Workers' Compensation Coverage: How Does It Work for Multiple Shifts?

Hi, can anybody clarify if I have a workers' compensation (WC) policy for 20 workmen covering all 3 shifts, with 20 workmen in each shift?

Regards,
Mayank

Dear Mayank,

In my opinion, your coverage may not protect you because if I am correct, the insurance company will seek information on the age and wages of the workmen. If the workman who has had an accident does not match the age profile of the insurance coverage, then you may run the risk of paying the compensation amount. However, the best person to consult would be the insurance company representative regarding this matter. I have heard that there is a provision for an open-ended policy without naming specific individuals. Please verify this information.

Regards, M.V. Kannan

Dear Mayank,

As far as my knowledge goes for WC Policy, the insurance company needs these details for WC Policy:

1. Number of Workers to be covered.
2. WC insurance coverage period: From To.
3. Wages of the workers during the coverage period.
4. Nature of job in which the workers are to be engaged or Work order in the case of contract labor.
5. Nature of job in respect of risk involved (for premium amount).

I do not have any idea whether 'Age' is a factor in the case of WC Insurance or not, but generally, I have never seen any policy where the age of the workers is mentioned. So, I think in your case, if the number of workers covered under WC Policy is 20 and each shift has 20 workers, there is no risk involved as far as payment of compensation by the insurance company in case of an accident is concerned. But make sure that at any shift, the number of workers should not exceed 20. However, if at any time you will be required to engage more than 20, do not keep any documentary proof of that.

Regards,
Jawed Alam

Dear Jawed,

In the event of compensation payable due to disablement, the amount is calculated based on the relevant factor displayed against his age. The compensation amount is determined by the loss of earning capacity, so the younger the age, the higher the compensation. This was the basis on which I indicated age could be a factor. As I wasn't sure about the exact terms and conditions of the workers' compensation insurance policies offered by insurance companies now, I felt that the insurance company was the best source.

A few years back, our contractor took out an open-ended insurance policy with a leading insurance company. However, as no issues arose during that period, I did not review the operational procedures.

Regards,
M.V. KANNAN

Open-Ended Policy Requirements

An open-ended policy is available, but you have to indicate the wages of employees to determine the premium charges. Age and name need not be given, but you must take insurance coverage for 60 workmen as you are engaging 20 workmen for each shift.

Regards,
R. Ponraj

Dear M.V. KANNAN,

You are absolutely correct. When calculating the compensation payable to a workman due to an accident arising out of and in the course of employment, age is a vital factor. Depending on age, the compensation amount is calculated (a relevant factor as you mentioned). However, consider the situation of contractors; they frequently change their workers, making it impossible for them to identify the age of future workers. This is why insurance companies generally do not require the age of the workers to provide coverage under the Workers' Compensation Policy. Age is not a factor for getting your workers covered under the WC Policy, but it is a vital factor for calculating the amount of compensation.

So, if you have obtained a Workers' Compensation Policy for 50 workers at a time and a worker dies due to an accident, whatever amount the WC Commissioner calculates, it will be the responsibility of the insurance company to pay the amount.

Regards,
Jawed Alam

Dear Mayank,

The WC Premium is always calculated based on the salary paid to the workers for the number of days they work. In your case, you should consider the number of workers, the days worked, and the total salary paid during that period. Subsequently, you should inform the insurance company about this matter and pay the premium.

Regards,
Sham

Based on my experience, the viewpoint presented by Mr. R. Ponraj is accurate. Insurance coverage should be provided for the maximum number of workers involved. In your situation, coverage should be for 60 workers.

Regards,
Subrata

Workers' Compensation Policy Coverage

You will have to take 60 workmen under the Workers' Compensation (WC) Policy. This is because, at the time of any WC claim settlement, the auditor will ask you for the Wage Register and Attendance Register. If the number of workmen exceeds the coverage of the policy in the attendance register, the claim will not be settled.

Thanks to all for your valuable replies. Please also tell whether WC covers only persons whose names are in the Workmen Employed Register and what are the documents required at the time of any claim.

