Employees Compensation Act
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Employees Compensation Act Insurance
Employees' Compensation Act Insurance provides financial protection to employers against legal liability arising from employee injury, disability, or death occurring out of and in the course of employment. The insurance is provided based on categorized list of employees. Named policies list covers specific employees, while unnamed policies cover all employees based on a total headcount or wage bill without specifying individual names. It covers compensation for medical expenses, temporary or permanent disability, occupational diseases, and fatal accidents as mandated by law. Plans are structured based on industry risk categories such as manufacturing, construction, logistics, IT/ITES, and other commercial establishments. The insurers are offering the coverages as envisaged in the above Act. Additional benefit offered is the Medical Expenses extension.
List of Coverage
The Act provides for the payment of Compensation by the Employer to his Employees (or their dependents in the event of fatal accidents) if personal injury is caused to them by accidents arising out of and in the course of employment.
The Definition of Workmen is as per the Act and includes persons whose employment is of casual nature also.
Acts Covered
- Indemnity against the Employer's Legal liability to his employee under the Employees Compensation Act, 2010 and subsequent amendments of the Act.
- Indian Fatal Accident Act, 1855
- The Common Law
Maximum Compensation Payable
The maximum Compensation Payable is upon the following (as per Employees Compensation Act, 2010).
| Minimum Compensation | Maximum Compensation | |
|---|---|---|
| Death Resulted from Injury | INR 1,20,000 | INR 17,14,050 |
| Where Death results from the injury, an amount equal to 50% of the deceased workman Multiplied by the relevant age factor OR an amount or INR 1,20,000 whichever is more. | ||
| Permanent Total Disablement | INR 1,40,000 | INR 20,56,860 |
| Where permanent total disablement results from the injury, an amount equal to 60% of the workman's monthly wages multiplied by the relevant age factor OR an amount of INR 1,40,000 whichever is more. | ||
| Permanent Partial Disablement | As per the % of loss of earning capacity. It varies from 1% to 90%. | |
| Temporary Disablement | An amount equal to 50% of monthly wages subject to a maximum of INR 7,500. No compensation would be Payable up to 3 days of disablement. If more than 3 days but less than 28 days, then 50% of balance days wages are payable. Disablement exceeding 28 days, No deduction for 3 days. | |
| Where monthly wages of workman exceed INR 15,000, then his monthly wage for the purpose of computation of compensation shall be deemed to be INR 7,500 only. This would mean that the maximum liability under the policy will be limited to monthly wages of INR 15,000/-. | ||
Compensation Calculation
The amount of compensation is calculated as:
Accidental Death
50% of wages (Max 15K) X by relevant age factor as given in Act.
Permanent Total Disability (PTD)
60% of wages (Max 15K) X by relevant age factor X percentage of disability.
Permanent Partial Disability
60% of wages (Max 15K) X by relevant age factor X percentage of partial disability as specified in Part II Schedule I.
Main Features
- Statutory compliance
- Coverage for full-time/contract workers
- Customized sum insured based on wages and risk class
- Coverage across multiple locations
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What is Employees' Compensation Insurance?
It covers employer liability for employee injury, disability, or death arising out of employment.
Who should take this policy?
Employers across industries.
What does it cover?
Compensation as per the Employees' Compensation Act.
Is it mandatory?
Yes, for applicable employers under the Act.
Does it cover occupational diseases?
Yes, as specified under the Act.
Are contractors covered?
Yes, if included in the policy.
What is not covered?
Injuries not related to employment.
How is compensation calculated?
As per statutory provisions.
How is premium calculated?
Based on employee wages and risk category.
How to claim?
Employer reports the incident and submits documentation.