Understanding the Difference Between ESIC and Workmen's Compensation Act: Can You Help?

Respected All Seniors / Juniors,

I need your help to understand the difference between the ESIC Act and Workmen's Compensation Act. Hope that you will help me in this regard.

With Regards,
Vikas Kumar

Workmen compensation is mainly intended for cases of death in the workplace, total disablement, total partial disablement, and partial disablement. It will provide monetary compensation for the above cases.

On the other hand, ESI will cover employees for any accidents, hospitalization, funeral expenses, and family healthcare for cardholders, etc.

Worker's compensation will only be helpful by paying compensation to the deceased employee's dependents.

To add to the points already mentioned, workers' compensation (WC) is regulated by Commissioners appointed for this purpose, whereas the Employees' State Insurance (ESI) is a corporate body with offices all over the country.

Under the Workmen's Compensation Act (WCA), the compensation is to be paid by the employer through the Commissioner, whereas under the ESI Act, a contribution from the employer and employee is regularly deposited with the ESI to create a pool to finance various expenses such as cash benefits, medical benefits, rehabilitation, etc. The benefits under ESI are better than those under WCA.

Once an area is covered under the ESI Act, it is compulsory for the employer to register itself under ESI. The WCA ceases to apply to industries in such areas.

Dear Vikas,

In my opinion, the most important difference is that ESIC covers your family in case of sickness. Benefits, including hospitalization, whereas the WC Act covers only workers in case of accidents during the course of and arising out of employment, so the scope of ESIC is wide.

In ESIC, the worker has to pay his contribution because it is insurance, whereas under the WC Act, there is no provision for worker contribution.

Regards,
D V Gosavi

Dear Vikas,

The important point is: "Once an area is covered under the ESI Act, it is compulsory for the employer to register itself under ESI. The WCA ceases to apply to industries in such areas."

Regards,
RR Wankhede

If the company is covered under ESI, the Workmen's Compensation Act will not be applicable. The benefits will be given through only one.

YASH

Dear all,

ESIC is governed under statutory provisions and covers establishments where there is availability of hospital/medical facilities. ESIC covers all areas including absenteeism of wages due to sickness, hospitalization, and family coverage.

In contrast, the Workmen Compensation policy provides coverage only to workmen in cases where ESIC is not applicable. This policy becomes a moral obligation for the employer, covering only workmen while on duty. It includes accidental absenteeism and a small amount of medical benefits.

In summary, ESIC has a broader scope under the welfare scheme and statutory regulations, whereas Workmen Compensation is primarily a moral obligation in the absence of ESIC coverage. This highlights the distinction between the two.

Regards,
Janvalkar Sharadkumar
Group Head - HR, Personnel & Admin
sjanvalkar@mutual-industries.com

Once the area is implemented under the coverage of the ESI Act of 1948, and the particular factory or establishment is covered under the ESI Act, all the employees employed there, with a salary up to Rs. 15,000, are covered under the ESI Act compulsorily. They will enjoy various cash and medical benefits provided under the Act. For those employees, the WCA will not apply, and they are barred from claiming both benefits. Moreover, if an employee is once covered under the ESI Act, they have no option to choose the WCA Act, and the coverage under the ESI Act is not optional.

However, if the area is not implemented under the ESI Act, or if the factory is not covered under the Act due to employing fewer persons for coverage under the ESI Act, then the WCA will apply. It is advisable for employers to take an insurance policy from any insurance company under the WCA Act to meet any unforeseen liability under the WCA Act.

Understanding ESI and Workmen's Compensation (WC)

ESI is statutory, but WC is mandatory if the employer wants to take care of the welfare of the employees. The employer must apply for ESI coverage, and WC can also be taken for the welfare for tax purposes (please check with the Income Tax Act for exemptions) as this shows the welfare expenses.

ESI Coverage Details

ESI: During service, employees can avail medical benefits which include coverage for their family members. If it's a female employee, even her mother is eligible for ESI coverage. However, for male employees, their mother-in-law is not eligible for ESI coverage. Please refer to the ESI Act in the exemption menu for more details.

Regards,

For expanding our activities recently, we have purchased land which is very far away from the city (it is in a remote village) where there is no ESI dispensary, hospital, government hospital, etc. What should we do to ensure our coverage under ECA? Although we take all measures for employee safety, our manufacturing process is prone to accidents.

Regards, Vijayant

Change in Legislation: Workmen's Compensation Act

The name of the Workmen's Compensation Act, 1923 has been changed to The Employee's Compensation Act, 1923 with effect from the year 2010 through an amendment carried out by Parliament.

In order to claim compensation or benefits under any of the enactments, it must be indicated whether the employee was covered under the ESI Act, 1948 or under the Employee's Compensation Act, 1923.

Regards,
Harsh Kumar Mehta

Hi Mr. Sharad, if the ESI limit exceeds but it is within the city, what will be the cause for the workmen? Whether WC is eligible or not? Please let me know if you need further clarification or information.

Hi all,

I want to know if my employees are covered under ESIC. However, as per our client's requirements, we also have a workers' compensation policy in place. Recently, one of our employees had an accident and passed away on the spot. In this situation, I am unsure which policy we should follow to ensure that his family can receive the policy benefits. Can we avail of both policies, or should we choose one over the other?

Your assistance in this matter would be greatly appreciated.