Regards,
Mayank

The insured individual must be on your payroll. In case of a claim, insurance companies verify attendance records, paysheets, and appointment procedures.

I would like to share my experience from working at a contracting company. We had coverage for only 50 workers, although we actually employed around 125. Unfortunately, one worker had a fatal accident while on duty. When we submitted a claim based on the compensation determined by the WC commissioner at the Labour Office, it was rejected. This was because the insurance companies found that we had more workers than stated in our WC policy. As a result, the principal employer deducted the compensation payable from our bills and deposited it with the Labour Commissioner.

Regards,
R. Ponraj

WC Policy is based on the salary sheet (total wages drawn). You are required to file the monthly returns of workers leaving and joining, along with the wage bill. The premium is calculated based on the wage bill, and adjustments for differences in the premium are made every month. You must provide details of the deceased employee (wages/age/name/death certificate, and other relevant documents).

Please share your views/knowledge on the following: Is there any legal provision for having a "Site-specific WC Policy" and an "All India Valid" policy? Also, share industry practices on the same.

Regards,

Dear Gaurang Sheth,

First of all, one thing I need to mention before addressing your question is that it is nowhere mentioned in the WC Act whether WC Policy is to be obtained from an insurance company or not. The essential aspect is the compensation paid to an employee for employment injury arising out of and in the course of employment. It is irrelevant whether your employees are covered under a WC Insurance Policy or not.

The decision whether to opt for a "Site-specific WC Policy" or an "All India Valid" WC Insurance Policy is highly dependent on your company's requirements and working area.

Some companies, mainly construction firms, operate nationwide due to job demands. For such companies, it is advisable to choose an All India Valid Insurance Policy because they may have workers engaged in various locations and may need to work in different parts of India throughout the year. However, the premium for this insurance coverage is significantly higher compared to the Site-specific Policy.

On the other hand, companies that operate in a single location where their employees do not need to travel for work may find it more suitable to opt for a Site-specific Insurance Policy.

Regarding the risk to the Principal Employer, with an All India Insurance Policy, there is no risk as long as the Contractor maintains all necessary documents in case of an accident. The Principal Employer can also include a clause in the Work Order/Purchase Order stipulating that in case of an accident, the Contractor will bear the total financial and administrative liability. Failure to comply with this clause may result in deductions from the Contractor's bill to cover the required amount.

Regards,

Jawed Alam.

I differ with Jawedalam.

In some cases, the nature of work will be labor-intensive. As anyone cannot predict the accident and its attendant consequences, it is always prescribed in such cases that workers' compensation (WC) coverage is a must. Otherwise, the principal employer is liable for the compensation arising out of such claims.

The WC policy can be taken for multiple locations, but all job locations shall be furnished to the insurance companies.

Regards,

R. Ponraj

Dear R. Ponraj,

What you are saying is correct, but it's only prescribed, not compulsory/mandatory in the WC Act. Just take our plant's (Thermal Power Station) example where the labor structure is as follows:

1. Permanent Employees: Around 950.
2. Contract Labor: Around 1500 on a daily basis at the Operation & Maintenance Site.
3. Contract Labor: Around 3000 on a daily basis at the Construction Site for new units of 250 MW X 2 EACH.

Our permanent employees are not covered under any WC Insurance Policy. The WC Policy for Contract Labor (O&M and Construction workers) is handled by the contractors. However, this does not mean that in the case of an accident involving our permanent employees, we do not pay compensation as per the WC Act. Our head office covers all the compensation amounts from its own funds.

That is why I said... waiting for your suggestions if our company is doing something wrong.

Regards,
Jawed Alam

Dear Jawed,

Permanent employees are covered under Group Insurance Policies. What we are discussing is about workmen Compensation policy. I am also from the Power sector, and we engage contract labour. We insist all subcontractors to cover their workmen under WC as most of the subcontractors are not financially healthy to take care of compensation arising out of any eventualities. I agree that WC coverage is not mandatory as per law.

Regards, R. Ponraj