The business risk is not limited to financial loss due to cutting-edge competition. The employer may also sustain financial loss if his/her employees sustain an injury in the workplace or die while performing the task.
In order to handle many unfortunate situations involving your employees, there is a product called workers’ compensation insurance. According to the Workmen’s Compensation Act of 1923, every employer has to compensate his/her employees for injuries sustained while discharging their duties, and employee insurance helps with that.
Let’s understand the scope of this coverage in detail.
What Workers’ Compensation Insurance Covers?
The employee insurance covers the following scenarios.
1. Injuries and Death
According to the Directorate General of Factory Advice Service & Labour Institutes (DGFASLI) data, India has around 3,63,442 registered factories as of 2020. Of them, 84% were operating, with over 20.3 million workers.
The data also revealed 4,000 injuries and more than 1,109 deaths per year. Now, the question is, who will be held accountable for workplace injuries? Obviously, the employer. This is where workers’ compensation insurance comes in.
Assume you run a coal mine, and one day, a number of your miners die as a result of explosions that release methane gas. In this situation, employee insurance pays a lump sum to their loved ones, and if the explosion causes injury, the coverage will cover their medical expenses.
2. Occupational Disease
Defining this term, this disease refers to a medical condition your employees contract because of the type of work they are engaged in.
Some common occupational disorders include:
- Irritant dermatitis that causes rashes or blisters on the skin
- Respiratory disorders like asthma and COPD (i.e., chronic obstructive pulmonary disease)
- Musculoskeletal disorders include tendonitis and carpal tunnel syndrome. These conditions are caused by repetitive heavy physical movement or while handling loads.
- Hearing loss
- Cancer is caused at the workplace when employees come in contact with carcinogenic substances
- Infections such as tuberculosis (TB) and hepatitis (B & C) are common among employees engaged in social services or diagnostic labs
Treating any of the above conditions requires a decent sum, and in many cases, the condition demands recurring doctor visits. Employee insurance takes care of such expenses
3. Lawsuits
The most important aspect of running an organisation is meeting safety requirements. Assume you run a business that manufactures heavy industrial equipment. However, several plants and machinery in your facility have completely depreciated and are dangerous to use, and you have received numerous requests to replace such units.
One day, while running this equipment, one of your employees gets seriously hurt. In this instance, the victim or a family member may file a lawsuit against your company.
Employee insurance can help with court costs, the fees of the advocate, and other legal expenses.
Common Exclusions of Workmen Insurance
The policy does not apply to the following situations:
- Your employee is injured in the workplace while under the influence of alcohol or drugs
- If the injury is caused by the employee knowingly disregarding the safety precautions required to do the task
- Injuries sustained while on duty but caused by war, uprising, nuclear threats, or invasion
- Outsourced employees are not covered unless you, the business owner, specifically cover them
- Any legal duties you, the employer, undertook under a contract
- The person working for you does not fall under the definition of Workman specified under the 1923 Workmen’s Compensation Insurance Act
Tips to Improve Workplace Safety
As an employer, it is your duty to step in and create a healthy and safe workplace. Here is what you can do.
- Train your personnel on what to do in an emergency, such as a gas leak, explosion, or machinery breakdown.
- Encourage break time to reduce the risk of mental health complications caused by a stressful job.
- Inspect the plant and machinery regularly and, if necessary, repair or replace any damaged parts.
- Keep a first aid kit and offer a doctor-on-call service at the facility. You can also schedule regular medical examinations to determine whether the worker can execute the task.
Conclusion
Workers’ compensation coverage is a must-have for any organisation. It is not only required by law but also protects your company financially and legally if an unforeseen event leads to your workers getting injured or you face legal action for such situations. However, there are several instances under which this insurance does not apply, and you must be aware of these to avoid trouble throughout the claim process.