Workers’ compensation is a form of financial cushion for employees who get injured while working. In India, the employees’ compensation covers the medical costs, lost wages, and rehabilitation expenses of injured employees. The workers' compensation in India is defined by the Employees' Compensation Act of 1923 (previously known as the Workmen's Compensation Act of 1923). It covers a broad category of work-related injuries in India.
Workers’ compensation insurance works as a safety net that covers different scenarios of injuries and sicknesses that one may be exposed to at the workplace. The following are some types of compensation:
Wage Replacement
Wage replacement aims to support the worker’s income once he/she suffers an injury. It has four key categories, all designed with the nature of injury in mind.
Temporary Total Disability (TTD) Compensation: This offers support for injured employees who cannot work temporarily owing to their injury but can resume their duties at the workplace after a while at full capacity.
Temporary Partial Disability (TPD) Compensation: This supports the employees who have resumed work but at a reduced capacity due to their partial disability caused by the injury.
Permanent Total Disability (PTD) Compensation: This supports workers with injuries that will never allow them to undertake any gainful employment in the future.
Permanent Partial Disability: It is appropriate for employees who will be able to work in the future but not in a similar capacity as they did before the injury.
These categories enable injury victims to obtain specific support to transition smoothly into their workplace or plan accordingly.
For temporary disabilities, employees can receive up to 25% of their monthly wages. In contrast, for permanent total disabilities, an employee can get 60% of his/her monthly salary or INR 1,20,000, whichever is higher. For permanent partial disabilities, employees receive a certain percentage of their wages.
However, if an employee passes away due to an accident at the workplace, his/her family members receive 50% of the person’s monthly wages or INR 1,20,000, whichever is higher.
It is important to note that individuals who receive compensation under the Employees’ State Insurance Scheme of India (ESIC) are not eligible for financial benefits under the Workers’ Compensation Act.
Vocational Rehabilitation
Vocational rehabilitation is useful to compensate those who need support in order to return to a previously strong work capacity. The policy also covers the cost of medical care and therapy required for a full recovery after the injury. In some cases, it may include training to enable the employee to undertake a fresh activity or function with the same efficiency.
Medical Treatment
Medical treatment is the other major aspect of a workers’ compensation insurance policy. It pays for all fees, such as doctor visits, emergency treatment, rehabilitation, medicines, and surgery, among others, which may be required in the recovery process. However, some procedures, such as homoeopathy and acupuncture, may not always be included.
A workers’ compensation insurance policy is compulsory for employers; it covers the risks associated with the health of employees and financial risks to employers. Organisations have the additional obligation of ensuring workers’ safety. Therefore, all organisations, including those in the construction industry, logistics, IT, and other labour-intensive industries, can acquire this policy.
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Workers’ compensation eligibility in India is determined by two factors: the type of employment and the circumstances of the injury. For the former, the injured employees must report the incident and make a claim. Usually, the employer is responsible for filing the said claim and prompts the injured to submit the required documentation.
The documentation includes medical records of the injury, police reports, and the injured’s employment contract. Depending on the claim's complexity, it may take some time to process, but it is usually settled within a short period.
Do remember that employers are not liable to pay compensation to any employee if he/she suffers from an accident/injury due to sheer negligence and ignores safety norms or partial/total disability occurs for less than 3 days. Also, if the employee sustains an injury or meets with an accident at the workplace under the influence of drugs/alcohol, the employer has no liability to pay any compensation.
Workers’ compensation under the Employees’ Compensation Act of 1923 supports employees and their families by ensuring financial security to cope with their ordeal. As an employee, knowing your rights and understanding what you are entitled to can transform a dark time into a tale of recovery.