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What is Permanent Total Disablement?

Posted on 29 August, 2022

When an individual is physically incapable of being employed in any capacity and has been in that condition for a continuous period, the individual is deemed to be in a state of permanent total disablement. Permanent total disablement may also involve an individual’s inability to use limbs due to injuries preventing the individual from working in the same capacity as they had before the injury. Such conditions must be approved by a registered medical practitioner appointed by the insurer.

Opting for an insurance cover for permanent total disablement comes in handy to support the family and loved ones of the individual deemed to be in permanent total disablement.

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Insurance companies differentiate disability in two ways - permanent and temporary. This differentiation is based on the disability condition of the individual. It should be understood that an individual cannot avail of permanent total disablement benefits if that disability has a cure or treatment.

As per the Workmen’s Compensation Act of 1923, compensation has to be made to workmen in case of injury caused by accident or certain occupational diseases arising due to the nature of employment, resulting in disability or death.

Workmen’s Compensation

The Workmen’s Compensation Act, 1923, was introduced to compensate workers who encountered injuries due to work-related accidents. This Act ensures workers’ rights are maintained if they encounter any disability or death during the course of their employment.

Injury to workers and workmen’s compensation are key issues for any business in India. There are labour laws in India that provide compensation for workers injured or disabled on the job. Compensation for workers employed in India varies based on the company’s size.

If a business has employed more than 20 employees, they are governed by the Employees’ State Insurance Act, 1948. However, if the business has less than 20 employees, the Workmen’s Compensation Act, 1923, comes into effect. This act mandates providing compensation to workers injured on the job. This Act is particularly important for businesses involved in small-scale manufacturing or small office places.

The Workmen’s Compensation Act,1923 (now known as The Employee’s Compensation Act,1923) was amended in 2017, which made it mandatory for employers to educate their employees and workers about their rights regarding compensation, failing which the employer is liable to pay the penalty to the tune of ₹50,000.

Permanent Total Disablement in Workmen’s Compensation

The Workmen’s Compensation Act requires employers to compensate employees who have suffered injuries or accidents while performing their work on the job, resulting in either or any of the following:

  • Permanent total disablement

  • Permanent partial disablement

  • Temporary disablement

  • Death

Permanent total disablement is relevant when an employee can no longer perform any of their previously performed duties due to an on-the-job injury. This injury must be assessed and confirmed to affect the employee’s inability to perform their duties permanently.

In such a case, the employees are entitled to a minimum compensation which is then multiplied by a particular factor based on the employee’s potential future earnings. The total compensation can be significantly larger depending on the injured employee’s age. The employer is duty-bound to guarantee that such workers undergo all the necessary medical evaluations, not at their own personal expenses.

However, certain aspects should be factored in before deciding on the compensation amount as per the Workmen’s Compensation policy. These are:

  • The disabled worker should be 18 years of age or above.

  • The maximum monthly wage allowed for the calculation of compensation under this Act is ₹ 8000.

  • There is no one law for the whole of India; it varies from state to state.

  • The total compensation amount varies since this amount is based on a different formula.

So, let us see how this compensation amount is calculated.

The first step to calculate a compensation amount is to obtain copies of the reports regarding the accident, including medical records and witness statements. The next step deals with the extent of impairment or disability. For a worker who is in permanent total disability, the rating will be 100%. This rating is based on the medical report received from a registered medical practitioner.

State regulations vary depending on the type of injury and the salary of the disabled worker. The final compensation includes the estimation of future expenses related to the accident. All legal fees can also be included in the workmen’s compensation settlement.

In case of permanent total disablement, the compensation offered under the workmen compensation policy amounts to:

  • 50% of the monthly salary multiplied by the relevant factor based on the worker’s age.

  • A minimum amount of 1,20,000 is payable in such situations.

Conclusion

Workmen’s Compensation Insurance policy enables employers to compensate the employees or their families in case of permanent total disablement caused due to accident and injury at the workplace. It also covers certain occupational diseases caused during the course of employment.

With ICICI Lombard, you can choose from various industries and sub-industries for your skilled, unskilled and semiskilled workers, avail the benefits of our Workmen’s Compensation policy, and give them the assurance and peace of mind of working with your organisation.

  • Workmen Compensation
  • Product Code: 4010
  • Product UIN: IRDAN115CP0017V01201920

Help us know you better!

This contains only an indication of the cover offered. For complete details on risk factors, terms, conditions, coverages and exclusions, please read the sales brochure carefully before concluding a sale.ICICI trade logo displayed above belongs to ICICI Bank and is used by ICICI Lombard GIC Ltd. under license and Lombard logo belongs to ICICI Lombard GIC Ltd. ICICI Lombard General Insurance Company Limited, ICICI Lombard House, 414, Veer Savarkar Marg, Prabhadevi, Mumbai – 400025. . IRDA Reg.No.115. Toll Free 1800 2666. Fax No – 022 61961323. CIN (L67200MH2000PLC129408). customersupport@iciclombard.com. www.icicilombard.com. (Workman Compensation, 4010 , IRDAN115P0010V01200607)