Permanent Partial Disability in Worker's Compensation Policy

A permanent partial disability can happen owing to an illness or an injury that is partially but not entirely disabling. In other words, an individual suffering from permanent partial disability can perform some but not all of their routine tasks. Permanent partial disability insurance provides compensation for this type of accidental injury.

The claim under a workmen’s compensation policy is different from other claims for other personal injury. An individual who has experienced an accident at their workplace that has rendered them partially disabled receives compensation for the injury.

Moreover, the compensation is only offered after being assessed by a qualified doctor. The amount of the compensation depends on the nature and severity of the injury.

The reason why it is important to understand this term is because the difference between partial disablement and total disablement determines the compensation that an individual would receive. The key difference between partial disablement and total disablement is that the former will not entirely prevent a worker from doing their job. Contrarily, total disablement makes it impossible for an individual to perform any of their routine duties.

Now that we understand its meaning, let’s see how the compensation for permanent partial disablement works.

In the unfortunate event of an accident at the workplace, the compensation depends on the analysis of a qualified doctor. After a thorough evaluation, the doctor provides an understanding of the scope of the damage and loss to subsequently determine the extent to which the patient’s earning capacity has been impaired.

In addition to the physical injury, several factors are taken into consideration when calculating the compensation, such as age and the current salary of the individual. A younger employee may receive a higher payout as the compensation also takes into consideration the rest of the individual’s working years.

However, before analysing the compensation under permanent partial disablement in labour law, it is important to make note of the following factors:

• The maximum monthly wage permitted for the computation of compensation was revised in 2020 from ₹8000 to ₹15,000 under the Workmen’s Compensation Act.
• The workers who are eligible for compensation must be above 18 years of age.
• Permanent partial disablement in labour law is different in different states.
• The calculation of the final compensation also differs as it is based on a different formula.

According to the Act, the compensation for permanent partial disablement has to be paid by the employer to the employee. The calculation of compensation is made on a monthly wage system. Here’s how section 4 of the Act outlines the calculation of employee compensation:

• In the unfortunate event of death, the dependents of the employee are eligible to receive compensation from the employer:
• Higher of the 50% of the deceased employee’s monthly wages multiplied by “the relevant factor” or
  ○ ₹1,20,000
• If an accident causes permanent or total disability, the employer is liable to pay:
  ○ Higher of the 60% of the salary of the injured employee multiplied by “the relevant factor” or
  ○ ₹1,40,000
• If an accident causes permanent partial disability, the employee is eligible for a half-monthly payment of the sum equivalent to 25% of the salary.

Schedule 4 of the Act mentions the relevant factor for computation. As per the latest revision outlined by the government, the compensation is now calculated at ₹15,000, which is considered as the wage amount.

Once an employer invests in workmen’s compensation policy online, they can financially cover their employees and dependents against unfortunate eventualities. Not only is it easy to buy workmen’s compensation policy online but this policy is the key to satisfying the legal obligations under the Employees Compensation Act, 1923. Here are the scenarios that are covered under a comprehensive workmen compensation policy:

• Injuries sustained in a workplace accident
• Partial disablement and total disablement coverage
• Death or temporary disability
• Injury worsening due to employment conditions
• Occupational illness and diseases
• Legal costs with the consent of the organisation
• Compensation for seeking medical treatment

Employees are a critical aspect of any enterprise. Therefore, investing in employee compensation insurance which falls under business insurance in India, can help ensure that the employees as well as the business are financially secured against mishaps. Some additional advantages of investing in this insurance include:

• Financial support to your employees who are suffering from an illness or a disability.
• Lowers financial costs to the company.
• Secures your business against legal liabilities.
• Secures your business from lawsuits in the event that an employee sustains a work-related injury.
• After a successful claim settlement, the employee is not eligible for additional compensation.

Accidents in the workplace can be greatly stressful for the employee as well as for the business owner. Although one can incorporate the best measures to prevent mishaps and cultivate a safe environment, there is no predicting the future. So, to not leave your business and workforce vulnerable to these unforeseeable events, it is advised to invest in business insurance in India for comprehensive protection.

One can even invest in Workmen’s Compensation Policy that secures employees against permanent partial disablement by offering adequate compensation to the injured individual.

What is the difference between workmen’s compensation policy and group insurance?

The key difference between employee compensation and group insurance is that the former offers coverage against work-related mishaps, including, death whereas the latter covers illness, disease, and accidents not restricted at a workplace. Additionally, businesses are legally obligated to provide employee compensation but not group health insurance.

What are the important updates on the Workmen Compensation Act 1923?
Since its inception, there have been two critical changes in the Act:

• The name of the law changed from the Workmen Compensation Act to the Employee’s Compensation Act in 2010.
• On January 3, 2020, the Ministry of Labour and Employment increased the compensation calculation amount from ₹8,000 to ₹15,000.