Reasons why business require workmen compensation policy

The Workmen Compensation Act 1923 is an employee compensation act that makes it mandatory for certain classes of employers to compensate employees/workmen for any injury/illness. The act helps employers pay compensation within the Workmen Compensation Act India, which the Ministry of Labour and Employment monitors.

The act is also crucial for workers as it helps them and their dependents get compensation for injuries/accidents caused at work or because of the nature of the work that might result in disability or death. Moreover, the Workmen's Compensation Act also mandates that employers pay compensation to workers if they come in contact with any specific occupational disease during that employment.

The Workmen's Compensation Act provides coverage to people working in construction mines, plantations, factories, mechanically propelled vehicles and other hazardous workplaces. The compensation that needs to be paid depends on various factors, such as the workmen’s age, the nature of the injury and the monthly wage/salary paid to employees.

Moreover, the maximum and minimum compensation rates are fixed for an employee's demise or disability and subject to timely revisions. In case the employee passes away, the employer has to pay the compensation amount to the employee's immediate dependent.

Also Read: Workmen Compensation Insurance for Small Business

-Workers Comp Insurance for Independent Contractors

After understanding the Workmen's Compensation Act, let us now understand whether or not it provides coverage for independent contract workers. Most worker's compensation policies do not provide coverage for independent contractors unless these workers are separately covered or have a declaration made.

However, if any independent contractor is injured or disabled during employment, they have the right to press charges against the employer and take them to court. If it is proved in the court that the injury or disablement happened due to the employer's negligence, then the employer has to pay proper compensation to the independent contractor.

A workmen's compensation policy is commercial insurance that provides coverage for legal liability towards employees. It does this by providing necessary compensation to an organisation's workers for their injury, disability or demise during employment.

Also known as the employee compensation policy, this insurance helps employers/ organisations to fulfil their obligations as imposed under the Workmen Compensation Act.

Also Read: How to Apply for Workers Compensation?

Workmen's Compensation Insurance is crucial for businesses in India due to various reasons. Let us understand them:

-Legal Compliance

It is legally mandated under the Employee’s Compensation Act 1923 that every business with 20 or more employees needs to provide employees with compensation. The compensation is for work injuries or illness. That is why investing in workmen's compensation insurance is a wise decision for businesses to avoid penalties and follow employment laws.

-Overall Protection of Employees

Employees are the backbone of any organisation and need to be protected at all times while they are working for the organisation. Having a workmen's compensation policy helps provide them with comprehensive protection.

Certain jobs or situations might risk an employee's health or life, and having this insurance is a boon for both the employee and employer. For the employee, it is a safety shield against financial loss, and for the employer, it is legal compliance.

Also Read: How Does Workmen Compensation Injury Settlement Work
-Coverage For Employer’s Liability

Every employer has the ethical responsibility to provide coverage to their employees for work-related injuries, disabilities or death. A workmen's compensation policy provides cover for the liabilities that arise due to such incidents. It helps employees cover their daily necessities and basic finances during emergencies.

-Reduced Lawsuits Against Organisation

Organisations need workers' comp insurance to avoid costly and time-consuming lawsuits. Workmen's compensation insurance operates on a no-fault basis. This means that the employee will receive compensation regardless of who is responsible for the injury, disability or death.

-Financial Security for Employees

Employees' lives depend on the finances earned through their salaries. When any work-related injury renders them disabled (permanently or partially), it affects their lives.

However, if organisations implement a workmen's compensation policy for their employees, it can greatly help in such dire situations. The compensation helps them get necessary medical care, pay for their necessities, and stay on their feet for the time being.

-Helps in Risk Management

Any injury or accident in an organisation leads to several incidents that can risk business operations, finances and more. In such cases, the business has to pay for legal fees, medical fees, injuries, restoration, etc.

However, if there is workmen's compensation insurance, then it will provide effective risk management on behalf of the organisation. This way, the stability and operations of the business are not affected.

Also Read: 10 Questions Workmen Compensation Insurance Answered

-Good Reputation Management

Organisations also need workers' comp insurance for their reputation management. As entities, businesses are liable to demonstrate their ethical business practices and social responsibilities.

Organisations can do this by providing workers' compensation to their employees. Moreover, it creates a positive image among the employees and overall society, which can boost their business operations.

-Talent Acquisition and Retention

Providing workers' compensation policies to employees is part of every employer's talent acquisition and retention efforts. When professionals learn that an organisation protects and provides coverage for its employees in need, they want to stay associated with it for a long time. Moreover, it attracts new talents, which helps keep business operations running smoothly.

-Enhance Employee Productivity and Morale

Every working professional looks for an organisation and employer who values their skills and them as individuals. Businesses can provide them with a sense of belonging through workers's compensation insurance.

When employees are informed that their employers are there to support them during any difficult circumstances, they feel motivated. This boosts employees' morale and overall productivity at work.

Also Read: Workmen Compensation Claim Settlement Process

It is known that Workmen's Compensation Insurance is mandated under the Employment Compensation Act 1923. However, even without its compulsion, businesses should invest actively in this employment insurance.

Nowadays, it has also become quite easier to do by workmen compensation policy online purchase and renewal process. Businesses can now protect their employees against any workplace incidents and themselves against legal lawsuits, public defamation, etc.

TATA AIG SME Insurance is one of the trusted insurance providers that businesses can look to for the best insurance plans. It comes with security against financial losses, helps in legal compliance, and protects against losses due to natural disasters, too.

What are the relevant factors for workers's compensation?

Some of the relevant factors for a workmen's compensation plan are the employee's age, the sum of coverage, and the insurance features.

What are the exclusions of the Workmen Compensation Policy?

Certain losses and circumstances are not covered under the workers' compensation policy. It includes:

Injuries caused due to war, invasion, acts of foreign enemies, hostilities

Injuries or accidents due to the influence of alcohol or drugs

Incapacity or death due to employee attempt of self-injury

Who is eligible for workers's compensation?

Associations, firms, and corporations who hire workers on contract.

Shipping ports, ship owners, ports and shipping companies

Nuclear mining, reactor and other handling firms

Civil engineering firms and contractors