Businesses that invest in a workers comp policy can financially secure the workers and their respective families against workplace-related accidents. This insurance coverage is a primary element that helps an employer satisfy their legal obligations under the Employee Compensation Act of 1923.

Typically, a workmen’s compensation insurance policy will cover the following:

• Workplace-related injuries and illnesses

• Accidental injury sustained at the workplace

• Disability cover for temporary, partial, as well as total permanent disability

• Injury worsening due to employment conditions

• Compensation for legal aid with the consent of the company

• Compensation for medical assistance

• Death

For the sake of convenience, insurance providers have enabled the option to buy a workmen's compensation policy online so organisations can easily secure their workforce.

Although offering workmen’s compensation is a statutory liability for businesses to secure their employees, it also comes with unique benefits to the organisation. These include:

• It offers coverage for a host of workplace-related accidents that could cause severe injuries, such as permanent or total disability and even death.

• It secures the employer against any legal liabilities that may arise owing to an accident or fatal injury to an employee at the workplace.

• It offers coverage against medical expenses incurred by the employee. In addition to taking care of the soaring medical bills, the policy also ensures that the family of the injured worker receives appropriate financial aid.

• The compensation that the family receives can help them navigate through the distressing times and provide a replacement for the income of the sole bread-winner.

Every organisation is responsible for the well-being of its workforce. However, this responsibility can be shared when companies invest in a workmen’s compensation policy online.

Providers like TATA AIG offer several types of business insurance in India that can be customised to secure the health of the employees and protect the business against mishaps such as fires, third-party losses, cargo security, etc.

What is the highest monthly wage compensation under the Act?

Under the Employee Compensation Act, the latest amendment outlines :

• 25% of monthly wages for temporary disabilities,

• 60% of the monthly wage or ₹1,40,000, whichever is higher for permanent total disabilities, and

• 50% of the deceased's monthly wages or ₹1,20,000, whichever is higher for death.

How can businesses ensure compliance with compensation requirements?

Organisations can comply with the legal requirements by regularly updating their insurance policies to ensure that they align with the latest legal requirements and compensation limits under the Employees' Compensation Act of 1923.

What if the employer does not offer workmen compensation insurance?

When insurance is not provided, it can lead to legal penalties, fines and additional financial liabilities for accidents at the workplace.