Differentiation between Workers Compensation & Employee State Insurance

Workmen's compensation insurance, or WC insurance, is designed specifically to protect employees financially in case of workplace accidents. It is a state-mandated policy with a no-fault system, which means the employee is entitled to a claim amount regardless of who is at fault for the injury.

Compensation

Under the workmen's compensation policy, employees are entitled to various benefits. These benefits include disability pay, medical expenses and rehabilitation costs. Medical expenses include all necessary and reasonable expenses related to injuries, such as regular doctor’s visits, medication, diagnosis, treatment or operation.

Disability Pay

Employees who suffer temporary or permanent disablement due to workplace injuries are entitled to disability pay. Temporary disability benefits are provided for temporary injuries, and permanent disability benefits are provided in case the employee is rendered disabled for life.

Rehabilitation Cost Cover

Worker compensation policy also covers rehabilitation costs. This includes vocational training, physical therapy and assistance with job placement services. Through these services, employees are helped to regain their skills and abilities to work and be included in the active workforce again.

Also Read: Benefits of Workmen Compensation Insurance

Employers' state insurance, or ESI, is a social security scheme that aims to provide necessary medical and financial assistance to all employees across India. The insurance is a contributory fund for which both the employer and employees make their share of regular contributions.

Eligibility Criteria

Employees with monthly salaries below ₹21,000 are eligible to get coverage under their employer's state insurance. The insurance includes several benefits for employees, such as sickness benefits, medical care, disablement benefits, maternity benefits and more.

Funding

Both the employer and the employee contribute to the funding for employers' state insurance contributions. The employer first contributes a percentage of the employee’s salary, and then the employee makes a smaller contribution. The contributions are used to fund the ESI scheme, which provides comprehensive health and social security benefits.

Health Benefits

Under ESI, employees get several health benefits, such as doctor consultation, diagnosis, hospitalisation, specialist consultation and much more. These health benefits are available for both the employee and their dependents and ensure that they get quality healthcare services without any financial strain.

Also Read: Employee’s State Insurance Scheme (ESIC)

Now that you know what worker' comp and employers' state insurance mean, understanding the difference between the two will become easier. Let us have a look:

Choosing between workmen's compensation insurance and employers' state insurance becomes difficult because both these business insurance India provide great benefits. However, employers need to assess every situation carefully. They need to consider the nature of the employee’s injury or illness, their eligibility for ESIC vs WC policy and applicable legal regulations.

Understanding the various concepts of both programs helps employers make informed decisions that benefit their employees and provide them with maximum coverage against any ill fortune.

Also Read: ESI or WC, Which is Applicable to My Organisation?

Employer’s Obligations

Employers have legal obligations to fulfil both workers' compensation and employers' state insurance. According to the workers' compensation laws, employers are required to provide a safe working place for their employees, report workplace injuries, and cooperate during the claim procedure. If an employer fails to fulfil these obligations, they have to face legal and financial consequences.

In the case of employer-state insurance, employers are responsible for deducting a certain amount from the employee’s salary and depositing it along with the employer’s contribution amount in the ESI fund. The employers also need to register the details of eligible employees for ESI coverage, maintain their records and cooperate during the claims submission process whenever required.

Employee’s Rights

Employees have the right to a safe workplace and necessary compensation in case of sickness or workplace injuries and accidents. Under workmen's compensation, employees are authorised to get medical treatment, rehabilitation facilities and disability benefits services.

Moreover, employees covered under the ESI have the right to services like healthcare, sickness benefits, social security benefits and maternity benefits as outlined under the ESI scheme.

Filling a claim under workers' compensation and employers' state insurance requires certain steps and adherence to policy guidelines. Let us better understand the required steps for both policies:

Process to Claim Workmen Compensation Insurance

First of all, the employer must be informed immediately about the disablement or death of the employee.

Next, if the incident occurs inside the office premises, the factory inspector must also be informed immediately.

Now, the employer needs to collect all the necessary documents and information as instructed by the insurance company.

Then, the employer will submit the collected documents to the insurance company executive for further processing.

Finally, after the documents are submitted, the insurance company will verify the documents and other claims to decide whether or not to approve the claim request.

Process to Claim Employers State Insurance

There is no specific procedure for claiming employer-state insurance, but insured individuals can claim these two types of benefits.

Cash Benefits: These are monetary benefits that employees can receive in case of sickness, unemployment, disablement, maternity, dependent or funeral costs, etc.

Medical Benefits: To claim medical benefits, the insured or their dependents need to visit an ESIC-specific in-panel hospital with their ESI card as proof.

The insured can also check the updated status of their claim on the UMANG app that ESIC provides. Here are the steps to check the status.

• Download the UMANG app from the internet.

• Once installed, open the app, enter the IP number or the ESIC number and then click on “Get OTP”.

• Enter the OTP received on the phone and tab on submit.

• Finally, the claim status and the details required for the advanced search option will be displayed on the screen.

Also Read: Key Factors for Choosing Workmen’s Compensation Policy

Although workers' compensation and employers' state insurance might be quite different, their purpose is similar: safeguarding the well-being of employees. It is up to employers which of these they choose for their employees. With the information provided here, organisations can compare employers' state insurance and workmen's compensation policy online and buy whichever seems suitable.

TATA AIG is one of the most trusted and reputable workmen compensation policy providers that employers can check. To get more information about the extensive and customised coverage plans for diverse business needs, explore the TATA AIG website.

How is the WC policy calculated?

The sum insured amount in the workmen's compensation policy is calculated based on various factors, such as the number of employees, employees’ annual wages and the nature of their work, legal requirements, industry standards and coverage limits mentioned in the policy.

What documents are required for WC policy?

Some crucial documents required for WC policy are employee details, a completed proposal form, the organisation’s KYC documents, employee salary information and other requested documents.

Which is better, WC policy or ESI?

Whether it is a workers' compensation policy or employee state insurance, both have benefits and provide coverage to employees. An organisation has to make a selection based on its eligibility, needs and funding.