Understanding Workmen Compensation vs. Group Personal Accident Policy: What HR Needs to Know

Dear All, The below information I got from Oriental Insurance Company. Hope this will help all HR Professionals.

Difference between WC & PA:

1. WC Policy is a Legal Liability Policy, whereas in PA Policy, certain Agreed Benefits are granted.

2. WC Policy covers Legal Liability towards employees in case of death or injury sustained by them during the course of Employment. PA Policy covers Accidental bodily injuries resulting solely and directly from an accident caused by EXTERNAL & VIOLENT means resulting in death or disablement at any time during the Policy period.

3. In the case of WC Policy, the amount of compensation depends on the nature of the injury in injury cases. For Fatal accidents, the compensation is calculated by considering factors like Age and Income of the person Injured/died, varying from case to case. In PA Policy, certain Agreed Benefits are provided as per the cover taken in the policy.

4. If a PA Policy is taken for a higher Sum Insured, it may cover compensation payable as per the WC Policy. If taken for a lower Sum Insured, the Award under WC may exceed the cover taken under WC.

Additional Points:

- The WC Policy includes occupational diseases that workers may contract arising from employment (with an additional premium of 25%). PA Policy only covers injuries due to accidental external and violent means, excluding occupational diseases.

- Premium rates under WC Policy are based on the nature of duties the workers perform, while PA charges Standard Rates except for workers in specific hazardous occupations.

- Benefits under ESI align with WC Policy, whereas PA & Mediclaim policies offer benefits based on their standard terms and conditions.

- PA covers compensation for Accidental Injury or Death as agreed upon in the policy, while Mediclaim provides reimbursement for hospitalization up to the policy's coverage limit.

Thank you.

In our factory, we typically mandate that every contract workman entering the plant and earning less than 15,000 must have an ESI registration. For contract workmen earning more than 15,000, we ensure that they have some other medical insurance policy, generally covering 1 lakh mediclaim and up to 4 lakh for a group accident policy. In this case, will we have any liability as the Principal Employer if an accident occurs inside the plant?

Yes, 4 lakh is not enough in case of death and permanent disability. As per the WC Act, for the youngest employee with accurate calculation, the compensation is approximately Rs. 11,00,000. Thus, your PA cover should be more than 11 lakh. Otherwise, simply take a WC policy as it will also cover elements like heart attacks in the office and paralysis, which will not be covered by a PA policy. I am sure about this, but as it is a sensitive issue, I would advise talking to a lawyer and a highly expert insurance advisor.

Regards,
Manoj Chaudhari

Please guide me on the procedure to take a workers' compensation (WC) policy for contract workers working at my plant. Is it possible to take a blanket unnamed policy to cover anyone who enters the plant?

WC Policy: An Overview

WC is an unnamed policy. Yes, you can take a WC unnamed policy. Contact any insurance advisor for the same. Provide your details such as wage and nature of work, obtain 2-3 quotations, and pay the premium.

Regards,
Manoj Chaudhari

I am slightly confused. Will the premium be paid by the Principal Employer or Contractor? He has small vendors providing manpower for temporary work (sometimes for just 2-3 hours) for temporary tasks, for instance, to repair some furniture or do some waterproofing work. In most cases, these people do not have PF or ESI registration. How should we handle such cases?

Second Question:

In our company, all employees earning more than 15,000 are covered under a Mediclaim Policy with coverage of 1.5 lakhs and a Group Accident Policy with a maximum coverage of up to 10.5 lakhs. But we have not taken a WC policy. Does that mean that we'll be liable to pay for treatment in case any accident takes place within the company?

I am working as an HR professional in a reputed underground mining contract company. We are involved in various types of work on a 24x7 basis (3 shifts per day), and we have different work orders for each type of work. For example, I am currently managing two work orders, X and Y. In the X work order, we have 19 persons, and in the Y work order, we have 5 persons.

Questions on Labor License and Workers' Compensation Policy

Now, I have a couple of questions:

1. Is a labor license applicable in this scenario?

2. Regarding the Workers' Compensation (WC) Policy

In the X work order, although we have 19 members, we actually require only 5 workers in each shift to carry out the work. I am considering implementing a WC policy with a basic wage of Rs. 8000 for 5 persons and a basic wage of Rs. 2000 for the remaining 14 members (total of 5 + 14 = 19) to reduce the premium burden on my company. Is this legally permissible?

Your feedback and guidance on these matters would be greatly appreciated.

Thank you.

Dear All,

In our factory in Gujarat, we have a Workers' Compensation (WC) policy, and we also provide coverage for employees with Mediclaim, Personal Accident (PA), and Term Life policies. These policies offer better coverage and benefits than the WC policy. Is it mandatory to have a WC policy even if better benefits are provided to employees?